-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VuLKQFYtoGs7jcVvlZNNmvy5cC/saDjJTKDAAXN5s28zVJNT2hSdLe1awfVORa4P CvcUdMb7ZWH56TY37j5nvg== /in/edgar/work/20000808/0000950144-00-009582/0000950144-00-009582.txt : 20000921 0000950144-00-009582.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950144-00-009582 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COX RADIO INC CENTRAL INDEX KEY: 0001018522 STANDARD INDUSTRIAL CLASSIFICATION: [4832 ] IRS NUMBER: 581620022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-08737 FILM NUMBER: 688408 BUSINESS ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048435000 MAIL ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 10-Q 1 e10-q.txt COX RADIO, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ---------- ---------- COMMISSION FILE NUMBER 1-12187 COX RADIO, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 58-1620022 (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 1400 LAKE HEARN DRIVE, ATLANTA, GEORGIA 30319 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (404) 843-5000 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] --------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. There were 40,472,543 shares of Class A common stock outstanding as of August 4, 2000. There were 58,733,016 shares of Class B common stock outstanding as of August 4, 2000. 2 COX RADIO, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS............................................................ 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................................... 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...................... 18 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS............................................................... 20 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS....................................... 20 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............................ 20 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................ 21 SIGNATURES........................................................................................ 23
2 3 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS COX RADIO, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31, 2000 1999 ----------- ------------ (AMOUNTS IN THOUSANDS) ASSETS Current Assets: Cash and cash equivalents .......................................... $ 13,589 $ 14,704 Restricted cash .................................................... 76,699 -- Accounts receivable, less allowance for doubtful accounts of $3,406 and $2,966, respectively .............................. 83,385 74,775 Prepaid expenses and other current assets .......................... 5,007 4,387 Amounts due from Cox Enterprises, Inc. ............................. 92,839 -- ----------- --------- Total current assets ............................................ 271,519 93,866 Plant and equipment, net ............................................. 58,086 56,582 Intangible assets, net ............................................... 804,652 829,307 Station investment note receivable ................................... -- 850 Other assets ......................................................... 26,168 6,016 ----------- --------- Total assets .................................................... $ 1,160,425 $ 986,621 =========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses .............................. $ 23,176 $ 28,115 Accrued salaries and wages ......................................... 6,076 4,464 Accrued interest ................................................... 1,623 2,476 Income taxes payable ............................................... 6,613 5,462 Other current liabilities .......................................... 1,653 1,572 Amounts due to Cox Enterprises, Inc. ............................... -- 17,138 ----------- --------- Total current liabilities ....................................... 39,141 59,227 Notes payable ........................................................ 200,125 420,105 Deferred income taxes ................................................ 148,005 128,623 ----------- --------- Total liabilities ............................................... 387,271 607,955 ----------- --------- Commitments and contingencies (Note 3) Shareholders' Equity: Preferred stock, $1.00 par value: 15,000,000 shares authorized, None outstanding ................................................ -- -- Class A common stock, $0.33 par value; 210,000,000 shares authorized; 40,612,257 and 28,015,983 shares outstanding at June 30, 2000 and December 31, 1999, respectively ............... 13,402 9,245 Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares outstanding at June 30, 2000 and December 31, 1999, respectively ............................. 19,382 19,382 Additional paid-in capital ......................................... 609,151 265,155 Retained earnings .................................................. 132,870 86,535 ----------- --------- 774,805 380,317 Less: Class A common stock held in treasury (119,856 shares at cost) (1,651) (1,651) ----------- --------- Total shareholders' equity ...................................... 773,154 378,666 ----------- --------- Total liabilities and shareholders' equity ...................... $ 1,160,425 $ 986,621 =========== =========
See notes to unaudited consolidated financial statements. 3 4 COX RADIO, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- --------------------------- 2000 1999 2000 1999 -------- -------- --------- --------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) NET REVENUES: Local ................................. $ 69,166 $ 58,181 $ 123,537 $ 103,391 National .............................. 22,172 18,506 40,139 32,250 Other ................................. 4,331 1,898 7,871 3,317 -------- -------- --------- --------- Total revenues ...................... 95,669 78,585 171,547 138,958 COSTS AND EXPENSES: Operating ............................. 20,375 17,755 37,795 32,621 Selling, general and administrative ... 37,397 30,144 69,178 55,947 Corporate general and administrative .. 3,136 2,409 5,979 4,595 Depreciation and amortization ......... 7,788 6,856 15,055 13,214 Loss (gain) on sales of assets ........ 4 -- (58) -- Gain on sales of radio stations ....... (5) (39,802) (45,353) (39,802) -------- -------- --------- --------- OPERATING INCOME ......................... 26,974 61,223 88,951 72,383 OTHER INCOME (EXPENSE): Interest income .......................... 1,058 -- 1,707 466 Interest expense ......................... (7,201) (5,611) (14,141) (10,457) Non-cash mark-to-market unrealized gain .. 2,172 -- 2,172 -- Other - net .............................. (104) (62) (344) (131) -------- -------- --------- --------- INCOME BEFORE INCOME TAXES ............... 22,899 55,550 78,345 62,261 Income taxes ............................. 9,432 22,876 32,010 25,763 --------- --------- ========= ========= NET INCOME ............................... $ 13,467 $ 32,674 $ 46,335 $ 36,498 ======== ======== ========= ========= --------- --------- Basic net income per common share ........ $ 0.15 $ 0.38 $ 0.53 $ 0.43 ======== ======== ========= ========= Diluted net income per common share ...... $ 0.15 $ 0.38 $ 0.53 $ 0.42 ======== ======== ========= ========= Weighted average basic common shares outstanding .............................. 87,465 85,830 87,120 85,780 ======== ======== ========= ========= Weighted average diluted common shares outstanding .............................. 88,148 86,896 87,806 86,787 ======== ======== ========= =========
See notes to unaudited consolidated financial statements. 4 5 COX RADIO, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
CLASS A CLASS B COMMON STOCK COMMON STOCK ADDITIONAL TREASURY STOCK ---------------- ----------------- PAID-IN RETAINED --------------- SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL ------ ------ ------ ------ ------- -------- ------ -------- ----- (AMOUNTS IN THOUSANDS) BALANCE AT DECEMBER 31, 1999 .................. 28,016 $ 9,245 58,733 $19,382 $265,155 $ 86,535 120 $(1,651) $378,666 Net income .......................... -- -- -- -- -- 46,335 -- -- 46,335 Issuance of Class A common stock pursuant to equity offering ........................... 12,392 4,089 -- -- 340,438 -- -- -- 344,527 Issuance of Class A common stock related to incentive plans .................... 204 68 -- -- 3,558 -- -- -- 3,626 ------ ------- ------ ------- -------- -------- --- ------- -------- BALANCE AT JUNE 30, 2000 ...................... 40,612 $13,402 58,733 $19,382 $609,151 $132,870 120 $(1,651) $773,154 ====== ======= ====== ======= ======== ======== === ======= ========
See notes to unaudited consolidated financial statements. 5 6 COX RADIO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ----------------------------- 2000 1999 --------- --------- (AMOUNTS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income .......................................................... $ 46,335 $ 36,498 Items not requiring cash: Depreciation ...................................................... 3,173 3,259 Amortization ...................................................... 11,882 9,955 Deferred income taxes ............................................. 19,382 17,106 Non-cash mark-to-market unrealized gain ........................... (2,172) -- Gain on sales of assets ........................................... (58) -- Gain on sales of radio stations ................................... (45,353) (39,802) Changes in assets and liabilities (net of effects of acquisitions and dispositions): Increase in accounts receivable ................................... (9,390) (6,066) (Decrease) increase in accounts payable and accrued expenses ...... (821) 1,753 Increase in accrued salaries and wages ............................ 1,612 656 Decrease in accrued interest ...................................... (853) (61) Increase in taxes payable ......................................... 2,303 7,424 Other, net ........................................................ (539) (2,301) --------- --------- Net cash provided by operating activities .................... 25,501 28,421 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................ (3,921) (3,201) Acquisitions, net of cash acquired .................................. (22,253) (112,587) Decrease in station investment note receivable ...................... 850 6,400 Increase in other long-term assets .................................. (18,186) (5,135) Proceeds from sales of assets ....................................... 423 -- Proceeds from sales of radio stations ............................... 81,600 -- Increase in cash restricted for investment .......................... (76,699) -- (Decrease) increase in amounts due to/from Cox Enterprises .......... (109,977) 35,311 Other, net .......................................................... -- 75 --------- --------- Net cash used in investing activities ........................ (148,163) (79,137) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings of revolving credit facility .............. (219,980) 50,031 Proceeds from stock options exercised ............................... 2,474 1,552 Net proceeds from stock offering .................................... 344,527 -- Repurchase of Class A common stock .................................. -- (1,651) (Decrease) increase in book overdrafts .............................. (4,369) 766 Payment of credit facility financing costs .......................... (1,105) -- --------- --------- Net cash provided by financing activities .................... 121,547 50,698 --------- --------- Net decrease in cash and cash equivalents ........................... (1,115) (18) Cash and cash equivalents at beginning of period .................... 14,704 6,479 --------- --------- Cash and cash equivalents at end of period .......................... $ 13,589 $ 6,461 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest ...................................................... $ 14,994 $ 10,518 Income taxes .................................................. $ 10,414 $ 1,236 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: Value of businesses exchanged ................................. $ -- $ 55,000 See notes to unaudited consolidated financial statements.
6 7 COX RADIO, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND OTHER INFORMATION Cox Radio is a leading national radio broadcasting company whose business, which constitutes one reportable segment, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises, Inc. indirectly owns approximately 63% of the common stock of Cox Radio and has approximately 95% of the voting power of Cox Radio. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal, recurring nature. These unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 1999 and notes thereto contained in Cox Radio's Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission (Commission File No. 1-12187). The results of operations for the three and six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000 or any other interim period. Certain prior year amounts have been reclassified for comparative purposes. 2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES During the past several years, Cox Radio has actively managed its portfolio of radio stations through selected acquisitions, dispositions and exchanges, as well as through the use of local marketing agreements, or LMAs, and joint sales agreements, or JSAs. Under an LMA, the company operating a station provides programming, sales and marketing services. Under a JSA, the company operating a station provides sales and marketing services. The broadcast revenues and operating expenses of stations operated by Cox Radio under LMAs and JSAs have been included in Cox Radio's operations since the respective dates of such agreements. All consummated and pending acquisitions discussed below have been or will be accounted for using the purchase method. As such, the results of operations of acquired stations have been or will be included in the results of operations from the date of acquisition. Specific transactions entered into or consummated by Cox Radio during the six months ended June 30, 2000 and through August 8, 2000 are discussed below. In addition, the pending AMFM Inc. transaction has been included below due to its significance. In August 1999, Cox Radio agreed to acquire from AMFM Inc. WEDR-FM in Miami, Florida; WFOX-FM in Atlanta, Georgia; WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in Jacksonville, Florida; WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in Stamford/Norwalk, Connecticut; and WPLR-FM and local sales rights at WYBC-FM in New Haven, Connecticut in exchange for KFI-AM and KOST-FM in Los Angeles, California plus approximately $3 million. In October 1999, Cox Radio began operating the stations to be acquired (other than WYBC-FM) pursuant to an LMA and WYBC-FM pursuant to a JSA. Pending certain regulatory approvals, including obtaining a temporary waiver of the FCC's newspaper-radio cross-ownership rule for the acquisition of WFOX-FM in Atlanta, Cox Radio anticipates consummating this transaction in the second half of 2000. In January 2000, Cox Radio acquired the assets of KRTQ-FM (formerly KTFX-FM) in Tulsa, Oklahoma for consideration of $3.5 million. Cox Radio had been operating this station pursuant to an LMA since January 1999. 7 8 Also in January 2000, Cox Radio disposed of the assets of KACE-FM and KRTO-FM, serving the Los Angeles, California market, for consideration of approximately $75 million. On March 3, 2000, Cox Radio entered into an agreement to acquire the assets of radio stations KKBQ-FM, KLDE-FM and KKTL-FM, serving the Houston, Texas market, and WKHK-FM, WMXB-FM, WKLR-FM and WTVR-AM, serving the Richmond, Virginia market, for consideration of approximately $380 million. Pending receipt of all necessary legal and regulatory approvals, Cox Radio anticipates closing this transaction during the second half of 2000. For tax purposes, Cox Radio intends to account for the disposition of KACE-FM and KRTO-FM, serving the Los Angeles, California market, and the acquisition of WKHK-FM, WMXB-FM, WKLR-FM and WTVR-AM, serving the Richmond, Virginia market, as tax deferred like-kind exchanges. Tax rules allow Cox Radio to defer a substantial portion of the tax gains on these transactions upon the reinvestment of the net proceeds in qualifying future acquisitions. Restricted cash of $76.7 million is being held in escrow pending reinvestment and has been reported in the June 30, 2000 Consolidated Balance Sheet as restricted cash. On April 2, 2000, the LMA for WCNN-AM, serving the Atlanta, Georgia market, terminated. Also in April 2000, Cox Radio disposed of the assets of KGMZ-FM, serving the Honolulu, Hawaii market, for approximately $6.6 million. Cox Radio continues to manage this station's local, regional and national advertising sales efforts under a JSA. In addition, Cox Radio is a guarantor of the buyer's financing for this transaction. On May 1, 2000, Cox Radio acquired the assets of KINE-FM, KCCN-FM and KCCN-AM, serving the Honolulu, Hawaii market, for consideration of approximately $17.8 million. On June 2, 2000, Cox Radio exercised its right of first refusal and agreed to acquire the capital stock of Midwestern Broadcasting Company, Inc. which owns WALR-FM, serving the Atlanta, Georgia market, for $280 million. In a related transaction, Cox Radio entered into an asset exchange agreement with Salem Communications Corporation to exchange the license and transmitting facilities of WALR-FM, as well as the license and transmitting facilities of radio stations KLUP-AM, serving San Antonio, Texas, and WSUN-AM, serving Tampa, Florida, for the license and transmitting facilities of radio station KKHT-FM, serving Houston, Texas. Cox Radio would retain the intellectual property of WALR-FM and intends to broadcast WALR-FM's programming on its WJZF-FM signal in Atlanta. Pending receipt of all regulatory approvals, Cox Radio anticipates consummation of these transactions in the second half of 2000. On July 13, 2000, Cox Radio acquired the outstanding capital stock of Marlin Broadcasting, Inc., which owns radio stations WTMI-FM serving Miami, WCCC-FM and WCCC-AM serving Hartford, Connecticut and WBOQ-FM serving Gloucester, Massachusetts, for approximately $125 million. As part of this transaction, Cox Radio sold certain assets of Marlin comprising WCCC-FM, WCCC-AM and WBOQ-FM to certain principals of Marlin for approximately $25 million. The proceeds of the sale of WCCC-FM, WCCC-AM, and WBOQ-FM are being held in escrow pending reinvestment in qualifying future acquisitions as part of a tax deferred like-kind exchange. 8 9 The following unaudited pro forma summary of operations presents the consolidated results of operations as if all consummated and pending transactions had occurred on January 1, 1999 and does not purport to be indicative of what would have occurred had these transactions been made as of that date or of results which may occur in the future.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------------------------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues .......................................... $111,324 $ 95,733 $200,870 $170,757 Net income ............................................ 13,865 9,973 20,577 14,243 ============================================================== Basic pro forma net income per common share ........... $ 0.16 $ 0.12 $ 0.24 $ 0.17 ============================================================== Diluted pro forma net income per common share ......... $ 0.16 $ 0.11 $ 0.23 0.16 ============================================================== Basic pro forma shares outstanding .................... 87,465 85,830 87,120 85,780 ============================================================== Diluted pro forma shares outstanding .................. 88,148 86,896 87,806 86,787 ==============================================================
3. COMMITMENTS AND CONTINGENCIES On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association, as Administrative Agent, Nationsbank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 of the financial statements included in Item 1. hereof. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, both with certain banks, including The Chase Manhattan Bank, as the Administrative Agent, Bank of America, N.A., as the Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate for both facilities is based on the Federal funds borrowing rate plus 1/2 of 1%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities include a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities contain, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At June 30, 2000, there were no amounts outstanding under these new bank credit facilities. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 9 10 1933, as amended, which have been exchanged for notes which have been registered under the Securities Act of 1933. The replacement notes consist of $100 million principal amount of 6.25% notes due in full in 2003 and $100 million principal amount of 6.375% notes due in full in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, Cox Radio consummated an exchange offer pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act of 1933. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At June 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $191.6 million and $191.0 million, respectively, based on quoted market prices. In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio has exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 of the financial statements included in Item 1. hereof, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under the bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash, mark-to-market unrealized gain of $2.2 million, which represented the fair value of the interest rate swap agreements at the date the underlying debt was paid off. Cox Radio is contemplating re-designating these interest rate swap agreements as hedges of related floating rate borrowings under its revolving credit facilities. On May 2, 2000, Cox Radio's universal shelf registration statement filed with the Securities and Exchange Commission on Form S-3 was declared effective. Under the universal shelf registration statement, Cox Radio and two financing trusts sponsored by Cox Radio may from time to time offer and issue debentures, notes, bonds and other evidences of indebtedness and forward contracts in respect of any such indebtedness, shares of preferred stock, shares of Class A common stock, warrants, stock purchase contracts and stock purchase units of Cox Radio and preferred securities of the Cox Radio trusts for a maximum aggregate offering amount of $750 million. Unless otherwise described in future prospectus supplements, Cox Radio intends to use the net proceeds from the sale of securities registered under this universal shelf registration statement for general corporate purposes, which may include additions to working capital, the repayment or redemption of existing indebtedness and the financing of capital expenditures and acquisitions. See Note 5 of the financial statements included in Item 1. hereof for a discussion of an offering of Class A common stock completed during the second quarter of 2000. On March 6, 2000, Cox Radio was named as a defendant in a putative class action suit filed in the state court of Gwinnett County, Georgia, alleging violations of the federal Telephone Consumer Protection Act and related Georgia telemarketing laws. The complaint sought statutory damages in the amount of $1,500, plus actual and punitive damages and attorneys' fees, on behalf of each person "throughout the State of Georgia" who received an unsolicited pre-recorded telephone message delivering an "advertisement" from a Cox Radio radio station. On May 1, 2000, the lawsuit was dismissed without prejudice. Counsel for the plaintiff has recently indicated his intention to file a similar action against Cox Radio at a later date. 10 11 4. GUARANTOR FINANCIAL INFORMATION CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, was formed on September 11, 1998, and Cox Radio transferred certain of its Federal Communications Commission licenses, permits and authorizations to CXR Holdings as of January 1, 1999. CXR Holdings became the guarantor of Cox Radio's $200 million public notes pursuant to a full and unconditional guarantee on February 1, 1999. Separate financial statements and other disclosures concerning CXR Holdings are not presented because CXR Holdings is comprised primarily of non-operating assets, including Federal Communications Commission licenses, permits and authorizations and cash royalties, and such separate financial statements and other disclosures would not be meaningful to investors. The following table sets forth condensed financial information of CXR Holdings as of June 30, 2000 and December 31, 1999 and for the three and six month periods ended June 30, 2000 and 1999.
AS OF JUNE 30, DECEMBER 31, 2000 1999 ------------------------------ (AMOUNTS IN THOUSANDS) ASSETS: Accounts receivable - Cox Radio ............. $ 47,409 $ 15,066 Intangible assets, net ...................... 413,500 391,832 Other assets ................................ 37 767 ------------------------------ Total assets ............................. $ 460,946 $ 407,665 ============================== ------------------------------ Shareholders' equity ........................ $ 460,946 $ 407,665 ==============================
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2000 1999 2000 1999 -------------------------------------------------------- (AMOUNTS IN THOUSANDS) Royalty income - Cox Radio ............................ $ 14,932 $ 6,652 $ 24,806 $ 13,522 Intercompany interest, net ............................ 735 -- 1,023 -- Depreciation and amortization ......................... (2,525) (1,092) (5,058) (2,252) -------------------------------------------------------- Operating Income ...................................... $ 13,142 $ 5,560 $ 20,771 $ 11,270 ========================================================
5. EARNINGS PER COMMON SHARE AND CAPITAL STRUCTURE
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------- ------------------------- 2000 1999 2000 1999 ----------- ------------ ----------- ----------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) NET INCOME ...................................................... $ 13,467 $ 32,674 $ 46,335 $ 36,498 ========== ========== ========== ========== BASIC EPS Weighted-average common shares outstanding ...................... 87,465 85,830 87,120 85,780 ========== ========== ========== ========== Basic net income per common share ............................... $ 0.15 $ 0.38 $ 0.53 $ 0.43 ========== ========== ========== ========== DILUTED EPS Weighted-average common shares outstanding - basic .............. 87,465 85,830 87,120 85,780 Shares issuable on exercise of dilutive options .............. 1,490 2,078 1,490 2,078 Shares assumed to be purchased with proceeds from options .... (950) (1,562) (948) (1,621) Shares issuable pursuant to employee stock purchase plan ..... 229 558 229 558 Shares assumed to be purchased with proceeds from employee stock purchase plan .............................. (86) (8) (85) (8) ---------- ---------- ---------- ---------- Shares applicable to diluted EPS ................................ 88,148 86,896 87,806 86,787 ========== ========== ========== ========== Diluted net income per common share ............................. $ 0.15 $ 0.38 $ 0.53 $ 0.42 ========== ========== ========== ==========
In January 1999, Cox Radio reacquired 119,856 shares of previously restricted Class A common stock from employees for cash consideration of approximately $1.7 million which was used to pay employee withholding taxes. 11 12 On February 7, 2000, Cox Radio announced that its Board of Directors approved a three-for-one stock split. The stock split resulted in a decrease in par value of each share, including shares of preferred stock (authorized with no shares presently outstanding), from $1.00 to $0.33 per share. At the Annual Meeting of Stockholders, the stockholders voted to amend Cox Radio's Articles of Incorporation to increase authorized (a) Class A common stock from 70,000,000 to 210,000,000 shares; (b) Class B common stock from 45,000,000 to 135,000,000 shares; and (c) preferred stock from 5,000,000 to 15,000,000 shares. The stock split was paid on May 19, 2000 to stockholders of record on May 12, 2000. All financial information contained elsewhere in these financial statements has been adjusted to reflect the impact of this stock split. On June 27, 2000, Cox Radio consummated a public offering of 8,800,000 shares of its Class A common stock pursuant to its shelf registration statement and completed a concurrent private placement of 3,591,954 shares of Class A common stock directly to Cox Enterprises at the public offering price per share, less underwriting discounts and commissions. Cox Radio received net proceeds of approximately $344.5 million from this offering and will use such proceeds to partially finance pending acquisitions, repay outstanding indebtedness and for general corporate purposes. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying unaudited historical Consolidated Statements of Income for the three and six month periods ended June 30, 2000 and 1999. This report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include, but may not be limited to, the information regarding future cash requirements of Cox Radio and statements regarding the intent, belief or current expectations of Cox Radio and its management. For such statements, Cox Radio claims the protection of the safe harbor for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended. Cox Radio's results could differ materially from those discussed in each forward-looking statement due to various factors which are outside Cox Radio's control, including competition for audience share and advertising revenue from other radio stations, electronic and print media and new media technologies and governmental regulation of the radio broadcasting industry. For a more detailed discussion of these factors and others, see the Risk Factors section of Cox Radio's Annual Report on Form 10-K, as amended, for the year ended December 31, 1999 (Commission File No. 1-12187). GENERAL Cox Radio is a leading national radio broadcast company whose business, which constitutes one reportable segment, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises indirectly owns approximately 63% of the common stock of Cox Radio through its wholly-owned subsidiary, Cox Broadcasting, Inc., and has approximately 95% of the voting power of Cox Radio. The performance of a radio station group such as Cox Radio is customarily measured by its ability to generate Broadcast Cash Flow, EBITDA and After-tax Cash Flow. Broadcast Cash Flow is defined as net revenues less station operating expenses. EBITDA is defined as operating income excluding the gain on sales of assets and radio stations plus depreciation and amortization. After-tax Cash Flow is defined as income (loss) before extraordinary items excluding gain on sales of assets and radio stations plus depreciation and amortization. Although Broadcast Cash Flow, EBITDA and After-tax Cash Flow are not recognized under generally accepted accounting principles, they are accepted by the broadcasting industry as generally recognized measures of performance and are used by analysts who report publicly on the condition and performance of broadcasting companies. For the foregoing reasons, Cox Radio believes that these measures will be useful to investors. However, Broadcast Cash Flow, EBITDA or After-tax Cash Flow should not be considered to be an alternative to operating income or cash flows from operating activities (as a measure of liquidity), each as determined in accordance with generally accepted accounting principles, or an indicator of Cox Radio's performance under generally accepted accounting principles. 12 13 The primary source of Cox Radio's revenues is the sale of local and national advertising. Historically, approximately 73% and 25% of Cox Radio's net revenues have been generated from local and national advertising, respectively. Cox Radio's most significant station operating expenses are employees' salaries and benefits, commissions, programming expenses and advertising and promotional expenditures. Cox Radio's revenues vary throughout the year. As is typical in the radio broadcasting industry, Cox Radio's revenues and broadcast cash flows are typically lowest in the first quarter and higher in the second and fourth quarters. Cox Radio's operating results in any period may be affected by the incurrence of advertising and promotional expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods. ACQUISITIONS AND DISPOSITIONS During the past several years, Cox Radio has actively managed its portfolio of radio stations through selected acquisitions, dispositions and exchanges, as well as through the use of local marketing agreements, or LMAs, and joint sales agreements, or JSAs. Under an LMA, the company operating a station provides programming, sales and marketing services. Under a JSA, the company operating a station provides sales and marketing services. The broadcast revenues and operating expenses of stations operated by Cox Radio under LMAs and JSAs have been included in Cox Radio's operations since the respective dates of such agreements. All consummated and pending acquisitions discussed below have been or will be accounted for using the purchase method. As such, the results of operations of acquired stations have been or will be included in the results of operations from the date of acquisition. Specific transactions entered into or consummated by Cox Radio during the six months ended June 30, 2000 and through August 8, 2000 are discussed below. In addition, the pending AMFM Inc. transaction has been included below due to its significance. In August 1999, Cox Radio agreed to acquire from AMFM Inc. WEDR-FM in Miami, Florida; WFOX-FM in Atlanta, Georgia; WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in Jacksonville, Florida; WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in Stamford/Norwalk, Connecticut; and WPLR-FM and local sales rights at WYBC-FM in New Haven, Connecticut in exchange for KFI-AM and KOST-FM in Los Angeles, California plus approximately $3 million. In October 1999, Cox Radio began operating the stations to be acquired (other than WYBC-FM) pursuant to an LMA and WYBC-FM pursuant to a JSA. Pending certain regulatory approvals, including obtaining a temporary waiver of the FCC's newspaper-radio cross-ownership rule for the acquisition of WFOX-FM in Atlanta, Cox Radio anticipates consummating this transaction in the second half of 2000. In January 2000, Cox Radio acquired the assets of KRTQ-FM (formerly KTFX-FM) in Tulsa, Oklahoma for consideration of $3.5 million. Cox Radio had been operating this station pursuant to an LMA since January 1999. Also in January 2000, Cox Radio disposed of the assets of KACE-FM and KRTO-FM, serving the Los Angeles, California market, for consideration of approximately $75 million. On March 3, 2000, Cox Radio entered into an agreement to acquire the assets of radio stations KKBQ-FM, KLDE-FM and KKTL-FM, serving the Houston, Texas market, and WKHK-FM, WMXB-FM, WKLR-FM and WTVR-AM, serving the Richmond, Virginia market, for consideration of approximately $380 million. Pending receipt of all necessary legal and regulatory approvals, Cox Radio anticipates closing this transaction during the second half of 2000. For tax purposes, Cox Radio intends to account for the disposition of KACE-FM and KRTO-FM, serving the Los Angeles, California market, and the acquisition of WKHK-FM, WMXB-FM, WKLR-FM and WTVR-AM, serving the Richmond, Virginia market, as tax deferred like-kind exchanges. Tax rules allow Cox Radio to defer a substantial portion of the tax gains on these transactions upon the reinvestment of the net proceeds in qualifying future acquisitions. Restricted cash of $76.7 million is being held in escrow pending reinvestment and has been reported in the June 30, 2000 Consolidated Balance Sheet as restricted cash. 13 14 On April 2, 2000, the LMA for WCNN-AM, serving the Atlanta, Georgia market, terminated. Also in April 2000, Cox Radio disposed of the assets of KGMZ-FM, serving the Honolulu, Hawaii market, for approximately $6.6 million. Cox Radio continues to manage this station's local, regional and national advertising sales efforts under a JSA. In addition, Cox Radio is a guarantor of the buyer's financing for this transaction. On May 1, 2000, Cox Radio acquired the assets of KINE-FM, KCCN-FM and KCCN-AM, serving the Honolulu, Hawaii market, for consideration of approximately $17.8 million. On June 2, 2000, Cox Radio exercised its right of first refusal and agreed to acquire the capital stock of Midwestern Broadcasting Company, Inc. which owns WALR-FM, serving the Atlanta, Georgia market, for $280 million. In a related transaction, Cox Radio entered into an asset exchange agreement with Salem Communications Corporation to exchange the license and transmitting facilities of WALR-FM, as well as the license and transmitting facilities of radio stations KLUP-AM, serving San Antonio, Texas, and WSUN-AM, serving Tampa, Florida, for the license and transmitting facilities of radio station KKHT-FM, serving Houston, Texas. Cox Radio would retain the intellectual property of WALR-FM and intends to broadcast WALR-FM's programming on its WJZF-FM signal in Atlanta. Pending receipt of all regulatory approvals, Cox Radio anticipates consummation of these transactions in the second half of 2000. On July 13, 2000, Cox Radio acquired the outstanding capital stock of Marlin Broadcasting, Inc., which owns radio stations WTMI-FM serving Miami, WCCC-FM and WCCC-AM serving Hartford, Connecticut and WBOQ-FM serving Gloucester, Massachusetts, for approximately $125 million. As part of this transaction, Cox Radio sold certain assets of Marlin comprising WCCC-FM, WCCC-AM and WBOQ-FM to certain principals of Marlin for approximately $25 million. The proceeds of the sale of WCCC-FM, WCCC-AM, and WBOQ-FM are being held in escrow pending reinvestment in qualifying future acquisitions as part of a tax deferred like-kind exchange. RESULTS OF OPERATIONS Three months ended June 30, 2000 compared to three months ended June 30, 1999 Net revenues for the second quarter of 2000 increased $17.1 million to $95.7 million, a 21.7% increase over the second quarter of 1999. This increase was primarily a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; and Honolulu, Hawaii; the acquisition of the operations of radio stations in Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida; and offset somewhat by the disposition of stations in Syracuse, New York and operations of KFI-AM and KOST-FM in Los Angeles, California. In addition, significant increases in net revenues at Cox Radio's previously owned radio stations in Atlanta, Georgia; Birmingham, Alabama; Long Island, New York; and San Antonio, Texas, were realized as a result of continued strong ratings performance. Station operating expenses increased $9.9 million to $57.8 million, an increase of 20.6% over the second quarter of 1999. This increase was primarily as a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; and Honolulu, Hawaii; the acquisition of the operations of radio stations in Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida, as well as higher programming and sales related costs which are driven by ratings and revenues, respectively. These increases were offset somewhat by the disposition of stations in Syracuse, New York and operations of KFI-AM and KOST-FM in Los Angeles, California. Broadcast cash flow increased $7.2 million to $37.9 million, a 23.5% increase over the second quarter of 1999, for the reasons discussed above. Corporate general and administrative expenses increased $0.7 million to $3.1 million, primarily due to higher overhead costs incurred as a result of the increase in number of stations owned and/or operated in 2000. 14 15 Operating income decreased $34.2 million to $27.0 million for the second quarter of 2000, for the reasons discussed above and as a result of a $39.8 million pre-tax gain recorded in the second quarter of 1999 on the sale of Cox Radio's stations in Syracuse, New York. Interest expense during the second quarter of 2000 increased $1.6 million to $7.2 million as a result of borrowings incurred to complete Cox Radio's acquisitions during 1999 and the first half of 2000. Net income decreased $19.2 million to $13.5 million for the second quarter of 2000 as a result of a $23.8 million after-tax gain recorded in the second quarter of 1999 on the sale of Cox Radio's stations in Syracuse, New York, offset by a $1.3 million after-tax non-cash "mark-to-market" unrealized gain related to Cox Radio's interest rate swap agreements in the second quarter of 2000 and also for the reasons discussed above. Six months ended June 30, 2000 compared to six months ended June 30, 1999 Net revenues for the first half of 2000 increased $32.6 million to $171.5 million, a 23.5% increase over the first half of 1999. This increase was primarily a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; and Honolulu, Hawaii; the acquisition of the operations of radio stations in Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida; and offset somewhat by the disposition of radio stations in Syracuse, New York and the operations of KFI-AM and KOST-FM in Los Angeles, California. In addition, significant increases in net revenues at Cox Radio's previously owned radio stations in Atlanta, Georgia; Birmingham, Alabama; Long Island, New York; and San Antonio, Texas, were realized as a result of continued strong ratings performance. Station operating expenses increased $18.4 million to $107.0 million, an increase of 20.8% over the first half of 1999. This increase was primarily as a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; and Honolulu, Hawaii; the acquisition of the operations of radio stations in Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida, as well as higher programming and sales related costs which are driven by ratings and revenues, respectively. These increases were offset somewhat by the disposition of stations in Syracuse, New York and the operations of KFI-AM and KOST-FM in Los Angeles, California. Broadcast cash flow increased $14.2 million to $64.6 million, a 28.1% increase over the first half of 1999, for the reasons discussed above. Corporate general and administrative expenses increased $1.4 million to $6.0 million, primarily due to higher overhead costs incurred as a result of the increase in number of stations owned and/or operated in 2000. Operating income increased $16.6 million to $89.0 million for the first half of 2000, primarily for the reasons discussed above. In addition, the $46.6 million pre-tax gain recorded in the first half of 2000 on the sale of KACE-FM and KRTO-FM in Los Angeles, California is greater than the $39.8 million pre-tax gain recorded in the first half of 1999 on the sale of Cox Radio's stations in Syracuse, New York. Interest expense during the first half of 2000 increased $3.7 million to $14.1 million as a result of borrowings incurred to complete Cox Radio's acquisitions during 1999 and the first half of 2000. Net income increased $9.8 million to $46.3 million for the first half of 2000, primarily for the reasons discussed above and due to a $1.3 million after-tax non-cash "mark-to-market" unrealized gain related to Cox Radio's interest rate swap agreements in the second quarter of 2000. In addition, the $27.9 million after-tax gain recorded in the first half of 2000 on the sale of KACE-FM and KRTO-FM in Los Angeles, California is greater than the $23.8 million after-tax gain recorded in the first half of 1999 on the sale of Cox Radio's stations in Syracuse, New York. 15 16 LIQUIDITY AND CAPITAL RESOURCES Cox Radio's primary source of liquidity is cash provided by operations. Historically, cash requirements have been funded through Cox Radio's operating activities and borrowings under Cox Radio's bank credit facility. For the six months ended June 30, 2000 as compared to the six months ended June 30, 1999, cash from operations decreased $2.9 million to $25.5 million, primarily attributable to the gain on sales of radio stations and the net change in working capital accounts. In addition, cash requirements historically have been funded on a temporary basis through intercompany advances under a revolving credit facility with Cox Enterprises. Borrowings, if any, by Cox Radio under the Cox Enterprises credit facility would typically be repaid by Cox Radio within 30 days and would accrue interest at Cox Enterprises' commercial paper rate plus .40%. Cox Enterprises continues to perform day-to-day cash management services for Cox Radio. On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association, as Administrative Agent, Nationsbank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 of the financial statements included in Item 1. hereof. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, both with certain banks, including The Chase Manhattan Bank, as the Administrative Agent, Bank of America, N.A., as the Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate for both facilities is based on the Federal funds borrowing rate plus 1/2 of 1%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities include a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities contain, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At June 30, 2000, there were no amounts outstanding under these new bank credit facilities. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 1933, as amended, which have been exchanged for notes which have been registered under the Securities Act of 1933. The replacement notes consist of $100 million principal amount of 6.25% notes due in full in 2003 and $100 million principal amount of 6.375% notes due in full in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, Cox Radio consummated an exchange offer pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act of 1933. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal 16 17 Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At June 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $191.6 million and $191.0 million, respectively, based on quoted market prices. In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio has exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 of the financial statements included in Item 1. hereof, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under the bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash, mark-to-market unrealized gain of $2.2 million, which represented the fair value of the interest rate swap agreements at the date the underlying debt was paid off. Cox Radio is contemplating re-designating these interest rate swap agreements as hedges of related floating rate borrowings under its revolving credit facilities. Future cash requirements are expected to include capital expenditures, principal and interest payments on indebtedness and funds for acquisitions. Cox Radio expects its operations to generate sufficient cash to meet its capital expenditures and debt service requirements. Additional cash requirements, including funds for pending or other acquisitions, will be funded from various sources, including the proceeds from bank financing and, if or when appropriate, other issuances of Company securities. On May 2, 2000, Cox Radio's universal shelf registration statement filed with the Securities and Exchange Commission on Form S-3 was declared effective. Under the universal shelf registration statement, Cox Radio and two financing trusts sponsored by Cox Radio may from time to time offer and issue debentures, notes, bonds and other evidences of indebtedness and forward contracts in respect of any such indebtedness, shares of preferred stock, shares of Class A common stock, warrants, stock purchase contracts and stock purchase units of Cox Radio and preferred securities of the Cox Radio trusts for a maximum aggregate offering amount of $750 million. Unless otherwise described in future prospectus supplements, Cox Radio intends to use the net proceeds from the sale of securities registered under this universal shelf registration statement for general corporate purposes, which may include additions to working capital, the repayment or redemption of existing indebtedness and the financing of capital expenditures and acquisitions. See Note 5 of the financial statements included in Item 1. hereof for a discussion of an offering of Class A common stock completed during the second quarter of 2000. On June 27, 2000, Cox Radio consummated a public offering of 8,800,000 shares of its Class A common stock pursuant to its shelf registration statement and completed a concurrent private placement of 3,591,954 shares of Class A common stock directly to Cox Enterprises at the public offering price per share, less underwriting discounts and commissions. Cox Radio received net proceeds of approximately $344.5 million from this offering and will use such proceeds to partially finance pending acquisitions, repay outstanding indebtedness and for general corporate purposes. 17 18 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates. The Company manages interest-rate risk through the use of fixed- and floating-rate debt, and through the use of derivatives. On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association, as Administrative Agent, Nationsbank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 of the financial statements included in Item 1. hereof. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, both with certain banks, including The Chase Manhattan Bank, as the Administrative Agent, Bank of America, N.A., as the Syndications Agent, and Citibank, N.A., as Documentation Agent. The interest rate for both facilities is based on the Federal funds borrowing rate plus 1/2 of 1%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities include a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Both facilities contain, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At June 30, 2000, there were no amounts outstanding under these new bank credit facilities. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 1933, as amended, which have been exchanged for notes which have been registered under the Securities Act of 1933. The replacement notes consist of $100 million principal amount of 6.25% notes due in full in 2003 and $100 million principal amount of 6.375% notes due in full in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, Cox Radio consummated an exchange offer pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act of 1933. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At June 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $191.6 million and $191.0 million, respectively, based on quoted market prices. 18 19 In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio has exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 of the financial statements included in Item 1. hereof, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under the bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash, mark-to-market unrealized gain of $2.2 million, which represented the fair value of the interest rate swap agreements at the date the underlying debt was paid off. Cox Radio is contemplating re-designating these interest rate swap agreements as hedges of related floating rate borrowings under its revolving credit facilities. 19 20 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 6, 2000, Cox Radio was named as a defendant in a putative class action suit filed in the state court of Gwinnett County, Georgia, alleging violations of the federal Telephone Consumer Protection Act and related Georgia telemarketing laws. The complaint sought statutory damages in the amount of $1,500, plus actual and punitive damages and attorneys' fees, on behalf of each person "throughout the State of Georgia" who received an unsolicited pre-recorded telephone message delivering an "advertisement" from a Cox Radio radio station. On May 1, 2000, the lawsuit was dismissed without prejudice. Counsel for the plaintiff has recently indicated his intention to file a similar action against Cox Radio at a later date. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On June 27, 2000, Cox Radio completed a private placement of 3,591,954 shares of Class A common stock to Cox Enterprises, Inc. at a price of $27.84 per share, pursuant to Section 4(2) of the Securities Act of 1933. Cox Radio is using the proceeds to partially finance pending acquisitions, repay outstanding indebtedness and for general corporate purposes. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Cox Radio held its Annual Meeting of Stockholders on May 11, 2000. Four matters were voted upon at the meeting: (a) the election of a Board of Directors of eight members to serve until the 2001 Annual Meeting or until their successors are duly elected and qualified; (b) ratification of the appointment by the Board of Directors of Deloitte & Touche LLP, independent certified public accountants, as Cox Radio's independent auditors for the fiscal year ending December 31, 2000; (c) approval of an amendment to the Certificate of Incorporation to increase the number of authorized shares of Class A common stock, Class B common stock and preferred stock; and (d) approval of an amendment to the Certificate of Incorporation to effect a three-for-one split of the Cox Radio's outstanding stock. The following directors were elected and they received the votes indicated:
Nominee Votes in Favor Votes Withheld ------- -------------- -------------- David E. Easterly 203,530,592 114,788 Ernest D. Fears, Jr. 203,554,974 90,406 Richard A. Ferguson 203,530,492 114,888 Paul M. Hughes 203,554,688 90,692 James C. Kennedy 203,530,592 114,788 Marc W. Morgan 203,530,492 114,888 Robert F. Neil 203,530,492 114,888 Nicholas D. Trigony 203,529,588 115,792
Ratification of Deloitte & Touche LLP, as independent auditors for the fiscal year ending December 31, 2000, was approved with 203,609,351 votes in favor, 35,176 votes opposed to, and 853 abstentions. The amendment to the Certificate of Incorporation to increase the number of authorized shares of Class A common stock, Class B common stock and preferred stock was approved with 200,545,496 votes in favor, 2,309,620 votes opposed to, and 361 abstentions. The amendment to the Certificate of Incorporation to effect a three-for-one split of Cox Radio's outstanding stock was approved by each class of shareholders as follows:
Class Votes in Favor Votes Opposed Abstentions ----- -------------- ------------- ----------- Class A Common 7,812,132 56,083 445 Class B Common 195,776,720 0 0 ----------- --------- ------- All classes combined 203,588,852 56,083 445
20 21 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Listed below are the exhibits which are filed as part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):
EXHIBIT NUMBER DESCRIPTION ------- ----------- (1)3.1 -- Amended and Restated Certificate of Incorporation of Cox Radio, Inc. (1)3.2 -- Amended and Restated Bylaws of Cox Radio, Inc. (2)4.1 -- Indenture dated as of May 26, 1998 between Cox Radio, Inc., The Bank of New York, WSB, Inc., and WHIO, Inc. (3)4.2 -- Supplemental Indenture dated as of February 1, 1999 by and among trustee, Cox Radio, Inc. and CXR Holdings, Inc. (4)4.3 -- Registration Rights Agreement dated May 26, 1998 among Cox Radio, Inc., WSB, Inc., WHIO, Inc., and Nationsbanc Montgomery Securities, LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc. (5)4.4 -- Specimen of Class A Common Stock Certificate. (6)10.1 -- Asset Exchange Agreement dated August 30, 1999 by and among Cox Radio, Inc. and AMFM Inc. (7) 10.2 -- Letter dated as of August 30, 1999 by and among Cox Radio, Inc. and AMFM Inc. (8) 10.3 -- Merger Agreement dated March 14, 2000 by and among Marlin Broadcasting, Inc., Cox Radio, Inc., Cox Miami Merger Sub, Inc. and Marlin Broadcasting, LLC (9) 10.4 -- Asset Purchase Agreement dated March 3, 2000 by and among Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Citicasters Co., Capstar Radio Operating Company, Capstar TX Limited Partnership, AMFM Texas Broadcasting, L.P., AMFM Texas Licenses Limited Partnership, Cox Radio, Inc., and CXR Holdings, Inc. 10.5 -- Asset Exchange Agreement dated as of May 31, 2000 by and among Cox Radio, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. 10.6 Letter dated May 31, 2000 by and among Cox Radio, Inc., CXR Holdings, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. 10.7 Letter dated June 7, 2000 by and among Cox Radio, Inc., CXR Holdings, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. 10.8 -- Stock Purchase Agreement dated as of June 7, 2000 by and among Midwestern Broadcasting, Inc., the stockholders of Midwestern Broadcasting Company, Inc. parties thereto and Cox Radio, Inc. 10.9 -- 364-Day Credit Agreement dated as of June 30, 2000 among Cox Radio, Inc., the Banks party thereto, The Chase Manhattan Bank, as Administrative Agent, Bank of America, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. 10.10 -- Five-Year Credit Agreement dated as of June 30, 2000 among Cox Radio, Inc., the Banks referred to therein, The Chase Manhattan Bank, as Administrative Agent, Bank of America, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. 27.1 -- Financial Data Schedule (for SEC use only)
- --------------- (1) Incorporated by reference to the corresponding exhibit of Cox Radio's Registration Statement on Form S-1 (Commission File No. 333-08737). (2) Incorporated by reference to Exhibit 4.1 of Cox Radio's Registration Statement on Form S-4 (Commission File No. 333-61179). 21 22 (3) Incorporated by reference to the corresponding exhibit of Cox Radio's Report on Form 10-Q for the period ending March 31, 1999 (Commission File No. 1-12187) (4) Incorporated by reference to Exhibit 4.2 of Cox Radio's Registration Statement on Form S-4 (Commission File No. 333-61179). (5) Incorporated by reference to Exhibit 4.3 of Cox Radio's Registration Statement on Form S-1 (Commission File No. 333-08737). (6) Incorporated by reference to Exhibit 99.1 of Cox Radio's Report on Form 8-K dated September 17, 1999 (Commission File No. 1-12187). (7) Incorporated by reference to Exhibit 99.2 of Cox Radio's Report on Form 8-K dated September 17, 1999 (Commission File No. 1-12187). (8) Incorporated by reference to Exhibit 2.2 of Cox Radio's Report on Form 8-K dated April 19, 2000 (Commission File No. 1-12187). (9) Incorporated by reference to Exhibit 2.3 of Cox Radio's Report on Form 8-K dated April 19, 2000 (Commission File No. 1-12187). (b) Reports on Form 8-K On April 19, 2000, Cox Radio filed a Current Report on Form 8-K to provide certain audited financial information for recently announced transactions and to provide an unaudited pro forma combined balance sheet as of December 31, 1999 as if the transactions had been consummated as of December 31, 1999 and an unaudited pro forma combined statement of operations for the year ended December 31, 1999 as if such transactions had been consummated on January 1, 1999. On June 27, 2000, Cox Radio filed a Current Report on Form 8-K to report the consummation of the public offering of 8,800,000 shares of its Class A common stock and the concurrent private placement of 3,591,954 shares of Class A common stock to Cox Enterprises, Inc. 22 23 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 thereunto duly authorized. COX RADIO, INC. August 8, 2000 /s/ Maritza C. Pichon ----------------------------------- Maritza C. Pichon Chief Financial Officer (Principal Financial Officer and duly authorized officer) 23 EX-10.5 2 ex10-5.txt ASSET EXCHANGE AGREEMENT 1 Exhibit 10.5 ASSET EXCHANGE AGREEMENT by and among COX RADIO, INC., CXR HOLDINGS, INC., SALEM COMMUNICATIONS CORPORATION and SOUTH TEXAS BROADCASTING, INC. Dated as of May 31, 2000 2 TABLE OF CONTENTS
Page ---- 1. Exchange of Personal Property; Exchange of Real Property; Exchange of Contracts and Licenses. ..................................................................2 1.1 Exchange of Tangible Personal Property....................................................2 1.2 Exchange of Real Property.................................................................3 1.3 Exchange of Licenses......................................................................3 1.4 [Intentionally Omitted]...................................................................4 1.5 Excluded Assets...........................................................................4 1.6 Assumption of Liabilities.................................................................5 1.7 Section 1031..............................................................................5 2. [Intentionally Omitted]...................................................................6 3. [Intentionally Omitted]...................................................................6 4. Closing...................................................................................6 4.1 Closing Deliveries........................................................................6 4.2 Prorations................................................................................8 4.3 Further Assurances........................................................................9 5. Representations and Warranties of Cox.....................................................9 5.1 Organization; Good Standing...............................................................9 5.2 Authority.................................................................................9 5.3 No Breach or Violation...................................................................10 5.4 Approvals................................................................................10 5.5 No Litigation............................................................................10 5.6 Brokerage................................................................................10 5.7 Title to and Condition of Tangible Personal Property.....................................10 5.8 Title to and Condition of Real Property..................................................11 5.9 Licenses.................................................................................11 5.10 FCC Compliance...........................................................................11 5.11 Compliance with Laws.....................................................................12 5.12 Environmental Matters....................................................................12 5.13 Accuracy of Information Furnished........................................................12 5.14 Taxes....................................................................................12 5.15 Definition of Knowledge..................................................................13 6. Representations and Warranties of Cox for the RRC Station and Stock Purchase Agreement.................................................................13 6.1. Stock Purchase Agreement.................................................................13 6.2 Organization; Good Standing..............................................................13 6.3 Authority................................................................................13 6.4 No Breach or Violation...................................................................14 6.5 Approvals................................................................................14 6.6 No Litigation............................................................................14 6.7 Brokerage................................................................................14 6.8 Accuracy of Information Furnished........................................................14 7. Representations and Warranties of Salem..................................................15
3 7.1 Organization; Good Standing..............................................................15 7.2 Authority................................................................................15 7.3 No Breach or Violation...................................................................15 7.4 Approvals................................................................................15 7.5 No Litigation............................................................................16 7.6 Brokerage................................................................................16 7.7 Title to and Condition of Tangible Personal Property.....................................16 7.8 Title to and Condition of Real Property..................................................16 7.9 Licenses.................................................................................16 7.10 FCC Compliance...........................................................................17 7.11 Compliance with Laws.....................................................................17 7.12 Environmental Matters....................................................................17 7.13 Accuracy of Information Furnished........................................................18 7.14 Taxes....................................................................................18 7.15 Definition of Knowledge..................................................................18 8. Covenants of the Parties.................................................................18 8.1 FCC Applications.........................................................................18 8.2 Stock Purchase Agreement.................................................................19 8.3 No Solicitation Of Third Parties or Employees............................................19 8.4 Access...................................................................................19 8.5 Inconsistent Actions.....................................................................20 8.6 Cooperation..............................................................................20 8.7 Control of the Stations..................................................................20 8.8 Risk of Loss.............................................................................20 8.9 Third Party Consents.....................................................................20 8.10 Title Insurance and Surveys..............................................................20 8.11 Compliance With HSR Act..................................................................21 8.12 Confidentiality..........................................................................21 8.13 Financial Statements.....................................................................21 9. Conditions to Salem's Obligations........................................................22 9.1 Representations, Warranties and Covenants. .............................................22 9.2 Approvals of Governmental Authorities....................................................22 9.3 No Adverse Proceedings .................................................................22 9.4 Consents.................................................................................22 9.5 Closing Documents. .....................................................................22 9.6 FCC Consent..............................................................................22 9.7 Resolutions..............................................................................22 9.8 HSR Act..................................................................................23 10. Conditions to Cox's Obligations..........................................................23 10.1 Representations, Warranties and Covenants................................................23 10.2 Approvals of Governmental Authorities. .................................................23 10.3 No Adverse Proceedings. ................................................................23 10.4 Consents.................................................................................23 10.5 Closing Documents........................................................................23 10.6 FCC Consent..............................................................................23 10.7 Resolutions..............................................................................23 10.8 HSR Act..................................................................................23 10.9 Stock Purchase Agreement.................................................................24
-ii- 4 11. Termination..............................................................................24 12. Survival of Representations and Warranties and Indemnification...........................24 12.1 Survival.................................................................................24 12.2 Indemnification by Cox...................................................................24 12.3 lndemnification by Salem.................................................................25 12.4 Procedure for Indemnification............................................................25 12.5 Specific Performance.....................................................................26 12.6 Opportunity to Cure......................................................................27 12.7 Rights under Stock Purchase Agreement....................................................27 13. Taxes, Costs and Expenses................................................................27 14. Benefit of Agreement; Assignment.........................................................27 15. Notices..................................................................................27 16. Severability.............................................................................28 17. Entire Agreement.........................................................................28 18. Governing Law............................................................................28 19. Exhibits.................................................................................28 20. Counterparts.............................................................................28 21. Intentionally Omitted....................................................................29 22. Amendment; Waiver........................................................................29 23. Attorney's Fees..........................................................................29 24. Defined Terms............................................................................29
-iii- 5 SCHEDULES SCHEDULES TO BE DELIVERED BY COX Schedule 1.1A -- Cox Tangible Personal Property Schedule 1.1B -- RRC Tangible Personal Property Schedule 1.2A -- Cox Real Property Schedule 1.2B -- RRC Real Property Schedule 1.3A -- Cox Licenses Schedule 1.3B -- RRC Licenses Schedule 5.3 -- Consents Schedule 5.4 -- Governmental Approvals Schedule 5.5 -- Litigation Schedule 5.7 -- Title to and Condition of Cox Tangible Personal Property Schedule 5.8 -- Title to and Condition of Cox Real Property Schedule 5.10 -- FCC Compliance Schedule 5.12 -- Environmental Matters Schedule 5.14 -- Taxes
SCHEDULES TO BE DELIVERED BY SALEM Schedule 1.1C -- Salem Tangible Personal Property Schedule 1.2C -- Salem Real Property Schedule 1.3C -- Salem Licenses Schedule 7.3 -- Consents Schedule 7.4 -- Governmental Approvals Schedule 7.5 -- Litigation Schedule 7.7 -- Title to and Condition of Salem Tangible Personal Property Schedule 7.8 -- Title to and Condition of Salem Real Property Schedule 7.9 -- Licenses Schedule 7.10 -- FCC Compliance Schedule 7.12 -- Environmental Matters Schedule 7.14 -- Taxes
-iv- 6 EXECUTION ASSET EXCHANGE AGREEMENT THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into as of this 31st day of May, 2000, by and among COX RADIO, INC., a Delaware corporation ("CRI"), CXR HOLDINGS, INC., a Nevada corporation ("CXR" and together with CRI, collectively referred to herein as "Cox"), SALEM COMMUNICATIONS CORPORATION, a Delaware corporation ("SCC"), and SOUTH TEXAS BROADCASTING, INC., a Texas corporation ("STB" and together with SCC, collectively referred to herein as "Salem"). WHEREAS, Cox currently owns and operates Radio Stations WSUN(AM), Plant City, Florida, and KLUP(AM), Terrell Hills, Texas (the "Cox Stations"), pursuant to certain licenses and authorizations issued by the Federal Communications Commission (the "FCC"); and WHEREAS, CRI has elected to exercise a right of first refusal granted to CRI under an Agreement for Right of First Refusal dated as of April 3, 1995, between WSB Radio, Inc., predecessor-in-interest to CRI, and Ring Radio Company, a Georgia corporation ("RRC"); and WHEREAS, in exercising its right of first refusal, CRI will execute on June 1, 2000 a Stock Purchase Agreement among CRI, Midwestern Broadcasting Company, Inc., an Ohio corporation ("Midwestern"), and the stockholders of Midwestern (the "Stockholders") (the "Stock Purchase Agreement"), pursuant to which CRI will agree to acquire the issued and outstanding capital stock of Midwestern from the Stockholders; and WHEREAS, CRI will deliver the Stock Purchase Agreement to Midwestern and the Stockholders on June 1, 2000; and WHEREAS, Midwestern owns 100% of the issued and outstanding capital stock of RRC, which owns and operates Radio Station WALR-FM, Athens, Georgia (the "RRC Station"), pursuant to certain licenses and authorizations issued by the FCC; and WHEREAS, STB owns and operates Radio Station KKHT(FM), Conroe, Texas (the "Salem Station") pursuant to certain licenses and authorizations issued by the FCC; and WHEREAS, upon the closing of the transactions contemplated by the Stock Purchase Agreement (the "Stock Purchase Closing"), Cox and Salem intend to contemporaneously exchange certain property and assets used and useful in the operations of the Cox Stations and the RRC Station on the one hand and the Salem Station on the other hand (collectively, sometimes referred to herein as the "Stations"); and WHEREAS, Cox and Salem intend to transfer the Stations in a transaction that will qualify as a "like-kind exchange" for nonrecognition of taxable income under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and Cox and Salem are willing to take such steps as are necessary on their respective parts to enable the transactions contemplated hereby to so qualify; and 7 WHEREAS, the prior consent of the FCC to the transfer of the licenses and authorizations issued by the FCC for the Stations is required, and it is intended that if such consent is obtained, the transactions contemplated by this Agreement will be consummated subject to all of the other terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual promises herein set forth and subject to the terms and conditions hereof, the parties agree as follows: 1. EXCHANGE OF PERSONAL PROPERTY; EXCHANGE OF REAL PROPERTY; EXCHANGE OF LICENSES. 1.1 EXCHANGE OF TANGIBLE PERSONAL PROPERTY. At the Closing (as defined in SECTION 4), (a) Cox shall, or cause RRC to, transfer, assign, convey and deliver to Salem, and Salem shall accept and acquire from Cox or RRC as the case may be, (i) all of the tangible personal property that is listed on Schedule 1.1A, together with any replacements thereof or additions thereto made between the date of this Agreement and the Closing Date (the "Cox Tangible Personal Property"), and (ii) all records relating to the Cox Assets (as defined below) including but not limited to, the public inspection files that relate to the Cox Stations and all proprietary information and data, maps, plans, diagrams, blueprints, schematics and technical drawings, engineering records, and FCC applications and filings maintained with respect to the Cox Assets (as defined below) pursuant to the rules and regulations of the FCC (the "Cox Records"); (b) Cox shall cause RRC to transfer and assign, convey and deliver to Salem and Salem shall accept and acquire from RRC (i) all of the tangible personal property that is listed on Schedule 1.1B, together with any replacements thereof or additions thereto made between the date of this Agreement and the Closing Date (the "RRC Tangible Personal Property"), and (ii) all records relating to the RRC Assets (as defined below) including but not limited to, the public inspection files that relate to the RRC Station and all proprietary information and data, maps, plans, diagrams, blueprints, schematics and technical drawings, engineering records and FCC Applications and filings maintained with respect to the RRC Assets (as defined below) pursuant to the rules and regulations of the FCC (the "RRC Records"); (c) Salem shall transfer, assign, convey and deliver to RRC, and RRC shall accept and acquire from Salem (i) all of the tangible personal property listed on Schedule 1.1C, together with any replacements thereof or additions thereto made between the date of this Agreement and the Closing Date (the "Salem Tangible Personal Property"), and (ii) all records relating to the Salem Assets (as defined below) including but not limited to, the public inspection files that relate to the Salem Station and all proprietary information and data, maps, plans, diagrams, blueprints, schematics and technical drawings, engineering records, and FCC applications and filings maintained with respect to the Salem Assets (as defined below) pursuant to the rules and regulations of the FCC (the "Salem Records"); and (d) the Cox Tangible Personal Property, the Cox Records, the RRC Tangible Personal Property, the RRC Records, the Salem Tangible Personal Property and the Salem Records shall be conveyed free and clear of all liens, mortgages, pledges, covenants, security -2- 8 interests, charges, claims or encumbrances of any kind whatsoever ("Liens") except for (i) Liens for current taxes not yet due and payable or the validity of which are being contested in good faith by appropriate proceedings and (ii) with respect to the Cox Real Property, the RRC Real Property and the Salem Real Property, easements, covenants, conditions and restrictions of record that do not individually or in the aggregate materially and adversely affect said real property (collectively, "Permitted Liens"). 1.2 EXCHANGE OF REAL PROPERTY. At the Closing, (a) Cox shall, or cause RRC to, transfer, assign, convey and deliver to Salem, and Salem shall accept and acquire from Cox or RRC, as the case may be, all real property and interests in real property, including fee estates, leaseholds and subleaseholds ("Cox Real Property Leases"), purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, and other real property interests which are listed on Schedule 1.2A, together with any replacements thereof and any additions thereto made between the date of this Agreement and the Closing Date (the "Cox Real Property"); (b) Cox shall cause RRC to transfer, assign, convey and deliver to Salem, and Salem shall accept and acquire from RRC, all real property and interests in real property, including fee estates, leaseholds and subleaseholds ("RRC Real Property Leases"), purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon and other real property interests which are listed on Schedule 1.2B, and any additions thereto made between the date of this Agreement and the Closing Date (the "RRC Real Property"); (c) Salem shall transfer, assign, convey and deliver to RRC, and RRC shall accept and acquire from Salem, all real property and interests in real property, including fee estates, leaseholds and subleaseholds ("Salem Real Property Leases"), purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, and other real property interests which are listed on Schedule 1.2C, together with any replacements thereof and any additions thereto made between the date of this Agreement and the Closing Date (the "Salem Real Property"); and (d) The Cox Real Property, the RRC Property and the Salem Real Property shall be conveyed free and clear of all Liens (except for Permitted Liens). 1.3 EXCHANGE OF LICENSES. At the Closing, (a) Cox shall assign, or cause RRC to assign to Salem, and Salem shall accept from Cox or RRC, as the case may be, all of such party's right, title and interest in and to the licenses, permits, authorizations and call letters, qualifications, orders, franchises, certificates, consents and approvals issued to Cox or RRC, as the case may be, by any governmental or regulatory agency or authority, whether Federal, state or local, and used in connection with the operation of the Cox Stations, including the licenses and authorizations issued by the FCC for the Cox Stations (the "Cox FCC Licenses"), and all applications for such licenses and authorizations to the extent assignable, all of which are set forth on Schedule 1.3A (the "Cox Licenses" and together with the Cox Tangible Personal Property, the Cox Records and the Cox Real Property, the "Cox Assets"); -3- 9 (b) Cox shall cause RRC to assign to Salem, and Salem shall accept from RRC, all of RRC's right, title and interest in and to the licenses, permits, authorizations and call letters, qualifications, orders, franchises, certificates, consents and approvals issued to RRC by any governmental or regulatory agency or authority, whether Federal, state or local, and used in connection with the operation of the RRC Station, including the licenses and authorizations issued by the FCC for the RRC Station (the "RRC FCC Licenses"), and all applications for such licenses and authorizations to the extent assignable, all of which are set forth on Schedule 1.3B (the "RRC Licenses" and together with the RRC Tangible Personal Property, the RRC Records and the RRC Real Property, the "RRC Assets"); (c) Salem shall assign to RRC and RRC shall accept from Salem, all of Salem's right, title and interest in and to the licenses, permits, authorizations and call letters, qualifications, orders, franchises, certificates, consents and approvals issued to Salem by any governmental or regulatory agency or authority, whether Federal, state or local, and used in connection with the operation of the Salem Station as now conducted, including the licenses and authorizations issued by the FCC for the Salem Station (the "Salem FCC Licenses"), and all applications for such licenses and authorizations to the extent assignable, all of which are set forth on Schedule 1.3C (the "Salem Licenses" and together with the Salem Tangible Personal Property, the Salem Records and the Salem Real Property, the "Salem Assets"); and (d) The Cox Licenses, the RRC Licenses and the Salem Licenses shall be assigned free and clear of all Liens (except for Permitted Liens). 1.4 INTENTIONALLY OMITTED. 1.5 APPLICABLE ASSETS. (a) The Cox Assets shall include only those assets set forth on Schedules 1.1A, 1.2A and 1.3A. The RRC Assets shall include only those assets set forth on Schedules 1.1B, 1.2B, and 1.3B. The Salem Assets shall include only those assets set forth on Schedules 1.1C, 1.2C and 1.3C. The Cox Assets, together with the RRC Assets and the Salem Assets shall be collectively referred to herein as the "Assets". (b) Notwithstanding any provision of this Agreement to the contrary, Cox and RRC shall not transfer, convey or assign to Salem and Salem shall not transfer, convey or assign to Cox and RRC, but shall retain all of its right, title and interest in and to, the following assets owned or held by it on the Closing Date ("Excluded Assets"): (i) any and all cash, cash equivalents, cash deposits to secure contract obligations (except to the extent the conveying party receives a credit therefor under SECTION 4.2, in which event the deposit shall be included as part of the Assets), all inter-company receivables from any affiliate of such party and all other accounts receivable, bank deposits and securities held by such party in respect of its Station at the Closing Date; (ii) any and all claims of the conveying party with respect to transactions prior to the Closing including, without limitation, claims for tax refunds and refunds of fees paid to the FCC; (iii) all prepaid expenses (except to the extent the conveying party receives a credit therefore under SECTION 4.2, in which event the prepaid expense shall be included as part of the Assets); (iv) all contracts of insurance and claims against insurers; (v) all employee benefit plans and the assets thereof and all employment contracts; (vi) all contracts that are terminated in accordance with the terms and provisions of this Agreement or have expired prior to the Closing -4- 10 Date in the ordinary course of business and all loans and loan agreements; (vii) all tangible personal property disposed of or consumed between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement; (viii) all tangible personal property associated with the studios and business offices of the Cox Stations, the RRC Station and the Salem Station; (ix) each party's corporate records except to the extent such records pertain to Assets, in which case copies thereof shall be provided; (x) all commitments, contracts and agreements not specifically assumed by the other party pursuant to SECTION 1.6; and (xi) the call letters of the Stations. 1.6 ASSUMPTION OF LIABILITIES. Except as provided in SECTION 4.1, Salem shall not assume or become obligated to perform any debt, liability or obligation of Cox or RRC whatsoever, and Cox and RRC shall not assume or become obligated to perform any debt, liability or obligation of Salem whatsoever, including (i) any obligations or liabilities under any contract, lease or agreement other than the Cox Real Property Leases, the RRC Real Property Leases or the Salem Real Property Leases, as the case may be; (ii) any obligations or liabilities under the Cox Real Property Leases, the RRC Real Property Leases or the Salem Real Property Leases relating to the period prior to the Closing; (iii) any claims or pending litigation or proceedings relating to the operation of the Stations prior to the Closing; (iv) any insurance policies of Salem, Cox, or RRC; (v) any obligations or liabilities arising under capitalized leases or other financing agreements; (vi) any obligations or liabilities of Cox, RRC, or Salem under any employee pension, retirement, health and welfare or other benefit plans and under any employment agreements or collective bargaining agreements; (vii) any obligation to any employee of the Stations for severance benefits, vacation time, sick leave or any other employment-related liability; (viii) any liability for any taxes attributable to the Cox Assets or the RRC Assets or the operations of the Cox Stations or the RRC Station on or prior to the Closing Date, except to the extent the amount of such taxes is included in the Cox Proration Schedule; (ix) any liability for taxes attributable to the Salem Assets or the operations of the Salem Station on or prior to the Closing Date, except to the extent that the amount of such taxes is included in the Salem Proration Schedule; or (x) any obligations or liabilities caused by, arising out of, or resulting from any action or omission of Cox, RRC, or Salem prior to the Closing (collectively, the "Excluded Liabilities"). All such Excluded Liabilities shall remain and be the obligations and liabilities solely of Cox and RRC or Salem, as the case may be. 1.7 SECTION 1031; APPRAISALS; TAX REPORTING (a) The parties agree to use commercially reasonable best efforts to agree upon the fair market value of each of the assets (other than assets which, individually or in the aggregate, are not material in value) which comprise the Assets, determined on the basis of certain appraisals prepared by an independent appraiser upon which the parties shall mutually agree (the "Appraiser"), and whose fees and expenses shall be shared equally between the parties (to the extent that the parties mutually agree upon the fair market value of any or all of the Assets, the "Appraisals"). The parties shall direct the Appraiser to deliver the Appraisals within sixty (60) days of the Closing Date. (b) Each party shall use commercially reasonable best efforts to engage in mutually agreeable sharing of financial and valuation information in order to obtain consistent financial and tax reporting, including, but not limited to, the preparation and filing of IRS Forms -5- 11 8894 and 8824 in a manner which is consistent with the Appraisals, to the greatest extent possible. (c) To the extent authorized by applicable law and regulation, each party shall report the transaction contemplated hereby as a "like-kind exchange" under Section 1031 of the Code, consistent with the Appraisals, and the IRS Forms 8594 and 8824 prepared in accordance with clause (b) above, and shall not take, and shall not cause their respective representatives, successors and assigns to take, any position on any federal, state or local tax return or report, or in any tax examination, tax audit or tax litigation, inconsistent with such reporting position, the Appraisals, or such IRS Form 8594 or 8824. (d) Each party shall cooperate with the other, including, without limitation, in preparing IRS Forms 8594 and 8824 and executing all necessary agreements and documents to the extent necessary for each party to treat the exchange of the Assets hereunder as a "like-kind exchange" to the extent permissible under Section 1031 of the Code. (e) Neither party shall have any liability or obligation to the other for the failure of the exchange of the Assets hereunder to qualify as a like-kind exchange under Section 1031 of the Code. 2. [INTENTIONALLY OMITTED]. 3. [INTENTIONALLY OMITTED]. 4. CLOSING. The closing of the transactions contemplated hereby (the "Closing") will take place at 10:00 a.m., local time, at the offices of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Washington, D.C. 20036, on a date designated by Cox that is not later than the tenth (10th) day following the date upon which the FCC has granted its consent to the assignment of the Cox FCC Licenses, the RRC FCC Licenses and the Salem FCC Licenses, or at such other time (in any event, the "Closing Date") as shall be agreed upon in writing by Cox and Salem. 4.1 CLOSING DELIVERIES. At the Closing: (a) (i) Cox shall execute and deliver, and shall cause RRC to execute and deliver to Salem bills of sale in form and substance reasonably acceptable to Salem, pursuant to which Cox shall convey to Salem good and marketable title to the Cox Tangible Personal Property and the Cox Records, and RRC shall convey to Salem good and marketable title to the RRC Tangible Personal Property and the RRC Records; and (ii) Salem shall execute and deliver to RRC bills of sale in form and substance reasonably acceptable to RRC, pursuant to which Salem shall convey to RRC good and marketable title to the Salem Tangible Personal Property and the Salem Records; (b) (i) Cox shall execute and deliver and cause RRC to execute and deliver to Salem a special warranty deed and such other transfer documents in form and substance reasonably acceptable to Salem pursuant to which Cox or RRC shall convey to Salem title to the owned Cox Real Property and any estoppel, assignment and assumption agreements for the Cox Real Property Leases pursuant to which Cox or RRC shall assign to Salem, and -6- 12 Salem shall accept assignment of, all of Cox's or RRC's rights and privileges and assume all obligations of Cox or RRC under the Cox Real Property Leases, insofar as they relate to the time on and after the Closing Date and arise out of events that occur after the Closing Date; (ii) Cox shall cause RRC to execute and deliver to Salem a special warranty deed and such other transfer documents in form and substance reasonably acceptable to Salem pursuant to which RRC shall convey to Salem title to the owned RRC Real Property and any estoppel, assignment and assumption agreements for the RRC Real Property Leases pursuant to which RRC shall assign to Salem, and Salem shall accept assignment of, all of RRC's rights and privileges and assume all obligations of RRC under the RRC Real Property Leases, insofar as they relate to the time on and after the Closing Date and arise out of events that occur after the Closing Date; and (iii) Salem shall execute and deliver to RRC a special warranty deed and such other transfer documents in form and substance reasonably acceptable to RRC pursuant to which Salem shall convey to RRC title to the Salem Real Property and any estoppel, assignment and assumption agreements for the Salem Real Property Leases pursuant to which Salem shall assign to RRC, and RRC shall accept assignment of, all of Salem's rights and privileges and assume all obligations of Salem under the Salem Real Property Leases as they relate to the time on and after the Closing Date and arise out of events that occur after the Closing Date; (c) (i) Cox shall execute and deliver, and shall cause RRC to execute and deliver to Salem such assignments of licenses and permits in form and substance reasonably acceptable to Salem pursuant to which Cox or RRC as the case may be shall assign to Salem, and Salem shall accept assignment of, all of such party's right, title and interest in and to the Cox Licenses; (ii) Cox shall cause RRC to execute and deliver to Salem such assignments of licenses and permits in form and substance reasonably acceptable to Salem pursuant to which RRC shall assign to Salem, and Salem shall accept assignment of, all of RRC's right, title and interest in and to the RRC Licenses; and (iii) Salem shall execute and deliver to RRC an Assignment of Licenses and Permits in form and substance reasonably acceptable to the parties pursuant to which Salem shall assign to RRC, and RRC shall accept assignment of, all of Salem's right, title and interest in and to the Salem Licenses; (d) (i) Cox shall deliver or cause to be delivered executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Salem, of any security interests granted in the Cox Assets or RRC Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens); and (ii) Salem shall deliver or cause to be delivered executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Cox, of any security interests granted in the Salem Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens); and (e) Cox shall deliver to Salem an assignment in form and substance reasonably acceptable to the parties pursuant to which CRI shall assign to Salem and Salem shall -7- 13 accept from CRI, the rights of CRI to indemnification by the Stockholders (including the right to draw against the Holdback Escrow as defined in the Stock Purchase Agreement) under the Stock Purchase Agreement as such rights pertain to the RRC Assets and the representations, warranties and covenants of Midwestern and the Stockholders with respect thereto. 4.2 PRORATIONS. (a) All income and expenses arising from the conduct of the business and operations of the Cox Stations and the RRC Station on the one hand, and the Salem Station, on the other hand, shall be prorated between Cox and Salem in accordance with generally accepted accounting principles as of 12:01 a.m., on the Closing Date. Such prorations shall include, without limitation, all ad valorem and applicable property taxes, business and license fees, annual FCC regulatory fees, power and utility expenses, rents (excluding amounts paid as capital expenditures in connection with real property, whether leased or owned), and similar prepaid and deferred items attributable to the ownership and operation of the Stations. The parties shall use commercially reasonable efforts to provide each other a list of all known proratable items and payables for the Stations at least five (5) days before the Closing Date; (b) The prorations and adjustments contemplated by this Section, to the extent practicable, shall be made on and as of the Closing Date. As to those prorations and adjustments not ascertained on the Closing Date, adjustments and prorations shall be made in accordance with the procedures set forth in SECTIONS 4.2(C) and 4.2(D); (c) Within ninety (90) days of the Closing Date, Cox shall deliver to Salem a schedule of its proposed prorations (which shall set forth in reasonable detail the basis for those determinations) for the Salem Station (the "Cox Proration Schedule"). The Cox Proration Schedule shall be conclusive and binding upon Salem unless Salem provides Cox with written notice of objection (the "Notice of Disagreement") within one hundred twenty (120) days after the Closing Date, which notice shall state the prorations of expenses proposed by Salem ("Salem's Proration Amount"). Cox shall have fifteen (15) days from receipt of a Notice of Disagreement to accept or reject Salem's Proration Amount. Payment by Salem or Cox, as the case may be, of the proration amounts determined pursuant to this SECTION 4.2(C) shall be due fifteen (15) days after the last to occur of (i) Salem's acceptance of the Cox Proration Schedule or failure to give Cox a timely Notice of Disagreement and (ii) Cox's acceptance of Salem's Proration Amount or failure to reject Salem's Proration Amount within fifteen (15) days of receipt of a Notice of Disagreement; (d) Within ninety (90) days of the Closing Date, Salem shall deliver to Cox a schedule of its proposed prorations (which shall set forth in reasonable detail the basis for those determinations) for the Cox Stations and the RRC Station (the "Salem Proration Schedule"). The Salem Proration Schedule shall be conclusive and binding upon Cox unless Cox provides Salem with a Notice of Disagreement within one hundred twenty (120) days after the Closing Date, which notice shall state the prorations of expenses proposed by Cox ("Cox's Proration Amount"). Salem shall have fifteen (15) days from receipt of a Notice of Disagreement to accept or reject Cox's Proration Amount. Payment by Cox or Salem, as the case may be, of the proration amounts determined pursuant to this SECTION 4.2(D) shall be due fifteen (15) days after the last to occur of (i) Cox's acceptance of the Salem Proration Schedule or failure to give Salem a timely Notice of Disagreement and (ii) Salem's acceptance of Cox's -8- 14 Proration Amount or failure to reject Cox's Proration Amount within fifteen (15) days of receipt of a Notice of Disagreement; and (e) In the event of any disputes between the parties as to the prorations and adjustments described in this Section, the amounts not in dispute shall nonetheless be paid at the time provided in this Section and such disputes shall be determined by an independent certified public accountant of national recognition (other than a firm which then serves as the independent auditor for Cox or Salem or any of their respective affiliates) mutually acceptable to the parties with the fees and expenses of such accountant being paid one half by Cox and one half by Salem. Any payment required by Cox to Salem or by Salem to Cox, as the case may be, under this Section shall be paid by wire transfer of immediately available funds to the account of the payee with a financial institution in the United States as designated by such party in the Salem Proration Schedule or Cox Proration Schedule, as the case may be. If either Cox or Salem fails to pay when due any amount under SECTION 4.2(C) or 4.2(D), interest on such amount will accrue from the date payment was due to the date such payment is made at a per annum rate equal to the Prime Rate plus two percent (2%), and such interest shall be payable upon demand. Notwithstanding the provisions of SECTION 4.2(C), (D) and (E) of this Agreement, if the amount of any taxes to be prorated pursuant to this SECTION 4.2 is not known by ninety (90) days after the Closing Date, then the amount will be estimated as of such date, and once the amount of such taxes is known, Salem shall pay to Cox, or Cox shall pay to Salem, as the case may be, the net amount due as a result of the actual apportionment of such taxes. 4.3 FURTHER ASSURANCES. At the Closing, and from time to time after the Closing, Cox will execute and deliver, and cause RRC to execute and deliver, such other instruments of conveyance, assignment, transfer and delivery and will take, and will cause RRC to take, such other actions as Salem reasonably may request in order to more effectively transfer, convey, assign, and deliver to Salem, and to place Salem in possession and control of, any of the Cox Assets and the RRC Assets, and Salem will execute and deliver such other instruments of conveyance, assignment, transfer and delivery and will take such other actions as Cox reasonably may request in order to more effectively transfer, convey, assign, and deliver to Cox or RRC, and to place Cox or RRC in possession and control of, any of the Salem Assets. 5. REPRESENTATIONS AND WARRANTIES OF COX FOR THE COX STATIONS. Cox hereby represents and warrants to Salem with respect to the Cox Stations only as follows: 5.1 ORGANIZATION; GOOD STANDING. Each of CRI and CXR (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation and (ii) is qualified to do business as a foreign corporation and is in good standing under the laws of the states in which such entity conducts business. 5.2 AUTHORITY. The execution, delivery and performance of this Agreement by Cox and all of the documents and instruments required to be delivered by Cox hereby, and the consummation by Cox of the transactions contemplated hereby and thereby are within the corporate power of Cox, and have been duly authorized by all necessary corporate action by Cox. This Agreement has been duly executed and delivered by Cox, and at the Closing, such other documents and other instruments required hereby to be executed and delivered by Cox will be duly executed and delivered by Cox. This Agreement is, and the other documents and instruments required hereby will be, when executed and delivered by Cox, the valid and binding -9- 15 obligations of Cox, enforceable against it in accordance with their respective terms, except as the enforceability of this Agreement or the documents or instruments contemplated hereby may be limited by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 5.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 5.3, the execution and delivery by Cox of this Agreement, the consummation by Cox of the transactions contemplated hereby, and compliance by Cox with the terms hereof, do not and will not: (i) violate or result in the breach of or contravene any of the terms, conditions or provisions of, or constitute a default under, any organizational documents of Cox, or any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to Cox or its assets and properties; (ii) except for those consents listed in Schedule 5.3, result in prohibited action under any term or provision of, the material breach of any term or provision of, the termination of, or the acceleration or permitting the acceleration of the performance required by the terms of, or constitute a default under or require the consent of any party to, any loan agreement, indenture, mortgage, deed of trust or any other contract to which Cox is a party or by which it is bound; (iii) result in any Lien upon the Cox Assets, except for Permitted Liens; or (iv) cause the suspension or revocation of any of the Cox Licenses. 5.4 APPROVALS. Except as set forth on Schedule 5.4 and except for the consent of the FCC, no authorizations, approvals or consents from any governmental or regulatory authorities or agencies are necessary to permit Cox to execute and deliver this Agreement and to permit Cox to perform its obligations hereunder. 5.5 NO LITIGATION. Except as set forth on Schedule 5.5, there are no actions, suits, investigations or proceedings pending or, to the best of Cox's knowledge, threatened against or affecting the Cox Assets, in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign, which, if adversely determined, would impair the ability of Cox to perform its obligations hereunder. 5.6 BROKERAGE. Except for Media Venture Partners, Cox has not dealt with any broker or finder in connection with any of the transactions contemplated by this Agreement, and to the best of Cox's knowledge, no other person is entitled to any commission or finder's fee in connection with any of these transactions. 5.7 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Except as specified on Schedule 5.7, and except for Permitted Liens, Cox has good title to the Cox Tangible Personal Property free and clear of all Liens. All of the Cox Tangible Personal Property is in a good working condition and repair (ordinary wear and tear excepted). All of the Cox Tangible Personal Property is listed in Schedule 1.1A, and such schedule contains a list of -10- 16 all tangible personal property used in the operation of the Cox Stations other than Excluded Assets. 5.8 TITLE TO AND CONDITION OF REAL PROPERTY. Schedule 1.2A lists all of the Cox Real Property and Cox has good title in and to the owned Cox Real Property, and such schedule contains a list of all real property used in the operation of the Cox Stations other than the Excluded Assets. All of the Cox Real Property is owned free and clear of all Liens except for Permitted Liens. Schedule 1.2A lists all of the Cox Real Property Leases. Except as disclosed on Schedule 5.8, with respect to each Cox Real Property Lease: (a) said lease is, and following the Closing to the best of Cox's knowledge, will continue to be legal, valid, binding, enforceable and in full force and effect; and (b) Cox has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in said lease or its rights thereunder. To the best of Cox's knowledge, no third party is in material default in the performance of any of its obligations under any of the Cox Real Property Leases, and no event or circumstance has occurred, which, with the giving of notice or the lapse of time or both, would constitute a material default by Cox under any Cox Real Property Lease. All improvements on the owned Cox Real Property are in material compliance with applicable zoning and land use laws, ordinances and regulations except for any instances of noncompliance which do not and will not in the aggregate have a material adverse effect on such owned Cox Real Property. All such improvements are in good working condition and repair, and comply in all material respects with FCC rules and regulations and all other applicable Federal, state and local statutes, ordinances and regulations. To the best of Cox's knowledge, all of the transmitting towers, ground radials, guy anchors, transmitter buildings and related improvements located on the owned Cox Real Property are located entirely on the owned Cox Real Property. Cox has no knowledge of any pending, threatened or contemplated action to take by eminent domain or otherwise to condemn any part of the owned Cox Real Property. Cox has full legal and practical access to the Cox Real Property. 5.9 LICENSES. Schedule 1.3A accurately and completely lists all Cox Licenses, and such schedule contains a list of all licenses, permits and applications used in the operation of or benefiting the Cox Stations, other than Excluded Assets. The Cox Licenses are (a) validly issued and in full force and effect, (b) unimpaired by any acts or omissions of Cox or Cox's employees or agents, (c) free and clear of any restrictions that might limit the full operation of the Cox Stations and (d) Cox has full power and authority to operate the Cox Stations thereunder. 5.10 FCC COMPLIANCE. Except as shown on Schedule 5.10, the Cox Stations have been operated at all times by Cox at full authorized power in material accordance with the terms of the Cox FCC Licenses, the Communications Act of 1934, as amended (the "Act"), and all applicable rules, regulations and policies of the FCC. Cox has timely filed or made all applications, reports, and other disclosures required by the FCC to be filed or made with respect to the Cox Stations. The Cox FCC Licenses are valid and in full force and effect. Except as shown on Schedule 5.10, no application, action or proceeding is pending for the renewal or modification of any of the Cox FCC Licenses and, to the best of Cox's knowledge, there is not now issued or outstanding any investigation or material complaint against Cox at the FCC as of the date of this Agreement relating to the Cox Stations. Except as disclosed on Schedule 5.10, there is no proceeding pending at the FCC, and there is no outstanding notice of violation from the FCC as of the date of this Agreement relating to the Cox Stations. All fees payable to -11- 17 governmental authorities pursuant to the Cox FCC Licenses, including FCC annual regulatory fees, have been paid and no event has occurred which, individually or in the aggregate, and with or without the giving of notice or the lapse of time or both, would constitute grounds for nonrenewal in the ordinary course or revocation thereof. 5.11 COMPLIANCE WITH LAWS. Cox has all licenses, permits or other authorizations of governmental, regulatory or administrative agencies required to conduct its business with respect to the Cox Stations in all material respects as currently conducted. No judgment, decree, order or notice of violation has been issued by any agency or authority which permits, or would permit, revocation, modification or termination of any governmental permit, license or authorization or which results or could result in any material impairment of any rights thereunder. With respect to the Cox Stations, Cox is in material compliance with all applicable federal, state, local or foreign laws, regulations, statutes, rules, ordinances, directives and orders and any other requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal applicable to it. 5.12 ENVIRONMENTAL MATTERS. Without limiting the generality of SECTION 5.11, except as disclosed on Schedule 5.12, all of the Cox Real Property is free of (1) waste or debris; (2) "hazardous waste" or any "hazardous substance" as defined in federal environmental and occupational safety and health statutes (including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"), and regulations promulgated thereunder; (3) any substance the presence of which on the Cox Real Property is prohibited by any federal, state or local environmental law; and (4) any materials which, under federal, state, or local environmental law, require special handling in collection, storage, treatment or disposal, each in quantities or in a manner sufficient to give rise to liability under the federal, state or local government environmental standards or to warrant the imposition of any penalty, civil or criminal, against Cox. Without limiting the generality of the foregoing, except as disclosed on Schedule 5.12, there are no installations on the Cox Real Property which contain PCBs or asbestos in quantities sufficient to mandate the removal of such PCBs or asbestos in accordance with federal, state or local government environmental standards or to warrant the imposition of any penalty, civil or criminal, against Cox. Cox has delivered to Salem all environmental assessments of the Cox Real Property owned by Cox. 5.13 ACCURACY OF INFORMATION FURNISHED. No statement by Cox contained in this Agreement or in any Schedule or Exhibit hereto contains any material untrue statement of a material fact or omits to state any material fact which is necessary to make the Statements contained herein not materially misleading. 5.14 TAXES. Cox has filed or caused to be filed all federal, state, county, local, or city tax returns which are required to be filed, and Cox has paid or caused to be paid all taxes as shown on those returns or on any tax assessment received by Cox to the extent that such taxes have become due, or has set aside on its books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no governmental investigations or other legal, administrative, or tax proceedings pending, or to the best of Cox's knowledge, threatened, pursuant to which Cox is or could be made liable for any taxes, penalties, interest, or other charges, the liability for which could extend to Salem as transferee of the Cox Assets, and no event has occurred that could impose on Salem any liability for any taxes, penalties, or interest due or to become due from Cox. Cox has paid in full or -12- 18 discharged, or caused to be paid in full or discharged, all taxes (i) relating to the Cox Assets that are required to be paid (whether or not such taxes are shown as due on any tax return) and (ii) the non-payment of which could result in a Lien on the Cox Assets in the hands of Salem, excepting in each case such taxes as will not be due until after the Closing Date and which are to be prorated pursuant to SECTION 4.2 of this Agreement. Any Lien for taxes on the Cox Assets the validity of which is being contested in good faith by appropriate proceedings shall be described on Schedule 5.14 of this Agreement. 5.15 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to the best of Cox's knowledge" or any similar formulation thereof means to the actual knowledge of Robert F. Neil, Chief Executive Officer; Richard A. Ferguson, Co-Chief Operating Officer; Marc W. Morgan, Co-Chief Operating Officer; Maritza Pichon, Chief Financial Officer; Sterling Davis, Director of Engineering; Jarrett O'Connor, Vice President and General Manager, WSUN(AM); and Caroline Devine, Vice President and General Manager, KLUP(AM). 6. REPRESENTATIONS AND WARRANTIES OF COX FOR THE RRC STATION AND STOCK PURCHASE AGREEMENT. Cox hereby represents and warrants to Salem with respect to the RRC Station and the Stock Purchase Agreement only as follows: 6.1 STOCK PURCHASE AGREEMENT. Cox will deliver to Salem a true and complete copy of the Stock Purchase Agreement (including all exhibits and schedules thereto) as executed by CRI on June 1, 2000. The Stock Purchase Agreement will not have been executed by Midwestern or the Stockholders at that time. Cox will deliver copies of the signature pages of Midwestern and the Stockholders immediately after receipt by Cox. Cox represents and warrants that the execution, delivery and performance of the Stock Purchase Agreement by CRI and all of the documents required to be delivered by CRI thereby and the consummation by CRI of the Stock Purchase Agreement in accordance with the terms thereof are within the corporate power of CRI and have been duly authorized by all necessary corporate action by CRI. When executed by CRI, the Stock Purchase Agreement will be a valid and binding offer of CRI subject to acceptance by Midwestern and the Stockholders and enforceable against CRI in accordance with its terms, except as the enforceability of the Stock Purchase Agreement or the documents or instruments contemplated thereby may be limited by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. Cox has no independent knowledge of and has not made any investigation to determine the accuracy or inaccuracy of the representations and warranties of Midwestern or the Stockholders in the Stock Purchase Agreement. 6.2 ORGANIZATION; GOOD STANDING. At the Closing, RRC (i) will be a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation and (ii) will be qualified to do business as a foreign corporation and will be in good standing under the laws of the states in which it conducts business. 6.3 AUTHORITY. At the Closing, the execution, delivery and performance of all of the documents and instruments required to be delivered by RRC hereby (the "RRC Documents"), and the consummation by RRC of the transactions contemplated hereby and thereby will be within the corporate power of RRC, and will have been duly authorized by all necessary corporate action by RRC. At the Closing, the RRC Documents will be duly executed and delivered by RRC and will be, when executed and delivered by RRC, the valid and binding -13- 19 obligations of RRC, enforceable against it in accordance with their respective terms, except as the enforceability of such documents or instruments may be limited by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 6.4 NO BREACH OR VIOLATION. Except for the consent of the FCC and the HSR Approval, at the Closing, the execution and delivery by RRC of the RRC Documents and the consummation by RRC of the transactions contemplated hereby, and compliance by RRC with the terms hereof, will not: (i) violate or result in the breach of or contravene any of the terms, conditions or provisions of, or constitute a default under, any organizational documents of RRC, or any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to RRC or its assets and properties; (ii) result in prohibited action under any term or provision of, the material breach of any term or provision of, the termination of, or the acceleration or permitting the acceleration of the performance required by the terms of, or constitute a default under or require the consent of any party to, any loan agreement, indenture, mortgage, deed of trust or any other contract to which RRC is a party or by which it is bound; (iii) result in any Lien upon the RRC Assets, excepted for Permitted Liens; or (iv) cause the suspension or revocation of any of the RRC Licenses. 6.5 APPROVALS. Except for the consent of the FCC and the HSR Approval, at the Closing, no authorizations, approvals or consents from any governmental or regulatory authorities or agencies will be necessary to permit RRC to execute and deliver the RRC Documents and to consummate the transactions contemplated hereby and thereby. 6.6 NO LITIGATION. At the Closing there will be no actions, suits, investigations or proceedings pending or, to the best of Cox's knowledge, threatened against or affecting the RRC Assets, in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign, which , if adversely determined, would impair the ability of RRC to consummate the transactions contemplated hereunder. 6.7 BROKERAGE. RRC will not have dealt with any broker or finder in connection with any of the transactions contemplated by this Agreement, and to the best of Cox's knowledge, no person will be entitled to any commission or finder's fee in connection with any of these transactions other than Media Venture Partners whose commission is the responsibility of Cox. 6.8 ACCURACY OF INFORMATION FURNISHED. As of the Closing, no statement by RRC contained in any of the RRC Documents shall contain any material untrue statement of a material fact or omit to state any material fact which is necessary to make the statements contained therein not materially misleading, -14- 20 7. REPRESENTATIONS AND WARRANTIES OF SALEM. Salem hereby represents and warrants to Cox as follows: 7.1 ORGANIZATION; GOOD STANDING. Each of SCC and STB is a corporation, duly incorporated, validly existing and in good standing under the laws of the state of its organization and is qualified to do business as a foreign corporation and is in good standing under the laws of the states in which it conducts business. 7.2 AUTHORITY. The execution, delivery and performance of this Agreement and all of the documents and instruments required to be delivered by Salem hereby, and the consummation by Salem of the transactions contemplated hereby and thereby are within the corporate power of Salem, and have been duly authorized by all necessary corporate action by Salem. This Agreement has been duly executed and delivered by Salem and at the Closing such other documents and other instruments required hereby to be executed and delivered by Salem will be duly executed and delivered by Salem. This Agreement is and the other documents and instruments required hereby will be when executed and delivered by Salem, the valid and binding obligations of Salem, enforceable against Salem in accordance with their respective terms, except as the enforceability of this Agreement or the documents or instruments contemplated hereby may be limited by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 7.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 7.3, the execution and delivery by Salem of this Agreement, the consummation by Salem of the transactions contemplated hereby, and compliance by Salem with the terms hereof, do not and will not: (i) violate or result in the breach of or contravene any of the terms, conditions or provisions of, or constitute a default under, Salem's organizational documents, or any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to Salem or its assets and properties; (ii) except for those consents listed in Schedule 7.3, result in prohibited action under any term or provision of, the material breach of any term or provision of, the termination of, or the acceleration or permitting the acceleration of the performance required by the terms of, or constitute a default under or require the consent of any party to, any loan agreement, indenture, mortgage, deed of trust or any other contract to which Salem is a party or by which it is bound; (iii) result in any Lien upon the Salem Assets except for Permitted Liens; or (iv) cause the suspension or revocation of any of the Salem Licenses. 7.4 APPROVALS. Except as set forth on Schedule 7.4, and except for the consent of the FCC, DOJ and any approval required by the HSR Act, no authorizations, approvals or consents from any governmental or regulatory authorities or agencies are necessary to permit Salem to execute and deliver this Agreement and to perform its obligations hereunder. -15- 21 7.5 NO LITIGATION. Except as set forth on Schedule 7.5, there are no actions, suits, investigations or proceedings pending or, to the best of Salem's knowledge, threatened against or affecting the Salem Assets, in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign, which, if adversely determined, would impair the ability of Salem to perform its obligations hereunder. 7.6 BROKERAGE. Salem has not dealt with any broker or finder in connection with any of the transactions contemplated by this Agreement, and, to the best of Salem's knowledge, except for Media Venture Partners, no other person is entitled to any commission or finder's fee in connection with any of these transactions. 7.7 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Except as specified on Schedule 7.7, and except for Permitted Liens, Salem has good title to the Salem Tangible Personal Property free and clear of all Liens. All of the Salem Tangible Personal Property is in a good working condition (ordinary wear and tear excepted). All of the Salem Tangible Personal Property is listed on Schedule 1.1C and such schedule contains a list of all tangible personal property used in the operation of the Salem Station other than Excluded Assets. 7.8 TITLE TO AND CONDITION OF REAL PROPERTY. Schedule 1.2C lists all of the owned Salem Real Property and Salem has good title in and to the owned Salem Real Property, and such schedule contains a list of all real property used in the operation of the Salem Station other than Excluded Assets. All of the Salem Real Property is owned free and clear of all Liens except for Permitted Liens. Schedule 1.2C lists all of the Salem Real Property Leases. Except as disclosed on Schedule 7.8, with respect to each of the Salem Real Property Leases: (a) said lease is and following the Closing, to the best of Salem's knowledge, will continue to be, legal, valid, binding, enforceable and in full force and effect; and (b) Salem has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in said lease or its rights thereunder. To the best of Salem's knowledge, no third party is in material default in the performance of any of its obligations under any of the Salem Real Property Leases, and no event or circumstance has occurred which, with the giving of notice or the lapse of time or both, would constitute a material default by Salem under any Salem Real Property Lease. All improvements on the owned Salem Real Property are in material compliance with applicable zoning and land use laws, ordinances and regulations except for any instances of noncompliance which do not and will not in the aggregate have a material adverse effect on such owned Salem Real Property. All such improvements are in good working condition and repair, comply in all material respects with FCC rules and regulations and all other applicable Federal, state and local statutes, ordinances and regulations. To the best of Salem's knowledge, all of the transmitting towers, ground radials, guy anchors, transmitter buildings and related improvements located on the owned Salem Real Property are located entirely on the owned Salem Real Property. Salem has no knowledge of any pending, threatened or contemplated action to take by eminent domain or otherwise to condemn any part of the Salem Real Property. Salem has full legal and practical access to the Salem Real Property. 7.9 LICENSES. Except as set forth on Schedule 7.9, Schedule 1.3C accurately and completely lists all of the Salem Licenses, and such schedule contains a list of all licenses, permits and applications used in the operation of or benefiting the Salem Station, other than Excluded Assets. All of the Salem Licenses are (a) validly issued and in full force and effect, (b) -16- 22 unimpaired by any acts or omissions of Salem or Salem's employees or agents, (c) free and clear of any restrictions that might limit the full operation of the Salem Station and (d) Salem has full power and authority to operate the Salem Station thereunder. 7.10 FCC COMPLIANCE. Except as shown on Schedule 7.10, the Salem Station has been operated at all times by Salem at full authorized power in material accordance with the terms of the Salem FCC Licenses, the Act, and all applicable rules, regulations and policies of the FCC. Salem has timely filed or made all applications, reports, and other disclosures required by the FCC to be filed or made with respect to the Salem Station. The Salem FCC Licenses are valid and in full force and effect. Except as shown on Schedule 7.10, no application, action or proceeding is pending for the renewal or modification of any of the Salem FCC Licenses and, to the best of Salem's knowledge, there is not now issued or outstanding any investigation or material complaint against Salem at the FCC as of the date of this Agreement relating to the Salem Station. Except as disclosed in Schedule 7.10, there is no proceeding pending at the FCC, and there is no outstanding notice of violation from the FCC as of the date of this Agreement relating to the Salem Station. All fees payable to governmental authorities, including FCC annual regulatory fees, pursuant to the Salem FCC Licenses have been paid and no event has occurred which, individually or in the aggregate, and with or without the giving of notice or the lapse of time or both, would constitute grounds for nonrenewal in the ordinary course or revocation thereof. 7.11 COMPLIANCE WITH LAWS. Salem has all licenses, permits or other authorizations of governmental, regulatory or administrative agencies required to conduct its business with respect to the Salem Station in all material respects as currently conducted. No judgment, decree, order or notice of violation has been issued by any such agency or authority which permits, or would permit, revocation, modification or termination of any such governmental permit, license or authorization or which results or could result in any material impairment of any rights thereunder. With respect to the Salem Station, Salem is in material compliance with all applicable federal, state, local or foreign laws, regulations, statutes, rules, ordinances, directives and orders and any other requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal applicable to it. 7.12 ENVIRONMENTAL MATTERS. Without limiting the generality of SECTION 7.11, except as disclosed on Schedule 7.12, all of the Salem Real Property is free of (1) waste or debris; (2) "hazardous waste" or any "hazardous substance" as defined in federal environmental and occupational safety and health statutes including CERCLA, as amended from time to time, and regulations promulgated thereunder, or as defined by CERCLA, and regulations promulgated thereunder; (3) any substance the presence of which on the Salem Real Property is prohibited by any federal, state or local environmental law; and (4) any materials which, under federal, state, or local environmental law, require special handling in collection, storage, treatment or disposal, each in quantities or in a manner sufficient to give rise to liability under federal, state or local government environmental standards or to warrant the imposition of any penalty, civil or criminal, against Salem. Without limiting the generality of the foregoing, except as disclosed on Schedule 7.12, there are no installations on the Salem Real Property which contain PCBs or asbestos in quantities sufficient to mandate the removal of such PCBs or asbestos in accordance with federal, state or local government environmental standards or to warrant the imposition of any penalty, civil or criminal, against Salem. Salem has delivered to Cox all environmental assessments of the Salem Real Property owned by Salem. -17- 23 7.13 ACCURACY OF INFORMATION FURNISHED. No statement by Salem contained in this Agreement or in any Schedule or Exhibit hereto contains any material untrue statement of a material fact or omits to state any material fact which is necessary to make the statements contained herein not materially misleading. 7.14 TAXES. Salem has filed or caused to be filed all federal income tax returns and all other federal, state, county, local, or city tax returns which are required to be filed, and Salem has paid or caused to be paid all taxes as shown on those returns or on any tax assessment received by Salem to the extent that such taxes have become due, or has set aside on its books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. Except as disclosed on Schedule 7.14, there are no governmental investigations or other legal, administrative, or tax proceedings pending, or to the best of Salem's knowledge, threatened, pursuant to which Salem is or could be made liable for any taxes, penalties, interest, or other charges, the liability for which could extend to Cox as transferee of the Salem Assets, and no event has occurred that could impose on Cox any liability for any taxes, penalties, or interest due or to become due from Salem. Salem has paid in full or discharged, or caused to be paid in full or discharged, all taxes (i) relating to the Salem Assets that are required to be paid (whether or not such taxes are shown as due on any tax return) and (ii) the non-payment of which could result in a Lien on the Salem Assets in the hands of Cox, excepting in each case such taxes as will not be due until after the Closing Date and which are to be prorated pursuant to SECTION 4.2 of this Agreement. Any Lien for taxes on the Salem Assets the validity of which is being contested in good faith by appropriate proceedings shall be described on Schedule 7.14 of this Agreement. 7.15 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to the best of Salem's knowledge" or any similar formulation thereof means to the actual knowledge of Edward G. Atsinger, III, President and Chief Executive Officer; John Ehde, Vice President of Engineering; and Gordon Marcy, General Manager of the Salem Station. 8. COVENANTS OF THE PARTIES. The parties hereby covenant to each other as follows. 8.1 FCC APPLICATIONS. Following the date of this Agreement, the parties shall proceed as expeditiously as practicable to file or cause to be filed applications with the FCC requesting consent to the assignment of the Cox FCC Licenses to Salem (the "Cox FCC Application"), an application with the FCC requesting consent to the assignment of the RRC FCC Licenses to Salem (the "RRC Application") and an application with the FCC requesting consent to the assignment of the Salem FCC Licenses to Cox (the "Salem FCC Application"), such applications to be duly filed with the FCC by the parties contemporaneously as contingent applications. The parties agree that the Cox FCC Application, the RRC FCC Application and the Salem FCC Application (together, the "FCC Applications") shall be filed not later than ten (10) business days after the date of this Agreement, and that the FCC Applications shall be prosecuted by each party in good faith and with due diligence. Cox and Salem shall cooperate with each other in the preparation, filing and prosecution of the FCC Applications. Should Cox or Salem become aware of facts which could reasonably be expected to affect or delay in a material and adverse manner, the FCC's grant of its consent to the FCC Applications, such party shall promptly notify the other party in writing and in accordance with the notices provisions set forth in SECTION 15. If the Closing shall not have occurred for any reason within the original effective period of the consent of the FCC to the FCC Applications, and neither party shall have -18- 24 terminated this Agreement under SECTION 11, the parties shall jointly request extensions of the effective period of the FCC consents. 8.2 STOCK PURCHASE AGREEMENT. CRI shall exercise its rights and fulfill all of its obligations under the Stock Purchase Agreement at all times in a timely manner and in good faith and CRI shall take no action that is materially inconsistent with the terms of this Agreement. CRI agrees to provide to Salem within two (2) business days of CRI's receipt thereof, copies of all notices, correspondence and other written communication from the Stockholders or RRC or from any governmental authority in connection with the transactions contemplated by the Stock Purchase Agreement. CRI shall provide Salem five (5) business days' written notice before it exercises any right to terminate the Stock Purchase Agreement. Prior to the end of such five (5) day notice period, Salem may request that CRI take and CRI shall take all commercially reasonable actions necessary to transfer to Salem any and all rights of CRI under the Stock Purchase Agreement. Salem and Cox hereby agree that, with respect to the RRC Assets, Salem shall have the full benefit of the representations and warranties made by Midwestern and the Stockholders in the Stock Purchase Agreement, including the right to draw against the Holdback Escrow as defined in the Stock Purchase Agreement. At the Closing and to the extent CRI is permitted to do so under the terms of the Stock Purchase Agreement, CRI shall assign to Salem, and Salem shall accept from CRI, the rights of CRI to indemnification by the Stockholders under the Stock Purchase Agreement insofar as such rights to indemnification relate to the RRC Assets and the representations, warranties and covenants of Midwestern and the Stockholders with respect thereto. To the extent that CRI is not permitted to assign such indemnification rights to Salem, CRI will cooperate with Salem to provide Salem with the benefit of such rights and to assist Salem in enforcing such rights against the Stockholders. CRI further agrees that it will not consent to or authorize any release of any funds held by the Escrow Agent pursuant to the Holdback Escrow Agreement (as each such term is defined in the Stock Purchase Agreement) without first consulting with Salem. 8.3 NO SOLICITATION OF THIRD PARTIES . Neither party nor any of its subsidiaries, nor any of its directors, officers, employees, representatives or agents shall, directly or indirectly, solicit or initiate inquiries or proposals from, or enter into any agreement with respect to, or provide any confidential information to or participate in any discussions or negotiations with, any corporation, partnership, person or other entity or group concerning any sale to such party of all or substantially all of the assets of the Stations owned by it (whether directly or through a merger or sale of stock of Cox or Salem). The parties will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any third parties conducted heretofore with respect to any of the foregoing. 8.4 ACCESS. Prior to the Closing, each party shall give to the other party and its representatives full and reasonable access during normal business hours to all of the party's properties, books, contracts, reports and records including financial information, in each case relating to Assets, in order that the parties may have full opportunity to make such investigation as they desire of such Stations, and each party shall furnish the other party with such information as such other party may reasonably request in connection therewith; provided that access to the properties, books, contracts and records of the RRC Station and RRC shall be subject to the terms of the Stock Purchase Agreement. The rights of the parties under this Section shall not be exercised in such a manner as to interfere unreasonably with the business of either party's Stations. -19- 25 8.5 INCONSISTENT ACTIONS. Prior to the Closing, neither Cox nor Salem shall take any action which is materially inconsistent with its obligations under this Agreement, or that could hinder or delay the consummation of the transactions contemplated by this Agreement. 8.6 COOPERATION. Each party shall use commercially reasonable efforts to cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their obligations under this Agreement, and each party will use commercially reasonable efforts to consummate the transactions contemplated hereby and to fulfill its obligations hereunder including without limitation, each party's obligation to ensure that the transactions contemplated hereby are accomplished in a manner enabling the transfer of the Cox Assets, the RRC Assets and the Salem Assets to qualify as part of a Section 1031 Exchange. 8.7 CONTROL OF THE STATIONS. Prior to Closing, neither party shall, directly or indirectly, control, supervise, or direct, or attempt to control, supervise or direct the operations of the other party's Stations; those operations, including complete control and supervision of all Station programs, employees, and policies, shall be the sole responsibility of the Station's licensee. 8.8 RISK OF LOSS. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Cox Assets from any cause whatsoever shall be borne by Cox at all times prior to the Closing. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the RRC Assets from any cause whatsoever shall be borne by RRC at all times prior to the Closing. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Salem Assets from any cause whatsoever shall be borne by Salem at all times prior to the Closing. 8.9 THIRD PARTY CONSENTS. Between the date of this Agreement and the Closing, Cox and Salem shall use their respective commercially reasonable efforts to obtain the consent of any third party necessary for the assignment of any contract or agreement to be assigned hereunder. In the event a consent or waiver required with respect to the assignment of a contract has not been obtained before the Closing, Cox or Salem (as the case may be) shall use its commercially reasonable best efforts to provide the other party with the benefits of any such contract, including without limitation, permitting such other party to enforce any rights of Cox or RRC or Salem under such contract. 8.10 TITLE INSURANCE AND SURVEYS. (a) With respect to each parcel of Cox Real Property and with respect to each parcel of RRC Real Property, Salem will obtain at or prior to Closing, an ALTA Owner's Policy of Title Insurance Form B-1992 (or equivalent policy acceptable to Salem), issued by a title insurer satisfactory to Salem, in an amount equal to the fair market value of the property and any improvements thereon (as reasonably determined by Salem), insuring title to such parcel in the name of Salem as of the Closing, subject only to liens or encumbrances expressly permitted by this Agreement; and with respect to each parcel of Salem Real Property that Salem owns, Cox will obtain at or prior to Closing, an ALTA Owner's Policy of Title Insurance Form B-1992 (or equivalent policy acceptable to Cox), issued by a title insurer satisfactory to Cox, in an amount equal to the fair market value of the property and any improvements thereon (as reasonably -20- 26 determined by Cox), insuring title to such parcel in the name of Cox as of the Closing, subject only to liens or encumbrances expressly permitted by this Agreement. (b) General Requirements as to Title Insurance Policies. Each title insurance policy obtained by Cox or Salem, as the case may be, pursuant to this Agreement shall (1) insure title to the Cox Real Property, the RRC Real Property or the Salem Real Property described in the policy and all recorded easements benefiting the Cox Real Property, the RRC Real Property or the Salem Real Property, (2) contain an "extended coverage endorsement" insuring over the general exceptions customarily contained in title policies, (3) contain an endorsement insuring that the Cox Real Property, the RRC Real Property or the Salem Real Property described in the policy is the same real estate shown in the survey delivered with respect to such property, and (4) contain a "contiguity" endorsement with respect to any of the Cox Real Property, the RRC Real Property or the Salem Real Property consisting of more than one record parcel. (c) Surveys. With respect to each parcel of Cox Real Property, RRC Real Property or Salem Real Property, as to which a title insurance policy is to be procured pursuant to this Agreement, Salem will procure a current survey of the parcel of Cox Real Property and RRC Real Property, and Cox will procure a current survey of the parcel of Salem Real Property, prepared by a licensed surveyor and conforming to current ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location of all improvements, easements, party walls, sidewalks, roadways, utility lines, and other matters customarily shown on such surveys, and showing access affirmatively to public streets and roads. 8.11 COMPLIANCE WITH HSR ACT. If the transactions contemplated by this Agreement are subject to the filing requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or the approval by the U.S. Federal Trade Commission (the "FTC") and the Antitrust Division of the U.S. Department of Justice (the "DOJ"), Cox and Salem will (i) each make such filings as are required under Title II of the HSR Act as soon as practicable but in any event within ten (10) days of the date of the acceptance by Midwestern and the Stockholders of Cox's offer set forth in the Stock Purchase Agreement, (ii) otherwise promptly comply with the applicable requirements under the HSR Act, including furnishing all information and filing all documents required thereunder, (iii) furnish to each other copies of those portions of the documents filed which are not confidential, and (iv) cooperate fully and use their respective commercially reasonable efforts to expedite compliance with the HSR Act. 8.12 CONFIDENTIALITY. Each of the parties hereto agrees to keep the terms and conditions of this Agreement confidential until the filing of the FCC Applications except (a) for any disclosures to Midwestern and the Stockholders that may be necessary under the Stock Purchase Agreement, and (b) as and to the extent required by law, including disclosure requirements of federal and state securities laws and rules and regulations of securities markets or as necessary to fulfill its obligations under this Agreement. 8.13 FINANCIAL STATEMENTS. To the extent any party acquiring a Station hereunder is required to provide audited financial statements regarding such Station pursuant to applicable law including, without limitation, Rule 3-05 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission, and to the extent such financial statements exist and are available to the conveying party, the conveying party (as soon as is -21- 27 reasonably practicable following Closing, but in any event within sufficient time for the acquiring party to comply with applicable law) shall provide to the acquiring party a true, correct and complete copy of the audited financial statements for such Station for the three (3) fiscal years prior to Closing, or, to the extent the audited financial statements are not within the conveying party's custody, possession or control, the conveying party (as soon as is reasonably practicable following Closing, but in any event within sufficient time for the acquiring party to comply with applicable law) shall provide to the acquiring party true, correct and complete copies of the financial records for such Station for the three (3) fiscal years prior to Closing and, provided management are available, requisite access to management sufficient for the acquiring party and/or its representatives to create audited financial statements for the Station. 9. CONDITIONS TO SALEM'S OBLIGATIONS. Unless waived by Salem in writing, all obligations of Salem under this Agreement are subject to the fulfillment, prior to or at the Closing, of each of the following conditions. 9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties of Cox in this Agreement shall be true and correct in all material respects at and as of the Closing Date, as if made at and as of such date; Cox shall have performed all obligations and complied with all covenants in all material respects required by this Agreement to be performed or complied with by it at or prior to the Closing; and Salem shall have received from Cox a certificate or certificates in such reasonable detail as Salem may reasonably request, signed by an officer of Cox and dated the Closing Date, to the foregoing effect. 9.2 APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all governmental approvals necessary to consummate the transactions contemplated by this Agreement shall have been received. 9.3 NO ADVERSE PROCEEDINGS. No order shall have been issued by, and no suit, action or other proceeding against Cox shall be pending before, any court or governmental agency of competent jurisdiction in which it is sought to restrain or prohibit any of the transactions contemplated by this Agreement or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby; provided, however, that if Cox and Salem mutually determine that any pending suit, action or proceeding seeking to restrain or prohibit the transactions contemplated hereby is unlikely to succeed on the merits, then the pendency of such proceeding shall not prevent the Closing. 9.4 CONSENTS. The consents designated as required consents on Schedule 5.3 shall have been obtained. 9.5 CLOSING DOCUMENTS. Cox and RRC shall have executed and delivered to Salem the documents required to be executed and delivered by it pursuant to SECTION 4. 9.6 FCC CONSENT. The FCC shall have given its consent to the FCC Applications and to the transactions contemplated hereby. 9.7 RESOLUTIONS. Cox shall have delivered to Salem resolutions adopted by the Board of Directors of Cox and RRC authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, certified by the Secretary of such companies as being true and complete as of the Closing Date. -22- 28 9.8 HSR ACT. If legally required, all filings with the FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable waiting periods with respect to such filings (including any extensions thereof) shall have expired or been terminated and no actions shall have been instituted which are pending on the Closing Date by the FTC or DOJ challenging or seeking to enjoin the consummation of this transaction. 10. CONDITIONS TO COX'S OBLIGATIONS. Unless waived by Cox in writing in its sole discretion, all obligations of Cox under this Agreement are subject to the fulfillment, prior to or at the Closing, of each of the following conditions. 10.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties of Salem in this Agreement shall be true and correct in all material respects at and as of the Closing Date, as if made at and as of such date; Salem shall have performed all obligations and complied with all covenants in all material respects required by this Agreement to be performed or complied with by it at or prior to the Closing; and Cox shall have received from Salem a certificate or certificates in such reasonable detail as Cox may reasonably request, signed by an officer of Salem and dated the Closing Date, to the foregoing effect. 10.2 APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all governmental approvals necessary to consummate the transactions contemplated by this Agreement shall have been received. 10.3 NO ADVERSE PROCEEDINGS. No order shall have been issued, and no suit, action or other proceeding against Salem shall be pending before, any court or governmental agency of competent jurisdiction in which it is sought to restrain or prohibit any of the transactions contemplated by this Agreement or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby; provided, however, that if Salem and Cox mutually determine that any pending suit, action or proceeding seeking to restrain or prohibit the transactions contemplated hereby is unlikely to succeed on the merits, then the pendency of such proceeding shall not prevent the Closing. 10.4 CONSENTS. The consents designated as required consents on Schedule 7.3 shall have been obtained. 10.5 CLOSING DOCUMENTS. Salem shall have executed and delivered to Cox the documents required to be executed and delivered by it pursuant to SECTION 4. 10.6 FCC CONSENT. The FCC shall have given its consent to the FCC Applications and the transactions contemplated hereby. 10.7 RESOLUTIONS. Salem shall have delivered to Cox resolutions adopted by the Board of Directors of Salem authorizing and approving the execution and delivery of the transactions contemplated hereby, certified by the Secretary of Salem as being true and complete as of the Closing Date. 10.8 HSR ACT. If legally required, all filings with the FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable waiting periods with respect to such filings (including any extensions thereof) shall have expired or been terminated and no -23- 29 actions shall have been instituted which are pending on the Closing Date by the FTC or DOJ challenging or seeking to enjoin the consummation of this transaction. 10.9 STOCK PURCHASE AGREEMENT. The Stock Purchase Closing shall have occurred. 11. TERMINATION. This Agreement may be terminated by either Cox or Salem, if the terminating party is not then in material default, upon written notice to the other party, upon the occurrence of any of the following: (a) Conditions. If on the Closing Date any of the conditions precedent to the obligations of the terminating party set forth in this Agreement have not been satisfied in all material respects or waived in writing by the terminating party. (b) Judgments. If there shall be in effect on the Closing Date any final judgment, decree, or order that would prevent or make unlawful the Closing of this Agreement. (c) Upset Date. If the Closing shall not have occurred on or before the date that is twelve (12) months after the date of the Stock Purchase Agreement. (d) Breach. If the other party is in material breach of this Agreement and the breach remains uncured notwithstanding the opportunity to cure provisions of SECTION 12.7 hereof. (e) Stock Purchase Agreement. If the Stock Purchase Agreement has been terminated other than by closing of the transactions contemplated thereby. 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION. 12.1 SURVIVAL. All representations and warranties contained in this Agreement shall survive the Closing for a period of twelve (12) months. Any investigations by or on behalf of any party hereto shall not constitute waiver as to enforcement of any representation, warranty, or covenant contained in this Agreement. No notice or information delivered by either party shall affect the other party's right to rely on any representation or warranty made by the party providing such notice or information or relieve such party of any obligations under this Agreement as the result of a breach of any of its representations and warranties. 12.2 INDEMNIFICATION BY COX. Notwithstanding the Closing, Cox hereby agrees, subject to SECTION 12.4(E), to indemnify and hold Salem harmless against and with respect to, and shall reimburse Salem for: (a) Breach. Any and all losses, liabilities, or damages resulting from any untrue representation or breach of warranty, to the extent such representation or warranty survives the Closing, or nonfulfillment of any covenant by Cox contained herein or in any certificate, document, or instrument delivered to Salem hereunder. (b) Obligations. Any and all Excluded Liabilities relating to the Cox Stations or the RRC Station. -24- 30 (c) Ownership. Any and all losses, liabilities (other than liabilities that are prorated pursuant to SECTION 4.2) or damages resulting from (i) the operation or ownership of the Cox Stations and the RRC Station prior to the Closing Date, including any and all liabilities arising under the Cox Licenses, the RRC Licenses, or the Cox Real Property Leases or the RRC Real Property Leases which relate to events occurring prior to the Closing Date, or (ii) the operation or ownership of the Salem Station on and after the Closing Date, including any and all liabilities arising under the Salem Licenses or the Salem Real Property Leases which relate to events occurring after the Closing Date. (d) Legal Matters. Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 12.3 LNDEMNIFICATION BY SALEM. Notwithstanding the Closing, subject to SECTION 12.4(E), Salem hereby agrees to indemnify and hold Cox harmless against and with respect to, and shall reimburse Cox for: (a) Breach. Any and all losses, liabilities, or damages resulting from any untrue representation or breach of warranty, to the extent such representation or warranty survives the Closing, or nonfulfillment of any covenant by Salem contained herein or in any certificate, document, or instrument delivered to Cox hereunder. (b) Obligations. Any and all Excluded Liabilities relating to the Salem Station. (c) Ownership. Any and all losses, liabilities (other than liabilities that are prorated pursuant to SECTION 4.2), or damages resulting from (i) the operation or ownership of the Salem Station prior to the Closing Date, including any and all liabilities arising under the Salem Licenses or the Salem Real Property Leases which relate to events occurring prior to the Closing Date, or (ii) the operation or ownership of the Cox Stations and the RRC Station on and after the Closing Date, including any and all liabilities arising under the Cox Licenses, the RRC Licenses, or the Cox Real Property Leases or the RRC Real Property Leases which relate to events occurring after the Closing Date. (d) Legal Matters. Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 12.4 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall be as follows: (a) Notice. The party seeking indemnification (the "Claimant") shall promptly give notice to the indemnifying party (the "Indemnitor") of any claim, whether solely between the parties or brought by a third party, specifying (i) the factual basis for the claim, and (ii) the amount of the claim. -25- 31 (b) Investigation. With respect to claims between the parties, following receipt of notice from the Claimant of a claim, the Indemnitor shall have thirty (30) business days to make any investigation of the claim that the Indemnitor deems necessary or desirable. For the purposes of this investigation, the Claimant agrees to make available to the Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnitor cannot agree as to the validity and amount of the claim within said 30-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate legal remedy. (c) Control. With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnitor shall have the right at its own expense to participate in or assume control of the defense of the Claim, and the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnitor. If the Indemnitor elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of the claim at its own expense. If the Indemnitor does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained by the Claimant with respect to the claim. (d) Immediate Action. If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) Limitations on Indemnification. (i) Any indemnity payment hereunder shall be limited to the extent of the actual loss or damage suffered by the Claimant and shall be reduced by the amount of any recovery by the Claimant from any third party, including any insurer, and by the amount of any tax benefits received. (ii) No party shall be entitled to indemnification hereunder unless and until the amount for which indemnification is owing exceeds Fifty Thousand Dollars ($50,000) (the "Minimum Loss") in the aggregate for all such matters; provided, however, that if such amount exceeds the Minimum Loss, the Indemnitor shall be liable to the Claimant for an amount equal to fifty percent (50%) of the Minimum Loss and one hundred percent (100%) of any excess over the Minimum Loss, and provided further, that the aggregate amount for which a party shall be entitled to indemnification hereunder for a breach by the other party of its representations, warranties and covenants shall not exceed Twenty Million Dollars ($20,000,000). No party shall be entitled to indemnification hereunder for any claim arising from the breach by the other party of its representations and warranties which is not asserted against the Indemnitor within twelve (12) months after the Closing Date. (iii) The limitations in SECTION 12.4(E)(II) shall not apply to the adjustments and prorations to be made pursuant to SECTION 4.2. 12.5 SPECIFIC PERFORMANCE. The parties recognize that if either party refuses to perform its obligations under this Agreement, monetary damages will not be adequate to compensate the other party for its injury. Each party shall therefore be entitled to elect, in lieu of -26- 32 money damages, to obtain specific performance of the terms of this Agreement. If any action is brought by either Salem or Cox to enforce this Agreement, Cox or Salem, as the case may be, shall waive the defense that there is an adequate remedy at law. Either party shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. 12.6 OPPORTUNITY TO CURE. Neither party shall have the right to terminate this Agreement as a result of the other party's default unless the terminating party shall have given the defaulting party written notice specifying in reasonable detail the nature of the default and shall have afforded the defaulting party thirty (30) days (the "Cure Period") to cure the default or to undertake to cure the default in a commercially reasonable manner during the Cure Period (if it cannot be reasonably cured during the Cure Period) and such party pursues said cure with reasonable diligence after the Cure Period. 12.7 RIGHTS UNDER STOCK PURCHASE AGREEMENT. Nothing in this SECTION 12 shall be deemed to limit or restrict the exercise by Salem of any rights to indemnification it may enjoy under the terms of the Stock Purchase Agreement, as contemplated by SECTIONS 4.1(E) and 8.2 hereof, in accordance with and subject to the terms of the Stock Purchase Agreement. 13. TAXES, COSTS AND EXPENSES. Each party shall bear its own legal, accounting and other professional expenses in connection with the negotiation, preparation and consummation of this Agreement and the transactions contemplated hereby. All other expenses and costs including but not limited to the HSR Act filing fee, FCC application filing fees, title insurance and survey expenses, transfer and use taxes, sales taxes, documentary stamps and recording fees shall be aggregated and paid one-half by Cox and one-half by Salem as part of the adjustments and prorations to be made pursuant to SECTION 4.2. 14. BENEFIT OF AGREEMENT; ASSIGNMENT. No party shall assign its interest under this Agreement, by operation of law or otherwise, without the written consent of the other party, such consent not to be unreasonably withheld, provided, however, that either party without obtaining the other party's consent may assign all or a portion of its rights and/or obligations to a corporation, partnership or other business entity that controls, is controlled by, or is under common control with such party, and further provided that Cox, RRC, or Salem may assign all or a portion of its rights but not its obligations to a qualified intermediary as defined in Treasury Regulation Section 1.1031(k) - - 1(g)(4). Subject to the foregoing, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, successors and assigns. 15. NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement, shall be in writing and shall be deemed to have been duly given upon the hand delivery thereof during business hours, or upon the earlier of receipt or three (3) days after posting by registered mail or certified mail, return receipt requested, or on the next business day following delivery to a reliable or recognized air freight delivery service, in each case addressed as follows. -27- 33 If to Cox or CBI: Robert F. Neil President Cox Radio, Inc. 1400 Lake Hearn Drive, N.E. Atlanta, Georgia 30319 with a copy to: Kevin F. Reed, Esq. Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036-6802 If to Salem: Jonathan Block, Esq. General Counsel Salem Communications Corp. 4880 Santa Rosa Road Suite 300 Camarillo, California 93012 with a copy to: James P. Riley, Esq. Fletcher, Heald & Hildreth, P.L.C. 1300 North 17th Street 11th Floor Arlington, VA 22209 Any party may, with written notice to the other, change the place for which all further notices to such party shall be sent. All costs and expenses for the delivery of notices hereunder shall be borne and paid for by the delivering party. 16. SEVERABILITY. All agreements and covenants herein are severable. In the event that any provision of this Agreement should be held to be unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected thereby. 17. ENTIRE AGREEMENT. Except as herein expressly provided, this Agreement embodies the entire agreement and understanding among Salem and Cox and supersedes all prior agreements and understandings, whether oral or in writing, with respect to the purchase and sale of the Assets. 18. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia, without reference to the conflict of law principles thereof. 19. EXHIBITS. All Exhibits, Schedules, collateral documents or instruments attached to this Agreement or to be provided at the Closing in the form of an exhibit attached to this Agreement, shall be deemed a part of this Agreement and incorporated herein, where applicable, as if fully set forth herein. 20. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which when taken together, shall have the same effect as if the signature on each counterpart were upon the same instrument. -28- 34 21. INTENTIONALLY OMITTED. 22. AMENDMENT; WAIVER. This Agreement (including the Schedules and Exhibits hereto) may not be amended, supplemented or otherwise modified, nor may any party hereto be relieved of any of its liabilities or obligations hereunder, except by a written instrument duly executed by the parties hereto. Any such written instrument entered into in accordance with the provisions of the preceding sentence shall be valid and enforceable notwithstanding the lack of separate legal consideration therefor. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 23. ATTORNEY'S FEES. In the event of a dispute between or among the parties hereto arising out of or related to this Agreement or the interpretation or enforcement of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees, costs and expenses from the other party. 24. DEFINED TERMS. "Act" ss. 5.10 "Agreement" Preamble "Appraisals" ss. 1.7(a) "Appraiser" ss. 1.7(a) "Assets" ss. 1.5(a) "CERCLA" ss. 5.12 "Claimant" ss. 12.4(a) "Closing Date" ss. 4 "Closing" ss. 4 "Code" Recitals "Cox" Preamble "Cox Assets" ss. 1.3 "Cox FCC Application" ss. 8.1 "Cox FCC Licenses" ss. 1.3 "Cox Licenses" ss. 1.3 "Cox Proration Schedule" ss. 4.2(c) "Cox Real Property" ss. 1.2 "Cox Real Property Leases" ss. 1.2 "Cox Records" ss. 1.1 "Cox Stations" Recitals "Cox Tangible Personal Property" ss. 1.1 "Cox's Proration Amount" ss. 4.2(d) "CRI" Preamble "Cure Period" ss. 12.6 "CXR" Preamble "DOJ" ss. 8.11 "Excluded Assets" ss. 1.5(b) "Excluded Liabilities" ss. 1.6 "FCC" Recitals
-29- 35 "FCC Applications" ss. 8.1 "FTC" ss. 8.11 "HSR Act" ss. 8.11 "Indemnitor" ss. 12.4(a) "Liens" ss. 1.1 "Midwestern" Recitals "Minimum Loss" ss. 12.4(e)(ii) "Notice of Disagreement" ss. 4.2(c) "Permitted Liens" ss. 1.1 "RRC" Recitals "RRC Assets" ss. 1.3 "RRC Documents" ss. 6.3 "RRC FCC Application ss. 8.1 "RRC FCC Licenses" ss. 1.3 "RRC Licenses" ss. 1.3 "RRC Real Property" ss. 1.2 "RRC Real Property Leases" ss. 1.2 "RRC Records" ss. 1.1 "RRC Station" Recitals "RRC Tangible Personal Property" ss. 1.1 "Salem" Preamble "Salem Assets" ss. 1.5 "Salem FCC Application" ss. 8.1 "Salem FCC Licenses" ss. 1.4 "Salem Licenses" ss. 1.4 "Salem Proration Schedule" ss. 4.2(d) "Salem Real Property" ss. 1.2 "Salem Real Property Leases" ss. 1.2 "Salem Records" ss. 1.1 "Salem Tangible Personal Property" ss. 1.1 "Salem's Proration Amount" ss. 4.2(c) "SCC" Preamble "Stations" Preamble "STB" Recitals "Stock Purchase Agreement" Recitals "Stock Purchase Closing" Recitals "Stockholders" Recitals "To the best of Salem's knowledge" ss. 7.15 "To the best of Cox's knowledge" ss. 5.15
[Remainder of this page intentionally left blank] -30- 36 IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written. COX RADIO, INC. By: -------------------------------------- Name: Title: CXR HOLDINGS, INC. By: -------------------------------------- Name: Title: SALEM COMMUNICATIONS CORPORATION By: -------------------------------------- Name: Title: SOUTH TEXAS BROADCASTING, INC. By: -------------------------------------- Name: Title: EX-10.6 3 ex10-6.txt LETTER DATED MAY 31, 2000 1 Exhibit 10.6 May 31, 2000 Jonathan Block, Esq. General Counsel Salem Communications Corp. 4880 Santa Rosa Road Suite 300 Camarillo, California 93012 RE: ASSET EXCHANGE AGREEMENT BY AND AMONG COX RADIO, INC., CXR HOLDINGS, INC., SALEM COMMUNICATIONS CORPORATION AND SOUTH TEXAS BROADCASTING, INC., DATED AS OF MAY 31, 2000 (THE "ASSET EXCHANGE AGREEMENT") Dear Mr. Block: This letter is provided in connection with the above-referenced Asset Exchange Agreement. Unless otherwise defined herein, all capitalized terms used herein shall have the same meaning ascribed to such terms in the Asset Exchange Agreement. Pursuant to the exercise of a right of first refusal granted to CRI under an Agreement for Right of First Refusal dated as of April 3, 1995 between WSB Radio, Inc., predecessor-in-interest to CRI, and Ring Radio Company ("RRC"), on June 1, 2000, Cox will enforce diligently the right of first refusal and take all steps reasonably necessary to enforce its rights thereunder including, without limitation, the execution and delivery of a Stock Purchase Agreement (the "Stock Purchase Agreement") among CRI, Midwestern Broadcasting Company, Inc. ("Midwestern"), and the stockholders of Midwestern (the "Stockholders") pursuant to which CRI will agree to acquire all of the issued and outstanding capital stock of Midwestern. Midwestern is the sole stockholder of RRC. a. Stock Purchase Agreement. Section 8.7 of the Stock Purchase Agreement provides that CRI shall not be obligated to close the transactions under the Stock Purchase Agreement unless the Stockholders shall have terminated the Station Affiliation Agreement (as defined in the Stock Purchase Agreement) with OURBUS without any continuing liability or obligations on the part of RRC or Midwestern under such agreement. Notwithstanding the terms of Section 8.7 of the Stock Purchase Agreement or any provision in the Asset Exchange Agreement to the contrary, CRI and Salem hereby agree that upon Salem's reasonable request, CRI will waive the Stockholders' compliance with the requirements of Section 8.7 of the Stock Purchase Agreement. 2 Jonathan Block, Esq. May 31, 2000 Page 2 b. Press Release. Salem and Cox agree that neither party shall issue a press release concerning the transactions contemplated by the Stock Purchase Agreement or the Asset Exchange Agreement prior to 8:00 a.m., Eastern Daylight Time, on Friday, June 2, 2000. c. Programming Agreements. Salem and Cox agree that with respect to the Salem Station, no later than the date on which the FCC Applications are filed, Salem shall provide notice of termination to the appropriate third parties under those agreements for programming on the Salem Station's affiliate station, KENR(AM), that require prior written notice of termination. In the event that the Closing occurs prior to the expiration of said notice period, Cox and Salem shall reasonably cooperate to complete the airing of such programming on the Salem Station. After the Closing, Cox and Salem also shall reasonably cooperate to transition the Salem Station's programming to KENR(AM), which, at this time, Salem anticipates will take no less than two weeks. d. FCC Licenses. Contemporaneously with the execution of the Asset Exchange Agreement, Salem learned that the antenna monitors for the Cox Stations may have been replaced. In connection therewith, and to the extent required by the FCC's rules and regulations, Cox shall conduct a proof of performance with respect to the Cox Stations prior to the Closing. e. Environmental Assessment. Within ten (10) business days after the execution of the Asset Exchange Agreement, Cox shall provide Salem and Salem shall provide Cox with the originals or readable copies of any environmental assessments with respect to such party's Stations that are in such party's possession or control. Prior to Closing, Cox may obtain, at its option and expense, an assessment of the Salem Real Property by an environmental engineer selected by Cox, and Salem may obtain, at its option and expense, an assessment of the Cox Real Property and the RRC Real Property by an engineer selected by Salem (in either case, the "Environmental Assessment"). Each Environmental Assessment shall be subject to the confidentiality provisions of the Asset Exchange Agreement. If, after appropriate inquiry into the previous ownership of and uses of the Cox Real Property, the RRC Real Property or the Salem Real Property, as the case may be, consistent with good commercial or customary practice, a party's engineer concludes, as set forth in the Environmental Assessment, that environmental conditions exist on, under or affecting such properties that would constitute a material violation or breach of the conveying party's representations and warranties contained in the Asset Exchange Agreement then notwithstanding any other provisions of the Asset Exchange Agreement to the contrary, but subject to the following sentence, the party conveying such real property shall at its sole cost and expense (up to a maximum amount of Fifty Thousand Dollars ($50,000)) remove, correct or remedy any condition or conditions which constitute a material violation or breach of such party's representations and warranties prior to the Closing Date and provide to the acquiring party at Closing a certificate from an environmental abatement firm that such removal, correction or remedy has been completed so that the party's representations and warranties with respect to environmental matters will be true and correct in all material respects as of the Closing Date. In the event the cost of removal, correction or remedy of the environmental conditions exceeds Fifty Thousand Dollars ($50,000), the acquiring party may elect to proceed with the Closing but shall not be obligated to close under any circumstances which would require the acquiring party to assume ownership of a Station under conditions 3 Jonathan Block, Esq. May 31, 2000 Page 3 where there exist any material uncured violations of the conveying party's warranties, representations or covenants with respect to environmental matters. Please indicate your agreement to the foregoing by signing in the space provided below. This letter agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. [SIGNATURES FOLLOW ON NEXT PAGE] 4 Jonathan Block, Esq. May 31, 2000 Page 4 Very truly yours, COX RADIO, INC. By: ----------------------------------- Maritza C. Pichon Chief Financial Officer CXR HOLDINGS, INC. By: ----------------------------------- Richard F. Klumpp Assistant Secretary ACCEPTED AND AGREED: SALEM COMMUNICATIONS CORPORATION SOUTH TEXAS BROADCASTING, INC. By: ----------------------------- Name: Title: cc: James P. Riley, Esq. Kevin F. Reed, Esq. EX-10.7 4 ex10-7.txt LETTER DATED JUNE 7, 2000 1 Exhibit-10.7 June 7, 2000 Jonathan Block, Esq. General Counsel Salem Communications Corp. 4880 Santa Rosa Road Suite 300 Camarillo, California 93012 RE: ASSET EXCHANGE AGREEMENT BY AND AMONG COX RADIO, INC., CXR HOLDINGS, INC., SALEM COMMUNICATIONS CORPORATION AND SOUTH TEXAS BROADCASTING, INC., DATED AS OF MAY 31, 2000, AS AMENDED (THE "ASSET EXCHANGE AGREEMENT") Dear Mr. Block: This letter is provided in connection with the above-referenced Asset Exchange Agreement. Unless otherwise defined herein, all capitalized terms used herein shall have the same meaning ascribed to such terms in the Asset Exchange Agreement. The parties hereby agree to amend the Asset Exchange Agreement as follows: 1. REPRESENTATIONS AND WARRANTIES OF COX. Section 5 of the Asset Exchange Agreement is hereby amended to include the following new Section 5.16: 5.16 QUALIFICATION. Cox is qualified under the Act and the rules, regulations and policies of the FCC to control the Salem FCC Licenses. 2. REPRESENTATIONS AND WARRANTIES OF SALEM. Section 7 of the Asset Exchange Agreement is hereby amended to include the following new Section 7.16: 7.16 FCC QUALIFICATION. Salem is qualified under the Act and the rules, regulations and policies of the FCC to control the Cox FCC Licenses and the RRC FCC Licenses. Please indicate your agreement to the foregoing by signing in the space provided below. 2 Jonathan Block, Esq. June 7, 2000 Page 2 This letter agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. Very truly yours, COX RADIO, INC. By: ----------------------------- Maritza C. Pichon Chief Financial Officer CXR HOLDINGS, INC. By: ----------------------------- Richard F. Klumpp Assistant Secretary ACCEPTED AND AGREED: SALEM COMMUNICATIONS CORPORATION SOUTH TEXAS BROADCASTING, INC. By: ------------------------------------- Name: Title: cc: James P. Riley, Esq. Kevin F. Reed, Esq. EX-10.8 5 ex10-8.txt STOCK PURCHASE AGREEMENT 1 Exhibit-10.8 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of June 7, 2000 (the "Effective Date"), by and among Midwestern Broadcasting Company, Inc., an Ohio corporation (the "Company"), the stockholders of the Company as listed on the signature page(s) of this Agreement (collectively, "Seller"), and Cox Radio, Inc., a Delaware corporation ("Buyer"). Recitals The Company owns one hundred (100) percent of the issued and outstanding capital stock of Ring Radio Company ("Ring"), a Georgia corporation, which, along with the Company, owns and operates pursuant to certain licenses, permits and authorizations (as further defined below, the "FCC Authorizations") issued by the Federal Communications Commission (the "FCC") WALR(FM), Athens, Georgia (a radio broadcasting station which is owned by Ring) (referred to herein as a "Station"). Seller owns all of the issued and outstanding shares of capital stock of the Company, and Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Shares, subject to the terms and conditions of this Agreement. Immediately after the effective time of the Closing, Buyer intends to cause Ring to transfer to Salem Communications Corporation and its wholly-owned subsidiary, South Texas Broadcasting, Inc. (collectively, "Salem") certain assets and properties, including the FCC Authorizations, used in the operation of the Station. Agreement NOW, THEREFORE, taking the foregoing into account, and in consideration of the mutual covenants and agreements set forth herein, the parties, intending to be legally bound, hereby agree as follows: ARTICLE 1: DEFINITIONS As used herein, the following items shall have the following meaning unless the context requires otherwise: "Adjustment Date" means the close of business on the day immediately preceding the Closing Date. "Affiliate" of any particular person means any other person controlling, controlled by, or under common control with, such particular person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a person whether through the ownership of voting securities, contract or otherwise. "Agreement" means this Stock Purchase Agreement. 2 "Assets" means all right, title and interest of Corporations in all properties, assets, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description, wherever located, including their business and goodwill, including, without limitation, the FCC Authorizations, Tangible Personal Property, Real Property, Time Sales Agreements, Station Contracts, Intangible Property, Programming and Copyrights, Files and Records and Websites, except for the Excluded Assets. "Assumed Obligations" means (i) the Closing Company Liabilities; and (ii) the obligations arising during and attributable to any period after the Closing under the Station Contracts (other than those required by this Agreement to be terminated at or prior to Closing); excluding, however, (A) any obligations or liabilities under any Station Contracts resulting from (1) the failure to obtain any consent required under any Station Contract in connection with the transactions contemplated by the Agreement and (2) any default under any Station Contract prior to or as a result of the Closing, (B) any oral agreements which may exist with the General Sales Manager and the National Sales Manager of the Station regarding promotion to General Manager and General Sales Manager, respectively, of the Station, and (C) the obligation to pay or provide any sales severance or other stay bonus, payment or benefit under any employment agreement conditioned upon or payable in connection with or as a result of the Closing, or calculated with reference to the financial terms of the transaction contemplated by this Agreement. "Buyer Indemnitees" has the meaning set forth in Section 10.2(a) of this Agreement. "Cap" has the meaning set forth in Section 10.2(a) of this Agreement. "Closing" means the closing of the transaction contemplated hereby. "Closing Accounts Receivable" means the accounts receivable of the Company and Ring as of the Adjustment Date, as determined on a consolidated basis in accordance with GAAP, that have arisen from the operation of the Station in the ordinary course consistent with past practice, excluding any non-cash receivables under barter agreements. "Closing Adjusted Net Worth" means the Closing Current Assets as of the Adjustment Date minus the Closing Company Liabilities as of the Adjustment Date. "Closing Current Assets" means the sum of (i) the Closing Accounts Receivable, plus (ii) the prepaid expenses of Company and Ring as of the Adjustment Date (but excluding any such prepaid expenses constituting a part of the Excluded Assets), plus (iii) the financial value of the goods and services to be received after the Closing Date under barter agreements, but excluding the portion, if any, of such value under barter agreements constituting a part of the Excluded Assets and excluding the remaining portion of such value, if any, that exceeds the Trade Liability (as defined in the definition of "Closing Company Liabilities"), all as determined for the Company and Ring on a consolidated basis in accordance with GAAP; provided, however, that the aggregate amount of prepaid expenses included in the Closing Current Assets shall in no event exceed $225,000. "Closing Date" means the calendar date on which the Closing occurs. 2 3 "Closing Company Liabilities" means all Indebtedness and other items (other than Excluded Liabilities) that would be included as liabilities on a consolidated balance sheet of the Company and Ring as of the Adjustment Date prepared in accordance with GAAP, including without limitation (i) the financial value of all advertising to be provided after the Closing Date under barter agreements (the "Trade Liability") and (ii) all indebtedness for borrowed money and all severance or change of control payments which either the Company or Ring is obligated to make as a result of the transactions contemplated by this Agreement. "Code" means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified. "Communications Act" means the Communications Act of 1934. "Company" means Midwestern Broadcasting Company, Inc., an Ohio corporation. "Contaminant" has the meaning set forth in Section 3.17 of this Agreement. "Contest Notice" has the meaning set forth in Section 10.5(b) of this Agreement. "Corporations" means Company and/or Ring. "Earnest Money" means as of a given date, the amount deposited as of such date with the Escrow Agent under the Escrow Agreement, together with the interest and other earnings thereon as of such date. "Effective Date" shall mean the date set forth in the preamble of this Agreement. "ERISA" means the Employee Retirement Income Security act of 1974, as amended. "Escrow Agent" means Wachovia Bank, N.A. "Escrow Agreement" means the Escrow Agreement, in the form of Exhibit 1 attached hereto and dated as of the date hereof, by and among Seller, Buyer and the Escrow Agent relating to the deposit, holding, investment and disbursement of the Earnest Money. "Excluded Assets" means (i) all employee benefit plans described in Section 3.15, (ii) all assets of the Company and Ring which are not primarily used in and do not primarily relate to the operation of the Station, including without limitation those assets identified on Schedule 1, and (iii) cash and cash equivalents. "Excluded Liabilities" means all liabilities and obligations of the Company and Ring as of the Adjustment Date (whether secured or unsecured, absolute, accrued, contingent, known or unknown, due or to become due, and regardless of whether required by GAAP to be reflected in a balance sheet or disclosed in the related notes), other than the Assumed Obligations. "FCC" means the Federal Communications Commission. 3 4 "FCC Application" has the meaning set forth in Section 2.8(a) of this Agreement. "FCC Authorizations" means all of the FCC authorizations issued to either of the Corporations, including without limitation all rights in and to the Station call letters and any variations thereof, and all of those FCC authorizations listed and described on Schedule 3.9 attached hereto, and all applications therefor, together with any renewals or extensions thereof and additions thereto. "FCC Consent" has the meaning set forth in Section 2.8(b) of this Agreement. "Files and Records" means all FCC logs and all files and other records of the Corporations which relate to the Station (other than duplicate copies of such files ("Duplicate Records")), including without limitation all schematics, blueprints, engineering data, customer lists, reports, specifications, projections, statistics, promotional graphics, original art work, mats, plates, negatives and other advertising, marketing or related materials, and all other technical and financial information. "Final Action" means an action of the FCC that has not been reversed, stayed, enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua sponte action of the FCC with comparable effect is pending; and as to which the normally applicable time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte action of the FCC has expired. "Final Determination" means the final resolution of liability for any Tax for a Taxable Period, including any related interest or penalties, that is final and nonappealable, including by reason of the expiration of the applicable statute of limitations. "Financial Statements" has the meaning set forth in Section 3.6 of this Agreement. "GAAP" means generally accepted accounting principles as of the date hereof consistently applied throughout the specified period and in prior periods. "Holdback" has the meaning set forth in Section 2.5 of this Agreement. "Holdback Escrow Agent" has the meaning set forth in Section 2.5 of this Agreement. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976. "Indebtedness" means all indebtedness, liabilities and obligations required to be accrued on a balance sheet prepared in accordance with GAAP. "Indemnifying Party" has the meaning set forth in Section 10.2(c) of this Agreement. "Independent Accounting Firm" means KPMG Peat Marwick. 4 5 "Intangible Property" means all interests of the Corporations as of the date of this Agreement in all trademarks, trade names, service marks, franchises, patents, jingles, slogans, logotypes and other intangible rights, including without limitation all right, title and interest in and to the marks consisting of the Station call letters and any variations thereof, and those acquired by the Corporations between the date hereof and the Closing Date, but in each case excluding any such items constituting a part of the Excluded Assets. "Knowledge", including the phrases "to the knowledge of" or "to the best knowledge of" any person and any similar phrase means, with respect to the Seller or the Corporations, the knowledge of the following individuals: Lewis W. Dickey, Sr., Lewis Dickey, Jr., David Dickey, and the General Manager, Sales Manager and Chief Engineer of the Station. "Legal Expenses" has the meaning set forth in Section 10.7 of this Agreement. "Liens" has the meaning set forth in Section 2.1 of this Agreement. "Material Adverse Effect" shall mean any material adverse effect on the assets, business, results of operation, operations or financial condition of the Corporations, taken as a whole, but excluding any material adverse effect on the Excluded Assets or the business, results of operation or financial condition of the Corporations relating solely to the Excluded Assets; provided that a material adverse effect on the financial condition of the Corporations relating to the Excluded Assets will constitute a Material Adverse Effect unless Seller and Buyer agree in writing prior to Closing on security satisfactory to Buyer, in addition to the Holdback, for performance of any Seller's indemnity obligations that may arise relating to such material adverse effect on the financial condition of the Corporations. "Material Station Contracts" means all Station Contracts which involve the payment or receipt in excess of $10,000 per year. "Minimum Loss" has the meaning set forth in Section 10.2(a) of this Agreement. "Owned Real Property" has the meaning set forth in Section 3.11 of this Agreement. "Operating Expense Amount" means the operating expenses of the Station for the 90-day period preceding the Closing Date determined in accordance with GAAP. "Permitted Encumbrances" means: (i) inchoate or other liens for real estate taxes not yet due and payable (all such taxes for the periods prior to Closing being Closing Company Liabilities); (ii) liens securing only one or more of the Closing Company Liabilities; and (iii) matters of public record which do not adversely affect the use of any of the Real Property by the Corporations in any material respect. "Programming and Copyrights" means all interests of Corporations as of the date of this Agreement in all programs and programming materials and elements of whatever form or nature, whether recorded on tape or any other substance or intended for live performance, and whether completed or in production, and all related common-law and statutory copyrights, 5 6 together with all such programs, materials, elements and copyrights acquired by Corporations between the date hereof and the Closing Date. "Purchase Price" has the meaning set forth in Section 2.2 of this Agreement. "Real Property" means all interests of Corporations as of the date of this Agreement in all land, leaseholds, licenses, rights-of-way and other interests of every kind and description in and to all of the real property and buildings and other improvements thereon (other than the Excluded Assets), including without limitation those listed and described on Schedule 3.12 attached hereto, and any additions and improvements thereto between the date of this Agreement and the Closing Date. "Real Property Leases" has the meaning set forth in Section 3.11 of this Agreement. "Regulatory Clearances" shall mean: (i) the FCC Consent; and (ii) expiration or early termination of the waiting period under the HSR Act. "Release" has the meaning set forth in Section 3.17 of this Agreement. "Ring" means Ring Radio Company, a Georgia corporation, which is a wholly-owned subsidiary of the Company. "Salem" has the meaning set forth in the recitals of this Agreement. "Seller" means the stockholders of the Company as listed on the signature page of this Agreement. "Seller Indemnitees" has the meaning set forth in Section 10.2(b) of this Agreement. "Shares" has the meaning set forth in Section 3.2.1 of this Agreement. "Station" means WALR(FM). "Station Contracts" means all contracts, agreements and other commitments (other than those constituting Excluded Assets) to which Company or Ring is a party or by which Company, Ring or their respective property is bound or encumbered. "Tangible Personal Property" means all interests of Corporations as of the date of this Agreement in all equipment, electrical devices, antennas, cables, vehicles, furniture, fixtures, towers, office materials and supplies, hardware, tools, spare parts, and other tangible personal property of every kind and description, and any additions and improvements thereto between the date of this Agreement and the Closing Date, but in any case excluding, any tangible personal property constituting a part of the Excluded Assets. "Target Closing Adjusted Net Worth" means the greater of (i) $2,000,000 or (ii) the Operating Expense Amount. 6 7 "Tax" means all forms of taxation, whenever created or imposed, whether imposed by a local, municipal, state, foreign, federal or other governmental body or authority, and, without limiting the generality of the foregoing, shall include income, gross receipts, ad valorem, excise, value-added, sales, use, transfer, franchise, license, stamp, occupation, withholding, employment, payroll, property or environmental tax or premium, together with any interest, penalty, addition to tax or additional amount imposed by any governmental body or authority responsible for the imposition of any such tax. "Tax Benefit" means, with respect to any Taxable Period, the amount of the actual reduction in an indemnified party's liability for Taxes payable for the Taxable Period as a result of the payment or accrual of any Deficiency indemnifiable under this Agreement. The amount, if any, of a Tax Benefit with respect to a Taxable Period arising from the payment or accrual of any Deficiency indemnifiable under this Agreement shall be determined after first reducing Taxes for the Taxable Period by taking into account all other applicable credits and items of loss, deduction and similar items. "Tax Cost" means, with respect to any Taxable Period, the amount of the actual increase in an indemnified party's liability for Taxes payable for the Taxable Period (including as a result of any decrease in a Tax refund or credit) as a result of the accrual or receipt of payment for any Deficiency for which the indemnified party is entitled to indemnification under this Agreement. "Taxable Period" means any taxable year or any other period that is treated as a taxable year with respect to which any Tax may be imposed under any applicable statute, rule or regulation. "Websites" means all interests of Corporations in any internet domain leases and domain names (but excluding any such leases or names constituting a part of the Excluded Assets), the unrestricted right to the use of HTML content located and publicly accessible from those domain names, and the "visitor" email data base for those sites. ARTICLE 2: SALE AND PURCHASE 2.1. Sale of Shares. Upon the terms and subject to the conditions set forth in this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Shares free and clear of any mortgages, liens, deeds of trust, security interest, pledges, restrictions, prior assignments, choses, claims, defects in tile and encumbrances of any kind of type whatsoever ("Liens"). Such sale, transfer, conveyance, and delivery shall be evidenced by the delivery to Buyer of duly endorsed blank share certificates or share certificates accompanied by duly executed stock powers. 2.2. Consideration. The purchase price to be paid by Buyer to Seller for the Shares (the "Purchase Price") shall be an aggregate cash amount equal to Two Hundred Eighty Million Dollars ($280,000,000) (which amount is subject to adjustment pursuant to Section 2.4). 7 8 2.3. Payment. Buyer in full payment for the Shares shall pay to Seller at Closing a cash amount equal to (i) the Purchase Price (as preliminarily adjusted pursuant to Section 2.4); less (ii) the amount of the Earnest Money; and less (iii) the amount of the Holdback. The payment shall be made in immediately available funds pursuant to written wire transfer instructions of Seller to be delivered by Seller to Buyer no later than three (3) business days prior to Closing. Also, at Closing, an amount equal to the Earnest Money shall be paid by the Escrow Agent's disbursement of the Earnest Money to Seller by wire transfer of immediately available funds pursuant to joint written instructions from Seller and Buyer. 2.4. Purchase Price Adjustment. 2.4.1. The Purchase Price shall be adjusted as follows: (a) The Purchase Price shall be reduced by the amount, if any, by which the Closing Adjusted Net Worth is less than the Target Closing Adjusted Net Worth; or (b) The Purchase Price shall be increased by the amount, if any, by which the Closing Adjusted Net Worth is greater than the Target Closing Adjusted Net Worth. (c) The adjustment will first be made on a preliminary basis for purposes of Closing in accordance with Section 2.4.2. A final adjustment to the Purchase Price will be made after the Closing based upon the final determination of the Closing Adjusted Net Worth and Target Closing Adjusted Net Worth as provided in Section 2.4.3. 2.4.2. Three (3) business days prior to the Closing Date, Seller shall provide Buyer with a reasonably detailed statement (the "Preliminary Adjustment Report") setting forth Seller's reasonable and good faith estimate of the Closing Current Assets, the Closing Company Liabilities, the Operating Expense Amount, the Target Closing Adjusted Net Worth, and the Closing Adjusted Net Worth. The Purchase Price payable on the Closing Date shall be adjusted in accordance with Section 2.4.1 based on the Preliminary Adjustment Report. 2.4.3. After the Closing Date, Buyer shall make its determination of the items set forth in the Preliminary Adjustment Report and deliver a written report of such determination to Seller within ninety (90) days after the Closing Date. The items shown in Buyer's report shall be final and binding on the parties for purposes of determining the adjusted Purchase Price under this Section 2.4.3 unless within thirty (30) business days after receiving such report, Seller objects to such determination by giving Buyer written notice setting forth its determination and the basis for its determination. In the event of such an objection and the failure of the parties within twenty (20) business days thereafter to reach agreement, the Independent Accounting Firm shall make a final determination of the adjusted Purchase Price based on its determination of the items set forth in the Preliminary Adjustment Report. Seller and Buyer shall each inform the Independent Accounting Firm in writing of their respective determinations of such items and the adjusted Purchase Price, and shall cooperate as reasonably requested by the Independent Accounting Firm in its determination of all such items. The Independent Accounting Firm shall 8 9 be instructed to complete its determination of the adjusted Purchase Price within thirty (30) days from the date of its engagement and upon completion to inform the parties in writing of its determination, the basis for its determination and whether Seller's or Buyer's written statement of the adjusted Purchase Price is closer to its own determination. The determination by the Independent Accounting Firm shall be final and binding upon the parties for purposes of determining the adjusted Purchase Price under this Section 2.4.3. The fees of the Independent Accounting Firm shall be paid (A) by Buyer if Seller's determination is closer to the Independent Accounting Firm's determination, (B) by Seller if Buyer's determination is closer to the Independent Accounting Firm's determination, and (C) otherwise 50% by Seller and 50% by Buyer. In the event the adjusted Purchase Price as finally determined under this Section 2.4.3 exceeds or is less than the preliminary determination of the adjusted Purchase Price under Section 2.4.2, Seller or Buyer, as appropriate, shall pay the other the amount of such excess or deficiency within ten (10) business days after the final determination of the adjusted Purchase Price. 2.5. Holdback. At Closing, Buyer shall deposit $10,000,000 in cash (the "Holdback") in escrow with Wachovia Bank, N.A. (the "Holdback Escrow Agent"), pursuant to the Holdback Escrow Agreement as of the Closing Date (in the form attached hereto as Exhibit 2.5) among Buyer and Seller and the Holdback Escrow Agent. Such funds shall be applied as follows: (i) if after Closing a Deficiency (as defined in Section 10.3(a)) is established pursuant to Article 10, then Buyer shall be entitled to recover part or all of the Holdback reflecting the amount of such Deficiency; (ii) on the date twelve months after Closing, Buyer shall deliver (or shall in writing instruct the Holdback Escrow Agent to deliver) to Seller the Holdback balance less any such Deficiency amounts retained by Buyer and less the amount of any unresolved indemnification claims made by Buyer under Article 10; and (iii) thereafter any Holdback balance reserved for unresolved claims shall be retained by Buyer or paid to Seller as appropriate upon resolution thereof in accordance with procedures set forth in Section 10.4. 2.6. Earnest Money. (a) Concurrently with the execution of this Agreement, Buyer has deposited with the Escrow Agent in immediately available funds the sum of Seventeen Million Dollars ($17,000,000). (b) The Escrow Agent shall hold the Earnest Money under the terms of the Escrow Agreement in trust for the benefit of Seller and Buyer. (c) If Closing does not occur, the Earnest Money shall be delivered to Seller or returned to Buyer in accordance with Section 11.1.2, and if Closing does occur, the Earnest Money shall be applied at Closing as provided in Section 2.3. 2.7. Closing. The Closing shall take place at a date and time designated by Seller within 10 days after the Regulatory Clearances have been granted. 9 10 2.8. FCC Application. (a) As soon as possible (but in no event later than ten business days after the date of this Agreement) Seller shall cause Ring and Buyer shall cause Salem to file an application with the FCC (the "FCC Application") requesting the FCC's written consent to the assignment of the FCC Authorizations from Ring to Salem immediately following the Closing. Seller and Buyer shall diligently take all steps, and Buyer shall cause Salem to diligently take all steps that are necessary, proper or desirable to expedite the prosecution of the FCC Application to obtain the FCC Consent without any conditions materially adverse to Ring or Salem or the Station and to cause the FCC Consent to become a Final Action without any such conditions. Seller shall promptly provide Buyer with a copy of any pleading, order or other document served on Seller or Ring relating to the FCC Application, shall furnish all information required by the FCC, and shall be represented at all meetings or hearings scheduled to consider the FCC Application. Buyer shall promptly provide Seller with a copy of any pleading, order or other document served on it or Salem relating to the FCC Application and shall furnish and shall cause Salem to furnish all information required by the FCC. Buyer and Salem shall be represented at all meetings or hearings scheduled to consider the FCC Application. (b) The FCC staff's initial grant of consent to the FCC Application is referred to herein as the "FCC Consent." 2.9. Hart-Scott-Rodino. As soon as possible (but in no event later than ten (10) days after the Effective Date), Buyer and Seller shall prepare and file with the Federal Trade Commission and the United States Department of Justice any documents that may be necessary to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") (including a request for early termination of the waiting period thereunder) in respect of the purchase and sale of the Shares and shall thereafter promptly furnish all materials thereafter requested by such agencies. ARTICLE 3: REPRESENTATIONS AND WARRANTIES RELATING TO THE CORPORATIONS To induce Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Buyer as follows: 3.1. Organization. Each of the Company and Ring is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization (as first set forth above), and is qualified to do business and is in good standing in each state or other jurisdiction in which its assets are located or in which its business or operations as presently conducted make such qualification necessary and where the absence of such qualification would have a Material Adverse Effect. Each of Company and Ring has the requisite power and authority to own and operate its assets, to carry on its business as now conducted by it, and to execute and deliver this Agreement and all other documents in connection with the transactions contemplated hereby (the "Other Documents"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. True and complete copies of the Company's Charter and the Company's By-Laws and Ring's Charter and Ring's By-Laws, each as amended to date and currently in full force and effect, have been made available to Buyer. All corporate minutes of the Company and Ring and the stock records of the Company 10 11 and Ring have been made available to Buyer. Such corporate minutes do not fail to disclose any action or omission to act by the shareholders of the Company or Ring, by the board of directors of the Company or Ring, or by any committee of either such board which is material to the assets, business, results of operation, operations or financial condition of the Station or the Corporations. 3.2. Capitalization. 3.2.1. The entire authorized capital stock of Company consists of 7,000 shares of Series A common stock, of which an aggregate of 6,754 shares are issued and outstanding and 63,000 shares of Series B common stock of which 60,786 shares are issued and outstanding (such issued and outstanding shares of Series A and Series B common stock herein referred to collectively as the "Shares"). All of the Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record and beneficially by the Seller free and clear of any Liens. The Shares constitute all of the outstanding shares of capital stock of Company. 6,692 shares of Class A common stock and 60,228 shares of Class B common stock are held of record and beneficially by Lewis W. Dickey, Sr., free and clear of any Liens, 42 shares of Class A common stock and 378 shares of Class B common stock are held of record and beneficially by Patricia A. Dickey free and clear of any Liens, and 20 shares of Class A Common Stock and 180 shares of Class B Common Stock are held of record and beneficially by Patricia L. Dickey, free and clear of any Liens. No shares of the Company are held in the treasury of the Company. There are no outstanding subscriptions, options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements of any character providing for the purchase, issuance or sale of any shares of the Company, and neither Seller nor Company has granted directly, or indirectly through any affiliate or otherwise, any such rights. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Company. There are no stockholder agreements, voting trusts, proxies, or other agreements or understandings with respect to the voting or transfer of any of the Shares. 3.2.2. The entire authorized capital stock of Ring consists of 100,000 shares of common stock, par value $.01 per share, of which only 8,000 shares are issued and outstanding (the "Ring Shares"), and 10,000 shares of preferred stock, none of which shares of preferred stock are issued or outstanding. All of the Ring Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record and beneficially by the Company free and clear of any Liens, other than the lien in favor of Key Bank securing indebtedness which Seller shall cause the Corporations to pay in full prior to or at Closing. No shares of Ring are held in the treasury of Ring. There are no outstanding subscriptions, options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements of any character providing for the purchase, issuance or sale of any shares of Ring, and neither Company nor Ring has granted directly, or indirectly through any affiliate or otherwise, any such rights. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to Ring. There are no stockholder agreements, voting trusts, proxies, or other agreements or understandings with respect to the voting or transfer of any of the Ring Shares. 3.3. Subsidiaries and Investments. Neither the Company nor Ring is a member of (nor is any part of its business conducted through) any partnership, nor is the Company a participant in any joint venture or similar arrangement. The Company does not own (except for its shares of 11 12 Ring), and Ring does not own, directly or indirectly, any capital stock or other equity or ownership or proprietary interest in any corporation, partnership, association, trust, joint venture or other entity. 3.4. Authority. The execution, delivery and performance of this Agreement have been duly authorized and approved by all necessary action of Company and Ring and do not require any further authorization or consent of Company or Ring. This Agreement and the Other Documents, when executed and delivered by Company and the other parties thereto, will be legal, valid and binding agreements of Company enforceable against the Company in accordance with their respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.5. No Conflicts. Neither the execution and delivery by Seller or Company of this Agreement or the Other Documents nor the consummation by Seller or Company of the purchase and sale of the Shares provided for herein (exclusive, for the purposes of this representation, of the transactions provided for in the transfer proposed by Buyer whereby it will cause Ring to transfer certain of Ring's assets and properties to Salem and all transactions related thereto, including without limitation, Buyer's retention of the intellectual property and programming of the Station and use of same by WJZF-FM), nor compliance by Seller or Company with or fulfillment by Seller or Company of the terms, conditions and provisions hereof or thereof will: (a) contravene or conflict with the Charter, By-Laws or other organizational documents of the Company or Ring; (b) contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company, Ring or Seller; (c) constitute a default or breach, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Company, Ring or Seller, or give rise to the loss of any benefit to which the Company, Ring or Seller is entitled, under any Material Station Contract; (d) result in the creation or imposition of any Lien upon any assets of the Company, Ring or Seller; or require the approval, consent, authorization or act of, or the making by Seller, Company or Ring of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except for such of the foregoing as are necessary pursuant to the HSR Act and the Communications Act. 3.6. Financial Statements; Liabilities. Seller has furnished Buyer with (i) audited financial statements of Ring for calendar years 1998 and 1999 (including a balance sheet as of the end of such year and an income statement for each such year), (ii) unaudited interim financial statements of Ring for the three (3) month period ended March 31, 2000 (the "Date of Interim Financial Statements"), including a balance sheet as of the end of each such month and income statements for each such month and the portion of the current year ended as of the end of each such month, (iii) unaudited financial statements of Company for calendar years 1998 and 1999 (including balance sheets as of the end of each such year and an income statement for each such year), and (iv) unaudited interim financial statements of Midwestern for the three (3) months month period ended March 31, 2000 [last month ending not less than forty-five (45) days prior to execution of this Agreement], including a balance sheet as of the end of each such month and 12 13 income statements for each such month and the portion of the current year ended as of the end of each such month. The financial statements described in the preceding sentence shall be collectively referred to as "Financial Statements". The Financial Statements: (x) have been prepared in all material respects in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved and as compared with prior periods; and (y) fairly present in all material respects the financial position, income, expenses, assets, liabilities, and the results of operations of Company and Ring and of the Station on a consolidated basis as of the dates and for the periods indicated. Neither the Company nor Ring is in default under any loan or other indebtedness, and except as otherwise disclosed in Schedule 3.6, all such loans and indebtedness may be repaid and discharged in whole or in part at any time without premium, penalty or other prepayment charge. Neither the Company nor Ring has any debt, liability or obligation (whether secured or unsecured, absolute, accrued, contingent, known or unknown, due or to become due, and required by generally accepted accounting principles to be reflected in a balance sheet or disclosed in the related notes), except (i) liabilities to the extent accrued or reserved against in the Financial Statements, (ii) current liabilities incurred in the ordinary course of operating the Station, all of which will be satisfied in full prior to Closing or included as Closing Company Liabilities, (iii) Excluded Liabilities, and (iv) the obligations of the Company or Ring (other than for breach) under Station Contracts. 3.7. Tax Matters. Except as disclosed in Schedule 3.7, (a) the Company and Ring (i) have timely filed (or caused to be filed) all tax returns required to be filed by the Company or Ring prior to the date of this Agreement, and all such tax returns are correct and complete in all material respects, and (ii) have paid or caused to be paid all taxes shown to be due and payable on such tax returns, (b) no federal, state, local or foreign audits or other administrative or court proceedings are presently pending or, to Seller's Knowledge, threatened with regard to any tax returns or taxes of the Company or Ring and (c) there are no Liens for taxes on the assets of the Company or Ring, except for taxes which are not yet due and payable, and there is no pending or, to Seller's Knowledge, threatened tax audit, examination, refund litigation or adjustment in controversy. Neither the Company nor Ring is a party to any tax sharing agreement. Neither the Company nor Ring has filed any consent of the type described under Section 341(f) of the Code or made any election or deemed election pursuant to Section 338 of the Code. Neither the Company nor Ring has extended or waived any statute of limitation with respect to any tax. The charges, accruals and reserves with respect to taxes on the books of the Corporations are adequate (determined in accordance with GAAP). To the Knowledge of Seller, there exists no proposed tax assessment against the Company except as disclosed in the Financial Statements. Seller has furnished Buyer with accurate and complete copies of the Corporations' state and federal tax returns for the ended tax years 1997 and 1998 and agrees to provide Buyer with such returns for the tax year 1999 promptly after such returns become available. 3.8. Assets. Either the Company or Ring holds title to, or a valid lessee's or licensee's interest (pursuant to one or more Material Station Contracts described in Schedule 3.12) in, all of the assets, properties of every type and description, real, personal and mixed, tangible and intangible, necessary for the operation of the Station as now operated, in each case free and clear of all Liens except Permitted Encumbrances. None of the Excluded Assets is necessary for the operation of the Station as now operated. Except as set forth in Schedule 3.8, neither Seller nor 13 14 any of their Affiliates has any interest in any assets or property used in the operation of the Station. 3.9. FCC Authorizations. (a) Corporations are the holder of the FCC Authorizations for the Station listed and described on Schedule 3.9. Such FCC Authorizations constitute all of the licenses and authorizations required under the Communications Act of 1934, as amended (the "Communications Act"), or the rules, regulations and policies of the FCC for, and used in the operation of, the Station. The FCC Authorizations are in full force and effect and have not been revoked, suspended, canceled, rescinded or terminated and have not expired. There is not pending or, to the Knowledge of the Corporations, threatened any action by or before the FCC to revoke, suspend, cancel, rescind or modify any of the FCC Authorizations (other than proceedings to amend FCC rules of general applicability), and there is not now issued or outstanding or pending or, to the Knowledge of the Corporations, threatened, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture or complaint against the Corporations or the Station. The Station is operating in compliance in all material respects with the FCC Authorizations, the Communications Act, and the rules, regulations and policies of the FCC. Any action of the FCC with respect to each FCC Authorization is a Final Action. Other than as set forth in the FCC Authorizations, none of the FCC Authorizations is subject to any restriction or condition which limits in any material respect the full operation of the Station as now conducted. Schedule 3.9 includes, with respect to each FCC Authorization, the name of the entity in whose name such authorization is issued and the date of expiration of such authorization. True, correct and complete copies of each FCC Authorization have been delivered to Buyer. (b) All reports and filings required to be filed with, and all regulatory fees required to be paid to, the FCC by Company or Ring with respect to the Station have been timely filed and paid. All such reports and filings are accurate and complete. Corporations maintain public files for the Station as required by FCC rules. With respect to FCC licenses, permits and authorizations, Corporations are operating only those facilities for which an appropriate FCC Authorization has been obtained and is in effect, and Corporations are meeting the conditions of each such FCC Authorization. (c) Corporations are aware of no facts indicating that they or the Station is not in compliance with all requirements of the FCC, the Communications Act, or any other applicable federal, state and local statutes, regulations and ordinances. Corporations are aware of no facts and Corporations have received no notice or communication, formal or informal, indicating that the FCC is considering revoking, suspending, canceling, rescinding or terminating any FCC Authorization. (d) The operation of the Station does not cause or result in exposure of workers or the general public to levels of radio frequency radiation in excess of the "Radio Frequency Protection Guides" recommended in "American National Standard Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic Fields 3 kHz to 300 GHz" (ANSI/IEEE C95.1-1992) issued by the American National Standards Institute, adopted by the FCC effective October 15, 1997, and described in OET Bulletin No. 65. Renewal of the FCC Authorizations would not constitute a "major action" within the meaning of Section 1.1301, et 14 15 seq., of the FCC's rules. (e) Each communications tower structure used in the operation of the Station (whether owned or leased) has been registered under the rules and regulations of the FCC, and the Federal Aviation Administration has issued a determination of no hazard to air navigation with respect to each such tower for which such a determination is required. 3.10. Personal Property. The Assets include all machinery, equipment, vehicles, furniture and other tangible personal property necessary for the operation of the Station, including but not limited to the personal property listed on Schedule 3.10. Each item of Tangible Personal Property is in good operating condition and repair, is free from material defect or damage, is functioning in the manner and purposes for which it was intended, and has been maintained in accordance with industry standards. 3.11. Real Property. Schedule 3.11 contains a description of all Real Property. The Company or Ring has good and marketable fee simple title to all owned Real Property (the "Owned Real Property"), including all Real Property described on Schedule 3.11 as owned, and including all buildings and other improvements thereon, subject to the Permitted Encumbrances. Schedule 3.11 includes a description of each lease or similar agreement (including the rental, expiration date, renewal and the location of the real property covered by such lease or other agreement) under which Company or Ring is lessee or licensee of, or holds, uses or operates, any Real Property (the "Real Property Leases"). The Owned Real Property includes, and the Real Property Leases provide, sufficient access to the Station facilities without the need to obtain any other access rights. To the knowledge of Corporations and Seller, neither the whole nor any part of any Real Property is subject to any pending or threatened suit for condemnation or other taking by any public authority. All buildings and other improvements included in the Real Property are in good operating condition and repair, and free from material defect or damage, and comply in all material respects with applicable zoning, health and safety laws and codes. 3.12. Contracts. Schedule 3.12 contains a complete and correct list of all Material Station Contracts. Each of the Material Station Contracts (including without limitation each of the Real Property Leases) constitutes a valid and binding obligation of Company or Ring and the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally) and is in full force and effect, and neither Company nor Ring is in, or, to the Knowledge of Corporations, alleged to be in, breach or default under any of the Material Station Contracts, and, to the Knowledge of Corporations, no other party to any of the Material Station Contracts has breached or defaulted thereunder, and no event has occurred and no condition or state of facts exists which, with the passage of time or the giving of notice or both, would constitute such a default or breach by Company, Ring or, to the Knowledge of Corporations, by any such other party. 3.13. Intangible Property. Corporations have all right, title and interest in and to all trademarks, service marks, trade names, copyrights, Websites and all other intangible property necessary to conduct the operations of the Station as presently operated. Except as set forth on Schedule 3.13, neither Company nor Ring has received notice of any claim that any Intangible Property or the use thereof conflicts with, or infringes upon, any rights of any third party (and there is no basis for any such claim of conflict). To the knowledge of the Corporations, no service provided by the Station or any programming or other material used, broadcast or 15 16 disseminated by the Station infringes upon any copyright, patent or trademark of any other party. 3.14. Employees. Schedule 3.14 sets forth a correct and complete list of the names, titles or positions, salaries, currently accrued and unused vacation (including both the number of days and dollar value), bonus arrangements, and all other compensation of employees or independent contractors employed or retained by either the Company or Ring, including, but not limited to, termination pay or other severance benefits and any change or control payments or arrangements. Except as disclosed in Schedule 3.14, all employees of either the Company or Ring are employees at-will. Company and Ring have complied in all material respects with all labor and employment laws, rules and regulations applicable to the Station business, including without limitation those which relate to prices, wages, hours, discrimination in employment and collective bargaining, and is not liable for any arrears of wages or any taxes or penalties for failure to comply with any of the foregoing. Neither the Company nor Ring is a party to any collective bargaining agreement and no collective bargaining agreement is currently being negotiated by the Company or Ring. There is no (i) unfair labor practice charge or complaint against Company or Ring in respect of its business pending or, to the Knowledge of the Corporations, threatened before the National Labor Relations Board, any state labor relations board or any court or tribunal, or (ii) strike, dispute, request for representation, slowdown or stoppage pending or threatened in respect of the business of Company or Ring. Buyer shall have the right, but not the obligation, to offer employment to any employees of the Company or Ring concurrent with Closing. 3.15. Employee Benefit Matters. A schedule of all employee benefits sponsored, contributed to, established or maintained by the Company or Ring (or by any entity which, together with Company or Ring would be treated a single employer under Section 414 of the Code) with respect to or for the benefit of any present or former employee or independent contractor of Company or Ring or their beneficiaries or dependents (including but not limited to "employee benefit plans" within the meaning of Section 3(3) of ERISA) is set forth as Schedule 3.15 hereto. Except as set forth in Schedule 3.15, neither the Company nor Ring has ever maintained, sponsored or contributed to, or been obligated to contribute to, any employee pension benefit plan as defined in Section 3(2) of ERISA. All other employee benefit plans that have been maintained, sponsored or contributed to by the Company or Ring have been maintained in compliance with their terms and, both as to form and operation, with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such plans, including but not limited to ERISA and the Code. Neither the Company, Ring nor any such employee benefit plan will have at Closing any present or future obligation to make any payment to or with respect to any present or former employee of the Company or Ring pursuant to any retiree medical benefit plan or other retiree welfare plan (within the meaning of Section 3(1) of ERISA. No condition, provision, restriction or prohibition exists which would prevent the Company or Ring from amending or terminating, and Company and Ring have the right to amend or terminate, any employee benefit plan. 3.16. Compliance with Law; Litigation. Company and Ring have complied in all material respects with all laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of any foreign, federal, state, municipal or other governmental authority which are applicable to Company or Ring. There is no action, suit or proceeding pending or, to the Knowledge of the Corporations, threatened against Company or Ring. There 16 17 are no claims or investigations pending or, to the Knowledge of Corporations, threatened against Company or Ring. 3.17. Environmental. To the knowledge of Corporations, no hazardous or toxic substance or waste (including without limitation petroleum products) or other material regulated under any applicable environmental, health or safety law (each a "Contaminant") has been generated, stored, transported or released (each a "Release") on, in, from or to any of the Assets or any property previously owned or leased by Company or Ring. Neither the Company, Ring nor any of the Assets is subject to any order from or agreement with any governmental authority or private party respecting (i) any environmental, health or safety law, (ii) any environmental clean-up, removal, prevention or other remedial action or (iii) any obligation or liability arising from the Release of a Contaminant. Except as provided on Schedule 3.17, to the Knowledge of Corporations, neither the Company, Ring nor any of the Assets includes any underground storage tanks or surface impoundments, any asbestos containing material, or any polychlorinated biphenyls. Neither Company nor Ring has received any notice or claim to the effect that it is or may be liable as a result of the Release of a Contaminant. To the Corporations' knowledge, neither the Company nor Ring is the subject of any investigation by any governmental authority with respect to a Release of a Contaminant. Corporations have delivered to Buyer copies of all environmental surveys, analyses and assessments in its possession relating to any of the Real Property. 3.18. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Seller, Company or Ring or any party acting on behalf of Seller, Company or Ring. 3.19. Insurance Policies. Schedule 3.19 (i) lists the policies of defamation, theft, fire, liability, worker's compensation and other forms of insurance held by or otherwise insuring the Company or Ring, including the names of the insurers, the types of coverage, the coverage limits and the deductible amounts, (ii) describes any self insurance program in effect with respect to the Company or Ring, and (iii) sets forth a claims history for the past five (5) years with respect to the Company and Ring. Neither Seller nor Corporations have any Knowledge of any threat made during the 180-day period preceding the Effective Date by any insurance carrier to terminate any such insurance policies or materially increase any of their premiums. There has not been a failure to comply with any conditions contained in any such insurance policies that would adversely affect any rights of the Company or Ring under or with respect to any such policies. 3.20. Changes. Except as set forth on Schedule 3.20 hereto, since the Date of the Interim Financial Statements through the Effective Date, neither the Company nor Ring has taken any action or entered into any agreement that if it were to have occurred subsequent to the Effective Date would constitute a breach of Section 6.1 of this Agreement. 3.21. Disclosure. To Seller's Knowledge, neither this Agreement (including the Schedules) nor any other document furnished by or on behalf of Seller contains any untrue statement of a material fact or omits to state a material fact necessary to make any statement in this Agreement or any such document not misleading. 3.22. Business Conducted. Except as set forth on Schedule 3.22, (i) the business of the 17 18 Company since its inception has been and is limited to the operation of radio stations WALR(AM), WCNN(AM) and WFOM-AM, and directly related business activities, and (ii) the business of Ring since December 31, 1993 has been and is limited to the operation of the Station and directly related business activities. ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF SELLER To induce Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Buyer as follows: 4.1. Authority. Each Seller has the requisite power and authority to execute and deliver this Agreement and the Other Documents, to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 4.2. Binding Effect. This Agreement has been, and each of the Other Documents at or prior to Closing will be, duly executed and delivered by Seller. This Agreement and the Other Documents, when executed and delivered by Seller and the other parties thereto, will be legal, valid and binding agreements of Seller enforceable against Seller in accordance with their respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.3. Ownership of Shares. Each Seller is the lawful owner of the Shares as described in Section 3.2 hereof as owned by such Seller, free and clear of all Liens. There are no outstanding subscriptions, options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements of any character providing for the purchase, issuance or sale of any of the Shares, and Seller has not granted directly, or indirectly through any affiliate or otherwise, any such rights. 4.4. No Conflicts. Each Seller has the full legal right, power and authority to enter into this Agreement and to sell, assign, transfer and convey the Shares so owned by such Seller pursuant to this Agreement without the consent or action of any other person, and the delivery to Buyer of the Shares pursuant to the provisions hereof will transfer to Buyer good title thereto, free and clear of all Liens. 4.5. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of any Seller or any party acting on any Seller's behalf. ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF BUYER To induce Seller to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer represents and warrants to Seller as follows: 5.1. Organization. Buyer is duly organized, validly existing and in good standing 18 19 under the laws of the jurisdiction of its organization (first set forth above). Buyer has the requisite power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Buyer (collectively, the "Buyer Ancillary Agreements"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 5.2. Authority. The execution, delivery and performance of this Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized and approved by all necessary action of Buyer and do not require any further authorization or consent of Buyer. This Agreement is, and each Buyer Ancillary Agreement when executed and delivered by Buyer and the other parties thereto will be, a legal, valid and binding agreement of Buyer enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5.3. No Conflicts. Neither the execution and delivery by Buyer of this Agreement and the Buyer Ancillary Agreements or the consummation by Buyer of any of the transactions contemplated hereby or thereby nor compliance by Buyer with or fulfillment by Buyer of the terms, conditions and provisions hereof or thereof will: (i) conflict with the charter or other organizational documents of Buyer or any judgment, order or decree to which Buyer is subject; or (ii) require the approval, consent, authorization or act of, or the making by Buyer of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except for such of the foregoing as are necessary pursuant to the HSR Act and the Communications Act. 5.4. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Buyer or any party acting on Buyer's behalf. 5.5. Qualification. Salem is qualified under the Communications Act and the rules, regulations and policies of the FCC to control the FCC Authorizations. 5.6. Investment Intent. Buyer is purchasing the Shares for investment purposes and acknowledges that the Shares are not registered under the Securities Act of 1933 or any state securities law. Buyer agrees not to resell any of the Shares except pursuant to registration under, or an applicable exemption from, the Securities Act of 1933 and applicable state securities laws. ARTICLE 6: COVENANTS OF COMPANY AND SELLER Company and Seller covenant and agree that from the date hereof until the completion of the Closing: 6.1. Operation of the Business. Seller covenants and agrees with Buyer that from the date of this Agreement through the Closing Date, or the termination of this Agreement, if earlier, unless Buyer otherwise consents in writing (which consent shall not be unreasonably withheld or 19 20 delayed), the Company and Ring shall, and Seller shall cause the Company and Ring to: (a) Operate the Station and its business in the ordinary course consistent with past practice, including (i) incurring promotional expenses consistent with the amount currently budgeted, (ii) making capital expenditures prior to the Closing Date as are necessary to repair or replace assets that are damaged or destroyed, (iii) using commercially reasonable efforts to preserve the Station's present business operations, organization and goodwill and its relationships with customers, employees, advertisers, suppliers and other contractors (including independent contractors providing on-air or production services) and to maintain programming for the Station consistent in all material respects with the type and quantity of the Station's programming as of the date of this Agreement, and (iv) continuing the Station's usual and customary policy with respect to extending credit and collection of accounts receivable; (b) Operate the Station and conduct its business in accordance with, and otherwise comply with, the terms and conditions of the FCC Authorizations, the Communications Act, and all other applicable laws, rules and regulations, and applicable orders of governmental agencies or authorities; (c) Maintain their books and records in accordance with GAAP; (d) Promptly notify Buyer in writing of any event or condition known to Seller which, with notice or the lapse of time or both, would constitute an event of default under any Material Station Contract; (e) Timely pay all monetary obligations when due and otherwise timely comply with and perform under all Material Station Contracts; (f) Not sell, lease, grant any rights in or to or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets or property, except for any Excluded Assets and except for dispositions of assets that (i) are in the ordinary course of business consistent with past practice and (ii) if material, are replaced by similar assets or property of comparable value or utility; (g) Not make or commit to make capital expenditures exceeding $10,000 in the aggregate; (h) Not enter into any agreement requiring the Corporations to acquire goods or services exclusively from a single supplier or provider or prohibiting the Corporations from providing certain goods or services to any person or entity other than a specified person or entity; and not enter into any other Material Station Contract, or amend any Material Station Contract, except (A) termination of the Station Affiliation Agreement with OURBUS in accordance with Section 6.8 or (B) in the ordinary course of the business of the Corporations consistent with past practice; (i) Maintain its equipment (except for Excluded Assets) currently in use in good operating condition and repair; (j) Not adopt or materially amend any bonus, profit-sharing, compensation, 20 21 deferred compensation, severance or other arrangement for the benefit of, or increase in any manner the compensation (including severance pay or plans) or benefits of, any directors, officers, employees, independent contractors, consultants or commission agents, except in the ordinary course of business consistent with past practice; (k) Not engage in any business other than operation of the Station, the Excluded Assets and directly related business activities in the ordinary course consistent with past practice; (l) Not voluntarily enter into any collective bargaining agreement applicable to any employees of the Station or otherwise voluntarily recognize any union as the bargaining representative of any such employees; and not enter into or amend any collective bargaining agreement applicable to any employees of the Station to provide that it shall be binding upon any successor employer of such employees; (m) Not take or agree to take any action that would materially delay the consummation of the Closing as contemplated by this Agreement; (n) Promptly notify Buyer in writing of any change that has or is reasonably likely to have a Material Adverse Effect; (o) Not incur any indebtedness for borrowed money other than indebtedness incurred in the ordinary course of business which, if not repaid prior to the Closing, will constitute a Closing Company Liability, and not create or incur any Lien on any of their assets other than Permitted Encumbrances; (p) Not assume, guarantee, endorse or otherwise become responsible for the obligations of any other person or entity except for endorsements for collection or deposit in the ordinary course of business and guarantees that it will be terminated on or before the Closing Date; and not make any loans or advances to any other person or entity unless repaid prior to Closing; (q) Not amend its Charter or By-Laws; not enter into, agree to enter into or effect any merger or consolidation; (r) Not take or agree to take any action inconsistent with consummation of the Closing as contemplated by this Agreement; (s) Not make any change in the number of shares of its capital stock authorized, issued or outstanding; not issue any shares of its capital stock; and not grant or issue any option, warrant or other right to purchase, or to convert any obligation into, shares of its capital stock; (t) Not purchase or redeem any shares of its capital stock or any other security; (u) Not declare, set aside, make or pay any dividend or any other distribution in respect of any issued and outstanding capital stock, except (i) dividends paid in cash and (ii) 21 22 dividends of non-barter accounts receivable that have not arisen in the ordinary course of the Station's business; and (v) Not enter into any agreement (other than agreements that will be terminated prior to Closing) with, or forgive any debts or obligations of, Seller or an Affiliate of Seller or make any payment to or on behalf of Seller or an Affiliate of Seller, other than payments required under Station Contracts in effect on the date of this Agreement and customary compensatory arrangements. In the event of the nonperformance of or noncompliance with one or more of the covenants under this Section 6.1 due to any cause beyond the reasonable control of Seller and Company, such nonperformance or noncompliance shall not be taken into account in determining satisfaction of the condition precedent in the second sentence of Section 8.1 regarding Company's and Seller's performance of and compliance with their covenants and agreements under this Agreement. 6.2. Access. Between the date hereof and the Closing Date, Buyer and the officers, employees, accountants, counsel, agents, consultants and representatives of Buyer shall be given reasonable access to all Assets, employees of Company and Ring, and the Station, accounts, statements, books, records, minutes, deeds, title papers, insurance policies, licenses, agreements, contracts, commitments, state and federal tax returns, records and files of every character, equipment, machinery, fixtures, furniture, vehicles, notes and accounts payable and receivable of Company and Ring, and any other information concerning the affairs of Company or Ring as Buyer may reasonably request. It is expressly understood that, pursuant to this Section, Buyer, at its expense, shall be entitled to conduct such inspections and reviews of the assets and financial records relating to the Company or Ring as Buyer may desire, so long as the same do not unreasonably interfere with the operation of Company's or Ring's business. No inspection or investigation made by or on behalf of Buyer, or Buyer's failure to make any inspection or investigation, shall affect Seller's representations, warranties and covenants hereunder or be deemed to constitute a waiver of any of those representations, warranties and covenants. Immediately after the date hereof, Seller at Seller's expense shall take such action as necessary to cause audited financial statements for Company and Ring to be prepared and furnished to Buyer prior to the Closing Date by PriceWaterhouseCoopers as of and for the 12-month periods ending on December 31, 1998 and 1999; in connection with such audits, Seller shall provide a customary management representation letter to PriceWaterhouseCoopers; and Seller shall consent, and shall at Seller's expense obtain PriceWaterhouseCoopers' consent, to Buyer's inclusion of Seller's audited financial statements in reports or registration statements filed by Buyer with any governmental or regulatory authority, including the Securities and Exchange Commission. 6.3. Excluded Assets and Excluded Liabilities. Prior to the Closing, Seller shall cause Company and Ring to distribute all Excluded Assets to an Affiliate of the Seller and such Affiliate shall assume all of the Excluded Liabilities of the Company and Ring pursuant to documents and instruments that (i) disclaim any express or implied representation or warranty by Corporations, including but not limited to any representation or warranty regarding title to, or condition, merchantibility or fitness for a particular purpose of, any Excluded Asset, (ii) release Corporations from all claims, liabilities and obligations relating or with respect to any of the Excluded Assets and (iii) are otherwise satisfactory to Buyer within its reasonable judgment. 22 23 6.4. Publicity. The parties agree that no public release or announcement concerning the transactions contemplated hereby shall be issued by any party or any party's Affiliate without the prior written consent of the other party, except as required by applicable law or regulations. 6.5. Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 6.6. No Solicitation. From the date hereof until the earlier of Closing or termination of this Agreement, neither the Company, Ring, Seller nor any Affiliate of Seller shall directly or indirectly (a) knowingly solicit or encourage submission of any proposal or offer from any person or entity relating to the acquisition or purchase of any interest in the Corporations or any material assets of the Corporations or any merger, consolidation or other business combination with either of the Corporations (each an "Acquisition Proposal"), or (b) otherwise knowingly assist or negotiate with any person or entity with respect to an Acquisition Proposal. Seller shall promptly notify Buyer in writing if an Acquisition Proposal is made after the date of this Agreement. 6.7. Resignations and Releases. On the Closing Date, Seller shall submit, and shall cause each of the Corporation's and Ring's other officers and directors to submit, his or her resignation as an officer or director, and his or her release of all claims against the Corporations, in each case effective as of the Closing Date and otherwise in form and substance satisfactory to Buyer's counsel within such counsel's reasonable judgment. 6.8. OURBUS. Seller shall cause the Station Affiliation Agreement with OURBUS to be terminated prior to Closing without any continuing liability or obligations on the part of the Corporations under such agreement. ARTICLE 7: CONDITIONS TO THE OBLIGATIONS OF SELLER The obligations of Seller under this Agreement are, at Seller's option, subject to the fulfillment of the following conditions prior to or on the Closing Date: 7.1. Representations, Warranties and Covenants. Each of the representations and warranties of Buyer contained in this Agreement shall have been true and correct as of the date when made and shall be deemed to be made again on and as of the Closing Date and shall then be true and correct, except to the extent changes are permitted pursuant to this Agreement. Buyer shall have performed and complied with each and every covenant and agreement required by this Agreement to be performed or complied with by it prior to or on the Closing Date. Buyer shall have furnished Seller with a certificate, dated the Closing Date and duly executed by an officer of Buyer authorized on behalf of Buyer to give such a certificate, to the effect that the conditions set forth in this Section have been satisfied. 7.2. Proceedings. None of Seller, the Company or Buyer shall be subject to any restraining order or injunction restraining or prohibiting the consummation of the transactions contemplated hereby. 23 24 7.3. FCC Consent. The FCC Consent shall have been granted by the FCC. 7.4. Hart-Scott-Rodino. The waiting period under the HSR Act shall have expired or been terminated (hereinafter referred to as "HSR Clearance"). 7.5. Deliveries. Buyer shall have complied with its obligations set forth in Section 9.2. ARTICLE 8: CONDITIONS TO THE OBLIGATIONS OF BUYER The obligations of Buyer under this Agreement are, at its option, subject to the fulfillment of the following conditions prior to or on the Closing Date: 8.1. Representations, Warranties and Covenants. Each of the representations and warranties of Seller contained in this Agreement shall have been true and correct as of the date when made and true and correct as of the Closing Date (except for representations and warranties that were made expressly as of a particular date) as if none of such representations and warranties contained any qualifications as to materiality or the absence of Material Adverse Effect; provided, however, that notwithstanding the foregoing, this condition shall be deemed to be satisfied if all inaccuracies in such representations and warranties (with such inaccuracies determined as if none of such representations and warranties contained any qualifications as to materiality or the absence of Material Adverse Effect) do not cumulatively constitute a Material Adverse Effect. In addition, Company and Seller shall have performed and complied in all material respects with each and every covenant and agreement required by this Agreement to be performed or complied with by each prior to or on the Closing Date, except to the extent nonperformance or noncompliance is not material to the assets, business, results of operation, operations or financial condition of the Station or the Corporations. Seller shall have furnished Buyer with a certificate, dated the Closing Date and duly executed to the effect that the conditions set forth in this Section have been satisfied. 8.2. Proceedings. None of Company, Ring, Seller or Buyer shall be subject to any restraining order or injunction restraining or prohibiting the consummation of the transactions contemplated hereby. 8.3. FCC Consent. The FCC Consent shall have been granted by the FCC without any conditions materially adverse to Salem. 8.4. Hart-Scott-Rodino. HSR Clearance shall have occurred. 8.5. Deliveries. Seller shall have complied with their obligations set forth in Section 9.1. 8.6. OURBUS. The Station Affiliation Agreement with OURBUS shall have been terminated without any continuing liability or obligations on the part of the Corporations under such agreement. ARTICLE 9: ITEMS TO BE DELIVERED AT THE CLOSING 9.1. Deliveries by Seller. At the Closing, Seller shall deliver to Buyer duly executed 24 25 by Company, Seller or such other signatory as may be required by the nature of the document: (a) the certificates representing the Shares accompanied by stock powers duly endorsed in blank, sufficient to sell, convey, transfer and assign to Buyer all right, title and interest in and to the Shares free and clear of Liens; (b) certified copies of resolutions duly adopted by Sellers and the board of directors of the Company, which shall be in full force and effect at the time of the Closing, authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; (c) the certificate referred to in Section 8.1; (d) the corporate minute books, stock ledger and all other original and duplicate corporate records of the Company and Ring; (e) copies of the certificates of incorporation of the Company and Ring, including all amendments thereto, certified by the Secretary of State or other appropriate official of the jurisdiction of incorporation dated within 10 days of the Closing Date; (f) copies of the By-Laws of the Company and Ring, certified by an officer as being true and correct and in effect on the Closing Date; (g) certificates from the Secretaries of State or other appropriate officials of the jurisdiction of incorporation of the Company and Ring and any jurisdiction in which the Company or Ring has qualified to do business, dated within 10 days of the Closing Date and showing that the Company (or Ring) is duly incorporated and in good standing in its jurisdiction of incorporation and that it is in good standing in each jurisdiction in which it has qualified to do business; (h) resignations (as applicable) and releases by Seller and all officers and directors of the Company and Ring; (i) a written instruction of Seller to Escrow Agent instructing the Escrow Agent to distribute the Earnest Money as prescribed in Section 2.6; and (j) the Holdback Escrow Agreement. 9.2. Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller: (a) the Purchase Price, which shall be paid in the manner specified in Section 2.3; (b) a written instruction to Buyer to Escrow Agent instructing the Escrow Agent to distribute the Earnest Money as prescribed in Section 2.6; (c) certified copies of resolutions authorizing the execution, delivery and performance by Buyer of this Agreement, which shall be in full force and effect at the time of the Closing; and 25 26 (d) the certificate referred to in Section 8.1. ARTICLE 10: SURVIVAL; INDEMNIFICATION 10.1. Survival. All representations, warranties, covenants and agreements of the parties made in this Agreement, any Other Document or Buyer Ancillary Agreement, shall survive the Closing regardless of any investigation, inquiry or knowledge on the part of any party, and the Closing shall not be deemed a waiver by any party of the representations, warranties, covenants or agreements of any other party in this Agreement, any Other Document or Buyer Ancillary Agreement; provided however, that the period of survival shall (i) with respect to the representations and warranties pertaining to taxes under Section 3.7, end for each tax sixty (60) days after expiration of the statute of limitations applicable to the tax; and (ii) with respect to the representations and warranties in Sections 3.1, 3.2, 3.4, 4.1, 4.2, and 4.3, continue indefinitely; and (iii) in the case of any other representation and warranty, end one (1) year after the Closing Date (in each case, the "Survival Period"). No claim for breach of any representation or warranty may be brought under this Agreement, any other Document or Buyer Ancillary Agreement unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the applicable Survival Period. In the event such notice of such a claim is so given, the right to indemnification with respect to such claim shall survive the applicable Survival Period until the claim is finally resolved and any obligations with respect to the claim are fully satisfied. 10.2. Indemnification. (a) Seller (an "Indemnifying Party") hereby agrees to indemnify and hold harmless the Corporations (if Closing occurs), Buyer, the shareholders, directors, officers and employees of Buyer and (if Closing occurs) of the Corporations and all persons which directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with Buyer, and their respective successors and assigns (collectively, the "Buyer Indemnitees") from, against and in respect of, and reimburse each of them for and with respect to, all Deficiencies (as defined in Section 10.3(a)). Notwithstanding anything in this Agreement to the contrary, if Closing occurs, the obligation of Seller to indemnify Buyer shall be subject to the following: (i) The Buyer shall not be entitled to recover for any Deficiencies for breach of any representation or warranty until the aggregate of all such Deficiencies exceeds One Million Five Hundred Thousand Dollars ($1,500,000) (the "Minimum Loss"), in which case, Buyer may then recover an aggregate amount of such Deficiencies equal to 50% of the Minimum Loss plus 100% of any excess over the Minimum Loss, provided that (i) the maximum aggregate recovery for Deficiencies for Seller's breach of representations or warranties shall not exceed $20,000,000 (the "Cap") and (ii) notwithstanding the foregoing, any Deficiencies for breach of any representation or warranty in Sections 3.1, 3.2, 3.4, 4.1, 4.2, or 4.3 shall not be subject to the Minimum Loss or Cap limitations. (ii) Buyer's maximum aggregate recovery for Deficiencies for Seller's breach of representations, warranties, covenants or agreements shall not exceed $50,000,000. (iii) No indemnity claim for any Deficiency relating to, arising out of 26 27 or resulting from any Excluded Liability may be brought unless written notice describing in reasonable detail the nature and basis of such claim is given within three (3) years after the Closing Date. In the event such notice of such a claim is so given, the right to indemnification with respect to such claim shall survive such three (3)-year period until the claim is finally resolved and any obligations with respect to the claim are fully satisfied. (b) Buyer shall recover amounts for Deficiencies from the Holdback as defined in Section 2.5 hereof prior to recovering any amounts directly from any Seller. (c) If Closing occurs, Buyer (an "Indemnifying Party") hereby agrees to indemnify and hold harmless Seller and its respective successors and assigns (collectively, the "Seller Indemnitees") from, against and in respect of, and to reimburse the Seller Indemnitees for, the amount of any and all Deficiencies (as defined in Section 10.3(b)). (d) Indemnification provided by this Section 10.2 shall be Buyer's sole and exclusive remedy with respect to Deficiencies (as defined in Section 10.3(a)), with the exception of the Buyer's additional remedy of specific performance as provided in Section 11.2. Indemnification provided by this Section 10.2 shall be Seller's sole and exclusive remedy with respect to Deficiencies (as defined in Section 10.3(b)). (e) Any Deficiency for which indemnification is provided under this Agreement shall be increased by any Tax Cost and reduced by any Tax Benefit which the indemnified party incurs or receives prior to or during the Taxable Period in which the corresponding indemnification payment is made. In the event any indemnification paid by an Indemnifying Party is reduced by a Tax Benefit, or the indemnified party pays the Indemnifying Party the amount of any Tax Benefit, and there is a subsequent Final Determination denying the Tax Benefit, the Indemnifying Party shall promptly reimburse the indemnified party for the amount of the Tax Benefit that was denied. In the event any indemnification paid by an Indemnifying Party is increased by a Tax Cost, or the indemnified party receives payment for any Tax Cost, and there is a subsequent Final Determination reducing the Tax Cost, the Indemnifying Party shall promptly be reimbursed by the indemnified party for the amount of the Tax Cost that was reduced. To the extent permitted by law, any indemnity payments due hereunder shall be treated as an adjustment to the Purchase Price. (f) Any party seeking indemnification for any damages for which it is entitled to seek indemnification shall use its commercially reasonable efforts to mitigate its damages in connection with such indemnity claim. 10.3. Deficiencies. (a) As used in this Article 10, the term "Deficiencies" when asserted by Buyer Indemnitees or arising out of a third party claim against Buyer Indemnitees shall mean any and all losses, damages, liabilities, claims, obligations, deficiencies, demands, penalties, assessments, judgments, actions, proceedings and suits of whatsoever kind or nature, and all costs and expenses relating thereto (including court costs and reasonable attorney fees), whether or not resulting from third party claims, relating to, arising out of or resulting from (i) any breach by any Seller of any of Seller's representations or warranties in this Agreement or any Other 27 28 Document, (ii) any breach by any Seller of any of Seller's covenants or agreements in this Agreement or any Other Document, (iii) all taxes of the Company or Ring for any period ending on or before the Adjustment Date, except to the extent such taxes are included as Closing Company Liabilities, (iv) any employee benefit plan described in Section 3.15, including but not limited to (A) termination of any employee's participation in any such plan, (B) withdrawal of the Company or Ring from any such plan, or (C) the obligation under any such plan to pay any employee a bonus or any severance or change of control payments as a result of the transactions contemplated by this Agreement, or (v) any other Excluded Liability. (b) As used in this Article 10, the term "Deficiencies" when asserted by Seller Indemnitees or arising out of a third party claim against Seller Indemnitees shall mean any and all losses, damages, liabilities and claims sustained by the Seller Indemnitees and arising out of, based upon or resulting from: (i) any misrepresentation, breach of warranty, or any failure to comply with any covenant, obligation or agreement on the part of Buyer contained in or made pursuant to this Agreement; (ii) any failure by Company or Ring to pay or perform any of the Closing Company Liabilities; or (iii) any litigation, proceeding or claim by any third party relating to the business or operation of the Company or Ring after Closing, excluding, however, all Excluded Liabilities. Such Deficiencies include without limitation any and all acts, suits, proceedings, demands, assessments and judgments, and all fees, costs and expenses of any kind, related or incident to any of the foregoing (including, without limitation, any and all Legal Expenses (as defined in Section 10.6 below)). 10.4. Procedures. (a) In the event that any claim shall be asserted by any third party against the Buyer Indemnitees or Seller Indemnitees (Buyer Indemnitees or Seller Indemnitees, as the case may be, hereinafter, the "Indemnitees"), which, if sustained, would result in a Deficiency, then the Indemnitees, as promptly as practicable after learning of such claim, shall notify the Indemnifying Party of such claim, and shall extend to the Indemnifying Party a reasonable opportunity to defend against such claim, at the Indemnifying Party's sole expense and through legal counsel acceptable to the Indemnitees, provided that the Indemnifying Party proceeds in good faith, expeditiously and diligently. The Indemnitees shall, at their option and expense, have the right to participate in any defense undertaken by the Indemnifying Party with legal counsel of their own selection. No settlement or compromise of any claim which may result in a Deficiency may be made by the Indemnifying Party without the prior written consent of the Indemnitees unless: (A) prior to such settlement or compromise the Indemnifying Party acknowledges in writing its obligation to pay in full the amount of the settlement or compromise and all associated expenses; (B) the Indemnitees are furnished with a full release from the party or parties asserting the claim; and (C) the Indemnifying Party has the ability (financial or otherwise) to pay or perform such settlement or compromise. (b) In the event that the Indemnitees assert the existence of any Deficiency against the Indemnifying Party, they shall give written notice to the Indemnifying Party of the nature and amount of the Deficiency asserted. If the Indemnifying Party, within a period of sixty (60) days after the giving of notice by the Indemnitees, shall not give written notice to the Indemnitees announcing its intent to contest such assertion of the Indemnitees (such notice by the Indemnifying Party being hereinafter referred to as the "Contest Notice"), such assertion of the Indemnitees shall be deemed accepted and the amount of the Deficiency shall be deemed 28 29 established. In the event, however, that a Contest Notice is given to the Indemnitees within said 60-day period, then the Indemnitees shall be entitled to pursue all remedies at law or in equity to establish and collect the contested Deficiency. (c) The Indemnitees and the Indemnifying Party may agree in writing, at any time, as to the existence and amount of a Deficiency, and, upon the execution of such agreement such Deficiency shall be deemed established. (d) Failure or delay by an Indemnitee to give a reasonably prompt notice of any claim (if given prior to expiration of any applicable Survival Period) shall not release, waive or otherwise affect an Indemnifying Party's obligations with respect to the claim, except to the extent that the Indemnifying Party can demonstrate actual loss or prejudice as a result of such failure or delay. Buyer shall not be deemed to have notice of any claim by reason of any knowledge acquired on or prior to the Closing Date by an employee or independent contractor of the Corporations. 10.5. Payment. The Indemnifying Party hereby agrees to pay the amount of established Deficiencies within 15 days after the establishment thereof. The amount of established Deficiencies shall be paid in cash. At the option of the Indemnitees, the Indemnitees may offset any Deficiency or any portion thereof that has not been paid by the Indemnifying Party to the Indemnitees against any obligation the Indemnitees, or any of them, may have to the Indemnifying Party. 10.6. Legal Expenses. As used in this Article 10, the term "Legal Expenses" shall mean any and all fees (whether of attorneys, accountants or other professionals), costs and expenses of any kind reasonably incurred by any person identified herein and its counsel in investigating, preparing for, defending against, or providing evidence, producing documents or taking other action with respect to any threatened or asserted claim. ARTICLE 11: MISCELLANEOUS 11.1.1. Right of Termination. This Agreement may be terminated prior to Closing: (a) By written agreement of Seller and Buyer; or (b) By written notice from a party that is not then in material breach of this Agreement if: (i) The other party has continued in material breach of this Agreement for thirty (30) days after written notice of such breach from the terminating party is received by the other party and such breach is not cured during such 30-day period or a commercially reasonable cure is not undertaken during such cure period (if it cannot be reasonably cured during such period) and not pursued with reasonable diligence thereafter; or (ii) By written notice from Seller to Buyer if within 45 days after filing of the documents required to be filed under the HSR Act with the Federal Trade Commission 29 30 and the United States Department of Justice in connection with the transactions contemplated by this Agreement, the waiting period under the HSR Act shall have failed to expire or be terminated and the reason for such failure shall be facts or circumstances relating to Buyer; or (iii) Closing does not occur within twelve (12) months after the date hereof. 11.1.2. Effect of Termination. (a) Upon termination of this Agreement, each party shall thereafter remain liable for (i) breach of this Agreement prior to such termination and (ii) payment and performance of the party's obligations under Sections 6.5 and 11.3 and under Article 10 and this Article 11, which in each case shall survive termination of this Agreement; provided, however, that if Closing does not occur, the aggregate liability of Buyer for breach or default under this Agreement shall be limited as provided in Section 11.1.2(d). (b) If this Agreement is terminated prior to Closing for any reason other than by Seller pursuant to Section 11.1.1(b)(i) or (ii) of this Agreement, Buyer shall be entitled to the return of the Earnest Money, in which case Escrow Agent shall promptly return the Earnest Money to Buyer. (c) If this Agreement is terminated prior to Closing by Seller pursuant to Section 11.1.1(b)(i) or (ii) of this Agreement, Seller shall be entitled to the Earnest Money, in which case Escrow Agent shall promptly deliver the Earnest Money to Seller. (d) If Closing shall not have occurred because of a material breach by Buyer under this Agreement, Seller's sole remedy at law or in equity under this Agreement shall be (i) the termination by Seller of this Agreement, and (ii) the recovery from Buyer of (A) an amount equal to the Earnest Money (the "Seller's Liquidated Damage Amount") and (B) Seller's reasonable attorneys' fees and other costs of collection incurred by Seller in enforcing its right to recover Seller's Liquidated Damage Amount (such fees and other costs herein referred to as "Seller's Enforcement Costs"). In the event of such termination by Seller, Seller shall be entitled to receive the Earnest Money in payment of Seller's Liquidated Damage Amount, and Buyer and Seller shall cooperate in taking such action as required under the Escrow Agreement to effect the Escrow Agent's distribution of the Earnest Money to Seller. Seller shall also be entitled to pursue any other remedy available to Seller at law or in equity to recover the entire Seller's Liquidated Damage Amount and Seller's Enforcement Costs, provided that the total monetary damages (including any amount received from the Escrow Agent under the Escrow Agreement) to which Seller shall be entitled shall not exceed the sum of Seller's Liquidated Damage Amount plus Seller's Enforcement Costs. BUYER ACKNOWLEDGES AND AGREES THAT SELLER'S RECEIPT OF SELLER'S LIQUIDATED DAMAGE AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY AND THAT SELLER'S LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE SUBSTANTIAL BUT INDETERMINATE HARM ANTICIPATED TO BE CAUSED BY BUYER'S MATERIAL BREACH OR DEFAULT UNDER THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS AND DAMAGES, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTIONS TO BE CONSUMMATED HEREUNDER. 30 31 11.1.3. Termination Notice. Each notice given by a party pursuant to Section 11.1.1 to terminate this Agreement shall specify the Subsection of Section 11.1.1 pursuant to which the notice is given. If at the time a party gives a termination notice, the party is entitled to give the notice pursuant to more than one Subsection of Section 11.1.1, the Subsection pursuant to which the notice is given and termination is effected shall be deemed to be the Subsection specified in the notice provided that the party giving the notice is at such time entitled to terminate this Agreement pursuant to the specified Subsection. 11.2. Specific Performance. In the event of a breach or threatened breach by Seller of any representation, warranty, covenant or agreement under this Agreement, at Buyer's election, in lieu of termination of this Agreement and in addition to any other remedy available to it, Buyer shall be entitled to an injunction restraining any such breach or threatened breach and, subject to obtaining any requisite approval of the FCC, to enforcement of this Agreement by a decree of specific performance requiring Seller to fulfill their obligations under this Agreement, in each case without the necessity of showing economic loss or other actual damage and without any bond or other security being required. The remedies provided Buyer in this Agreement shall be cumulative and shall not preclude the assertion by Buyer of any other rights or the seeking of any other remedies against Seller. 11.3. Expenses. Each party hereto shall bear all of its expenses incurred in connection with the transactions contemplated by this Agreement, including without limitation, accounting and legal fees incurred in connection herewith; provided that Buyer and Seller shall each pay 50% of the HSR Act filing fees and the FCC filing fees required to be paid in connection with the FCC Application. 11.4. Further Assurances. From time to time prior to and after Closing, each party hereto will execute all such instruments and take all such actions as any other party shall reasonably request, without payment of further consideration, in connection with carrying out and effectuating the intent and purpose hereof and all transactions contemplated by this Agreement, including without limitation the execution and delivery of any and all confirmatory and other instruments in addition to those to be delivered at Closing, and any and all actions which may reasonably be necessary to complete the transactions contemplated hereby. The parties shall cooperate fully with each other and with their respective counsel and accountants in connection with any steps required to be taken as part of their respective obligations under this Agreement. 11.5. Cooperation. From the date of Closing and for a period of three (3) years thereafter, Seller shall provide Buyer with such cooperation and information as Buyer shall reasonably request in Buyer's: (i) analysis and review of Financial Statements or information provided or created hereunder, or (ii) preparation of any reports or analyses prepared by Buyer. Seller shall also make its accountants available, including any work papers, opinions and financial statements relating to the Company or Seller, to provide explanations of any documents or information provided hereunder and to permit disclosure of such information by Buyer, including disclosure to any governmental authority, including the Securities and Exchange Commission. 11.6. Employee Matters. Immediately prior to the Closing Date, Seller shall cause the Company and Ring, as applicable, to cease to be a participating employer under, and terminate 31 32 its sponsorship of, each employee benefit plan identified on Schedule 3.15 or otherwise described in Section 3.15. Employees of the Corporations after Closing shall be eligible to participate in Buyer's 401(k) plan in accordance with the terms and provisions of such plan, and Buyer shall use commercially reasonable efforts to process enrollment of such employees in such plan as soon as practicable after the Closing Date. Subject to applicable law, all such employees will be eligible to roll over cash distributions from the Corporations' 401(k) plan to Buyer's 401(k) plan. 11.7. Intercompany Accounts. Prior to the Closing Date, Seller shall cause all intercompany payables or other indebtedness owed by the Company or Ring to any of their Affiliates to be canceled and discharged in full. ARTICLE 12: GENERAL PROVISIONS 12.1. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective representatives, successors and assigns. Seller may not assign any of Seller's rights or delegate any of Seller's duties hereunder without the prior written consent of Buyer, and any such attempted assignment or delegation without such consent shall be void. Buyer may not assign its rights and obligations hereunder in whole or in part without consent of Seller except to: (a) any person which directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Buyer; or (b) Buyer's senior lenders as collateral. Except in the case of Indemnitees under Article 10, nothing in this Agreement, expressed or implied, shall confer on any person, other than the parties to this Agreement and their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 12.2. Amendments; Waivers. The terms, covenants, representations, warranties and conditions of this Agreement may be changed, amended, modified, waived, or terminated only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right of such party at a later date to enforce the same. No waiver by any party of any condition or the breach of any provision, term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement. 12.3. Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing (which shall include notice by telex or facsimile transmission) and shall be deemed to have been duly made and received when personally served, or when delivered by Federal Express or a similar overnight courier service, expenses prepaid, or, if sent by telex, graphic scanning or other facsimile communications equipment, delivered by such equipment, addressed as follows: 32 33 if to Company or Seller: Lewis W. Dickey, Sr. 11304 Old Harbour Road Lost Tree Village North Palm Beach, FL 33408. Facsimile No.: (561) 775-6360 with a copy (which shall not constitute notice) to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street Atlanta, Georgia 30308-3242 Attn: John E. Zamer, Esq. Facsimile No.: (404) 581-8330 If to Buyer: Cox Radio, Inc. 1400 Lake Hearn Drive, N.E. Atlanta, GA 30319 Attn: Robert F. Neil, Chief Executive Officer Facsimile No.: (404) 843-5586 with a copy (which shall not constitute notice) to: Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20554 Attn: Kevin F. Reed, Esq. Facsimile No.: (202) 776-2222 Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions of this Section providing for the giving of notice. 12.4. Captions. The captions of Articles and Sections of this Agreement are for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 12.5. Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the State of Georgia, without giving effect to principles of conflicts of laws. 12.6. Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof, and supersedes all prior agreements, understandings, inducements or conditions, express or implied, oral or written, relating to the subject matter hereof. The express terms hereof control and supersede any course 33 34 of performance and/or usage of trade inconsistent with any of the terms hereof. This Agreement has been prepared by all of the parties hereto, and no inference of ambiguity against the drafter of a document therefore applies against any party hereto. 12.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. 12.8. Severability. Except to the extent that such unenforceability would deprive either party of the substantial value of its bargain, if any court shall determine that any aspect of this Agreement is unenforceable, it is the intention of the parties that it shall not thereby terminate, but shall be deemed amended to the extent required to render it valid and enforceable and such provision shall be deemed severed from this Agreement, but in any event, every other provision of this Agreement shall remain in full force and effect. 12.9. Interpretation. If there are multiple Sellers, references herein to Seller shall be construed case by case to refer to any, some or all Sellers as the context requires to enable Buyer to obtain the fullest benefit of this Agreement, and all Sellers shall be jointly and severally liable for all representations, warranties, covenants, agreements, liabilities and other obligations of any one or all of the Sellers under this Agreement or any Other Document whether or not so indicated in any other provision of this Agreement or any Other Document. [SIGNATURE PAGE FOLLOWS] 34 35 SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above. BUYER: COX RADIO, INC. By: ------------------------------- Name: ----------------------------- Title: ---------------------------- COMPANY: MIDWESTERN BROADCASTING COMPANY, INC. By: ------------------------------- Name: ----------------------------- Title: ---------------------------- SELLER: ---------------------------------- Lewis W. Dickey, Sr., an individual ---------------------------------- Patricia A. Dickey, an individual ---------------------------------- Patricia L. Dickey, an individual 35 EX-10.9 6 ex10-9.txt 364-DAY CREDIT AGREEMENT 1 Exhibit 10.9 ================================================================================ 364-DAY CREDIT AGREEMENT dated as of June 30, 2000 among COX RADIO, INC., THE BANKS REFERRED TO HEREIN, THE CHASE MANHATTAN BANK, as Administrative Agent, BANK OF AMERICA, N.A., as Syndications Agent, and CITIBANK, N.A., as Documentation Agent ================================================================================ [CSM Ref. 6700-510] 2 COX RADIO, INC. TABLE OF CONTENTS ARTICLE I SECTION 1.01. Definitions ........................................... 1 SECTION 1.02. Terms Generally ....................................... 18 ARTICLE II The Loans SECTION 2.01. The Revolving Loans ................................... 18 SECTION 2.02. Setoff, Counterclaims and Taxes ....................... 31 SECTION 2.03. Withholding Tax Exemption ............................. 32 SECTION 2.04. Obligations Several, Not Joint ........................ 32 SECTION 2.05. Evidence of Debt ...................................... 32 SECTION 2.06. Discretionary Loans ................................... 33 SECTION 2.07. Swingline Loans ....................................... 34 ARTICLE III Optional and Required Prepayments; Interest Payment Date; Other Payments SECTION 3.01. Optional Prepayments ................................. 37 SECTION 3.02. Required Prepayments ................................. 38 SECTION 3.03. Interest Payment Date ................................ 41 SECTION 3.04. Place, Etc. of Payments and Prepayments .............. 41 ARTICLE IV Fees; Reduction of Commitments SECTION 4.01. Administration Fee ................................... 42 SECTION 4.02. Commitment Fees ...................................... 42 SECTION 4.03. Utilization Fees ..................................... 42 SECTION 4.04. Reduction or Termination of Commitments .............. 43 ARTICLE V Application of Proceeds .............................. 43
3 2 ARTICLE VI Representations and Warranties SECTION 6.01. Organization; Qualification; Subsidiaries ........................................ 44 SECTION 6.02. Financial Statements .................................. 44 SECTION 6.03. Actions Pending ....................................... 44 SECTION 6.04. Default ............................................... 45 SECTION 6.05. Title to Assets; Licenses; Intellectual Property ............................................ 45 SECTION 6.06. Payment of Taxes ...................................... 45 SECTION 6.07. Conflicting or Adverse Agreements or Restrictions ........................................ 46 SECTION 6.08. Purpose of Loans ...................................... 46 SECTION 6.09. Authority; Validity ................................... 46 SECTION 6.10. Consents or Approvals ................................. 47 SECTION 6.11. Compliance with Law ................................... 47 SECTION 6.12. ERISA ................................................. 47 SECTION 6.13. Investment Company Act ................................ 47 SECTION 6.14. Disclosure ............................................ 48 SECTION 6.15. Insurance ............................................. 48 SECTION 6.16. Environmental and Safety Matters ...................... 48 ARTICLE VII Conditions SECTION 7.01. Conditions Precedent to Closing ....................... 49 SECTION 7.02. Conditions Precedent to Each Borrowing ................ 51 ARTICLE VIII Affirmative Consents SECTION 8.01. Certain Financial Covenants ........................... 52 SECTION 8.02. Financial Statements and Information .................. 53 SECTION 8.03. Existence; Laws; Obligations .......................... 55 SECTION 8.04. Notice of Litigation and Other Matters ................ 55 SECTION 8.05. Books and Records ..................................... 56 SECTION 8.06. Inspection of Property and Records .................... 56 SECTION 8.07. Maintenance of Property, Insurance .................... 56 SECTION 8.08. ERISA ................................................. 56 SECTION 8.09. Maintenance of Business Lines ......................... 57
4 3 SECTION 8.10. Restricted/Unrestricted Designation of Subsidiaries ........................................ 57 SECTION 8.11. Compliance with Material FCC Licenses ................. 58 ARTICLE IX Negative Covenants SECTION 9.01. Mortgages, Etc......................................... 58 SECTION 9.02. Merger; Consolidation; Disposition of Assets .............................................. 60 SECTION 9.03. Restricted Payments ................................... 60 SECTION 9.04. Limitation on Margin Stock ............................ 60 SECTION 9.05. Transactions with Affiliates .......................... 61 SECTION 9.06. Loans and Advances to and Investments in Unrestricted Subsidiaries ........................... 61 SECTION 9.07. Debt .................................................. 62 ARTICLE X Events of Default SECTION 10.01. Failure To Pay Principal or Interest ................. 63 SECTION 10.02. Failure To Pay Other Sums ............................ 63 SECTION 10.03. Failure To Pay Other Debt ............................ 63 SECTION 10.04. Misrepresentation or Breach of Warranty ........................................... 64 SECTION 10.05. Violation of Certain Covenants ....................... 64 SECTION 10.06. Violation of Other Covenants, Etc..................... 64 SECTION 10.07. Undischarged Judgment ................................ 64 SECTION 10.08. ERISA ................................................ 64 SECTION 10.09. Change of Control .................................... 65 SECTION 10.10. Assignment for Benefit of Creditors or Nonpayment of Debts ............................. 65 SECTION 10.11. Voluntary Bankruptcy ................................. 65 SECTION 10.12. Involuntary Bankruptcy ............................... 65 SECTION 10.13. Dissolution .......................................... 65 ARTICLE XI Modifications, Amendments or Waivers ...................... 66
5 4 ARTICLE XII The Administrative Agent SECTION 12.01. Appointment of Administrative Agent .................. 67 SECTION 12.02. Indemnification of Administrative Agent .............................................. 67 SECTION 12.03. Limitation of Liability .............................. 68 SECTION 12.04. Independent Credit Decision .......................... 68 SECTION 12.05. Rights of Chase ...................................... 69 SECTION 12.06. Successor to the Administrative Agent ................ 69 ARTICLE XIII Miscellaneous SECTION 13.01. Payment of Expenses .................................. 70 SECTION 13.02. Notices .............................................. 71 SECTION 13.03. Setoff ............................................... 71 SECTION 13.04. Indemnity and Judgments .............................. 72 SECTION 13.05. Interest ............................................. 73 SECTION 13.06. Governing Law; Submission to Jurisdiction; Venue ................................ 74 SECTION 13.07. Survival of Representations and Warranties; Binding Effect; Assignment ......................................... 75 SECTION 13.08. Counterparts ......................................... 79 SECTION 13.09. Severability ......................................... 79 SECTION 13.10. Descriptive Headings ................................. 80 SECTION 13.11. Representation of the Banks .......................... 80 SECTION 13.12. Final Agreement of the Parties ....................... 80 SECTION 13.13. Waiver of Jury Trial ................................. 80
LIST OF EXHIBITS Exhibit 2.01(a) - Banks and Commitments Exhibit 2.01(g)(iv) - Eurocurrency Liabilities (Regulation D) Exhibit 2.07 - Swingline Lenders and Commitments Exhibit 6.01 - List of Subsidiaries Exhibit 6.03 - List of Actions Pending Exhibit 7.01(b) - Opinion of the Company's Counsel 6 5 Exhibit 7.01(c) - Officer's Certificate Exhibit 9.01(d) - List of Liens and Security Interests Exhibit 9.07(a) - Subsidiary Debt Exhibit 13.02 - Addresses for Notices Exhibit 13.07(c) - Assignment and Acceptance 7 364-DAY CREDIT AGREEMENT dated as of June 30, 2000 (this "Agreement"), among COX RADIO, INC., a Delaware corporation (the "Company"), the BANKS referred to herein, THE CHASE MANHATTAN BANK ("Chase"), as administrative agent (the "Administrative Agent"), BANK OF AMERICA, N.A., as syndications agent, and CITIBANK, N.A., as documentation agent. WHEREAS the Company, an indirect majority-owned subsidiary of Cox Enterprises (such term and each other capitalized term used in this Agreement having the meaning set forth in Article I hereof) has previously entered into the Five-Year Credit Agreement dated as of March 7, 1997 (the "Existing Facility"), among the Company, the banks party thereto, Texas Commerce Bank National Association, as Administrative Agent, Nationsbank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. WHEREAS the Company desires, and the Banks, the Administrative Agent and the Documentation Agent have agreed, to replace the Existing Facility with this Agreement and the Facility B Credit Agreement (as defined below). WHEREAS the proceeds of the borrowings hereunder will be used for general corporate purposes (including acquisitions) and to repay any amounts outstanding under the Existing Facility. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE I Definitions Section 1.01. Definitions. As used in this Agreement, the following words and terms shall have the respective meanings indicated opposite each of them and all accounting terms shall be construed in accordance with GAAP consistent with those followed in the preparation of the 8 2 financial statements referred to in Section 6.02, unless otherwise indicated: "Administrative Agent" shall have the meaning set forth in the introductory paragraph of this Agreement. "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agent's Fee Letter" shall mean the fee letter dated as of June 22, 2000, between Chase Securities Inc. ("CSI") and the Company. "Aggregate Commitments" shall have the meaning set forth in Section 4.03. "Agreement" shall mean this 364-Day Credit Agreement. "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the greater of (a) the Floating Rate in effect on such day; or (b) the Federal Funds Borrowing Rate in effect for such day plus 1/2 of 1%. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Federal Funds Borrowing Rate shall be effective on the effective date of such change in the Federal Funds Borrowing Rate. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive, absent demonstrable error) that it is unable to ascertain, after reasonable efforts, the Federal Funds Borrowing Rate, the Alternate Base Rate shall be the Floating Rate until the circumstances giving rise to such inability no longer exist. "Alternate Base Rate Loans" shall mean the loans described in Section 2.01(d)(i) which bear interest at a rate based on the Alternate Base Rate and the Swingline Loans. "Applicable Percentage" shall mean, with respect to any Bank at any time, the percentage of the Total Commitment represented by such Bank's Commitment at such time. 9 3 "Assignment and Acceptance" shall have the meaning specified in Section 13.07(c) hereof. "Attributable Amount" shall mean, in connection with any designation of a Restricted Subsidiary as an Unrestricted Subsidiary or of an Unrestricted Subsidiary as a Restricted Subsidiary pursuant to Section 8.10, the amount of EBITDA for the most recent four consecutive fiscal quarter period for which financial statements have been delivered in accordance with Section 8.02, determined at the time of such designation, which was attributable to such Subsidiary. "Bank Affiliate" shall mean, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor. "Banks" shall mean the Persons listed on Exhibit 2.01(a), each such Bank's respective successors (which successors shall include any entity resulting from a merger or consolidation) and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Banks" includes the Swingline Lenders. "Borrowing Date" shall mean a date upon which a Borrowing is, or is to be made, under Section 2.01(a). "Borrowings" shall mean Borrowings by the Company under (a) Section 2.01(a) consisting of simultaneous Revolving Loans from the Banks or (b) Section 2.07 consisting of Swingline Loans. "Business Day" shall mean a day when the Reference Banks and the Administrative Agent are open for business; provided that in connection with Eurodollar Loans, it shall mean a day when the Reference Banks and the 10 4 Administrative Agent are open for business and banks are authorized to be open for business in London and New York. "Capital Stock" of any Person shall mean any and all shares, interests, share capital, rights to subscribe for or purchase, warrants, options, participations or other equivalents of or interests or membership interests in (however designated) equity of such Person, including any Preferred Stock, any limited or general partnership interest and any limited liability company membership interest (but excluding any debt securities convertible into such equity), and any rights to subscribe for or purchase any thereof. "Cash Flow Producing Assets" shall mean (a) assets other than (i) cash equivalents and other investments purchased in the ordinary course of the Company's cash management activities, (ii) office buildings and office equipment and supplies and (iii) other assets not comprising radio broadcast stations or portions thereof or not directly employed in the cash flow-producing activities of the Company and the Restricted Subsidiaries and (b) any Capital Stock of a Restricted Subsidiary substantially all the assets of which constitute assets described in clause (a) above. "CD Rate" for any Interest Period shall mean, for each CD Rate Loan comprising all or part of the relevant Borrowing, an interest rate per annum determined by the Administrative Agent to be equal to the sum of: (a) the rate per annum obtained by dividing (i) the per annum rate of interest determined by the Administrative Agent to be the average (rounded upward to the nearest whole multiple of 0.01%, if such average is not such a multiple) of the bid rate determined independently by each Reference Bank at 9:00 a.m. (New York, New York time), or as soon thereafter as is practicable, on the first day of such Interest Period, of a certificate of deposit dealer of recognized standing selected by each Reference Bank for the purchase at face value of its certificates of deposit in an amount approximately equal or comparable to the aggregate principal amount of such CD Rate Loans, with a maturity equal to such Interest Period, by (ii) the result obtained by subtracting from 100% all reserve (including any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirements (expressed as a rate 11 5 per annum) applicable (or scheduled at the time of determination to become applicable during such Interest Period) to such certificates of deposit, plus (b) the weighted average of annual assessment rates, determined by the Administrative Agent to be in effect on the first day of such Interest Period, used to determine the then current annual assessment payable by the Reference Banks to the Federal Deposit Insurance Corporation for such Corporation's insuring Dollar deposits of such Reference Banks in the United States. The Administrative Agent shall deliver to the Company a certificate setting forth in reasonable detail the calculation of the CD Rate with each determination of the CD Rate. "CD Rate Loans" shall mean the loans described in Section 2.01(d)(iii) which bear interest at a rate based on the CD Rate. A "Change of Control" shall be deemed to have occurred if (a) the Cox Family and Cox Enterprises shall cease at any time to own directly or indirectly Capital Stock of the Company carrying at least 50.1% of the voting power of all the outstanding voting stock of the Company, (b) any Person or group of Persons other than the Cox Family, Cox Enterprises and Persons Controlled by them shall have the right or ability, directly or indirectly, to cause the election of a majority of the directors of the Company, (c) the Cox Family shall cease at any time to own directly or indirectly at least 50.1% of the outstanding voting stock of Cox Enterprises, or (d) any Person or group of Persons other than the Cox Family shall have the right or ability, directly or indirectly, to cause the election of a majority of the directors of Cox Enterprises. "Chase" shall have the meaning set forth in the introductory paragraph of this Agreement. "Closing Date" shall mean the date of this Agreement. "Commitment" shall mean as to any Bank the aggregate amount of such Bank's commitment to make Loans as set forth beside such Bank's name on Exhibit 2.01(a) attached hereto or in any Assignment and Acceptance executed pursuant to Section 13.07(c), as such amount 12 6 (a) may be reduced from time to time pursuant to the terms of this Agreement or pursuant to an Assignment and Acceptance or (b) may be increased from time to time pursuant to an Assignment and Acceptance. "Commitment Fees" shall have the meaning set forth in Section 4.02. "Commitment Fee Rate" shall have the meaning set forth under the definition of "Margin Percentage". "Commitment Letter" shall have the meaning assigned to such term in Section 13.04. "Company" shall have the meaning set forth in the introductory paragraph of this Agreement. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Counsel for the Company" shall mean Dow, Lohnes & Albertson, PLLC. "Cox Enterprises" shall mean Cox Enterprises, Inc., a Delaware corporation. "Cox Family" shall mean those certain trusts commonly referred to as the Dayton-Cox Trust A, the Barbara Cox Anthony Atlanta Trust, the Anne Cox Chambers Atlanta Trust, the Estate of James M. Cox, Jr., Barbara Cox Anthony, Garner Anthony, Anne Cox Chambers, and the estates, executors and administrators, and children of the above-named individuals, and any corporation, partnership, limited liability company, trust or other entity in which the above-named trusts or individuals in the aggregate have a beneficial interest of greater than 50%. "CSI" shall have the meaning set forth in the definition of "Agent's Fee Letter" under this Agreement. "Debt" shall mean with respect to any Person and without duplication (a) indebtedness for borrowed money or for the deferred purchase price of Property or services in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in 13 7 respect of which such Person directly or indirectly assures a creditor against loss, (b) the capitalized portions of obligations under leases which shall have been or should have been, in accordance with GAAP, recorded as capital leases, (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (d) all guarantees by such Person of the Debt of others. "Default Rate" shall mean a rate per annum (for the actual number of days elapsed, based on a year of 365 or 366 days, as the case may be) which shall be equal to the lesser of (a) the Alternate Base Rate plus 1% or (b) the Highest Lawful Rate. "Depositary" shall have the meaning assigned to such term in Section 13.03. "Discretionary Borrowings" shall mean borrowings by the Company under Section 2.06 consisting of Discretionary Loans. "Discretionary Loans" shall mean loans made by a Bank pursuant to Section 2.06. "Dollars" and "$" shall mean lawful currency of the United States of America. "EBITDA" shall mean, with respect to any period, the net income of the Company and its Subsidiaries on a consolidated basis for such period plus, to the extent deducted in computing such consolidated net income, without duplication, the sum of (a) income tax expense, (b) interest expense, (c) depreciation and amortization expense, (d) any extraordinary or non-recurring losses, (e) management fees paid to Cox Enterprises, (f) closing costs and other non-recurring costs incurred in connection with this Agreement, the Facility B Credit Agreement and any other acquisition, disposition or financing, and (g) other noncash items reducing such consolidated net income, minus, to the extent added in computing such consolidated net income, without duplication, the sum of (i) interest income, (ii) any extraordinary or non-recurring gains and (iii) other noncash items increasing such consolidated net income, determined on a consolidated basis in accordance with GAAP. "ERISA" shall mean the Employee Retirement Income Security Act of 1974. 14 8 "Eurodollar Event" shall have the meaning assigned to such term in Section 2.01(e). "Eurodollar Loans" shall mean the Loans described in Section 2.01(d)(ii) which bear interest at a rate based on the Eurodollar Rate. "Eurodollar Rate" for any Interest Period shall mean, for each Eurodollar Loan comprising part of the relevant Borrowing, an interest rate per annum equal to the per annum rate of interest determined by the Administrative Agent to be the arithmetical average (rounded upward to the nearest whole multiple of 0.01%, if such average is not such a multiple) of the rate per annum at which deposits in Dollars are offered by the Lending Office of each Reference Bank to a prime bank in the interbank domestic eurodollar market at 10:00 a.m. (New York, New York time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of the relevant Eurodollar Loan of such Reference Bank during such Interest Period. "Event of Default" shall have the meaning assigned to such term in Article 10; provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "Default" shall mean any of such events, whether or not any such requirement has been satisfied. "Existing Facility" shall have the meaning set forth in the introductory paragraph of this Agreement. "Facility B Credit Agreement" shall mean the Five-Year Credit Agreement dated as of June 30, 2000, among the Company, certain lenders, Chase, as administrative agent for such lenders, Bank of America, N.A., as syndication agent for such lenders, and Citibank, N.A., as documentation agent for such lenders. "FCC" shall mean the Federal Communications Commission or any successor governmental agency thereto. "Federal Funds Borrowing Rate" shall mean, for any day, a fluctuating interest rate per annum equal to the weighted average (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the 15 9 Federal Reserve System for such day quoted by the Reference Banks to the Administrative Agent at 12:00 noon (New York, New York time) on such day. "Floating Rate" shall mean, as of a particular date, the prime rate most recently determined by the Administrative Agent. Without notice to the Company or any other Person, the Floating Rate shall change automatically from time to time as and in the amount by which said prime rate shall fluctuate, with each such change to be effective as of the date of each change in such prime rate. The Floating Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent may make commercial loans or other loans at rates of interest at, above or below the Floating Rate. "GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination; provided that, if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Majority Banks request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. "Granting Bank" shall have the meaning assigned to such term in Section 13.07(d). "Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if any, that at any applicable time may be contracted for, taken, reserved, charged or received on any Loan or on the other amounts which may be owing to any Bank pursuant to this Agreement under the laws applicable to such Bank and this transaction. 16 10 "Indemnified Liabilities" shall have the meaning assigned to such term in Section 13.04. "Index Debt" shall mean senior, unsecured long-term Debt of the Company that is not guaranteed by any other Person or subject to any other credit enhancement. "Interest Coverage Ratio" shall mean, at any time, the ratio of (a) Pro Forma EBITDA plus, to the extent subtracted in computing EBITDA, interest income to (b) Interest Expense, in each case for any four consecutive fiscal quarter period. "Interest Expense" shall mean, with respect to any period, cash interest expense of the Company and its Restricted Subsidiaries on a consolidated basis for such period determined in accordance with GAAP. "Interest Payment Date" shall mean, with respect to Alternate Base Rate Loans, each Quarterly Date, with respect to Eurodollar Loans or CD Rate Loans, the last day of each Interest Period, or with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid. "Interest Period" shall mean, with respect to each Eurodollar Loan and CD Rate Loan made hereunder, the period commencing on the Borrowing Date of such Loan and (a) in the case of Eurodollar Loans, ending one, two, three or six months thereafter; and (b) in the case of CD Rate Loans, ending 30, 60, 90 or 180 days thereafter; in each case as the Company may select in the Notice of Borrowing; provided, however, that (i) no Interest Period for a Loan may be chosen that would extend beyond the Maturity Date, (ii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided that with respect to Eurodollar Loans, any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day only if such Business Day does not fall in another month, and in the event the next succeeding Business Day falls in another month, the Interest Period for such Eurodollar Loan shall be accelerated so that such Interest Period shall end on 17 11 the next preceding Business Day and (iii) any Interest Period that begins on a day for which there is no numerically corresponding day in the last month of such Interest Period shall end on the last Business Day of the last month of such Interest Period. In no event shall there be more than ten Interest Periods in effect at any one time. "Lending Office" shall mean, with respect to any Bank, its principal office in the city identified with such Bank in Exhibit 13.02 hereto, or such other office or branch of such Bank, or Affiliate of such Bank located in the United States (acting on behalf of such Bank as its "Lending Office" hereunder), as it shall designate in writing from time to time to the Company, as the case may be. "Leverage Ratio" shall mean, at any time, the ratio of (a) Total Debt, as of the last day of the fiscal quarter most recently ended, to (b) Pro Forma EBITDA, for the four consecutive fiscal quarter period then most recently ended. "Loans" shall mean Revolving Loans, Discretionary Loans and Swingline Loans. "Majority Banks" shall mean Banks holding at least 51% of the aggregate Commitments hereunder. "Mandatory Prepayment Ratio" shall have the meaning set forth in Section 3.02(b)(i). "Margin Percentage" shall mean at any date that percentage (a) to be added to the CD Rate or the Eurodollar Rate pursuant to Section 2.01(d)(iii) or Section 2.01(d)(ii) for purposes of determining the per annum rate of interest applicable from time to time to CD Rate Loans or Eurodollar Loans and (b) to be used in computing the Commitment Fee Rate pursuant to Section 4.02, set forth under the appropriate column below opposite the 18 12 Category corresponding to the credit ratings by Moody's or S&P, respectively, applicable to the Index Debt on such date:
Category Ratings Commitment Applicable Fee Rate (%) Margin (%) Category 1 >A-/A3 0.09 0.40 = Category 2 BBB+/Baa1 0.10 0.50 Category 3 BBB/Baa2 0.125 0.625 Category 4 BBB-/Baa3 0.15 0.75 Category 5 For purposes of the foregoing, (i) if either of Moody's or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall fall within different Categories, the Margin Percentage shall be based on the highest of the ratings; and (iii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Margin Percentage shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if any such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Banks shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Margin Percentage shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Margin Stock" shall mean "margin stock" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System. 19 13 "Material FCC Licenses" shall have the meaning set forth in Section 8.04. "Materially Adverse Effect" shall mean (a) a material and adverse effect on the business, properties, operations or financial condition of the Company and the Restricted Subsidiaries taken as a whole, (b) a material impairment of the ability of the Company to perform any of its material obligations under this Agreement or (c) a material impairment of the rights or interests of the Banks in connection with this Agreement. "Maturity Date" shall mean the date that is 364 days after the Closing Date. "Maximum Permissible Rate" shall have the meaning set forth in Section 13.05. "Moody's" shall mean Moody's Investors Service, Inc. "Net Cash Proceeds" shall mean (a) with respect to a sale, assignment, transfer or other disposition by the Company or any Restricted Subsidiaries to any Person other than the Company or any Restricted Subsidiaries of any Capital Stock or assets owned by such party, the gross cash proceeds to such party (including cash proceeds, whenever received, of any non-cash consideration) of such sale, assignment, transfer or other disposition, less the sum of (i) the reasonable costs associated with such sale, assignment, transfer or other disposition, including income taxes (as estimated by the Company or any Restricted Subsidiaries, as the case may be, in good faith after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) payments of the outstanding principal amount of, premium or penalty, if any, and interest on any Debt required to be, and which in fact is, prepaid under the terms thereof as a result of such disposition, and payments required to be made to the holders of any Debt to obtain the consent of such holders to such transaction, (iii) appropriate amounts as a reserve, in accordance with GAAP, against any liabilities directly associated with the Capital Stock or assets sold and which liabilities are retained by the Company or any Restricted Subsidiaries after such sale, assignment, transfer or other disposition, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such sale, assignment, transfer 20 14 or disposition, and (iv) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such transaction, and (b) with respect to any incurrence of Debt, cash proceeds net of underwriting commissions or placement fees and expenses directly incurred in connection therewith. "Notice of Borrowing" shall have the meaning set forth in Section 2.01(b)(i). "Obligations" shall mean the obligations of the Company under this Agreement with respect to (a) the principal amount of the Loans, (b) interest on the Loans and (c) all other monetary obligations of the Company under this Agreement. "Officer's Certificate" shall mean a certificate signed in the name of the Company by either its chief executive officer, its president, its chief financial officer, one of its vice presidents or its treasurer. "PBGC" shall have the meaning set forth in Section 6.12. "Person" shall mean an individual, partnership, joint venture, corporation, company, limited liability company, bank, trust, unincorporated organization or a government or any department or agency thereof or any other entity. "Plan" shall mean any employee pension benefit plan within the meaning of Title IV of ERISA which is either (i) maintained for employees of the Company, of any Subsidiary, or of any member of a "controlled group of corporations" or "combined group of trades or businesses under common control" as such terms are defined, respectively, in Sections 414(b) and (c) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, of which the Company or any Subsidiary is a party, or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Company, any Subsidiary or any member of a "controlled group of corporations" or "combined group of trades or businesses under common control" defined as aforesaid, is at the time in question making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. 21 15 "Preferred Stock", as applied to the Capital Stock of any Person, shall mean Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "Pro Forma Compliance" shall mean the compliance by the Company on a pro forma basis with the covenants set forth in subsection 8.01 for the four fiscal quarter period ending on the last day of the most recently ended fiscal quarter for which financial statements have been delivered in accordance with subsection 8.02 as if the designation of a Restricted Subsidiary or an Unrestricted Subsidiary with respect to which Pro Forma Compliance is being measured had occurred on the first day of such period. "Pro Forma EBITDA" shall mean EBITDA, excluding therefrom EBITDA attributable to any Property sold or otherwise disposed of other than in the ordinary course of business during any applicable period as if such Property were not owned at any time during such period, and including therein EBITDA attributable to any Property acquired other than in the ordinary course of business during any applicable period as if such Property were at all times owned during such period. "Pro Rata Share" shall mean, with respect to any Bank, a fraction (expressed as a percentage rounded upward to the nearest whole multiple of 0.000000001%) (a) the numerator of which shall be the amount equal to such Bank's Commitment, and (b) the denominator of which shall be the aggregate amount of all Banks' Commitments. "Property" shall mean all types of real and personal property, whether tangible, or intangible or mixed. "Quarterly Date" shall mean the last day of each March, June, September and December, beginning with September 30, 2000, or if any such date is not a Business Day, the next succeeding Business Day. "Reference Banks" shall mean Chase, Bank of America, N.A. and Citibank, N.A. "Register" shall have the meaning set forth in Section 13.07(f) hereof. 22 16 "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System. "Required Prepayment Date" shall have the meaning set forth in Section 2.01(e)(i) hereof. "Restricted Subsidiary" shall mean each Subsidiary other than those Subsidiaries identified as Unrestricted Subsidiaries in Exhibit 6.01; provided, however, that subject to Section 8.10, a Restricted Subsidiary may be designated by the Company as an Unrestricted Subsidiary or an Unrestricted Subsidiary may be redesignated by the Company as a Restricted Subsidiary; provided further, that after the initial designation of an Unrestricted Subsidiary by the Company, only five further redesignations of such Subsidiary shall be permitted. "Revolving Loans" shall mean CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans made pursuant to Section 2.01(a). "S&P" shall mean Standard & Poor's Rating Group. "SPC" shall have the meaning set forth in Section 13.07(d) hereof. "Subsidiary" shall mean, with respect to the Company at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the Company in the Company's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. "Swingline Borrowing" shall mean a borrowing consisting of simultaneous Swingline Loans from each of the Swingline Lenders. "Swingline Commitment" shall mean, with respect to any Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans hereunder as set forth in Section 2.07, as such Bank's Swingline Commitment may be 23 17 permanently terminated or reduced from time to time pursuant to Section 2.07(d). The Swingline Commitments shall automatically and permanently terminate on the Maturity Date. "Swingline Commitment Percentage" shall mean, with respect to any Swingline Lender at any time, the percentage that the Swingline Commitment of such Swingline Lender represents of the Total Swingline Commitment at such time. "Swingline Lender" shall mean each Person that is listed on Exhibit 2.07. "Swingline Loan" shall mean any Loan made by a Bank pursuant to Section 2.07. Each Swingline Loan shall be an Alternate Base Rate Loan. "Swingline Loan Exposure" shall mean, at any time, the aggregate outstanding principal amount at such time of all Swingline Loans. The Swingline Loan Exposure of any Bank at any time shall mean its Applicable Percentage of the aggregate Swingline Loan Exposure at such time. "Swingline Maturity Date" shall mean the date that is seven Business Days following the applicable Swingline Borrowing or, if earlier, on the Maturity Date or the date of repayment or prepayment or conversion of such Borrowing. "Total Commitment" shall mean, at any time, the aggregate amount of the Commitments, as in effect at such time. "Total Debt" shall mean, as of any date and without duplication, all Debt of the Company and the Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, including guaranties of Debt obligations of parties other than the Company or such Restricted Subsidiaries and obligations under or with respect to standby letters of credit of the Company and the Restricted Subsidiaries. "Total Swingline Commitment" shall mean, at any time, the aggregate amount of the Swingline Commitments, as in effect at such time. 24 18 "Unrestricted Subsidiary" shall mean any Subsidiary so designated in accordance with Section 6.01 or Section 8.10. "Utilization Fee" shall have the meaning set forth in Section 4.03 hereof. "Utilized Loans" shall have the meaning set forth in Section 4.03 hereof. "Wholly Owned", when used with respect to a Subsidiary, shall mean the beneficial ownership by the Company of 100% of the Capital Stock of such Subsidiary. SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. ARTICLE II The Loans SECTION 2.01. The Revolving Loans. (a) Revolving Loan Commitment. Subject to and upon the terms and conditions set forth in this Agreement, each Bank severally agrees to make Revolving Loans in Dollars to the Company on any one or more Business Days on or after the date hereof and prior to the Maturity Date, up to an 25 19 aggregate principal amount of Revolving Loans not exceeding at any one time outstanding an amount equal to such Bank's Commitment made to the Company, if any, minus such Bank's Swingline Loan Exposure; provided, however, that in no event shall the aggregate outstanding principal amount at any time of the Revolving Loans and the Discretionary Loans and the Swingline Loan Exposure exceed $350,000,000, as such amount may be reduced pursuant to the terms of this Agreement. Each Borrowing shall be in an aggregate amount of not less than $3,000,000 and an integral multiple of $250,000. Subject to the foregoing, each Borrowing shall be made simultaneously from the Banks according to their Pro Rata Shares of the principal amount requested for each Borrowing, and shall consist of Revolving Loans of the same type (e.g., CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans) with the same Interest Period from each Bank. Within such limits and during such period, the Company may borrow, repay and reborrow under this Section 2.01(a). (b) Borrowing Procedures; Delivery of Proceeds; Recordation of Loans. (i) Each Borrowing under this Section 2.01 shall be made on at least (A) in the case of a Borrowing consisting of Alternate Base Rate Loans, prior oral or written notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) on the same day as the requested Borrowing (and the Administrative Agent shall prior to 12:00 noon (New York, New York time) on the date such notice is received by the Administrative Agent provide oral or written notice of the requested Borrowing to the Banks, and each Reference Bank shall then provide to the Administrative Agent not later than 12:15 p.m. (New York, New York time) oral or written notice of the Federal Funds Borrowing Rate for such day offered at 12:00 noon (New York, New York time) by such Reference Bank to the Company, and the Alternate Base Rate determined by the Administrative Agent shall be conveyed by the Administrative Agent by oral or written communication to all the Banks by 1:00 p.m. (New York, New York time) on the Borrowing Date), (B) in the case of a Borrowing consisting of Eurodollar Loans, three Business Days' prior written or oral notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) and (C) in the case of a Borrowing consisting of CD Rate Loans, one Business Day's prior written or oral notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) (and the Administrative Agent shall, in the case of (B) and (C) above, provide to each Bank prior oral or written notice of the requested borrowing by 26 20 11:30 a.m. (New York, New York time) on the date such notice is received by the Administrative Agent) (in each case, a "Notice of Borrowing"); provided, however, with respect to each oral Notice of Borrowing, the Company shall deliver promptly (and in any event, no later than two Business Days after the giving of such oral notice) to the Administrative Agent a confirmatory written Notice of Borrowing. Each Notice of Borrowing shall be irrevocable and shall specify: (w) the total principal amount of the proposed Borrowing, (x) whether the Borrowing will be comprised of CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans, (y) with respect to Eurodollar Loans and CD Rate Loans the applicable Interest Period for such Loans (which may not extend beyond the Maturity Date), and (z) the Borrowing Date. The Administrative Agent shall promptly give like notice to the other Banks, and on the Borrowing Date each Bank shall make its Pro Rata Share of the Borrowing available at the principal banking office of the Administrative Agent, 270 Park Avenue, New York, New York 10017, no later than 3:30 p.m. (New York, New York time) in the case of a Borrowing consisting of Alternate Base Rate Loans, and no later than 2:00 p.m. (New York, New York time) in the case of all other Borrowings, in each case in immediately available funds. (ii) The Administrative Agent shall pay or deliver the proceeds of each Borrowing to or upon the order of the Company. Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Bank resulting from each Loan, from time to time, including the amounts of principal and interest payable and paid such Bank from time to time under this Agreement. The Administrative Agent shall maintain accounts in which it will record (A) the principal amount of each Loan made hereunder, the type of each Loan and the Interest Period applicable thereto, (B) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder and (C) the amount of any sum received by the Administrative Agent hereunder from the Company and each Bank's Pro Rata Share thereof. The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Bank or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Loans in accordance with their terms. 27 21 (c) Substitute Rate. Anything in this Agreement to the contrary notwithstanding, if at any time prior to the determination of the rate with respect to any proposed Loan (i) the Majority Banks in their discretion shall determine with respect to Eurodollar Loans to be made by them on the applicable Borrowing Date of such Loan that there is a reasonable probability that Dollar deposits will not be offered to such Banks in the interbank eurodollar market for a period of time equal to the applicable Interest Period in amounts equal to the amount of each such Bank's Eurodollar Loan in Dollars, that the Eurodollar Rate does not reflect the cost to the Banks of funding Eurodollar Loans or that adequate and reasonable means do not exist to be able to determine the Eurodollar Rate or (ii) the Administrative Agent in its discretion shall determine with respect to CD Rate Loans to be made by the Banks on the applicable Borrowing Date of such proposed Loan that bid rates will not be provided by certificate of deposit dealers of recognized standing for the purchase at face value of certificates of deposit of the Reference Banks for a period of time equal to the applicable Interest Period in amounts approximately equal or comparable to the aggregate principal amount of such Loans with a maturity equal to the applicable Interest Period, then: (A) the Majority Banks (acting through the Administrative Agent) or the Administrative Agent, as the case may be, shall give the Company notice thereof, and in the case of subsection (ii) above, the Administrative Agent shall also give the Banks notice thereof, and (B) Alternate Base Rate Loans shall be made in lieu of any Eurodollar Loans or CD Rate Loans that were to have been made at such time. (d) Interest. The Loans shall bear interest as follows: (i) Each Alternate Base Rate Loan (including each Swingline Loan) shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 365 or 366 days, as the case may be) which shall be equal to the lesser of (A) the Alternate Base Rate or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. 28 22 (ii) Each Eurodollar Loan shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 360 days) which shall be the lesser of (A) the sum of the Eurodollar Rate plus the applicable Margin Percentage or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. (iii) Each CD Rate Loan shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 360 days) which shall equal to the lesser of (A) the sum of the CD Rate plus the applicable Margin Percentage or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. (iv) Interest on the outstanding principal of each Loan shall accrue from and including the Borrowing Date for such Loan to but excluding the date such Loan is paid in full and shall be due and payable (A) on the Interest Payment Date for each such Loan, (B) as to any Eurodollar Loan having an Interest Period greater than three months, at the end of the third month of the Interest Period for such Loan, (C) as to any CD Rate Loan having an Interest Period greater than 90 days, on the 90th day of the Interest Period for such Loan, and (D) as to all Loans, at maturity, whether by acceleration or otherwise, or after notice of prepayment in accordance with Section 2.01(e)(i) or Section 3.01(c) hereof, on and after the Required Prepayment Date or the applicable prepayment date, as the case may be, as specified in such notice. (v) Past due principal, whether pursuant to acceleration or the Company's failure to make a prepayment on the date specified in the applicable prepayment notice or otherwise, and, to the extent permitted by applicable law, past due interest and (after the occurrence of an Event of Default) past due fees, pursuant to acceleration or otherwise, shall bear interest from their respective due dates, until paid, at the Default Rate and shall be due and payable upon demand. (e) Change of Law. (i) Anything in this Agreement to the contrary notwithstanding, if at any time 29 23 any Bank in good faith determines (which determination shall be conclusive absent demonstrable error) that any change after the date hereof in any applicable law, rule or regulation or in the interpretation or administration thereof makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful (any of the above being described as a "Eurodollar Event") for such Bank or its foreign branch or branches to maintain or fund any Loan in Dollars by means of Dollar deposits obtained in the interbank eurodollar market then, at the option of such Bank, the aggregate principal amount of each of such Bank's Eurodollar Loans then outstanding, which Loans are directly affected by such Eurodollar Events, shall be prepaid in Dollars, and any remaining obligation of such Bank hereunder to make Eurodollar Loans (but not CD Rate Loans or Alternate Base Rate Loans) shall be suspended for so long as such Eurodollar Events shall continue. Upon the occurrence of any Eurodollar Event and at any time thereafter so long as such Eurodollar Event shall continue, such Bank may exercise its aforesaid option by giving written notice thereof to the Administrative Agent and the Company. Any prepayment of any Eurodollar Loan which is required under this Section 2.01(e) shall be made, together with accrued and unpaid interest and all other amounts payable to such Bank under this Agreement with respect to such prepaid Loan (including amounts payable pursuant to Section 2.01(f)), on the date stated in the notice to the Company referred to above, which date ("Required Prepayment Date") shall be not less than 15 days (or such earlier date as shall be necessary to comply with the relevant law, rule or regulation) from the date of such notice. If any Eurodollar Loan is required to be prepaid under this Section 2.01(e), the Banks agree that at the written request of the Company, the Bank that has made such Eurodollar Loan shall make an Alternate Base Rate Loan or a CD Rate Loan on the Required Prepayment Date to the Company in the same principal amount, in Dollars, as the Eurodollar Loan of such Bank being so prepaid. Any such written request by the Company for Alternate Base Rate Loans or a CD Rate Loan under this Section 2.01(e) shall be irrevocable and, in order to be effective, must be delivered to the Administrative Agent not less than one Business Day prior to the Required Prepayment Date. (ii) Notwithstanding the foregoing, in the event the Company is required to pay to any Bank amounts with respect to any Borrowing pursuant to Section 2.01(e)(i), the Company may give notice to such Bank (with copies to the Administrative Agent) that it wishes to seek one or 30 24 more assignees (which may be one or more of the Banks) to assume the Commitment and any Swingline Commitment of such Bank and to purchase its outstanding Loans and the Administrative Agent will use its best efforts to assist the Company in obtaining an assignee; provided that if more than one Bank requests that the Company pay substantially and proportionately equal additional amounts under Section 2.01(e)(i) and the Company elects to seek an assignee to assume the Commitments and any Swingline Commitments of any of such affected Banks, the Company must seek an assignee or assignees to assume the Commitments and any Swingline Commitments of all such affected Banks. Each Bank requesting compensation pursuant to Section 2.01(e)(i) agrees to sell its Commitments, any Swingline Commitments, Loans and interest in this Agreement in accordance with Section 13.07 to any such assignee for an amount equal to the sum of the outstanding unpaid principal of and accrued interest on such Loans in Dollars plus all other fees and amounts (including any compensation claimed by such Bank under Section 2.01(e)(i) and Section 2.01(f)) due such Bank hereunder calculated, in each case, to the date such Commitments, Swingline Commitments, Loans and interest are purchased. Upon such sale or prepayment, each such Bank shall have no further Commitment, Swingline Commitment or other obligation to the Company hereunder. (f) Funding Losses. In the event of (i) any payment or prepayment (whether authorized or required hereunder pursuant to acceleration or otherwise) of all or a portion of any CD Rate Loan or Eurodollar Loan on a day other than the last day of an Interest Period, (ii) any payment or prepayment (whether authorized or required hereunder pursuant to acceleration or otherwise), of any CD Rate Loan or Eurodollar Loan made after the delivery of the Notice of Borrowing for such CD Rate Loan or Eurodollar Loan, but before the Borrowing Date therefor, if such payment or prepayment prevents such CD Rate Loan or Eurodollar Loan from being made in full or (iii) the failure of any Loan to be made by any Bank due to any condition precedent to a Loan not being satisfied or as a result of this Section 2.01, or due to any other action or inaction of the Company, the Company shall pay, in Dollars, to each affected Bank upon its request made on or before 45 days after the occurrence of any such event, acting through the Administrative Agent, such amount or amounts (to the extent such amount or amounts would not be usurious under applicable law) as may be necessary to compensate such Bank for any costs and losses incurred by such Bank (including such amount or amounts as will compensate it for 31 25 the amount by which the rate of interest on such Loan immediately prior to such repayment exceeds the Eurodollar Rate or the CD Rate, for the period from the date of such prepayment to the Interest Payment Date with respect to such prepaid Loan, all as determined in good faith by such Bank) but otherwise without penalty. Any such claim by a Bank for compensation shall be made through the Administrative Agent and shall be accompanied by a certificate signed by an officer of such Bank authorized to so act on behalf of such Bank, setting forth in reasonable detail the computation upon which such claim is based. The obligations of the Company under this Section 2.01(f) shall survive the termination of this Agreement and/or the payment of the obligations hereunder. (g) Increased Costs--Taxes, Reserve Requirements, Etc. (i) The Company for and on behalf of each Bank shall pay or cause to be paid directly to the appropriate governmental authority or shall reimburse or compensate each Bank upon demand by such Bank, acting through the Administrative Agent, for all costs incurred, losses suffered or payments made, as determined by such Bank, by reason of any and all present or future taxes (including any interest equalization tax or any similar tax on the acquisition of debt obligations), levies, imposts or any other charge of any nature whatsoever imposed by any taxing authority, whether or not such taxes were correctly or legally asserted, on or with regard to any aspect of the transactions with respect to this Agreement and the Loans, except such taxes as may be imposed on the overall net income of a Bank or its Lending Office or franchise taxes (imposed on or measured by income, earnings or retained earnings) imposed by the jurisdiction, or any political subdivision or taxing authority thereof, in which such Bank's principal executive office or its Lending Office is located; provided, that the Company shall not be required to pay, cause to be paid or reimburse or compensate any Bank for any taxes, levies, imposts or other charges that (A) are attributable to such Bank's failure to comply with the requirements of Section 2.03 or (B) are imposed on amounts payable to such Bank at the time such Bank becomes a party to this Agreement (or designate a new lending office), except to the extent that such Bank (or its assignor, if any), was entitled, at the time of designation of a new lending office (or assignment) to receive additional amounts from the Company with respect to such taxes pursuant to this paragraph. 32 26 (ii) The Company shall pay immediately upon demand by any Bank, acting through the Administrative Agent, any applicable stamp and registration taxes, duties, official and sealed paper taxes, or similar charges due, in connection with any Loans or this Agreement or in connection with the enforcement hereof; provided, that the Company shall not be required to pay any such taxes on behalf of any Bank if such taxes are imposed at the time such Bank becomes a party to this Agreement (or designates a new lending office), except to the extent that such Bank (or its assignor, if applicable) was entitled at the time of designation of a new lending office (or assignment) to the payment of such taxes pursuant to this paragraph. (iii) If any Bank or the Administrative Agent receives a refund in respect of taxes for which such Bank or the Administrative Agent has received payment from the Company hereunder, it shall promptly notify the Company of such refund and if no Event of Default has occurred shall, within 30 days after receipt of such refund, repay such refund to the Company with interest if any interest is received thereon by such Bank or the Administrative Agent; provided that the Company, upon the request of such Bank or the Administrative Agent, agrees to return such refund (plus penalties, interest or other charges) to such Bank or the Administrative Agent in the event such Bank or the Administrative Agent is required to repay such refund. (iv) (A) The Company shall reimburse or compensate each Bank upon demand by such Bank, acting through the Administrative Agent, for all costs incurred, losses suffered or payments made in connection with any CD Rate Loans or Eurodollar Loans or any part thereof which costs, losses or payments are a result of any future reserve, special deposit or similar requirement against assets of, liabilities of, deposits with or for the account of, or Loans by such Bank imposed on such Bank, its foreign lending branch or the interbank eurodollar market by any regulatory authority, central bank or other governmental authority, whether or not having the force of law, including Regulation D. (B) If as a result of (y) the introduction of or any change in or in the interpretation or administration of any law or regulation or (z) the compliance with any request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Bank of agreeing to make or making, funding or maintaining Loans, (other 33 27 than with respect to taxes, levies, imposts and other charges covered by Sections 2.01(g)(i)-(ii) or Section 2.02 and changes in the rate of tax on the overall net income of such Bank) for which such Bank shall not have been reimbursed pursuant to the provisions of clause (A) above, then the Company shall from time to time, upon demand by such Bank, acting through the Administrative Agent, pay to such Bank additional amounts sufficient to indemnify such Bank against the full amount of such increased cost. (C) Any Bank claiming reimbursement or compensation under this Section 2.01(g)(iv) shall make its demand on or before 45 days after the end of each Interest Period during which any such cost is incurred, loss is suffered or payment is made and shall provide the Administrative Agent, who in turn shall provide the Company, with a written statement showing in reasonable detail the calculation of the amount and basis of its request, which statement, subject to Section 2.01(h), shall be conclusive absent demonstrable error; provided that in the event any reimbursement or compensation demanded by a Bank under this Section 2.01(g) is a result of reserves actually maintained pursuant to the requirements imposed by Regulation D with respect to "Eurocurrency liabilities" (as defined or within the meaning of such Regulation), such demand shall be accompanied by a statement of such Bank in the form of Exhibit 2.01(g)(iv) attached hereto. No Bank may request reimbursement or compensation under this Section 2.01(g)(iv) for any period prior to the period for which demand has been made in accordance with the foregoing sentence. In preparing any statement delivered under this Section 2.01(g)(iv), such Bank may employ such assumptions and allocations of costs and expenses as it shall in good faith deem reasonable and may be determined by any reasonable averaging and attribution method. So long as any notice requirement provided for herein has been satisfied, any decision by the Administrative Agent or any Bank not to require payment of any interest, cost or other amount payable under this Section 2.01(g)(iv), or to calculate any amount payable by a particular method, on any occasion, shall in no way limit or be deemed a waiver of the Administrative Agent's or such Bank's right to require full payment of any interest, cost or other amount payable hereunder, or to calculate any amount payable by another method, on any other or subsequent occasion for a subsequent Interest Period. (v) If any Bank shall have determined in good faith that any applicable law, rule, regulation or 34 28 guideline regarding capital adequacy now or hereafter in effect, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or any Lending Office of such Bank) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency has the effect of reducing the rate of return on such Bank's capital or the capital of any corporation Controlling such Bank as a consequence of its obligations hereunder to a level below that which such Bank would have achieved as a consequence of its obligations hereunder but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed in good faith by such Bank to be material, then from time to time, upon notice by the Bank requesting (through the Administrative Agent) compensation, under this Section 2.01(g)(v) within a reasonable period of time after such Bank has obtained knowledge of such event, the Company shall pay to the Administrative Agent for the account of such Bank such additional amount or amounts as will compensate such Bank for such reduction. Any such claim by a Bank for compensation shall be made through the Administrative Agent and shall be accompanied by a certificate signed by an officer of such Bank authorized to so act on behalf of such Bank setting forth in reasonable detail the calculation upon which such claim is based. It is acknowledged that this Agreement is being entered into by the Banks on the understanding that the Banks will not be required to maintain capital against their Commitments or Swingline Commitments under currently applicable laws, regulations and regulatory guidelines. In the event Banks shall be advised by any governmental authority or shall otherwise determine on the basis of pronouncements of any governmental authority that such understanding is incorrect, it is agreed that the Banks will be entitled to make claims under this Section 2.01(g)(v) (each such claim to be made within a reasonable period of time after the period to which it relates) based upon market requirements prevailing on the date hereof for commitments under comparable credit facilities against which capital is required to be maintained. (vi) Notwithstanding the foregoing, in the event the Company is required to pay to, for or on behalf of any Bank amounts pursuant to Section 2.01(g)(i), 35 29 Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02, the Company may give notice to such Bank (with copies to the Administrative Agent) (A) that it wishes to seek one or more assignees (which may be one or more of the Banks) to assume the Commitment and any Swingline Commitment of such Bank and to purchase its outstanding Loans, in which case the Administrative Agent will use its best efforts to assist the Company in obtaining an assignee, or (B) in the case of any Bank that became a Bank pursuant to an assignment under Section 13.07, that it wishes to terminate the Commitment and any Swingline Commitment of such Bank; provided that if more than one Bank requests that the Company pay substantially and proportionately equal additional amounts under Section 2.01(g)(i), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02 and the Company elects to seek an assignee to assume, or to terminate, the Commitments and any Swingline Commitments of any such affected Banks, the Company must seek an assignee or assignees to assume, or must terminate, as the case may be, the Commitments and any Swingline Commitments of all such affected Banks. Each Bank requesting compensation pursuant to Section 2.01(g)(i), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), or Section 2.01(g)(v) or Section 2.02 agrees to sell its Commitment and any Swingline Commitment, its outstanding Loans, Swingline Loans and interest in this Agreement in accordance with Section 13.07 to any such assignee for an amount equal to the sum of, and agrees that its Commitment and any Swingline Commitment shall be terminated as provided above upon payment to it by the Company of, the outstanding unpaid principal of and accrued interest on its outstanding Loans in Dollars plus all other fees and amounts (including, any compensation claimed by such Bank under Section 2.01(g)(i), Section 2.01(f), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02) due such Bank hereunder calculated, in each case, to the date such Commitment, Swingline Commitment, Loans and interest are purchased or such amounts are paid, as the case may be. Upon such sale or prepayment, each such Bank shall have no further Commitment, Swingline Commitment or other obligation to the Company hereunder. (vii) Any Bank claiming any amounts pursuant to this Section 2.01(g) or Section 2.02 shall use its reasonable good faith efforts (consistent with its internal policies and legal and regulatory restrictions) to avoid or minimize the payment by the Company of any amounts under 36 30 this Section 2.01(g) or Section 2.02, including changing the jurisdiction of its Lending Office; provided that no such change or action shall be required to be made or taken if, in the reasonable judgment of such Bank, such change would be materially disadvantageous to such Bank; and, provided, further, that no Bank will receive compensation for expenses stemming from the change of jurisdiction of its Lending Office if such change is not required by law, regulation or order of regulatory authority. (viii) The aggregate amount payable, reimbursable or compensable by the Company to or for the account of a Bank under this Section 2.01(g) shall not include any cost covered by the amount received by such Bank from the Company through the Administrative Agent in connection with the calculation of the CD Rate. The Company agrees to indemnify and hold the Administrative Agent and each Bank harmless from and against any and all liabilities with respect to or resulting from any delay in the payment or omission to pay such amounts. The obligations of the Company under this Section 2.01(g) created in accordance with this Section 2.01(g) shall survive the termination of the Commitments, any Swingline Commitments, this Agreement and the payment of the Obligations hereunder. (h) Calculation Errors. Each calculation by the Administrative Agent or any Bank with respect to amounts owing or to be owing by the Company pursuant to this Agreement or any Loan shall be conclusive except in the case of error. In the event the Administrative Agent determines within a reasonable time that any such error shall have occurred in connection with the determination of the applicable interest rate for any Loan which results in the Company paying either more or less than the amount which would have been due and payable but for such error, then (i) any Bank that received an overpayment shall promptly refund such overpayment to the Company and (ii) if any Bank received an underpayment, the Company shall promptly pay to such Bank the amount of such underpayment. In the event it is determined within a reasonable time that any Bank, acting through the Administrative Agent, has miscalculated any amount for which it has demanded reimbursement or compensation from the Company in respect of amounts owing by the Company (other than interest) which results in the Company paying more or less than the amount which would have been due and payable but for such error, such Bank or the Company, as the case may be, shall promptly refund or pay, as the case may be, to the other the full amount of such overpayment or underpayment. In 37 31 the event it is determined within a reasonable time that the Company has miscalculated the Commitment Fees due under Section 4.02 which results in the Company paying more or less than the amount which would have been due and payable but for such error, (x) any Bank that received an overpayment shall promptly refund such overpayment to the Company and (y) if any Bank received an underpayment, the Company shall promptly pay to such Bank the amount of such underpayment. SECTION 2.02. Setoff, Counterclaims and Taxes. All payments (whether of principal, interest, fees, reimbursements or otherwise) under this Agreement shall be made by the Company without setoff or counterclaim and shall be made free and clear of and without deduction (except as specifically contemplated in Section 2.03 below) for any present or future tax, levy, impost, or other charge, of any nature whatsoever now or hereafter imposed by any governmental authority (including withholdings of United States taxes, subject to compliance by such payment's recipient with Section 2.03). Except as specifically provided in Section 2.03 below, if the making of such payments is prohibited by law unless such tax, levy, impost, or other charge is deducted or withheld therefrom, the Company shall (i) notwithstanding anything to the contrary in this Agreement, be entitled to deduct or withhold an amount equal to such tax, levy, impost or other charge from the amounts payable under this Agreement and make such tax payments as so required, and (ii) provided that such Bank has complied with the requirements of Section 2.03, pay to the Administrative Agent for the account of each Bank, on the date of each such payment, such additional amounts as may be necessary in order that the net amounts received by such Bank after such deduction or withholding shall equal the amounts in Dollars which would have been received if such deduction or withholding were not required. The Company shall confirm that any applicable taxes imposed on this Agreement or transactions hereunder shall have been properly and legally paid by it to the appropriate taxing authorities by sending official tax receipts or notarized copies of such receipts (if receipts are issued therefor) to the Administrative Agent within 30 calendar days after receipt of request from the Administrative Agent regarding payment of any applicable tax. Upon request of any Bank, the Administrative Agent shall forward to such Bank a copy of such official receipt or a copy of such notarized copy of such receipt. 38 32 SECTION 2.03. Withholding Tax Exemption. Each Bank that is not a corporation created or organized in the United States or under the laws of the United States or any state of the United States or the District of Columbia shall (i) deliver to the Company (with a copy to the Administrative Agent), at least five Business Days prior to the first date on which interest or fees are payable hereunder to such Bank, two original Internal Revenue Service Forms W-8BEN, W-8IMY or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, properly completed and duly executed under penalties of perjury, certifying that such Bank is completely exempt from or entitled to a zero rate of United States withholding tax on all payments by the Company to such Bank pursuant to this Agreement; (ii) deliver to the Company (with copies to the Administrative Agent) such new forms and documents prescribed by the Internal Revenue Service upon the expiration or obsolescence of any previously delivered forms or other documents referred to in this Section 2.03, or after the occurrence of any event requiring a change in the most recent forms or other documents delivered by such Bank, and (iii) promptly provide written notice to the Company (with a copy to the Administrative Agent) at any time it determines that it is no longer in a position to provide any previously delivered form or other document (or any other form of certification adopted by the Internal Revenue Service for such purpose). In no event will any withholding by the Company on any interest payable to any Bank as contemplated by this Section 2.03 give rise to a Default under Section 10.01 with respect to payments of interest. SECTION 2.04. Obligations Several, Not Joint. The obligations of the Banks hereunder are several and not joint. The failure of any Bank to make the Loan to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation to make its Loan on the date of such Borrowing, and no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on the date of any Borrowing. SECTION 2.05. Evidence of Debt. Any Bank may request that Loans made by it be evidenced by a promissory note. In such event, the Company shall prepare, execute and deliver to such Bank a promissory note payable to the order of such Bank (or, if requested by such Bank, to such Bank and its registered assigns) and in a form approved by the Administrative Agent and the Company. Thereafter, the Loans evidenced by such promissory note and interest 39 33 thereon shall at all times (including after assignment pursuant to Section 13.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.06. Discretionary Loans. (a) Each Bank may, in its sole discretion and on terms and conditions in writing satisfactory to it and the Company that are consistent with the provisions of this Agreement, make additional Loans to the Company under its Commitment on any one or more Business Days on or after the date hereof and prior to the Maturity Date, which Discretionary Loans will be payable to the appropriate Bank upon such terms and conditions; provided, however, that the Company will not permit to remain outstanding any Discretionary Loans from any Bank, and no Bank will make Discretionary Loans to the Company, if the sum of the aggregate principal amount of the Discretionary Loans and the Revolving Loans made by such Bank and such Swingline Exposure exceeds such Bank's Commitment. Should any Discretionary Loan be outstanding from any Bank on a date on which a Borrowing is to be made, such Borrowing shall be made available only if the Company has paid or shall simultaneously with the making of such Borrowing pay such portions of Discretionary Loans (including the payment of the amount of any losses payable pursuant to Section 2.01(f) actually incurred by such Bank as a result of such prepayment) as shall be necessary to make available a portion of each Bank's Commitment at least equal to such Bank's Pro Rata Share of such Borrowing. No Discretionary Loan shall have a maturity date or interest period that extends beyond the Maturity Date. Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Bank resulting from each Discretionary Loan made by such Bank. The entries made in the accounts maintained pursuant to this Section 2.06(a) shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Bank to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Discretionary Loans in accordance with their terms. (b) Promptly upon written request of the Administrative Agent, each Bank will certify in writing the borrowing date, the principal amount and the maturity date of any Discretionary Loans made during any period for which the Commitment Fees under Section 4.02 are to be 40 34 calculated. The Company agrees to certify to the Administrative Agent at the request of the Administrative Agent on or before (i) each Borrowing and each Discretionary Borrowing, the borrowing date, the principal amount, the maturity date and the lending Bank for each outstanding Discretionary Loan and (ii) each Quarterly Date, the borrowing date, the principal amount, the maturity date and the lending Bank for all Discretionary Loans made during any period for which the Commitment Fees under Section 4.02 are to be calculated. SECTION 2.07. Swingline Loans. (a) On the terms, subject to the conditions and relying upon the representations and warranties herein set forth, each Swingline Lender agrees, severally and not jointly, at any time and from time to time on and after the date hereof and until the earlier of the Business Day immediately preceding the Maturity Date and the termination of the Swingline Commitment of such Swingline Lender, to make Swingline Loans to the Company in an aggregate principal amount at any time outstanding not to exceed such Swingline Lender's Swingline Commitment Percentage of the lesser of (i) the difference between (A) the Total Swingline Commitment and (B) the Swingline Loan Exposure, and (ii) the difference between (A) the Total Commitment and (B) the outstanding aggregate principal amount of all Loans. Each Swingline Loan shall be made as part of a Borrowing consisting of Swingline Loans made by the Swingline Lenders ratably in accordance with their respective Swingline Commitment Percentages (it being understood that (I) the failure of any Swingline Lender to make any Swingline Loan shall not in itself relieve any other Swingline Lender of its obligation to lend hereunder and (II) no Swingline Lender shall be responsible for the failure of any other Swingline Lender to make any Swingline Loan required to be made by such other Swingline Lender). The Swingline Loans comprising any Swingline Borrowing shall be in an aggregate principal amount that is an integral multiple of $500,000 and not less than $2,000,000 (or an aggregate principal amount equal to the remaining balance of the available Swingline Commitments). Each Swingline Lender shall make its portion of each Swingline Borrowing available to the Company by means of a credit to the general deposit account of the Company with the Administrative Agent or a wire transfer to an account designated in writing by the Company, in each case by 3:00 p.m., New York City time, on the date such Swingline Borrowing is requested to be made pursuant to paragraph (b) below. Within the limits set forth in the first sentence of this paragraph, the Company 41 35 may borrow, pay or prepay and reborrow Swingline Loans on or after the Closing Date and prior to the Maturity Date on the terms and subject to the conditions and limitations set forth herein. (b) The Company shall give the Administrative Agent telephonic, written or telecopy notice (in the case of telephonic notice, such notice shall be promptly confirmed by telecopy) no later than 11:30 a.m., New York City time, on the day of a proposed Swingline Borrowing. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount of such Swingline Borrowing. The Administrative Agent shall promptly advise the Swingline Lenders of any notice received from the Company pursuant to this paragraph (b). (c) The Company agrees to repay the principal amount of each Swingline Loan, together with all interest accrued thereon, on the Swingline Maturity Date of such Swingline Loan. If the Company does not fully repay a Swingline Borrowing on or prior to the last day of the applicable Swingline Maturity Date, the Administrative Agent shall promptly notify each Bank thereof (by telecopy or by telephone, confirmed in writing) and of its Applicable Percentage of such Swingline Borrowing. Upon such notice but without any further action, each Swingline Lender hereby agrees to grant to each Bank, and each Bank hereby agrees to acquire from each Swingline Lender, a participation in such Swingline Loan made by such Swingline Lender as part of such defaulted Swingline Borrowing equal to such Bank's Applicable Percentage of the principal amount of such Swingline Loan. In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the applicable Swingline Lender, such Bank's Applicable Percentage of each Swingline Borrowing that is not repaid on the Swingline Maturity Date applicable thereto. From and after the Swingline Maturity Date, each Swingline Loan shall bear interest at the Default Rate." Each Bank acknowledges and agrees that its obligation to acquire participations in such Swingline Loans made in accordance with the terms hereof pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default or the failure of any condition precedent set forth in 42 36 Article VII, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Bank shall comply with its obligation under this paragraph in the same manner as provided in Section 2.01(b) with respect to Loans made by such Bank, and the Administrative Agent shall promptly pay to the Swingline Lenders their respective shares of the amounts so received by it from the Banks. The Administrative Agent shall notify the Company of any participations in any Swingline Loan acquired pursuant to this paragraph. Notwithstanding anything herein to the contrary, the purchase of participations in a Swingline Borrowing pursuant to this paragraph shall not relieve the Company of its default in respect of the payment of the Swingline Loans. (d) Upon written or telecopy notice to the Swingline Lenders and to the Administrative Agent, the Company may at any time permanently terminate, or from time to time in part permanently reduce, the Swingline Commitments of the Swingline Lenders. Each reduction of the Swingline Commitments shall be allocated pro rata among the Swingline Lenders in accordance with their respective Swingline Commitment Percentages. On the date of any termination or reduction of the Swingline Commitments pursuant to this paragraph (d), the Company shall pay or prepay so much of the Swingline Borrowings as shall be necessary in order that the aggregate outstanding principal amount of Swingline Loans will not exceed the Total Swingline Commitment after giving effect to such termination of reduction. (e) The Company may prepay any Swingline Borrowing in whole or in part at any time without premium or penalty; provided that the Company shall have given the Administrative Agent written or telecopy notice (or telephone notice promptly confirmed in writing or by telecopy) of such prepayment not later than 10:30 a.m., New York City time, on the Business Day designated by the Company for such prepayment; and provided further that each partial payment shall be in an amount that is an integral multiple of $500,000 and not less than $2,000,000. Each notice of prepayment under this paragraph (e) shall specify the prepayment date and the principal amount of each Swingline Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Company to prepay such Swingline Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this paragraph (e) shall be accompanied by accrued 43 37 interest on the principal amount being prepaid to the date of payment. Each payment of principal of or interest on or any other amount in respect of Swingline Loans shall be allocated, as between the Swingline Lenders, pro rata in accordance with their respective Swingline Commitment Percentages. ARTICLE III Optional and Required Prepayments; Interest Payment Date; Other Payments SECTION 3.01. Optional Prepayments. Loans may be prepaid in whole or from time to time in part at the option of the Company on any Business Day, without premium or penalty, notwithstanding that such Business Day is not an Interest Payment Date, provided that: (a) losses, if any, incurred by any Bank under Section 2.01(f) shall be payable with respect to each such prepayment of any such Eurodollar Loan or CD Rate Loan; and (b) all partial prepayments shall be in an aggregate principal amount of at least $2,000,000 and an integral multiple of $200,000; and (c) the Company shall give the Administrative Agent not less than one full Business Day's prior oral or written notice of each prepayment of any Eurodollar Loans or CD Rate Loans, or any portion thereof, and notice to the Administrative Agent not less than 9:00 a.m. (New York, New York time) on the same day of the prepayment of Alternate Base Rate Loans, or any portion thereof, proposed to be made pursuant to this Section 3.01, specifying the aggregate principal amount of the Loans to be prepaid and the prepayment date; provided, however, with respect to each oral notice of a prepayment, the Company shall deliver promptly (and in any event, no later than two Business Days after the giving of such oral notice) to the Administrative Agent a confirmatory written notice of such proposed prepayment. The Administrative Agent shall promptly notify the Banks of the principal amount to be prepaid and the prepayment date. Notice of such prepayment shall be irrevocable and having been given as aforesaid, the principal amount specified in such notice, together with accrued and unpaid interest thereon to the date of prepayment, 44 38 shall become due and payable on such prepayment date, and the provisions of Section 2.01(f) shall be applicable. The Company shall have no optional right to prepay the principal amount of any Loan other than as provided in this Section 3.01. SECTION 3.02. Required Prepayments. (a) If the Company shall reduce or terminate the respective Commitments of the Banks pursuant to Section 4.04, it will prepay to each Bank on the effective date of any such reduction or termination: (i) in the case of a reduction of the Commitments, that part of such unpaid principal amount outstanding of the Revolving Loans and the Discretionary Loans held by such Bank that exceeds the amount of the Commitment of such Bank immediately after such reduction, minus such Bank's Swingline Loan Exposure; and (ii) in the case of termination of the Commitments, the entire unpaid principal amount of the Revolving Loans and the Discretionary Loans, as applicable; together, in each case, with accrued and unpaid interest on the amount being so prepaid and all other amounts accrued and owing under this Agreement on such date. (b) (i) If on any Borrowing Date the sum of the principal amount outstanding of the Loans (other than Swingline Loans), and Swingline Loan Exposure of any Bank shall exceed the Commitment of such Bank, the Company shall promptly pay to such Bank an amount equal to such excess, together with accrued and unpaid interest on the amount so prepaid and all other amounts accrued and owing under this Agreement on such date; and (ii) As of any date on which the Company or any Restricted Subsidiary sells, assigns, transfers or otherwise disposes of any Property (other than dispositions of inventory in the ordinary course of business or sales or transfers of Capital Stock or assets to the Company or a Restricted Subsidiary), if either (i) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02, to Pro Forma EBITDA, for the four consecutive fiscal quarter period ended on the date of such balance sheet, is in excess of a ratio equal to the Leverage Ratio required to be maintained at such 45 39 time under Section 8.01 less .5 (the "Mandatory Prepayment Ratio") or (ii) the Company is not in compliance with its obligations under Section 8.02, then 50% of the Net Cash Proceeds of such sale, assignment, transfer or disposition shall be immediately applied, on a pro-rata basis between this Agreement and the Facility B Credit Agreement, to the prepayment of the Utilized Loans, and the Commitments under this Agreement shall be reduced by such amount so prepaid, to the extent required in order that after such application the ratio of (i) Total Debt as of such balance sheet date minus the amount of Net Cash Proceeds so applied to (ii) Pro Forma EBITDA for such four consecutive fiscal quarter period would be less than the Mandatory Prepayment Ratio; provided that if in connection with the disposition of any such Property the Company shall advise the Administrative Agent that it intends to use the Net Cash Proceeds of such disposition to acquire Cash Flow Producing Assets to be owned by the Company or a Restricted Subsidiary, then (i) the Commitments will not be reduced as required by this Section 3.02(b) to the extent the amount prepaid or a portion thereof shall have been reborrowed within 12 months after the date of such disposition and used to acquire Cash Flow Producing Assets, and (ii) during such 12 month period an amount of the Commitments equal to the amount so prepaid will be restricted and the Company will be entitled to reborrow such amount as provided herein only upon a certification to the Administrative Agent that the proceeds of such borrowing will be promptly applied to acquire such Cash Flow Producing Assets. Notwithstanding the foregoing, such prepayment will not be required in the event and for so long as such Net Cash Proceeds are held by a "qualified intermediary" (as defined in ss. 1.103(k)-1(g)(4)(iii) of Title 26 of the Code of Federal Regulations) pursuant to a like kind exchange as provided for by ss. 1031 of the Internal Revenue Code of 1986; provided, however, that this sentence shall in no way limit or otherwise affect the Company's obligations under this Section 3.02(b) to reduce the Commitments by the amount of such prepayment of such Net Cash Proceeds in the event the notice and reinvestment provisions set forth above are not complied with. (c) As of any date on which the Company or any Restricted Subsidiary on a consolidated basis incurs Debt other than Debt incurred under this Agreement, if either (i) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02 on a pro forma basis giving effect to such incurrence and any use of the proceeds thereof to repay Debt reflected on such 46 40 balance sheet, to Pro Forma EBITDA, for the four consecutive fiscal quarter period ended on the date of such balance sheet, is in excess of the Mandatory Prepayment Ratio, or (ii) the Company is not in compliance with its obligations under Section 8.02, then 50% of the Net Cash Proceeds of such Debt shall be immediately applied, on a pro-rata basis between this Agreement and the Facility B Credit Agreement, to the prepayment of the Utilized Loans, and the Commitments under this Agreement shall be reduced by the amount so prepaid, to the extent required in order that after such application the ratio of (i) Total Debt as of such balance sheet date minus the amount of Net Cash Proceeds so applied to (ii) Pro Forma EBITDA for such four consecutive fiscal quarter period would be less than the Mandatory Prepayment Ratio; provided, however, that prepayments and reductions required under this Section 3.02(c) shall be made only at such time as the aggregate amount of payments and reductions required but not made shall equal an amount not less than $40,000,000, at which time Loans shall be prepaid and Commitments reduced in such aggregate amount. (d) Notwithstanding the foregoing, (i) no prepayment shall be required under Section 3.02(b) with respect to an aggregate of $10,000,000 or less of Net Cash Proceeds and (ii) in the event any prepayment required by Section 3.02(b) to be made under this Agreement and the Facility B Credit Agreement shall be in an amount less than $5,000,000, such prepayment may be deferred until the aggregate amount of the prepayments deferred in reliance on this provision and the corresponding provision of the Facility B Credit Agreement shall exceed $5,000,000, at which time all such prepayments shall be promptly made and the Commitments correspondingly reduced. In the event any prepayment required by Section 3.02(b) or (c) with respect to any Loan would become due on a date that is not an Interest Payment Date and as a result thereof the Company would incur liabilities under Section 2.01(f), then (A) at the Company's option, if the next Interest Payment Date for such Loan would occur within 90 days of the date on which such prepayment is otherwise due, such prepayment may be made on such Interest Payment Date and (B) if the next Interest Payment Date for such Loan would not occur within 90 days of such date on which such prepayment is due, the Company shall make such prepayment to the Administrative Agent on the due date; provided, however, that interest shall continue to accrue on any Loan so prepaid and shall be paid by the Company to the Administrative Agent on the applicable Interest Payment Date, and, so long as no 47 41 Default or Event of Default shall occur or shall have occurred and be continuing, the Administrative Agent shall hold the proceeds of such prepayment for the benefit of the Banks, in an interest bearing account, until such time as such proceeds can be applied towards payment of the Loans in accordance with the provisions of this Agreement without resulting in any liability to the Company under Section 2.01(f). All interest which may accrue on such amounts so held in escrow shall be held by the Administrative Agent for the benefit of the Company. (e) All prepayments made pursuant to the provisions of this Section 3.02 shall be applied, first, towards payment of all Alternate Base Rate Loans, as the Company directs, and secondly, and subject to the provisions of Section 2.01(f), towards payment of the appropriate amount of CD Rate Loans and Eurodollar Loans, as the Company directs. SECTION 3.03. Interest Payment Date. The Company shall repay the principal amount of each CD Rate Loan and Eurodollar Rate Loan on the last day of the Interest Period for such Loan, or if earlier, the Maturity Date; provided that the Company may reborrow in accordance with Section 2.01(a) or Section 2.06 for the purpose of refinancing any Loan made thereunder. All principal payments of Loans shall be accompanied by accrued and unpaid interest on the principal amount being repaid to the date of payment. SECTION 3.04. Place, Etc. of Payments and Prepayments. All payments and prepayments made in accordance with the provisions of this Agreement in respect of the Commitment Fees and the Administrative Agent's fee and of principal of and interest on the Revolving Loans shall be made to the Administrative Agent in Dollars at its office at 270 Park Avenue, New York, New York, 10017, in immediately available funds for the accounts of the Banks. The Administrative Agent will promptly distribute to the Banks, in accordance with each Bank's Pro Rata Share in immediately available funds, the amount of principal, interest and Commitment Fees received by the Administrative Agent for the account of the Banks, taking into account the effect of any Discretionary Loans; provided that if interest shall accrue on any Loan at a rate different from the rate applicable to any other Loan, payment and distribution of interest shall be based on the respective accrual rates applicable to such Loan. Any payment to the Administrative Agent for the account of a Bank under this 48 42 Agreement shall constitute payment by the Company to such Bank of the amounts so paid to the Administrative Agent, and any Loan or portions thereof so paid shall not be considered outstanding for any purpose after the date of such payment to the Administrative Agent. ARTICLE IV Fees; Reduction of Commitments SECTION 4.01. Administration Fee. Until payment in full of the Obligations and termination of the Commitments hereunder, the Company agrees to pay to the Administrative Agent an administration fee pursuant to the terms and conditions set forth in the Agent's Fee Letter. SECTION 4.02. Commitment Fees. The Company agrees to pay to the Administrative Agent for the account of each Bank in Dollars, Commitment Fees, computed on a daily basis of a year of 365 or 366 days, as the case may be, from the date of this Agreement to and including the Maturity Date at a rate per annum equal to the applicable Commitment Fee Rate from time to time in effect on the daily average unused amount of the Commitment of such Bank (taking into account all Revolving Loans and Discretionary Loans of such Bank outstanding, but not the Swingline Exposure of such Bank, on the dates covered by such calculation). Each such Commitment Fee shall be payable on or before the 15th day following each Quarterly Date and on the Maturity Date or on such earlier date as the Commitment of such Bank shall terminate pursuant to the terms of this Agreement. SECTION 4.03. Utilization Fees. The Company agrees to pay to the Administrative Agent for the account of each Bank (ratably in accordance with the outstanding Loans (other than Swingline Loans) and Swingline Exposures of the Banks), in Dollars, a utilization fee ("Utilization Fee") (i) equal to 0.10% times the sum of the aggregate principal amount of the outstanding Loans for any date on which the sum of the outstanding aggregate principal amount of the (a) Loans plus (b) loans under the Facility B Credit Agreement (such sum, the "Utilized Loans") is greater than the sum of 33 1/3% of the (x) Total Commitment hereunder plus (y) aggregate amount of the commitments of the lenders under the Facility B Credit Agreement (such sum, the "Aggregate Commitments") but less than or equal to 66 2/3% of the Aggregate Commitments, and (ii) equal to 0.15% 49 43 times the aggregate amount of the outstanding Loans for any date on which the amount of the Utilized Loans exceeds 66 2/3% of the Aggregate Commitments. Any Utilization Fee accrued during any quarter will be payable, on a 360-day basis, on the last business day of such quarter. SECTION 4.04. Reduction or Termination of Commitments. The Company may at any time or from time to time reduce ratably in proportion to their respective Commitments and Swingline Commitments or terminate in whole, the respective Commitments and Swingline Commitments of the Banks hereunder by giving not less than three full Business Days' prior written notice to such effect to the Administrative Agent; provided that any partial reduction shall be in an aggregate amount of not less than $5,000,000 and an integral multiple of $1,000,000; provided, further, that the Commitments may not be reduced to an amount less than the sum of the Swingline Exposure and the aggregate principal amount of Loans outstanding at such time, unless simultaneously therewith the Company shall make a prepayment in accordance with Section 3.02(a) hereof. In the event of any prepayment of the Loans outstanding hereunder pursuant to Section 3.02(b) or (c), the Commitments shall be ratably reduced by the amount of such prepayment to the extent provided in Section 3.02(b) or (c). The Administrative Agent shall promptly notify each Bank of its Pro Rata Share of and of the date of each reduction of the Commitments. After each such reduction, the Commitment Fees and Utilization Fees owing to each Bank shall be calculated upon the Commitment of such Bank as so reduced. In the event of acceleration of the date on which any Loan is payable in accordance with Article X, the Commitments hereunder of the Banks shall thereupon automatically terminate without notice. Each reduction or any termination of the Commitments, and each notice thereof, under this Agreement shall be irrevocable. ARTICLE V Application of Proceeds The Company agrees that the proceeds of the Loans hereunder shall be used by the Company for general corporate purposes (including acquisitions) and to repay any amounts outstanding under the Existing Facility. 50 44 ARTICLE VI Representations and Warranties The Company represents and warrants that: SECTION 6.01. Organization; Qualification; Subsidiaries. The Company and each Restricted Subsidiary (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has the organizational power to own its Properties and to carry on its business as now conducted, and (c) is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where failure to be duly qualified would result, in the aggregate, in a Materially Adverse Effect. Attached hereto as Exhibit 6.01 is a correct and complete list (determined in good faith by the Company) setting forth, as of date hereof: (i) the name of and jurisdiction of organization of each Restricted Subsidiary, (ii) the title and number of such outstanding shares of Capital Stock of each Restricted Subsidiary, if any, owned by Persons other than the Company or any Restricted Subsidiary and (iii) the name and address of each such other Persons. All shares of Capital Stock of Restricted Subsidiaries owned by the Company or any Restricted Subsidiary are owned thereby free and clear of all liens, claims and encumbrances. No shares of Capital Stock of any Restricted Subsidiary are owned by any Unrestricted Subsidiary. SECTION 6.02. Financial Statements. The Company has furnished each Bank with the consolidated financial statements for the Company and the Subsidiaries as at and for its fiscal year ended December 31, 1999, accompanied by the opinion of Deloitte & Touche LLP, and quarterly consolidated financial statements as at and for the period ended March 31, 2000. Such statements have been prepared in conformity with GAAP consistently applied throughout the period involved, except as may be explained in such opinion. Such statements fairly present in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated. There have been no events or occurrences which would, in the aggregate, have a Materially Adverse Effect since December 31, 1999. SECTION 6.03. Actions Pending. Except as disclosed in Exhibit 6.03 attached hereto, there are no 51 45 actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any Restricted Subsidiary before any court or administrative agency or other governmental authority which could reasonably be expected to in the aggregate result in any Materially Adverse Effect. SECTION 6.04. Default. Neither the Company nor any Restricted Subsidiary is (a) in default under the provisions of any instrument evidencing any Debt or any other liability, contingent or otherwise, or of any agreement relating thereto or (b) in default under or in violation of any order, writ, injunction or decree of any court, or in default under or in violation of any order, regulation or demand of any governmental instrumentality, other than for such defaults or violations under clauses (a) and (b) above which taken in the aggregate do not and could not reasonably be expected to result in any Materially Adverse Effect. SECTION 6.05. Title to Assets; Licenses; Intellectual Property. (a) The Company and each Restricted Subsidiary (i) have good and marketable title to their respective real property assets and (ii) good title to their respective personal property assets, in each case subject to no liens, security interests or other encumbrances except those permitted by Section 9.01. (b) Each of the Company and the Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents, licenses and other intellectual property material to its business, and the use thereof by the Company and the Restricted Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, in the aggregate, could not reasonably be expected to result in a Materially Adverse Effect. SECTION 6.06. Payment of Taxes. The Company and each Subsidiary have filed all Federal and all material state income and franchise tax returns (or extensions therefor) required to be filed and have paid all material taxes and all material assessments required to have been paid by it (other than those the amount or validity of which are currently being contested in good faith by appropriate proceedings and for which adequate reserves in conformity with GAAP have been set aside on the books of the Company or the Subsidiary, as applicable). The Company and its officers know of no claims by any governmental 52 46 authority for any unpaid taxes which claims in the aggregate could reasonably be expected to result in a Materially Adverse Effect. SECTION 6.07. Conflicting or Adverse Agreements or Restrictions. Neither the Company nor any Restricted Subsidiary is a party to any contracts or agreements or subject to any restrictions which in the aggregate have a Materially Adverse Effect. Neither the execution nor delivery of this Agreement nor compliance with the terms and provisions hereof or of any instruments required hereby will be contrary to the provisions of, or constitute a default under, (a) the charter or by-laws of the Company or any Restricted Subsidiary or (b) any law or any regulation, order, writ, injunction or decree of any court or governmental authority or any material agreement to which the Company or any Restricted Subsidiary is a party or by which it is bound or to which it is subject if such noncompliance or defaults referred to in this clause (b) could reasonably be expected in the aggregate to have a Materially Adverse Effect. SECTION 6.08. Purpose of Loans. Neither the Company nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. This Agreement and the transactions contemplated hereby comply in all respects with Regulations U, T and X and all other regulations of the Board of Governors of the Federal Reserve System. Neither the Company nor any agent acting on its behalf has taken or will take any action which would cause this Agreement to violate Regulation U, T or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect on the date of any Loan. SECTION 6.09. Authority; Validity. The Company has the corporate power and authority to make and carry out this Agreement and the transactions contemplated herein, to make the borrowings provided for herein and to perform its obligations hereunder; and all such action has been duly authorized by all necessary corporate proceedings on its part. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other laws of general 53 47 application relating to or affecting the enforcement of creditors' rights and general principles of equity. SECTION 6.10. Consents or Approvals. No order, consent, approval, license, authorization or validation of any governmental authority and no registration or filing with or notice to any governmental authority is necessary to authorize or permit, or is required in connection with, the execution and delivery of this Agreement, the making of borrowings pursuant hereto or the performance of the obligations of the Company hereunder other than the filing of this Agreement with the FCC and the consent of the FCC upon the exercise of remedies hereunder to the extent such exercise would involve a change of control of the Company or the transfer of any license, permit or authorization issued by the FCC. SECTION 6.11. Compliance with Law. Neither the Company nor any of the Restricted Subsidiaries are in violation of any Federal, state or local laws or orders affecting the Company or any Subsidiary or any of their respective businesses and operations which violations in the aggregate, could reasonably be expected to have a Materially Adverse Effect. Neither the Company nor any Restricted Subsidiary has failed to obtain any license, permit, franchise, consent or authorization of any governmental authority necessary to the ownership of its properties or the operation of its business, which failure could reasonably be expected to have a Materially Adverse Effect. SECTION 6.12. ERISA. The Company and the Subsidiaries are in compliance in all material respects with the applicable provisions of ERISA. Neither the Company nor any Subsidiary, taken individually or in the aggregate, has incurred any material accumulated funding deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue Code of 1986, as amended, or has incurred any material liability to the Pension Benefit Guaranty Corporation established under ERISA, or any successor thereto under ERISA (the "PBGC"), in connection with any Plan other than a material accumulated funding deficiency or any material liability that no longer exists or is no longer outstanding. SECTION 6.13. Investment Company Act. Neither the Company nor any Subsidiary (i) is an investment company as that term is defined in the Investment Company Act of 1940, (ii) directly or indirectly Controls or is Controlled 54 48 by a company which is an investment company as that term is defined in the Investment Company Act of 1940 or (iii) is otherwise subject to regulation under the Investment Company Act of 1940. SECTION 6.14. Disclosure. All material information furnished by or on behalf of the Company in writing to the Administrative Agent or any Bank pursuant to the terms of this Agreement (a) in the Confidential Information Memorandum dated June, 2000 or (b) after the date hereof and, in either case, concerning the historical operations of the Company and the Subsidiaries, did not or will not, as the case may be, when made, include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were or are made, not materially misleading when made. SECTION 6.15. Insurance. The Company and each Restricted Subsidiary maintains insurance of such types as is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated with financially sound and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdiction in which its operations are carried on) and in such amounts (and with co-insurance and deductibles) as such insurance is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. SECTION 6.16. Environmental and Safety Matters. The Company and each Restricted Subsidiary has complied in all material respects with all Federal, state, local and other statutes, ordinances, orders, judgments, rulings and regulations relating to environmental pollution or to environmental regulation or control or to employee health or safety. To the best knowledge of the Company's executive officers, neither the Company nor any Restricted Subsidiary has received notice of any material failure so to comply. The Company's and the Restricted Subsidiaries' plants do not manage any hazardous wastes, hazardous substances, hazardous materials, toxic substances, toxic pollutants or substances similarly denominated, as those terms or similar terms are used in the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance 55 49 Control Act, the Clean Air Act, the Clean Water Act or any other applicable law relating to environmental pollution or employee health and safety generally, in violation in any material respect of any law or any regulations promulgated pursuant thereto. The Company is aware of no events, conditions or circumstances involving environmental pollution or contamination or employee health or safety that could reasonably be expected to result in a Materially Adverse Effect. ARTICLE VII Conditions SECTION 7.01. Conditions Precedent to Closing. The effectiveness of this Agreement is subject to the satisfaction on the Closing Date of the following conditions: (a) the Company shall have duly and validly executed and delivered to the Administrative Agent this Agreement; (b) the Administrative Agent shall have received on behalf of the Banks from Counsel for the Company, its opinion, dated the Closing Date, substantially in the form attached hereto as Exhibit 7.01(b); (c) the Administrative Agent shall have received on behalf of the Banks an Officer's Certificate, dated the Closing Date, substantially in the form attached hereto as Exhibit 7.01(c); (d) no Default shall have occurred and be continuing or shall occur after giving effect to the Company's execution of this Agreement; (e) after giving effect to the Company's execution of this Agreement, the representations and warranties made by the Company in Article VI shall be true on and as of the Closing Date (other than those that expressly relate to an earlier date, in which case such representation or warranty shall be true as of such date); (f) no material adverse change shall have occurred in the business, properties, operations or financial condition of the Company and the 56 50 Subsidiaries on a consolidated basis since December 31, 1999; (g) there shall not exist any litigation or regulatory proceedings or other legal or regulatory development, actual or threatened, that, in the good faith judgment of the Banks, could reasonably be expected to result in a Materially Adverse Effect; provided that solely for purposes of this clause (g), any litigation or regulatory proceeding or other legal or regulatory development shall be deemed to have a Materially Adverse Effect as contemplated above if, after giving effect to such proceeding or development on a pro forma basis over the succeeding twelve month period, a Default would occur hereunder; (h) the Administrative Agent shall have received from the Company certificates of appropriate officials as to the existence and good standing of the Company in its jurisdiction of incorporation and any and all jurisdictions where the Property owned or the business transacted by the Company makes such qualification necessary and where the failure to be so duly qualified would have a Materially Adverse Effect, all in form and substance satisfactory to the Administrative Agent and counsel for the Administrative Agent; (i) the Administrative Agent shall have received all such information as the Administrative Agent shall request concerning the insurance maintained by the Company described in Section 6.15 hereof; (j) the Administrative Agent shall have received all fees and other amounts due and payable to the Administrative Agent and to the Banks on or prior to the Closing Date, including (i) such fees and amounts due and payable pursuant to the terms and conditions set forth in the Agent's Fee Letter and (ii) to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Company hereunder; and (k) on the date hereof, the Company shall have repaid, or shall repay from the initial Loans hereunder, in full the principal of all loans outstanding and other amounts accrued and not yet paid under the Existing Facility, and the Company shall have effectively terminated all the commitments then 57 51 outstanding in accordance with Section 4.03 of the Existing Facility and replaced them with the Commitments as set forth in Schedule 2.01(a) hereto (and, solely for the purposes of permitting such termination, the notice requirements of Section 14.02 of the Existing Facility are hereby waived). SECTION 7.02. Conditions Precedent to Each Borrowing. The obligation of the Banks to fund each Borrowing (including the initial Borrowing) and of the Swingline Lenders to make Swingline Loans hereunder is subject to the following (Borrowings that do not have the effect of increasing the aggregate amount of Loans outstanding are subject only to (a) through (c), below): (a) No Default shall have occurred and be continuing or shall occur after giving effect to such Borrowing and the application of the proceeds thereof, and each Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date to such effect. (b) The Administrative Agent shall have received by telecopy, or otherwise, the Notice of Borrowing required by Section 2.01(b). (c) The Company shall have delivered to the Administrative Agent and each Bank such certificates and other documents as are otherwise required under this Agreement. (d) After giving effect to such Borrowing and the application of the proceeds thereof, the representations and warranties contained in Article VI, other than the representations and warranties made by the Company in the last sentence of Section 6.02, and in Sections 6.03 and 6.04 or expressly relating to a prior date, in which case such representation or warranty shall be true as of such date, shall be true on and as of the particular Borrowing Date as though made on and as of such date and each such Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date as to the matters set forth in Article VI (other than the representations and warranties made by the Company in the last sentence of Section 6.02, and in Sections 6.03 and 6.04). 58 52 (e) Except as otherwise set forth therein, or in certificates accompanying such financial statements, the most recent financial statements delivered to the Banks pursuant to Section 8.02 together with the reconciliation adjustments made thereto pursuant to Section 8.02(a)(ii) or Section 8.02(b)(ii), as the case may be, fairly present in all material respects the financial condition of the Company and the Restricted Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated. Each Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date to such effect. ARTICLE VIII Affirmative Covenants The Company covenants and agrees that, until payment in full of the Obligations and termination of the Commitments and Swingline Commitments hereunder, the Company will: SECTION 8.01. Certain Financial Covenants. Maintain at all times: (a) a Leverage Ratio as of the last day of and for any four consecutive fiscal quarter period ending during a period set forth below not in excess of the ratio set forth opposite such period:
Period Ratio Closing Date through December 30, 2001 5.5 to 1.0 December 31, 2001, through December 30, 2002 5.25 to 1.0 Thereafter 5.0 to 1.0
(b) an Interest Coverage Ratio for any four consecutive fiscal quarter (commencing with such 59 53 period ending on June 30, 2000) period of not less 2.0 to 1.0. SECTION 8.02. Financial Statements and Information. Deliver to each of the Banks in duplicate: (a) as soon as available, and in any event within 90 days, after the end of each fiscal year (i) a copy of the consolidated annual audited financial statements of the Company and the Subsidiaries for such fiscal year containing a balance sheet, an income statement, a statement of shareholders' equity and a consolidated statement of cash flows, all in reasonable detail, together with the unqualified opinion of Deloitte & Touche LLP or another independent certified public accountant of nationally recognized standing, that such statements have been prepared in accordance with GAAP, consistently applied, except as may be explained in such opinion, and fairly present in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated and (ii) a copy of the reconciliation sheet, certified by the chief financial officer of the Company, setting forth the adjustments required to the consolidated audited financial statements of the Company and the Subsidiaries referred to above in this paragraph (a) in order to arrive at the consolidated financial statements of the Company and the Restricted Subsidiaries; (b) as soon as available, and in any event within 60 days, after the end of each of the first three quarterly accounting periods in each fiscal year (i) a copy of the consolidated unaudited financial statements of the Company and the Subsidiaries as at the end of such quarter and for the period then ended, containing a balance sheet, an income statement, a statement of shareholders' equity and a consolidated statement of cash flows, all in reasonable detail and certified by a financial officer of the Company to have been prepared in accordance with GAAP, consistently applied (subject to year end audit adjustments and except for the absence of footnotes), except as may be explained in such certificate, and as fairly presenting in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results 60 54 of its and their operations as at the dates and for the periods indicated and (ii) a copy of the reconciliation sheet, certified by the chief financial officer of the Company, setting forth the adjustments required to the consolidated quarterly financial statements of the Company and the Subsidiaries referred to above in this paragraph (b) in order to arrive at the consolidated financial statements of the Company and the Restricted Subsidiaries; (c) promptly after the filing thereof, copies of all statements and reports filed with the Securities and Exchange Commission other than Form S-8 registration statements and other reports relating to employee benefit plans, supplements to registration statements relating solely to the pricing of securities offerings for which registration statements were previously filed and delivered and Forms D; (d) promptly after any officer of the Company obtains knowledge of an Event of Default or Default, an Officer's Certificate specifying the nature of such Event of Default or Default, the period of existence thereof, and what action the Company has taken and proposes to take with respect thereto; (e) promptly upon the Company's or any Subsidiary's receipt thereof, copies of all notices received from the FCC regarding the termination, cancelation, revocation or taking of any other materially adverse action with respect to any Material FCC Licenses; and (f) promptly after request, such additional financial or other information as the Administrative Agent or any Bank acting through the Administrative Agent may reasonably request from time to time. All financial statements specified in clauses (a) and (b) above shall be furnished with comparative consolidated figures for the corresponding period in the preceding year. Together with each delivery of financial statements required by clauses (a) and (b) above, the Company will deliver to each Bank (i) such schedules, computations and other information as may be required to demonstrate that the Company is in compliance with its covenants in Sections 8.01, 9.01(f), 9.02, 9.06 and 9.07 or reflecting any non-compliance therewith as at the applicable date, and (ii) an Officer's Certificate stating 61 55 that, to the knowledge of such officer, there exists no Event of Default or Default, or, if to the knowledge of such officer, any such Event of Default or Default exists, stating the nature thereof, the period of existence thereof, and what action the Company has taken and proposes to take with respect thereto. Together with each delivery of financial statements required by clause (a) above, the Company will deliver to each Bank a written statement of said accountants that, in making the audit necessary to the certification of such financial statements, they have obtained no knowledge of any Event of Default or Default, or, if such accountants shall have obtained knowledge of any Event of Default or Default, they shall specify the nature and period of existence thereof in such statement; provided that such accountants shall not be liable directly or indirectly to any Bank for failure to obtain knowledge of any Event of Default or Default; and provided, further, that in issuing such statement, such accountants shall not be required to go beyond normal auditing procedures conducted in connection with their opinion referred to above. Each Bank is authorized to deliver a copy of any financial statement delivered to it to any regulatory body having jurisdiction over it and to any other Person as may be required by applicable law, rules and regulations. SECTION 8.03. Existence; Laws; Obligations. Maintain its corporate existence, comply and cause the Subsidiaries to comply, in all respects material to the business, properties, operations and financial condition of the Company and the Restricted Subsidiaries on a consolidated basis, with all applicable laws and regulations and pay and cause the Restricted Subsidiaries to pay all taxes, assessments, governmental charges and other obligations which if unpaid might become a lien against any material portion of the Property of the Company or a Restricted Subsidiary, except such obligations being contested in good faith by appropriate proceedings. SECTION 8.04. Notice of Litigation and Other Matters. Promptly notify the Administrative Agent in writing of (i) any action, suit or proceeding pending or to the knowledge of the Company threatened, before any governmental authority (including any bankruptcy or similar proceeding by or against the Company or any Restricted Subsidiary) which could reasonably be expected to have a Materially Adverse Effect, (ii) any action or development which could reasonably be expected to have a Materially Adverse Effect, (iii) the failure of any Unrestricted Subsidiary to pay when due (after giving effect to any 62 56 grace period permitted from time to time) any Debt of such Unrestricted Subsidiary, the outstanding amount of which exceeds, singularly or in the aggregate, $20,000,000, or the holder of which Debt declares, or may declare, such Debt due prior to its stated maturity because of the occurrence of a default or other event thereunder or with respect thereto and (iv) any revocation, suspension or expiration of FCC licenses which, in the aggregate, are material to the operations of the Company and the Restricted Subsidiaries on a consolidated basis (the "Material FCC Licenses"). SECTION 8.05. Books and Records. Maintain, and cause the Subsidiaries to maintain, proper books of record and account in accordance with GAAP, consistently applied. SECTION 8.06. Inspection of Property and Records. Permit any Person designated in writing by the Administrative Agent, or any Bank (at the expense of the Administrative Agent or such Bank) (i) to visit and inspect any properties of the Company or any Restricted Subsidiary and discuss its and their respective affairs and finances with its and their respective principal officers and to inspect any corporate books and financial records of the Company and any Restricted Subsidiary and (ii) from and after the occurrence of an Event of Default, to make copies of and abstracts from the books and records of account of the Company and the Restricted Subsidiaries, in each case all upon reasonable prior notice and at such times as the Administrative Agent or any Bank may reasonably request. SECTION 8.07. Maintenance of Property, Insurance. Cause its Property and the Property of the Subsidiaries to be maintained, preserved and protected and kept in good repair, working order and condition so as not to materially and adversely affect the business carried on in connection therewith and maintain, and cause the Subsidiaries to maintain, insurance with responsible companies in such amounts and against such risks as is reasonably deemed appropriate by the Company. SECTION 8.08. ERISA. Comply, and cause each Subsidiary to comply, in all material respects with the applicable provisions of ERISA and furnish to the Administrative Agent (i) as soon as possible, and in any event within 30 days after the Company or a duly appointed administrator of a Plan files or is required to file, with respect to any Plan, any notice of a "reportable event" (as such term is defined in Section 4043 of ERISA) for which 63 57 the notice requirement has not been waived by the PBGC (provided that notice shall be required for reportable events arising from the disqualification of a Plan or the distress termination of a Plan (in accordance with ERISA Section 4041(c)) without regard to the waiver of notice provided by the PBGC by regulation or otherwise), a statement of the chief financial officer of the Company setting forth details as to such reportable event and the action which the Company, or such Subsidiary, as the case may be, proposes to take with respect thereto, together with a copy of the notice, if any, of such reportable event given to the PBGC and (ii) promptly after receipt thereof, a copy of any notice the Company, any Subsidiary or any member of the Controlled group of corporations may receive from the PBGC relating to the intention of the PBGC to terminate any Plan pursuant to Section 4042 of ERISA. SECTION 8.09. Maintenance of Business Lines. Maintain and cause the Restricted Subsidiaries to maintain lines of business only in radio broadcasting and related lines of business that are similar in scope to the existing business lines and operations of the Company and the Restricted Subsidiaries. SECTION 8.10. Restricted/Unrestricted Designation of Subsidiaries. The Company will be permitted to designate a Restricted Subsidiary as an Unrestricted Subsidiary or an Unrestricted Subsidiary as a Restricted Subsidiary by the delivery to the Administrative Agent of a written notice certifying that all conditions set forth in this Section 8.10 are satisfied as of the effective date of such designation, which certification shall state the effective date of such designation and shall set forth the computations and information as may be required to demonstrate that the Company is in compliance with this Section 8.10 and shall be signed by a financial officer of the Company; provided that (a) no Default or Event of Default shall exist immediately before or after the effective date of any such designation and the Company (other than with respect to designations of a Subsidiary involved in, and in connection with, a merger, an acquisition of an entity or a business or a joint venture in connection with any such transaction) shall be in Pro Forma Compliance with respect to such designation; and (b) the Company shall not designate as Unrestricted Subsidiaries during any period of 12 consecutive months Restricted Subsidiaries as to which the Attributable Amount shall exceed 15% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the 64 58 balance sheet most recently delivered pursuant to Section 8.02 excluding therefrom the Attributable Amount of the Unrestricted Subsidiaries which have been designated as Restricted Subsidiaries during such period. Promptly after receiving any written notice from the Company regarding the designation thereby of a Restricted Subsidiary or an Unrestricted Subsidiary, the Administrative Agent will provide notice thereof to the Banks. SECTION 8.11. Compliance with Material FCC Licenses. The Company will maintain, and will cause each Subsidiary to maintain, in full force and effect at all times during the term of this Agreement, and will materially comply with, and will cause each Subsidiary to materially comply with, the terms and provisions of, the Material FCC Licenses. ARTICLE IX Negative Covenants Until payment in full of the Obligations and termination of the Commitments and Swingline Commitments hereunder: SECTION 9.01. Mortgages, Etc. The Company will not and will not permit any Restricted Subsidiary to create or permit to exist any lien, encumbrance, or security interest (including the charge upon assets purchased under a conditional sales agreement, purchase money mortgage, security agreement, or other title retention agreement) upon any of its assets, whether now owned or hereafter acquired, or assign or otherwise convey any right to receive income, except: (a) liens for taxes, assessments, governmental charges and other obligations not yet due or which are being contested in good faith by appropriate proceedings and for which adequate reserves in conformity with GAAP have been set aside on the Company's books; (b) other liens, encumbrances and security interests incidental to the conduct of its business or the ownership of its assets which were not incurred in connection with the borrowing of money, and which do not in the aggregate materially detract from the value 65 59 of its assets or materially impair the use thereof in the operation of its business; (c) liens and security interests on assets of a Restricted Subsidiary to secure obligations of such Restricted Subsidiary to the Company or a Wholly Owned Restricted Subsidiary; (d) liens and security interests existing on the date hereof which are (i) both (y) described in Exhibit 9.01(d) attached hereto and (z) reflected in the consolidated financial statements of the Company referred to in Section 6.02 and (ii) liens and security interests on Property that were existing at the time of the acquisition thereof by the Company or any Restricted Subsidiary or placed thereon to secure a portion of the purchase price thereof described in Exhibit 9.01(d); (e) liens and security interests on Property acquired after the date hereof existing at the time of acquisition thereof by the Company or any Restricted Subsidiary or placed thereon within one year of such acquisition to secure a portion of the purchase price thereof, provided that no such lien or security interest may encumber or cover any other Property of such Restricted Subsidiary, the Company or any other Restricted Subsidiary; and (f) other liens and security interests (in addition to those permitted pursuant to Section 9.01(e)) on Property of the Company and the Restricted Subsidiaries that secure Debt of the Company and the Restricted Subsidiaries in an amount which, when taken together with all other outstanding secured Debt incurred in reliance on this clause (f) and, without duplication, all outstanding Debt of Restricted Subsidiaries incurred in reliance on Section 9.07(b) ("Section 9.01(f) Debt"), does not at the time such lien or security interest comes into existence exceed 20% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the balance sheet most recently delivered pursuant to Section 8.02; and (g) liens, encumbrances and security interests on shares of Capital Stock of Unrestricted Subsidiaries. 66 60 SECTION 9.02. Merger; Consolidation; Disposition of Assets. The Company will not merge or consolidate with any Person unless the Company shall be the continuing or surviving corporation and both before and after giving effect to such merger or consolidation no Default or Event of Default shall exist. The Company will not and will not permit any Restricted Subsidiary to sell, lease or transfer or otherwise dispose of (whether in one transaction or a series of transactions) any Cash Flow Producing Assets, other than sales of inventory in the ordinary course of business and Capital Stock of Unrestricted Subsidiaries to any Person and other than dispositions to the Company and the Restricted Subsidiaries, unless both before and after giving effect to such disposition no Default or Event of Default shall exist. The Company will not and will not permit any Restricted Subsidiary to directly or indirectly acquire (by purchase, merger or otherwise) any Property in any transaction or series of transactions involving a purchase price in excess of $10,000,000, unless both before and after giving effect to such acquisition no Default or Event of Default shall exist. SECTION 9.03. Restricted Payments. If on any date either (a) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02, to Pro Forma EBITDA (as reduced by the amount of any payment, declaration, redemption or acquisition described below), for the four consecutive fiscal quarter period ended on the date of such balance sheet, is in excess of 4.5 to 1.0 or (b) the Company is not in compliance with its obligations under Section 8.02, then the Company will not, and will not permit any Restricted Subsidiary to, pay or declare dividends (exclusive of (i) stock dividends and (ii) cash dividends paid by the Subsidiaries to the Company or to Restricted Subsidiaries) or redeem or acquire, directly or indirectly, any Capital Stock of the Company or such Subsidiary or any warrant or option to purchase any such Capital Stock. SECTION 9.04. Limitation on Margin Stock. The Company will not and will not permit any Subsidiary to own or acquire Margin Stock such that at any time (a) Margin Stock of the Company and the Subsidiaries represents more than 25% of the value of the assets of the Company and the Subsidiaries on a consolidated basis that are subject to Section 9.01 or Section 9.02, or (b) any Loan or Loans shall be in violation of Regulation U of the Federal Reserve Board. 67 61 SECTION 9.05. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any Affiliate other than (a) of the type specified in Section 9.06 that are not prohibited by such Section 9.06, (b) transactions on terms and conditions substantially as favorable to the Company or such Restricted Subsidiary as would be obtainable by the Company or such Restricted Subsidiary at the time in comparable arm's length transactions with Persons other than Affiliates, (c) transactions involving the Company and the Restricted Subsidiaries exclusively, (d) any executive or employee incentive or compensation plan, contract or other arrangement (including any loans or extensions of credit in connection therewith) if such plan, contract or arrangement is approved either by the stockholders of the Company (in accordance with such voting requirements as may be applicable) or by the Board of Directors of the Company at a meeting at which a quorum of disinterested directors is present and (e) any tax sharing agreement with Cox Enterprises, Inc., or its Affiliates, provided, however, that any such tax sharing agreement shall apportion tax liabilities between or among the parties based on factors customarily used in similar agreements to determine such apportionment. SECTION 9.06. Loans and Advances to and Investments in Unrestricted Subsidiaries. At any time when (a) the Company shall not have outstanding Index Debt that is investment grade rated by Moody's and S&P and (b) the Leverage Ratio for the four consecutive fiscal quarter period most recently ended exceeds (or would exceed on a pro forma basis after giving effect to a transaction of the sort referred to in this Section 9.06 as if it had occurred at the beginning of such period and as if loans, investments, capital contributions and other investments are deductions to EBITDA) 4.5 to 1.0, the Company will not and will not permit any Restricted Subsidiary to make any loan or advance to, or make any capital contribution to or other investment in, any Unrestricted Subsidiary unless (i) in the case of a loan, advance, capital contribution or other investment, such loan, advance, capital contribution or other investment is on terms which are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than would obtain in a comparable arm's length transaction with an unaffiliated Person, and (ii) in each case at the time of the making of any such loan, advance, capital contribution or investment no Default or Event of 68 62 Default has occurred and is continuing and after giving effect to such loan, advance, capital contribution or investment no Default or Event of Default would occur. SECTION 9.07. Debt. The Company will not permit any Restricted Subsidiary to create, incur or suffer to exist any Debt except: (a) Debt outstanding on the date hereof which is both (i) described on Exhibit 9.07(a) attached hereto and (ii) reflected in the consolidated financial statements of the Company referred to in Section 6.02; and (b) additional Debt in an amount which, when taken together with all other outstanding Debt incurred in reliance on this clause (b) and, without duplication, all outstanding Debt of the Company and the Restricted Subsidiaries secured by liens incurred in reliance on clause (g) of Section 9.01, does not at the time it is incurred exceed 20% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the balance sheet most recently delivered pursuant to Section 8.02. ARTICLE X Events of Default Upon (i) the occurrence of any Event of Default specified in Sections 10.10, 10.11, 10.12 or 10.13, (x) the unpaid principal amount of, and all accrued but unpaid interest on, all Loans outstanding (including all Discretionary Loans) and any other amounts payable hereunder shall automatically become immediately due and payable without presentment, demand, protest, notice of intent to accelerate or other notice of any kind to the Company, all of which are hereby expressly waived and (y) the obligation of the Banks to make Loans hereunder shall immediately terminate and (ii) the occurrence and during the continuance of any other Event of Default and upon the written request of the Majority Banks, the Administrative Agent shall, by notice to the Company, (x) declare the obligation of the Banks to make Loans hereunder to be immediately terminated, and the same shall forthwith be terminated, and/or (y) declare all Loans then outstanding (including all Discretionary Loans) and any other amounts payable hereunder to be, and the same shall forthwith become, immediately due and payable without presentment, demand, protest, notice of intent to accelerate or other 69 63 notice of any kind to the Company, all of which are hereby expressly waived. An Event of Default will occur if: SECTION 10.01. Failure To Pay Principal or Interest. The Company does not pay or prepay any principal of any Loan on the date due (whether at stated maturity, by acceleration, by notice of prepayment, under Section 2.01, 3.01 or 3.02 or otherwise) or the Company does not pay or prepay any interest on any Loan (a) on or before five days after actual receipt of oral or written notice from the Administrative Agent, or the applicable Bank with respect to any Discretionary Loan, as to the amount of interest due, but in no event shall the Company be required to pay or prepay any such interest prior to the date due, or (b) within 10 days after the due date thereof if no notice is actually received by the Company from the Administrative Agent with respect to the amount of interest due; or SECTION 10.02. Failure To Pay Other Sums. The Company does not pay any sums (other than payments of principal and interest on any Loan covered by Section 10.01) payable to the Administrative Agent or any Bank under the terms of this Agreement within 10 days after the date due (or, in the case of administration fees payable to the Administrative Agent pursuant to Section 4.01 or the Commitment Fees, L/C Participation Fees or Utilization Fees payable to the Administrative Agent for the account of each Bank pursuant to Section 4.02, 10 days after written notice of nonpayment has been received by the Company from the Administrative Agent or any Bank); or SECTION 10.03. Failure To Pay Other Debt. (a) The Company or any Restricted Subsidiary does not pay when due any other Debt of the Company or any Restricted Subsidiary, the outstanding amount of which exceeds, singularly or in the aggregate, $25,000,000, in respect of which any applicable grace period has expired; or (b) the Company or any Restricted Subsidiary shall otherwise default under any other Debt of the Company or any Restricted Subsidiary (or any other event shall have occurred that would cause, or give the holders thereof the right to cause, such Debt to become due prior to the maturity thereof), the outstanding amount of which exceeds, singularly or in the aggregate, $25,000,000, in respect of which any applicable notice has been given and such Debt has been declared or become due prior to any maturity thereof; provided that during the continuance of any applicable grace period with respect thereto, such event shall constitute a Default (but not an Event of Default) hereunder; or 70 64 SECTION 10.04. Misrepresentation or Breach of Warranty. (i) Any representation or warranty made by the Company herein when made or deemed made by the Company pursuant hereto shall be incorrect in any material respect or (ii) any other information (other than projections and similar forward-looking information) provided by the Company pursuant to this Agreement after the date hereof, shall, when made, include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not materially misleading; or SECTION 10.05. Violation of Certain Covenants. The Company violates any covenant, agreement or condition contained in Article V or Section 8.01 or Section 8.02(d) or Article IX; or SECTION 10.06. Violation of Other Covenants, Etc. The Company violates any other covenant, agreement or condition contained herein and such violation shall not have been remedied within 30 days after written notice has been received by the Company from the Administrative Agent or any Bank; or SECTION 10.07. Undischarged Judgment. Final judgment for the payment of money in excess of $25,000,000 (which judgment is not covered by insurance, subject to normal deductible amounts) shall be rendered against the Company or any Restricted Subsidiary and the same shall remain undischarged for a period of 30 days during which period execution shall not be effectively stayed; or SECTION 10.08. ERISA. (a) A "reportable event" (as such term is defined in Section 4043 of ERISA) shall have occurred with respect to any Plan with respect to which a statement by the chief financial officer of the Company is required to be submitted under Section 8.08 and within 30 days after the reporting of any such reportable event to the Administrative Agent, the Administrative Agent shall have notified the Company in writing that the Majority Banks have made a reasonable determination that, on the basis of such reportable event, there is a substantial likelihood that such Plan will be terminated by the PBGC or (b) the PBGC has instituted proceedings to terminate any Plan and the effect of either of the foregoing would reasonably be expected to have a Materially Adverse Effect; or 71 65 SECTION 10.09. Change of Control. A Change of Control shall have occurred; or SECTION 10.10. Assignment for Benefit of Creditors or Nonpayment of Debts. The Company or any Restricted Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or SECTION 10.11. Voluntary Bankruptcy. The Company or any Restricted Subsidiary petitions or applies to any tribunal for or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of the Company or any Restricted Subsidiary, or of any substantial part of the assets of the Company or any Restricted Subsidiary, or commences any case or proceedings relating to the Company or any Restricted Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction; or SECTION 10.12. Involuntary Bankruptcy. An involuntary proceeding is commenced or an involuntary petition is filed in a court of competent jurisdiction seeking (i) relief in respect of the Company or any Restricted Subsidiary, or of a substantial part of the Property or assets of the Company or a Restricted Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Restricted Subsidiary or for a substantial part of the Property or assets of the Company or Restricted Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or SECTION 10.13. Dissolution. Any order is entered in any proceeding against the Company or any Restricted Subsidiary decreeing the dissolution or split-up of the Company or such Restricted Subsidiary, and such order remains unstayed and in effect for 60 days. 72 66 ARTICLE XI Modifications, Amendments or Waivers Any of the provisions of this Agreement may from time to time be modified or amended by, or waived with the written consent of, the Majority Banks; provided that no such waiver, modification or amendment may be made which will: (a) Reduce or increase the amount or alter the term of the Commitment of any Bank hereunder, other than as permitted by Section 4.04, without the prior written consent of such Bank; or (b) Extend the stated maturity of or the time for payment of interest on any Loan or the time for payment of any fee, or waive an Event of Default with respect to payment of any principal, interest, or fee, or reduce the principal amount of or the rate of interest on any Loan, or reduce the amount of any fee, or otherwise affect the terms of payment of any such fee, without the prior written consent of each affected Bank; or (c) Change the definition of Majority Banks without the prior written consent of all the Banks; or (d) Waive, modify or amend the provisions of this Article XI, Section 13.07(a) or any other provision of this Agreement requiring the ratable distribution of payments among the Banks without the prior written consent of all the Banks; (e) Waive, modify or amend the provisions of Article XII without the prior written consent of the Administrative Agent and the Majority Banks, or waive, modify or amend any provisions of this Agreement affecting the rights or obligations of the Swingline Lenders without the prior written consent of each Swingline Lender. No failure or delay on the part of the Administrative Agent or any Bank in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy or any abandonment or discontinuance of steps to enforce such a power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy hereunder. The remedies provided for in this Agreement are cumulative 73 67 and not exclusive of any remedies provided by law or in equity. No modification or waiver of any provision of this Agreement or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. ARTICLE XII The Administrative Agent SECTION 12.01. Appointment of Administrative Agent. Each of the Banks irrevocably appoints and authorizes the Administrative Agent to act on its behalf under this Agreement, and to exercise such powers hereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof, together with such powers as may be reasonably incidental thereto. As to any matters not expressly provided for by this Agreement, the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Banks; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. SECTION 12.02. Indemnification of Administrative Agent. The Administrative Agent shall not be required to take any action hereunder or to prosecute or defend any suit in respect of this Agreement, unless indemnified to its reasonable satisfaction by the Banks against loss, cost, liability and expense. If any indemnity furnished to the Administrative Agent shall become impaired, it may call for additional indemnity and cease to do the acts indemnified against until such additional indemnity is given. In addition, the Banks agree to indemnify the Administrative Agent (to the extent not reimbursed by the Company), ratably according to the respective principal amounts of the Loans then held by each of them (or if no Loans are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against 74 68 any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, 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 wilful misconduct. SECTION 12.03. Limitation of Liability. Neither the Administrative Agent nor any of its directors, officers, employees, attorneys or agents shall be liable for any action taken or omitted by it or them hereunder, or in connection herewith, (i) with the consent or at the request of the Majority Banks, or (ii) in the absence of its or their own gross negligence or wilful misconduct. Without limitation of the generality of the foregoing (but subject to the immediately preceding clause (ii)), the Administrative Agent: (v) may consult with legal counsel (including Counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such Counsel, accountants or experts; (w) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations made in or in connection with this Agreement; (x) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, or to inspect the Property (including the books and records) of the Company; (y) shall not be responsible to any Bank for the due execution, legality, validity, enforceability and genuineness of this Agreement, or any other instrument or document furnished pursuant hereto; and (z) shall incur no liability under or in respect of the Agreement by acting upon any notice or consent (whether oral or written and whether by telephone, telegram, cable or facsimile), certificate or other instrument or writing (which may be by telegram, cable or facsimile) believed by it to be genuine and communicated, signed or sent by the proper Person or Persons. SECTION 12.04. Independent Credit Decision. Each Bank agrees that it has relied solely upon its independent review of the financial statements of the Company and all other representations and warranties made by the Company 75 69 herein or otherwise in making the credit decisions preliminary to entering into this Agreement and agrees that it will continue to rely solely upon its independent review of the facts and circumstances of the Company in making future decisions with respect to this Agreement and the Loans. Each Bank agrees that it has not relied and will not rely upon the Administrative Agent or any other Bank respecting the ability of the Company to perform its obligations pursuant to this Agreement. SECTION 12.05. Rights of Chase. With respect to its Commitments, Swingline Commitments, participations in the Loans made by it, Chase shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Administrative Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include Chase in its individual capacity. Chase and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of the Subsidiaries and any Person or entity who may do business with or own securities of any of them or of their subsidiaries, all as if Chase were not the Administrative Agent and without any duty to account therefor to the Banks. SECTION 12.06. Successor to the Administrative Agent. The Administrative Agent may resign at any time as Administrative Agent under this Agreement, by giving 30 days' prior written notice thereof to the Banks and the Company and may be removed as Administrative Agent under this Agreement, at any time with or without cause by the Company and the Majority Banks. Upon any such resignation or removal, the Company (with the consent of the Majority Banks) shall have the right to appoint a successor Administrative Agent thereunder. If no successor Administrative Agent shall have been so appointed by the Company (with the consent of the Majority Banks), and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Banks' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $1,000,000,000. Upon the acceptance of any appointment as Administrative Agent under this Agreement by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to 76 70 and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation or removal as Administrative Agent under this Agreement, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. ARTICLE XIII Miscellaneous SECTION 13.01. Payment of Expenses. Any provision hereof to the contrary notwithstanding, and whether or not the transactions contemplated by this Agreement shall be consummated, the Company agrees to pay on demand (i) all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Agreement and all amendments hereto (including waivers hereunder and workouts with respect to Loans hereunder) and the other instruments and documents to be delivered hereunder or with respect to any amendment hereto, including the reasonable fees and out-of-pocket expenses of any counsel for the Administrative Agent with respect thereto; provided, however, that so long as no Default or Event of Default has occurred and is continuing, such reasonable counsel expenses shall be limited to the reasonable expenses of one counsel for the Administrative Agent, (ii) all reasonable increases in costs and expenses of the Administrative Agent and the Banks or any Bank (including reasonable counsel fees and expenses, including reasonable allocated costs of in-house legal counsel to the Administrative Agent or any Bank), if any, in connection with the administration of this Agreement after the occurrence of a Default or Event of Default and so long as the same is continuing and (iii) all reasonable costs and expenses of the Administrative Agent and the Banks or any Bank (including reasonable counsel fees and expenses, including reasonable allocated costs of in-house legal counsel to the Administrative Agent or any Bank), if any, in connection with the enforcement of this Agreement and the other instruments and documents to be delivered hereunder. The obligations of the Company under this Section 13.01 shall survive the termination of this Agreement and the payment of the obligations hereunder. 77 71 SECTION 13.02. Notices. The Administrative Agent or any Bank giving consent or notice to the Company provided for hereunder (other than in connection with any Discretionary Loans) shall notify each Bank and the Administrative Agent thereof. In the event that any Bank shall transfer any Loan in accordance with Section 13.07(c), it shall immediately so advise the Administrative Agent which shall be entitled to assume conclusively that no transfer of any Loan has been made by any Bank unless and until the Administrative Agent receives written notice to the contrary. Except as otherwise specifically permitted by this Agreement with respect to oral Notices of Borrowing or oral notices regarding the payment of interest under Section 10.01, notices and other communications provided for herein shall be in writing (including telegraphic, facsimile or cable communication) and shall be delivered, mailed, telegraphed, transmitted or cabled addressed to the addresses set forth on Exhibit 13.02 attached hereto (or, as to the Company or the Administrative Agent, at such other address as shall be designated by such party to the other parties in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given upon receipt, in each case addressed to such party as provided in this Section 13.02 or in accordance with the latest unrevoked direction from such party. The Administrative Agent and the Banks may at any time waive any requirement for notice hereunder. SECTION 13.03. Setoff. If one or more Events of Default as defined herein shall occur, any Bank or commercial bank which is owed any obligation hereunder (a "Depositary") shall have the right, in addition to all other rights and remedies available to it, and is hereby authorized, to the extent permitted by applicable law, at any time and from time to time, during the continuance of such Event of Default without notice to the Company (any such notice being hereby expressly waived by the Company), to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness (whether or not then due and payable) at any time owing by the Depositary to or for the credit or the account of the Company, against any of or all the Obligations of the Company now or hereafter existing under this Agreement irrespective of whether or not the Depositary shall have made any demand for satisfaction of 78 72 such Obligations and although such Obligations may be unmatured. Each Depositary agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Depositary under this Section are in addition to other rights and remedies (including other rights of setoff which such Depositary may have hereunder or under any applicable law). Each Depositary agrees that (i) if it shall exercise any such right of banker's lien, setoff, counterclaim or similar right pursuant hereto, it will apply the proceeds thereof to the payment of Loans outstanding hereunder and (ii) if it shall through the exercise of a right of banker's lien, setoff, counterclaim or otherwise obtain payment of a proportion of the Loans held by it in excess of the proportion of the Loans of each of the other Depositaries being paid simultaneously, it shall be deemed to have simultaneously purchased from each other's Depositary a participation in the Loans owed to such other Depositaries so that the amount of unpaid Loans and participations therein held by all Depositaries shall be proportionate to the original principal amount of the Loans owed to them, and in each case it shall promptly remit to each such Depositary the amount of the participation thus deemed to have been purchased. The Company expressly consents to the foregoing arrangements, and in furtherance thereof, agrees that at such time as an Event of Default hereunder has occurred, the Administrative Agent shall provide to each Bank a schedule setting forth the Commitment of each Bank hereunder to permit each Bank to correctly determine the portion which its Commitment hereunder bears to the aggregate of all Commitments hereunder. If all or any portion of any such excess payment is thereafter recovered from the Depositary which received the same, the purchase provided for herein shall be deemed to have been rescinded to the extent of such recovery, without interest. SECTION 13.04. Indemnity and Judgments. The Company agrees to indemnify the Administrative Agent and each of the Banks and each of their respective directors, officers, employees, agents, attorneys, advisors, Controlling Persons and Affiliates from and hold each harmless against any and all losses, costs, liabilities, claims, damages and expenses incurred by any of the foregoing Persons (collectively, the "Indemnified Liabilities"), including reasonable attorneys' fees, settlement costs, court costs and other legal expenses, arising out of or by reason of any investigation, litigation, claim or proceeding related to or arising out 79 73 of any participation in, or any action or omission in connection with this Agreement (and, with respect to Chase and CSI and each of their officers, directors, employees and Affiliates, any action or omission in connection with the Commitment Letter dated as of June 23, 2000 (the "Commitment Letter"), by and among the Company and such parties) or any Loan by a Bank hereunder or to any use or proposed use to be made by the Company or any Subsidiary of the Loans and to the extent that the Indemnified Liabilities arise out of or by reason of claims made by Persons other than the Administrative Agent or any Bank; provided that no such Person shall be entitled to be indemnified and held harmless against any such Indemnified Liabilities arising out of or by reason of the gross negligence or wilful misconduct of such Person. The parties acknowledge that the indemnification provisions set forth in the Commitment Letter shall be superseded by this Section 13.04. SECTION 13.05. Interest. Anything in this Agreement to the contrary notwithstanding, the Company shall never be required to pay unearned interest on any Loan and shall never be required to pay interest on any Loan at a rate in excess of the Highest Lawful Rate, and if the effective rate of interest which would otherwise be payable under this Agreement would exceed the Highest Lawful Rate, or if any Bank shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable under this Agreement to a rate in excess of the Highest Lawful Rate, then (i) in lieu of the amount of interest which would otherwise be payable under this Agreement, the Company shall pay the Highest Lawful Rate, and (ii) any unearned interest paid by the Company or any interest paid by the Company in excess of the Highest Lawful Rate shall be credited on the principal of such Loan, and, thereafter, refunded to the Company. It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by any Bank under this Agreement that are made for the purpose of determining whether such rate exceeds the Highest Lawful Rate applicable to such Bank (such Highest Lawful Rate being such Bank's "Maximum Permissible Rate"), shall be made, to the extent permitted by usury laws applicable to such Bank (now or hereafter enacted), by amortizing, prorating and spreading in equal parts during the period of the full stated term of the Loans all interest at any time contracted for, charged or received by such Bank in connection therewith. If at any time and from time to time (y) the amount of interest 80 74 payable to any Bank on any date shall be computed at such Bank's Maximum Permissible Rate pursuant to this Section 13.05 and (z) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Bank would be less than the amount of interest payable to such Bank computed at such Bank's Maximum Permissible Rate, then the amount of interest payable to such Bank in respect of such subsequent interest computation period shall continue to be computed at such Bank's Maximum Permissible Rate until the total amount of interest payable to such Bank shall equal the total amount of interest which would have been payable to such Bank if the total amount of interest had been computed without giving effect to this Section. SECTION 13.06. Governing Law; Submission to Jurisdiction; Venue. (a) THIS AGREEMENT AND OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS EXECUTED BY THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS UNDER THE LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF SAID STATE AND OF THE UNITED STATES. Without limitation of the foregoing, nothing in this Agreement shall be deemed to constitute a waiver of any rights which any Bank may have under applicable Federal law relating to the amount of interest which such Bank may contract for, take, receive or charge in respect of any Loans, including any right to take, receive, reserve and charge interest at the rate allowed by the laws of the state where such Bank is located. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of New York sitting in New York City or of the United States for the Southern District of New York, and by execution and delivery of this Agreement, the Company hereby irrevocably accepts for itself and in respect of its Property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The Company 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 the Company at its address for notices pursuant to Section 13.02, such service to become effective 15 days after such mailing. Nothing herein shall affect the right of the Administrative Agent or any Bank to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. 81 75 (b) The Company 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 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. SECTION 13.07. Survival of Representations and Warranties; Binding Effect; Assignment. (a) All representations, warranties and covenants contained herein or made in writing by the Company in connection herewith shall survive the execution and delivery of this Agreement, and will bind and inure to the benefit of the respective successors and assigns of the parties hereto, whether so expressed or not. This Agreement shall become effective when it shall have been executed by the Company, the Administrative Agent and each of the Banks, and thereafter shall be binding upon and inure to the benefit of the Company, the Administrative Agent and the Banks and each of their respective successors and assigns, except that the Company shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of each Bank. (b) Each Bank may grant participations to one or more other banks or other Persons in or to all or any part of its rights and obligations under this Agreement (including all or a portion of its Commitment or Swingline Commitment) pursuant to such participation agreements and certificates as are customary in the banking industry; provided, however, that (i) such Bank's obligations under this Agreement (including its Commitment and Swingline Commitment to the Company hereunder) shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company the Administrative Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, including such Bank's rights under Article XI hereof. In connection with any such participation, each Bank may deliver such financial information concerning the Company and the Subsidiaries to permit such participant to make an informed and independent credit decision concerning such participation; provided, however, each such Bank shall obtain from each such participant an agreement to the effect that all such information delivered to it in connection with such participation shall be considered 82 76 confidential and shall not be further distributed or delivered to any other Person except any regulatory body having jurisdiction over such participant or to any director, officer, employee, Affiliate or representative (including accountants and attorneys acting for such participants) or as may otherwise be required by legal process or applicable law, rules and regulations. Upon request of the Company, each Bank shall give prompt notice to the Company of each such participation to banks or other Persons that are not Affiliates of such Bank identifying each such participant and the interest acquired by each such participant. This Agreement shall not be construed so as to confer any right or benefit upon any Person, including any Person acquiring a participation in any Loan, other than the parties to this Agreement, except that any Person acquiring a participation shall be entitled to the benefits conferred upon the Banks by Section 2.01(f)-(g) (provided that such Person shall have complied with the requirements of Section 2.03 and that the cost to the Company is not in excess of what such cost would have been had such participation not been granted). (c) Subject (except in the case of assignments to Bank Affiliates) to the prior written consent of the Company (which consent shall not be unreasonably withheld) and the Administrative Agent, each Bank may assign to a bank or other Person a portion of its rights and obligations under this Agreement (including a portion of its Commitment and Swingline Commitment); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Bank's rights and obligations under this Agreement and shall be in an amount equal to or greater than $5,000,000 of the assigning Bank's Commitment and Swingline Commitment (except in the case of assignments to Affiliates of any Bank or unless otherwise agreed by the Company) and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance in substantially the form of Exhibit 13.07(c) attached hereto (the "Assignment and Acceptance"), together with a processing and recordation fee of $3,500; provided, however, that such recordation fee shall not be payable if such transfer is made pursuant to Sections 2.01(e) or (g)(vi), and provided, further, that any consent of the Company required under this paragraph shall not be required if an Event of Default has occurred and is continuing. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be 83 77 the date on which such Assignment and Acceptance is accepted by the Administrative Agent, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank under this Agreement and (y) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto). (d) Notwithstanding anything to the contrary contained herein, any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Company, the option to provide to the Company all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Company pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 13.07(c) or Section 13.07(d), any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loan to the Granting Bank or to any financial institutions 84 78 (consented to by the Company and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section may not be amended without the written consent of the SPC. (e) By executing and delivering an Assignment and Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any other instrument or document furnished pursuant thereto, (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its respective obligations under this Agreement, (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Sections 6.02 and 8.02 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with its terms all the obligations which by the terms of this Agreement are required to be performed by it as a Bank. (f) The Administrative Agent shall maintain at its address referred to in Section 13.02 a copy of each Assignment and Acceptance delivered to and accepted by it 85 79 and a register for the recordation of the names and addresses of the Banks and the Commitment and any Swingline Commitment of, and principal amount of the Loans owing to, each Bank from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent demonstrable error, and the Company, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank at any reasonable time and from time to time upon reasonable prior notice. (g) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit 13.07(c) attached hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. (h) Notwithstanding any other provision in this Agreement, any Bank may at any time, without the consent of the Company, assign all or any portion of its rights under this Agreement (including the Loans) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System; provided that no such assignment shall release a Bank from any of its obligations hereunder or substitute any such Federal Reserve Bank for such Bank as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the Company shall, at the request of the assigning Bank, duly execute and deliver to the assigning Bank a promissory note or notes evidencing the Loans made to the Company by the assigning Bank hereunder. SECTION 13.08. Counterparts. This Agreement may be executed in several counterparts, and by the parties hereto on separate counterparts. When counterparts executed by all the parties shall have been delivered to the Administrative Agent, this Agreement shall become effective, and at such time the Administrative Agent shall notify the Company and each Bank. Each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. SECTION 13.09. Severability. Should any clause, sentence, paragraph or section of this Agreement be 86 80 judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement, and the parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such part or parts had never been included herein. SECTION 13.10. Descriptive Headings. The section headings in this Agreement have been inserted for convenience only and shall be given no substantive meaning or significance whatever in construing the terms and provisions of this Agreement. SECTION 13.11. Representation of the Banks. Each Bank hereby represents and warrants that it is not relying upon any Margin Stock as collateral in extending or maintaining the credit to the Company represented by this Agreement. SECTION 13.12. Final Agreement of the Parties. This Agreement (including the Exhibits hereto) represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no oral agreements between the parties. SECTION 13.13. Waiver of Jury Trial. THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 87 81 IN WITNESS WHEREOF this Agreement has been executed by the duty authorized signatories of the parties hereto in several counterparts all as of the day and year first above written. COX RADIO, INC., by /s/ Richard J. Jacobson ------------------------------ Name: Richard J. Jacobson Title: Treasurer THE CHASE MANHATTAN BANK, Individually and as Administrative Agent, by /s/ Constance M. Coleman ------------------------------ Name: Constance M. Coleman Title: Vice President BANK OF AMERICA, N.A., Individually and as Syndication Agent, by /s/ Patrick Honey ------------------------------ Name: Patrick Honey Title: Vice President CITIBANK, N.A., Individually and as Documentation Agent, by /s/ Maureen Maroney ------------------------------ Name: Maureen Maroney Title: Vice President 88 82 ABN AMRO BANK N.V., by /s/ Ann Schwalbenberg ------------------------------ Name: Ann Schwalbenberg Title: Vice President by /s/ Francis O'R. Logan ------------------------------ Name: Francis O'R. Logan Title: Senior Vice President THE BANK OF NEW YORK, by /s/ John C. Lambert ------------------------------ Name: John C. Lambert Title: Vice President COMMERZBANK AG NEW YORK AND GRAND CAYMAN BRANCHES, by /s/ Brian J. Campbell ------------------------------ Name: Brian J. Campbell Title: Vice President by /s/ W. David Suttles ------------------------------ Name: W. David Suttles Title: Vice President CREDIT SUISSE FIRST BOSTON, by /s/ Tom Muoio ------------------------------ Name: Tom Muoio Title: Vice President by /s/ Vitaly Butenko ------------------------------ Name: Vitaly Butenko Title: Asst. Vice President 89 83 THE DAI-ICHI KANGYO BANK, LTD., by /s/ Nancy Stengel ------------------------------ Name: Nancy Stengel Title: Vice President DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, by /s/ Brian Schneider ------------------------------ Name: Brian Schneider Title: Assistant Vice President by /s/ Constance Loosemore ------------------------------ Name: Constance Loosemore Title: Assistant Vice President FIRST UNION NATIONAL BANK, by /s/ Jeffrey M. Graci ------------------------------ Name: Jeffrey M. Graci Title: Director FLEET NATIONAL BANK, by /s/ Tanya M. Crossley ------------------------------ Name: Tanya M. Crossley Title: Vice President 90 84 BAYERISCHE HYPO-UND VEREINSBANK AG NEW YORK BRANCH, by /s/ Eric N. Pelletier ------------------------------ Name: Eric N. Pelletier Title: Director by /s/ Cheryl K. Chiappetta ------------------------------ Name: Cheryl K. Chiappetta Title: Associate Director THE INDUSTRIAL BANK OF JAPAN, LIMITED, by /s/ James W. Masters ------------------------------ Name: James W. Masters Title: Senior Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Robert Bottamedi ------------------------------ Name: Robert Bottamedi Title: Vice President THE SUMITOMO BANK, LTD., by /s/ Leo E. Pagarigan ------------------------------ Name: Leo E. Pagarigan Title: Vice President SUNTRUST BANK, by /s/ Thomas C. Palmer ------------------------------ Name: Thomas C. Palmer Title: Director 91 85 WACHOVIA BANK, N.A., by /s/ J. Timothy Toler ------------------------------ Name: J. Timothy Toler Title: Senior Vice President WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, by /s/ Lucie L. Guernsey ------------------------------ Name: Lucie L. Guernsey Title: Director by /s/ Barry S. Wadler ------------------------------ Name: Barry S. Wadler Title: Associate EX-10.10 7 ex10-10.txt FIVE-YEAR CREDIT AGREEMENT 1 Exhibit 10.10 ================================================================================ FIVE-YEAR CREDIT AGREEMENT dated as of June 30, 2000 among COX RADIO, INC., THE BANKS REFERRED TO HEREIN, THE CHASE MANHATTAN BANK, as Administrative Agent, BANK OF AMERICA, N.A., as Syndications Agent, and CITIBANK, N.A., as Documentation Agent ================================================================================ [CSM Ref. 6700-510] 2 COX RADIO, INC. TABLE OF CONTENTS ARTICLE I SECTION 1.01. Definitions ...................................... 1 SECTION 1.02. Terms Generally .................................. 18 ARTICLE II The Loans and Letters of Credit SECTION 2.01. The Revolving Loans .............................. 19 SECTION 2.02. Setoff, Counterclaims and Taxes .................. 31 SECTION 2.03. Withholding Tax Exemption ........................ 32 SECTION 2.04. Obligations Several, Not Joint ................... 32 SECTION 2.05. Evidence of Debt ................................. 33 SECTION 2.06. Discretionary Loans .............................. 33 SECTION 2.07. Swingline Loans .................................. 34 SECTION 2.08. Letters of Credit ................................ 37 ARTICLE III Optional and Required Prepayments; Interest Payment Date; Other Payments SECTION 3.01. Optional Prepayments ............................. 43 SECTION 3.02. Required Prepayments ............................. 44 SECTION 3.03. Interest Payment Date ............................ 47 SECTION 3.04. Place, Etc. of Payments and Prepayments .......... 47 ARTICLE IV Fees; Reduction of Commitments SECTION 4.01. Administration Fee ............................... 48 SECTION 4.02. Commitment Fees .................................. 48 SECTION 4.03. Utilization Fees ................................. 48 SECTION 4.04. LC Participation Fees ............................ 49 SECTION 4.05. Reduction or Termination of Commitments .......... 49 ARTICLE V Application of Proceeds ............. 50
3 2 ARTICLE VI Representations and Warranties SECTION 6.01. Organization; Qualification; Subsidiaries ................................... 50 SECTION 6.02. Financial Statements ............................. 51 SECTION 6.03. Actions Pending .................................. 51 SECTION 6.04. Default .......................................... 51 SECTION 6.05. Title to Assets; Licenses; Intellectual Property ....................................... 52 SECTION 6.06. Payment of Taxes ................................. 52 SECTION 6.07. Conflicting or Adverse Agreements or Restrictions ................................... 52 SECTION 6.08. Purpose of Loans ................................. 53 SECTION 6.09. Authority; Validity .............................. 53 SECTION 6.10. Consents or Approvals ............................ 53 SECTION 6.11. Compliance with Law .............................. 54 SECTION 6.12. ERISA ............................................ 54 SECTION 6.13. Investment Company Act ........................... 54 SECTION 6.14. Disclosure ....................................... 54 SECTION 6.15. Insurance ........................................ 55 SECTION 6.16. Environmental and Safety Matters ................. 55 ARTICLE VII Conditions SECTION 7.01. Conditions Precedent to Closing .................. 56 SECTION 7.02. Conditions Precedent to Each Borrowing ........... 58 ARTICLE VIII Affirmative Consents SECTION 8.01. Certain Financial Covenants ...................... 59 SECTION 8.02. Financial Statements and Information ............. 60 SECTION 8.03. Existence; Laws; Obligations ..................... 62 SECTION 8.04. Notice of Litigation and Other Matters ........... 62 SECTION 8.05. Books and Records ................................ 63 SECTION 8.06. Inspection of Property and Records ............... 63 SECTION 8.07. Maintenance of Property, Insurance ............... 63 SECTION 8.08. ERISA ............................................ 63 SECTION 8.09. Maintenance of Business Lines .................... 64
4 3 SECTION 8.10. Restricted/Unrestricted Designation of Subsidiaries ................................... 64 SECTION 8.11. Compliance with Material FCC Licenses ............ 65 ARTICLE IX Negative Covenants SECTION 9.01. Mortgages, Etc ................................... 65 SECTION 9.02. Merger; Consolidation; Disposition of Assets ......................................... 66 SECTION 9.03. Restricted Payments .............................. 67 SECTION 9.04. Limitation on Margin Stock ....................... 67 SECTION 9.05. Transactions with Affiliates ..................... 67 SECTION 9.06. Loans and Advances to and Investments in Unrestricted Subsidiaries ...................... 68 SECTION 9.07. Debt ............................................. 69 ARTICLE X Events of Default SECTION 10.01. Failure To Pay Principal or Interest ............ 70 SECTION 10.02. Failure To Pay Other Sums ....................... 70 SECTION 10.03. Failure To Pay Other Debt ....................... 70 SECTION 10.04. Misrepresentation or Breach of Warranty ...................................... 71 SECTION 10.05. Violation of Certain Covenants .................. 71 SECTION 10.06. Violation of Other Covenants, Etc ............... 71 SECTION 10.07. Undischarged Judgment ........................... 71 SECTION 10.08. ERISA ........................................... 71 SECTION 10.09. Change of Control ............................... 72 SECTION 10.10. Assignment for Benefit of Creditors or Nonpayment of Debts ........................ 72 SECTION 10.11. Voluntary Bankruptcy ............................ 72 SECTION 10.12. Involuntary Bankruptcy .......................... 72 SECTION 10.13. Dissolution ..................................... 72 ARTICLE XI Modifications, Amendments or Waivers ...... 73
5 4 ARTICLE XII The Administrative Agent SECTION 12.01. Appointment of Administrative Agent ............. 74 SECTION 12.02. Indemnification of Administrative Agent ......................................... 74 SECTION 12.03. Limitation of Liability ......................... 75 SECTION 12.04. Independent Credit Decision ..................... 75 SECTION 12.05. Rights of Chase ................................. 76 SECTION 12.06. Successor to the Administrative Agent ........... 76 ARTICLE XIII Miscellaneous SECTION 13.01. Payment of Expenses ............................. 77 SECTION 13.02. Notices ......................................... 78 SECTION 13.03. Setoff .......................................... 78 SECTION 13.04. Indemnity and Judgments ......................... 79 SECTION 13.05. Interest ........................................ 80 SECTION 13.06. Governing Law; Submission to Jurisdiction; Venue ........................... 81 SECTION 13.07. Survival of Representations and Warranties; Binding Effect; Assignment .................................... 82 SECTION 13.08. Counterparts .................................... 86 SECTION 13.09. Severability .................................... 87 SECTION 13.10. Descriptive Headings ............................ 87 SECTION 13.11. Representation of the Banks ..................... 87 SECTION 13.12. Final Agreement of the Parties .................. 87 SECTION 13.13. Waiver of Jury Trial ............................ 87 LIST OF EXHIBITS Exhibit 2.01(a) - Banks and Commitments Exhibit 2.01(g)(iv) - Eurocurrency Liabilities (Regulation D) Exhibit 2.07 - Swingling Lenders and Commitments Exhibit 2.08 - Issuing Banks and Letter of Credit Commitments Exhibit 6.01 - List of Subsidiaries Exhibit 6.03 - List of Actions Pending
6 5 Exhibit 7.01(b) - Opinion of the Company's Counsel Exhibit 7.01(c) - Officer's Certificate Exhibit 9.01(d) - List of Liens and Security Interests Exhibit 9.07(a) - Subsidiary Debt Exhibit 13.02 - Addresses for Notices Exhibit 13.07(c) - Assignment and Acceptance
7 FIVE-YEAR CREDIT AGREEMENT dated as of June 30, 2000 (this "Agreement"), among COX RADIO, INC., a Delaware corporation (the "Company"), the BANKS referred to herein, THE CHASE MANHATTAN BANK ("Chase"), as administrative agent (the "Administrative Agent"), BANK OF AMERICA, N.A., as syndications agent, and CITIBANK, N.A., as documentation agent. WHEREAS the Company, an indirect majority-owned subsidiary of Cox Enterprises (such term and each other capitalized term used in this Agreement having the meaning set forth in Article I hereof) has previously entered into the Five-Year Credit Agreement dated as of March 7, 1997 (the "Existing Facility"), among the Company, the banks party thereto, Texas Commerce Bank National Association, as Administrative Agent, Nationsbank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. WHEREAS the Company desires, and the Banks, the Administrative Agent and the Documentation Agent have agreed, to replace the Existing Facility with this Agreement and the Facility A Credit Agreement (as defined below). WHEREAS the proceeds of the borrowings hereunder will be used for general corporate purposes (including acquisitions) and to repay any amounts outstanding under the Existing Facility. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE I Definitions Section 1.01. Definitions. As used in this Agreement, the following words and terms shall have the respective meanings indicated opposite each of them and all accounting terms shall be construed in accordance with GAAP consistent with those followed in the preparation of the 8 2 financial statements referred to in Section 6.02, unless otherwise indicated: "Administrative Agent" shall have the meaning set forth in the introductory paragraph of this Agreement. "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agent's Fee Letter" shall mean the fee letter dated as of June 22, 2000, between Chase Securities Inc. ("CSI") and the Company. "Aggregate Commitments" shall have the meaning set forth in Section 4.03. "Agreement" shall mean this Five-Year Credit Agreement. "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the greater of (a) the Floating Rate in effect on such day; or (b) the Federal Funds Borrowing Rate in effect for such day plus 1/2 of 1%. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Federal Funds Borrowing Rate shall be effective on the effective date of such change in the Federal Funds Borrowing Rate. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive, absent demonstrable error) that it is unable to ascertain, after reasonable efforts, the Federal Funds Borrowing Rate, the Alternate Base Rate shall be the Floating Rate until the circumstances giving rise to such inability no longer exist. "Alternate Base Rate Loans" shall mean the loans described in Section 2.01(d)(i) which bear interest at a rate based on the Alternate Base Rate and the Swingline Loans. "Applicable Percentage" shall mean, with respect to any Bank at any time, the percentage of the Total Commitment represented by such Bank's Commitment at such time. 9 3 "Assignment and Acceptance" shall have the meaning specified in Section 13.07(c) hereof. "Attributable Amount" shall mean, in connection with any designation of a Restricted Subsidiary as an Unrestricted Subsidiary or of an Unrestricted Subsidiary as a Restricted Subsidiary pursuant to Section 8.10, the amount of EBITDA for the most recent four consecutive fiscal quarter period for which financial statements have been delivered in accordance with Section 8.02, determined at the time of such designation, which was attributable to such Subsidiary. "Bank Affiliate" shall mean, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor. "Banks" shall mean the Persons listed on Exhibit 2.01(a), each such Bank's respective successors (which successors shall include any entity resulting from a merger or consolidation) and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Banks" includes the Swingline Lenders and the Issuing Banks. "Borrowing Date" shall mean a date upon which a Borrowing is, or is to be made, under Section 2.01(a). "Borrowings" shall mean Borrowings by the Company under (a) Section 2.01(a) consisting of simultaneous Revolving Loans from the Banks or (b) Section 2.07 consisting of Swingline Loans. "Business Day" shall mean a day when the Reference Banks and the Administrative Agent are open for business; provided that in connection with Eurodollar Loans, it shall mean a day when the Reference Banks and the 10 4 Administrative Agent are open for business and banks are authorized to be open for business in London and New York. "Capital Stock" of any Person shall mean any and all shares, interests, share capital, rights to subscribe for or purchase, warrants, options, participations or other equivalents of or interests or membership interests in (however designated) equity of such Person, including any Preferred Stock, any limited or general partnership interest and any limited liability company membership interest (but excluding any debt securities convertible into such equity), and any rights to subscribe for or purchase any thereof. "Cash Flow Producing Assets" shall mean (a) assets other than (i) cash equivalents and other investments purchased in the ordinary course of the Company's cash management activities, (ii) office buildings and office equipment and supplies and (iii) other assets not comprising radio broadcast stations or portions thereof or not directly employed in the cash flow-producing activities of the Company and the Restricted Subsidiaries and (b) any Capital Stock of a Restricted Subsidiary substantially all the assets of which constitute assets described in clause (a) above. "CD Rate" for any Interest Period shall mean, for each CD Rate Loan comprising all or part of the relevant Borrowing, an interest rate per annum determined by the Administrative Agent to be equal to the sum of: (a) the rate per annum obtained by dividing (i) the per annum rate of interest determined by the Administrative Agent to be the average (rounded upward to the nearest whole multiple of 0.01%, if such average is not such a multiple) of the bid rate determined independently by each Reference Bank at 9:00 a.m. (New York, New York time), or as soon thereafter as is practicable, on the first day of such Interest Period, of a certificate of deposit dealer of recognized standing selected by each Reference Bank for the purchase at face value of its certificates of deposit in an amount approximately equal or comparable to the aggregate principal amount of such CD Rate Loans, with a maturity equal to such Interest Period, by (ii) the result obtained by subtracting from 100% all reserve (including any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirements (expressed as a rate 11 5 per annum) applicable (or scheduled at the time of determination to become applicable during such Interest Period) to such certificates of deposit, plus (b) the weighted average of annual assessment rates, determined by the Administrative Agent to be in effect on the first day of such Interest Period, used to determine the then current annual assessment payable by the Reference Banks to the Federal Deposit Insurance Corporation for such Corporation's insuring Dollar deposits of such Reference Banks in the United States. The Administrative Agent shall deliver to the Company a certificate setting forth in reasonable detail the calculation of the CD Rate with each determination of the CD Rate. "CD Rate Loans" shall mean the loans described in Section 2.01(d)(iii) which bear interest at a rate based on the CD Rate. A "Change of Control" shall be deemed to have occurred if (a) the Cox Family and Cox Enterprises shall cease at any time to own directly or indirectly Capital Stock of the Company carrying at least 50.1% of the voting power of all the outstanding voting stock of the Company, (b) any Person or group of Persons other than the Cox Family, Cox Enterprises and Persons Controlled by them shall have the right or ability, directly or indirectly, to cause the election of a majority of the directors of the Company, (c) the Cox Family shall cease at any time to own directly or indirectly at least 50.1% of the outstanding voting stock of Cox Enterprises, or (d) any Person or group of Persons other than the Cox Family shall have the right or ability, directly or indirectly, to cause the election of a majority of the directors of Cox Enterprises. "Chase" shall have the meaning set forth in the introductory paragraph of this Agreement. "Closing Date" shall mean the date of this Agreement. "Commitment" shall mean as to any Bank the aggregate amount of such Bank's commitment to make Loans and to acquire participations in Letters of Credit hereunder, as set forth beside such Bank's name on Exhibit 2.01(a) attached hereto or in any Assignment and 12 6 Acceptance executed pursuant to Section 13.07(c), as such amount (a) may be reduced from time to time pursuant to the terms of this Agreement or pursuant to an Assignment and Acceptance or (b) may be increased from time to time pursuant to an Assignment and Acceptance. "Commitment Fees" shall have the meaning set forth in Section 4.02. "Commitment Fee Rate" shall have the meaning set forth under the definition of "Margin Percentage". "Commitment Letter" shall have the meaning assigned to such term in Section 13.04. "Company" shall have the meaning set forth in the introductory paragraph of this Agreement. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Counsel for the Company" shall mean Dow, Lohnes & Albertson, PLLC. "Cox Enterprises" shall mean Cox Enterprises, Inc., a Delaware corporation. "Cox Family" shall mean those certain trusts commonly referred to as the Dayton-Cox Trust A, the Barbara Cox Anthony Atlanta Trust, the Anne Cox Chambers Atlanta Trust, the Estate of James M. Cox, Jr., Barbara Cox Anthony, Garner Anthony, Anne Cox Chambers, and the estates, executors and administrators, and children of the above-named individuals, and any corporation, partnership, limited liability company, trust or other entity in which the above-named trusts or individuals in the aggregate have a beneficial interest of greater than 50%. "CSI" shall have the meaning set forth in the definition of "Agent's Fee Letter" under this Agreement. "Debt" shall mean with respect to any Person and without duplication (a) indebtedness for borrowed money or for the deferred purchase price of Property or services in respect of which such Person is liable, contingently or 13 7 otherwise, as obligor, guarantor or otherwise, or in respect of which such Person directly or indirectly assures a creditor against loss, (b) the capitalized portions of obligations under leases which shall have been or should have been, in accordance with GAAP, recorded as capital leases, (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (d) all guarantees by such Person of the Debt of others. "Default Rate" shall mean a rate per annum (for the actual number of days elapsed, based on a year of 365 or 366 days, as the case may be) which shall be equal to the lesser of (a) the Alternate Base Rate plus 1% or (b) the Highest Lawful Rate. "Depositary" shall have the meaning assigned to such term in Section 13.03. "Discretionary Borrowings" shall mean borrowings by the Company under Section 2.06 consisting of Discretionary Loans. "Discretionary Loans" shall mean loans made by a Bank pursuant to Section 2.06. "Dollars" and "$" shall mean lawful currency of the United States of America. "EBITDA" shall mean, with respect to any period, the net income of the Company and its Subsidiaries on a consolidated basis for such period plus, to the extent deducted in computing such consolidated net income, without duplication, the sum of (a) income tax expense, (b) interest expense, (c) depreciation and amortization expense, (d) any extraordinary or non-recurring losses, (e) management fees paid to Cox Enterprises, (f) closing costs and other non-recurring costs incurred in connection with this Agreement, the Facility A Credit Agreement and any other acquisition, disposition or financing, and (g) other noncash items reducing such consolidated net income, minus, to the extent added in computing such consolidated net income, without duplication, the sum of (i) interest income, (ii) any extraordinary or non- recurring gains and (iii) other noncash items increasing such consolidated net income, determined on a consolidated basis in accordance with GAAP "ERISA" shall mean the Employee Retirement Income Security Act of 1974. 14 8 "Eurodollar Event" shall have the meaning assigned to such term in Section 2.01(e). "Eurodollar Loans" shall mean the Loans described in Section 2.01(d)(ii) which bear interest at a rate based on the Eurodollar Rate. "Eurodollar Rate" for any Interest Period shall mean, for each Eurodollar Loan comprising part of the relevant Borrowing, an interest rate per annum equal to the per annum rate of interest determined by the Administrative Agent to be the arithmetical average (rounded upward to the nearest whole multiple of 0.01%, if such average is not such a multiple) of the rate per annum at which deposits in Dollars are offered by the Lending Office of each Reference Bank to a prime bank in the interbank domestic eurodollar market at 10:00 a.m. (New York, New York time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of the relevant Eurodollar Loan of such Reference Bank during such Interest Period. "Event of Default" shall have the meaning assigned to such term in Article 10; provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "Default" shall mean any of such events, whether or not any such requirement has been satisfied. "Existing Facility" shall have the meaning set forth in the introductory paragraph of this Agreement. "Facility A Credit Agreement" shall mean the 364 day Credit Agreement dated as of June 30, 2000, among the Company, certain lenders, Chase, as administrative agent for such lenders, Bank of America, N.A., as syndication agent for such lenders, and Citibank, N.A., as documentation agent for such lenders. "FCC" shall mean the Federal Communications Commission or any successor governmental agency thereto. "Federal Funds Borrowing Rate" shall mean, for any day, a fluctuating interest rate per annum equal to the weighted average (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the 15 9 Federal Reserve System for such day quoted by the Reference Banks to the Administrative Agent at 12:00 noon (New York, New York time) on such day. "Floating Rate" shall mean, as of a particular date, the prime rate most recently determined by the Administrative Agent. Without notice to the Company or any other Person, the Floating Rate shall change automatically from time to time as and in the amount by which said prime rate shall fluctuate, with each such change to be effective as of the date of each change in such prime rate. The Floating Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent may make commercial loans or other loans at rates of interest at, above or below the Floating Rate. "GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination; provided that, if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Majority Banks request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. "Granting Bank" shall have the meaning assigned to such term in Section 13.07(d). "Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if any, that at any applicable time may be contracted for, taken, reserved, charged or received on any Loan or on the other amounts which may be owing to any Bank pursuant to this Agreement under the laws applicable to such Bank and this transaction. 16 10 "Indemnified Liabilities" shall have the meaning assigned to such term in Section 13.04. "Index Debt" shall mean senior, unsecured long-term Debt of the Company that is not guaranteed by any other Person or subject to any other credit enhancement. "Interest Coverage Ratio" shall mean, at any time, the ratio of (a) Pro Forma EBITDA plus, to the extent subtracted in computing EBITDA, interest income to (b) Interest Expense, in each case for any four consecutive fiscal quarter period. "Interest Expense" shall mean, with respect to any period, cash interest expense of the Company and its Restricted Subsidiaries on a consolidated basis for such period determined in accordance with GAAP. "Interest Payment Date" shall mean, with respect to Alternate Base Rate Loans, each Quarterly Date, with respect to Eurodollar Loans or CD Rate Loans, the last day of each Interest Period, or with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid. "Interest Period" shall mean, with respect to each Eurodollar Loan and CD Rate Loan made hereunder, the period commencing on the Borrowing Date of such Loan and (a) in the case of Eurodollar Loans, ending one, two, three or six months thereafter; and (b) in the case of CD Rate Loans, ending 30, 60, 90 or 180 days thereafter; in each case as the Company may select in the Notice of Borrowing; provided, however, that (i) no Interest Period for a Loan may be chosen that would extend beyond the Maturity Date, (ii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided that with respect to Eurodollar Loans, any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day only if such Business Day does not fall in another month, and in the event the next succeeding Business Day falls in another month, the Interest Period for such Eurodollar Loan shall be accelerated so that such Interest Period shall end on 17 11 the next preceding Business Day and (iii) any Interest Period that begins on a day for which there is no numerically corresponding day in the last month of such Interest Period shall end on the last Business Day of the last month of such Interest Period. In no event shall there be more than ten Interest Periods in effect at any one time. "Issuing Banks" shall mean The Chase Manhattan Bank and each other Person that is listed on Exhibit 2.08 or that shall, by an instrument satisfactory in form and substance to, and executed by, the Company and the Administrative Agent, become an Issuing Bank, and its successors in such capacity as provided in Section 2.08(i). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate executing this Agreement as Issuing Bank, in its capacity as issuer of Letters of Credit hereunder. "LC Disbursement" shall mean a payment made by an Issuing Bank pursuant to a Letter of Credit. "LC Exposure" shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Company at such time. The LC Exposure of any Bank at any time shall be its Applicable Percentage of the total LC Exposure at such time. "L/C Participation Fees" shall have the meaning set forth in Section 4.04. "Lending Office" shall mean, with respect to any Bank, its principal office in the city identified with such Bank in Exhibit 13.02 hereto, or such other office or branch of such Bank, or Affiliate of such Bank located in the United States (acting on behalf of such Bank as its "Lending Office" hereunder), as it shall designate in writing from time to time to the Company, as the case may be. "Letter of Credit" shall mean any letter of credit issued pursuant to this Agreement. "Leverage Ratio" shall mean, at any time, the ratio of (a) Total Debt, as of the last day of the fiscal 18 12 quarter most recently ended, to (b) Pro Forma EBITDA, for the four consecutive fiscal quarter period then most recently ended. "Loans" shall mean Revolving Loans, Discretionary Loans and Swingline Loans. "Majority Banks" shall mean Banks holding at least 51% of the aggregate Commitments hereunder. "Mandatory Prepayment Ratio" shall have the meaning set forth in Section 3.02(b)(i). "Margin Percentage" shall mean at any date that percentage (a) to be added to the CD Rate or the Eurodollar Rate pursuant to Section 2.01(d)(iii) or Section 2.01(d)(ii) for purposes of determining the per annum rate of interest applicable from time to time to CD Rate Loans or Eurodollar Loans and (b) to be used in computing the Commitment Fee Rate pursuant to Section 4.02, set forth under the appropriate column below opposite the Category corresponding to the credit ratings by Moody's or S&P, respectively, applicable to the Index Debt on such date:
Category Ratings Commitment Applicable Fee Rate (%) Margin (%) Category 1 >=A-/A3 0.10 0.40 Category 2 BBB+/Baa1 0.125 0.50 Category 3 BBB/Baa2 0.15 0.625 Category 4 BBB-/Baa3 0.20 0.75 Category 5 <=BB+/Ba1 0.25 1.00
For purposes of the foregoing, (i) if either of Moody's or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall fall within different Categories, the Margin Percentage shall be based on the highest of the ratings; and (iii) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt 19 13 shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Margin Percentage shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if any such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Banks shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Margin Percentage shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Margin Stock" shall mean "margin stock" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System. "Material FCC Licenses" shall have the meaning set forth in Section 8.04. "Materially Adverse Effect" shall mean (a) a material and adverse effect on the business, properties, operations or financial condition of the Company and the Restricted Subsidiaries taken as a whole, (b) a material impairment of the ability of the Company to perform any of its material obligations under this Agreement or (c) a material impairment of the rights or interests of the Banks in connection with this Agreement. "Maturity Date" shall mean the fifth anniversary of the Closing Date. "Maximum Permissible Rate" shall have the meaning set forth in Section 13.05. "Moody's" shall mean Moody's Investors Service, Inc. "Net Cash Proceeds" shall mean (a) with respect to a sale, assignment, transfer or other disposition by the Company or any Restricted Subsidiaries to any Person other than the Company or any Restricted Subsidiaries of any Capital Stock or assets owned by such party, the gross cash proceeds to such party (including cash proceeds, whenever 20 14 received, of any non-cash consideration) of such sale, assignment, transfer or other disposition, less the sum of (i) the reasonable costs associated with such sale, assignment, transfer or other disposition, including income taxes (as estimated by the Company or any Restricted Subsidiaries, as the case may be, in good faith after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) payments of the outstanding principal amount of, premium or penalty, if any, and interest on any Debt required to be, and which in fact is, prepaid under the terms thereof as a result of such disposition, and payments required to be made to the holders of any Debt to obtain the consent of such holders to such transaction, (iii) appropriate amounts as a reserve, in accordance with GAAP, against any liabilities directly associated with the Capital Stock or assets sold and which liabilities are retained by the Company or any Restricted Subsidiaries after such sale, assignment, transfer or other disposition, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such sale, assignment, transfer or disposition, and (iv) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such transaction, and (b) with respect to any incurrence of Debt, cash proceeds net of underwriting commissions or placement fees and expenses directly incurred in connection therewith. "Notice of Borrowing" shall have the meaning set forth in Section 2.01(b)(i). "Obligations" shall mean the obligations of the Company under this Agreement with respect to (a) the principal amount of the Loans, (b) interest on the Loans and (c) all other monetary obligations of the Company under this Agreement. "Officer's Certificate" shall mean a certificate signed in the name of the Company by either its chief executive officer, its president, its chief financial officer, one of its vice presidents or its treasurer. "PBGC" shall have the meaning set forth in Section 6.12. "Person" shall mean an individual, partnership, joint venture, corporation, company, limited liability 21 15 company, bank, trust, unincorporated organization or a government or any department or agency thereof or any other entity. "Plan" shall mean any employee pension benefit plan within the meaning of Title IV of ERISA which is either (i) maintained for employees of the Company, of any Subsidiary, or of any member of a "controlled group of corporations" or "combined group of trades or businesses under common control" as such terms are defined, respectively, in Sections 414(b) and (c) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, of which the Company or any Subsidiary is a party, or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Company, any Subsidiary or any member of a "controlled group of corporations" or "combined group of trades or businesses under common control" defined as aforesaid, is at the time in question making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. "Preferred Stock", as applied to the Capital Stock of any Person, shall mean Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "Pro Forma Compliance" shall mean the compliance by the Company on a pro forma basis with the covenants set forth in subsection 8.01 for the four fiscal quarter period ending on the last day of the most recently ended fiscal quarter for which financial statements have been delivered in accordance with subsection 8.02 as if the designation of a Restricted Subsidiary or an Unrestricted Subsidiary with respect to which Pro Forma Compliance is being measured had occurred on the first day of such period. "Pro Forma EBITDA" shall mean EBITDA, excluding therefrom EBITDA attributable to any Property sold or otherwise disposed of other than in the ordinary course of business during any applicable period as if such Property were not owned at any time during such period, and including therein EBITDA attributable to any Property acquired other than in the ordinary course of business 22 16 during any applicable period as if such Property were at all times owned during such period. "Pro Rata Share" shall mean, with respect to any Bank, a fraction (expressed as a percentage rounded upward to the nearest whole multiple of 0.000000001%) (a) the numerator of which shall be the amount equal to such Bank's Commitment, and (b) the denominator of which shall be the aggregate amount of all Banks' Commitments. "Property" shall mean all types of real and personal property, whether tangible, or intangible or mixed. "Quarterly Date" shall mean the last day of each March, June, September and December, beginning with September 30, 2000, or if any such date is not a Business Day, the next succeeding Business Day. "Reference Banks" shall mean Chase, Bank of America, N.A. and Citibank, N.A. "Register" shall have the meaning set forth in Section 13.07(f) hereof. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System. "Required Prepayment Date" shall have the meaning set forth in Section 2.01(e)(i) hereof. "Restricted Subsidiary" shall mean each Subsidiary other than those Subsidiaries identified as Unrestricted Subsidiaries in Exhibit 6.01; provided, however, that subject to Section 8.10, a Restricted Subsidiary may be designated by the Company as an Unrestricted Subsidiary or an Unrestricted Subsidiary may be redesignated by the Company as a Restricted Subsidiary; provided further, that after the initial designation of an Unrestricted Subsidiary by the Company, only five further redesignations of such Subsidiary shall be permitted. "Revolving Loans" shall mean CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans made pursuant to Section 2.01(a). "S&P" shall mean Standard & Poor's Rating Group. 23 17 "SPC" shall have the meaning set forth in Section 13.07(d) hereof. "Subsidiary" shall mean, with respect to the Company at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the Company in the Company's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. "Swingline Borrowing" shall mean a borrowing consisting of simultaneous Swingline Loans from each of the Swingline Lenders. "Swingline Commitment" shall mean, with respect to any Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans hereunder as set forth in Section 2.07, as such Bank's Swingline Commitment may be permanently terminated or reduced from time to time pursuant to Section 2.07(d). The Swingline Commitments shall automatically and permanently terminate on the Maturity Date. "Swingline Commitment Percentage" shall mean, with respect to any Swingline Lender at any time, the percentage that the Swingline Commitment of such Swingline Lender represents of the Total Swingline Commitment at such time. "Swingline Lender" shall mean each Person that is listed on Exhibit 2.07. "Swingline Loan" shall mean any Loan made by a Bank pursuant to Section 2.07. Each Swingline Loan shall be an Alternate Base Rate Loan. "Swingline Loan Exposure" shall mean, at any time, the aggregate outstanding principal amount at such time of all Swingline Loans. The Swingline Loan Exposure of any Bank at any time shall mean its Applicable 24 18 Percentage of the aggregate Swingline Loan Exposure at such time. "Swingline Maturity Date" shall mean the date that is seven Business Days following the applicable Swingline Borrowing or, if earlier, on the Maturity Date or the date of repayment or prepayment or conversion of such Borrowing. "Total Commitment" shall mean, at any time, the aggregate amount of the Commitments, as in effect at such time. "Total Debt" shall mean, as of any date and without duplication, all Debt of the Company and the Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, including guaranties of Debt obligations of parties other than the Company or such Restricted Subsidiaries and obligations under or with respect to standby letters of credit of the Company and the Restricted Subsidiaries. "Total Swingline Commitment" shall mean, at any time, the aggregate amount of the Swingline Commitments, as in effect at such time. "Unrestricted Subsidiary" shall mean any Subsidiary so designated in accordance with Section 6.01 or Section 8.10. "Utilization Fee" shall have the meaning set forth in Section 4.03 hereof. "Utilized Loans" shall have the meaning set forth in Section 4.03 hereof. "Wholly Owned", when used with respect to a Subsidiary, shall mean the beneficial ownership by the Company of 100% of the Capital Stock of such Subsidiary. SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise 25 19 (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. ARTICLE II The Loans and Letters of Credit SECTION 2.01. The Revolving Loans. (a) Revolving Loan Commitment. Subject to and upon the terms and conditions set forth in this Agreement, each Bank severally agrees to make Revolving Loans in Dollars to the Company on any one or more Business Days on or after the date hereof and prior to the Maturity Date, up to an aggregate principal amount of Revolving Loans not exceeding at any one time outstanding an amount equal to such Bank's Commitment made to the Company, if any, minus such Bank's LC Exposure and Swingline Loan Exposure; provided, however, that in no event shall the aggregate outstanding principal amount at any time of the Revolving Loans and the Discretionary Loans, the LC Exposure and the Swingline Loan Exposure exceed $350,000,000, as such amount may be reduced pursuant to the terms of this Agreement. Each Borrowing shall be in an aggregate amount of not less than $3,000,000 and an integral multiple of $250,000. Subject to the foregoing, each Borrowing shall be made simultaneously from the Banks according to their Pro Rata Shares of the principal amount requested for each Borrowing, and shall consist of Revolving Loans of the same type (e.g., CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans) with the same Interest Period from each Bank. Within such limits and during such period, the Company may borrow, repay and reborrow under this Section 2.01(a). (b) Borrowing Procedures; Delivery of Proceeds; Recordation of Loans. (i) Each Borrowing under this Section 2.01 shall be made on at least (A) in the case of a 26 20 Borrowing consisting of Alternate Base Rate Loans, prior oral or written notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) on the same day as the requested Borrowing (and the Administrative Agent shall prior to 12:00 noon (New York, New York time) on the date such notice is received by the Administrative Agent provide oral or written notice of the requested Borrowing to the Banks, and each Reference Bank shall then provide to the Administrative Agent not later than 12:15 p.m. (New York, New York time) oral or written notice of the Federal Funds Borrowing Rate for such day offered at 12:00 noon (New York, New York time) by such Reference Bank to the Company, and the Alternate Base Rate determined by the Administrative Agent shall be conveyed by the Administrative Agent by oral or written communication to all the Banks by 1:00 p.m. (New York, New York time) on the Borrowing Date), (B) in the case of a Borrowing consisting of Eurodollar Loans, three Business Days' prior written or oral notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) and (C) in the case of a Borrowing consisting of CD Rate Loans, one Business Day's prior written or oral notice from the Company to the Administrative Agent by 9:00 a.m. (New York, New York time) (and the Administrative Agent shall, in the case of (B) and (C) above, provide to each Bank prior oral or written notice of the requested borrowing by 11:30 a.m. (New York, New York time) on the date such notice is received by the Administrative Agent) (in each case, a "Notice of Borrowing"); provided, however, with respect to each oral Notice of Borrowing, the Company shall deliver promptly (and in any event, no later than two Business Days after the giving of such oral notice) to the Administrative Agent a confirmatory written Notice of Borrowing. Each Notice of Borrowing shall be irrevocable and shall specify: (w) the total principal amount of the proposed Borrowing, (x) whether the Borrowing will be comprised of CD Rate Loans, Alternate Base Rate Loans or Eurodollar Loans, (y) with respect to Eurodollar Loans and CD Rate Loans the applicable Interest Period for such Loans (which may not extend beyond the Maturity Date), and (z) the Borrowing Date. The Administrative Agent shall promptly give like notice to the other Banks, and on the Borrowing Date each Bank shall make its Pro Rata Share of the Borrowing available at the principal banking office of the Administrative Agent, 270 Park Avenue, New York, New York 10017, no later than 3:30 p.m. (New York, New York time) in the case of a Borrowing consisting of Alternate Base Rate Loans, and no later than 2:00 p.m. (New York, New 27 21 York time) in the case of all other Borrowings, in each case in immediately available funds. (ii) The Administrative Agent shall pay or deliver the proceeds of each Borrowing to or upon the order of the Company. Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Bank resulting from each Loan, from time to time, including the amounts of principal and interest payable and paid such Bank from time to time under this Agreement. The Administrative Agent shall maintain accounts in which it will record (A) the principal amount of each Loan made hereunder, the type of each Loan and the Interest Period applicable thereto, (B) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder and (C) the amount of any sum received by the Administrative Agent hereunder from the Company and each Bank's Pro Rata Share thereof. The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Bank or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Loans in accordance with their terms. (c) Substitute Rate. Anything in this Agreement to the contrary notwithstanding, if at any time prior to the determination of the rate with respect to any proposed Loan (i) the Majority Banks in their discretion shall determine with respect to Eurodollar Loans to be made by them on the applicable Borrowing Date of such Loan that there is a reasonable probability that Dollar deposits will not be offered to such Banks in the interbank eurodollar market for a period of time equal to the applicable Interest Period in amounts equal to the amount of each such Bank's Eurodollar Loan in Dollars, that the Eurodollar Rate does not reflect the cost to the Banks of funding Eurodollar Loans or that adequate and reasonable means do not exist to be able to determine the Eurodollar Rate or (ii) the Administrative Agent in its discretion shall determine with respect to CD Rate Loans to be made by the Banks on the applicable Borrowing Date of such proposed Loan that bid rates will not be provided by certificate of deposit dealers of recognized standing for the purchase at face value of certificates of deposit of the Reference Banks for a period of time equal to the applicable Interest Period in amounts approximately equal or comparable to the 28 22 aggregate principal amount of such Loans with a maturity equal to the applicable Interest Period, then: (A) the Majority Banks (acting through the Administrative Agent) or the Administrative Agent, as the case may be, shall give the Company notice thereof, and in the case of subsection (ii) above, the Administrative Agent shall also give the Banks notice thereof, and (B) Alternate Base Rate Loans shall be made in lieu of any Eurodollar Loans or CD Rate Loans that were to have been made at such time. (d) Interest. The Loans shall bear interest as follows: (i) Each Alternate Base Rate Loan (including each Swingline Loan) shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 365 or 366 days, as the case may be) which shall be equal to the lesser of (A) the Alternate Base Rate or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. (ii) Each Eurodollar Loan shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 360 days) which shall be the lesser of (A) the sum of the Eurodollar Rate plus the applicable Margin Percentage or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. (iii) Each CD Rate Loan shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum (for the actual number of days elapsed, based on a year of 360 days) which shall equal to the lesser of (A) the sum of the CD Rate plus the applicable Margin Percentage or (B) the Highest Lawful Rate. In addition, the Company will pay a Utilization Fee pursuant to Section 4.03. (iv) Interest on the outstanding principal of each Loan shall accrue from and including the Borrowing Date for such Loan to but excluding the date such Loan is paid in full and shall be due and payable 29 23 (A) on the Interest Payment Date for each such Loan, (B) as to any Eurodollar Loan having an Interest Period greater than three months, at the end of the third month of the Interest Period for such Loan, (C) as to any CD Rate Loan having an Interest Period greater than 90 days, on the 90th day of the Interest Period for such Loan, and (D) as to all Loans, at maturity, whether by acceleration or otherwise, or after notice of prepayment in accordance with Section 2.01(e)(i) or Section 3.01(c) hereof, on and after the Required Prepayment Date or the applicable prepayment date, as the case may be, as specified in such notice. (v) Past due principal, whether pursuant to acceleration or the Company's failure to make a prepayment on the date specified in the applicable prepayment notice or otherwise, and, to the extent permitted by applicable law, past due interest and (after the occurrence of an Event of Default) past due fees, pursuant to acceleration or otherwise, shall bear interest from their respective due dates, until paid, at the Default Rate and shall be due and payable upon demand. (e) Change of Law. (i) Anything in this Agreement to the contrary notwithstanding, if at any time any Bank in good faith determines (which determination shall be conclusive absent demonstrable error) that any change after the date hereof in any applicable law, rule or regulation or in the interpretation or administration thereof makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful (any of the above being described as a "Eurodollar Event") for such Bank or its foreign branch or branches to maintain or fund any Loan in Dollars by means of Dollar deposits obtained in the interbank eurodollar market then, at the option of such Bank, the aggregate principal amount of each of such Bank's Eurodollar Loans then outstanding, which Loans are directly affected by such Eurodollar Events, shall be prepaid in Dollars, and any remaining obligation of such Bank hereunder to make Eurodollar Loans (but not CD Rate Loans or Alternate Base Rate Loans) shall be suspended for so long as such Eurodollar Events shall continue. Upon the occurrence of any Eurodollar Event and at any time thereafter so long as such Eurodollar Event shall continue, such Bank may exercise its aforesaid option by giving written notice thereof to the Administrative Agent and the Company. Any prepayment of any Eurodollar Loan which is 30 24 required under this Section 2.01(e) shall be made, together with accrued and unpaid interest and all other amounts payable to such Bank under this Agreement with respect to such prepaid Loan (including amounts payable pursuant to Section 2.01(f)), on the date stated in the notice to the Company referred to above, which date ("Required Prepayment Date") shall be not less than 15 days (or such earlier date as shall be necessary to comply with the relevant law, rule or regulation) from the date of such notice. If any Eurodollar Loan is required to be prepaid under this Section 2.01(e), the Banks agree that at the written request of the Company, the Bank that has made such Eurodollar Loan shall make an Alternate Base Rate Loan or a CD Rate Loan on the Required Prepayment Date to the Company in the same principal amount, in Dollars, as the Eurodollar Loan of such Bank being so prepaid. Any such written request by the Company for Alternate Base Rate Loans or a CD Rate Loan under this Section 2.01(e) shall be irrevocable and, in order to be effective, must be delivered to the Administrative Agent not less than one Business Day prior to the Required Prepayment Date. (ii) Notwithstanding the foregoing, in the event the Company is required to pay to any Bank amounts with respect to any Borrowing pursuant to Section 2.01(e)(i), the Company may give notice to such Bank (with copies to the Administrative Agent) that it wishes to seek one or more assignees (which may be one or more of the Banks) to assume the Commitment and any Swingline Commitment of such Bank and to purchase its outstanding Loans and the Administrative Agent will use its best efforts to assist the Company in obtaining an assignee; provided that if more than one Bank requests that the Company pay substantially and proportionately equal additional amounts under Section 2.01(e)(i) and the Company elects to seek an assignee to assume the Commitments and any Swingline Commitments of any of such affected Banks, the Company must seek an assignee or assignees to assume the Commitments and any Swingline Commitments of all such affected Banks. Each Bank requesting compensation pursuant to Section 2.01(e)(i) agrees to sell its Commitments, any Swingline Commitments, Loans and interest in this Agreement in accordance with Section 13.07 to any such assignee for an amount equal to the sum of the outstanding unpaid principal of and accrued interest on such Loans in Dollars plus all other fees and amounts (including any compensation claimed by such Bank under Section 2.01(e)(i) and Section 2.01(f)) due such Bank hereunder calculated, in each case, to the date such Commitments, Swingline Commitments, Loans and interest are 31 25 purchased. Upon such sale or prepayment, each such Bank shall have no further Commitment, Swingline Commitment or other obligation to the Company hereunder. (f) Funding Losses. In the event of (i) any payment or prepayment (whether authorized or required hereunder pursuant to acceleration or otherwise) of all or a portion of any CD Rate Loan or Eurodollar Loan on a day other than the last day of an Interest Period, (ii) any payment or prepayment (whether authorized or required hereunder pursuant to acceleration or otherwise), of any CD Rate Loan or Eurodollar Loan made after the delivery of the Notice of Borrowing for such CD Rate Loan or Eurodollar Loan, but before the Borrowing Date therefor, if such payment or prepayment prevents such CD Rate Loan or Eurodollar Loan from being made in full or (iii) the failure of any Loan to be made by any Bank due to any condition precedent to a Loan not being satisfied or as a result of this Section 2.01, or due to any other action or inaction of the Company, the Company shall pay, in Dollars, to each affected Bank upon its request made on or before 45 days after the occurrence of any such event, acting through the Administrative Agent, such amount or amounts (to the extent such amount or amounts would not be usurious under applicable law) as may be necessary to compensate such Bank for any costs and losses incurred by such Bank (including such amount or amounts as will compensate it for the amount by which the rate of interest on such Loan immediately prior to such repayment exceeds the Eurodollar Rate or the CD Rate, for the period from the date of such prepayment to the Interest Payment Date with respect to such prepaid Loan, all as determined in good faith by such Bank) but otherwise without penalty. Any such claim by a Bank for compensation shall be made through the Administrative Agent and shall be accompanied by a certificate signed by an officer of such Bank authorized to so act on behalf of such Bank, setting forth in reasonable detail the computation upon which such claim is based. The obligations of the Company under this Section 2.01(f) shall survive the termination of this Agreement and/or the payment of the obligations hereunder. (g) Increased Costs--Taxes, Reserve Requirements, Etc. (i) The Company for and on behalf of each Bank shall pay or cause to be paid directly to the appropriate governmental authority or shall reimburse or compensate each Bank upon demand by such Bank, acting through the Administrative Agent, for all costs incurred, losses suffered or payments made, as determined by such 32 26 Bank, by reason of any and all present or future taxes (including any interest equalization tax or any similar tax on the acquisition of debt obligations), levies, imposts or any other charge of any nature whatsoever imposed by any taxing authority, whether or not such taxes were correctly or legally asserted, on or with regard to any aspect of the transactions with respect to this Agreement and the Loans and Letters of Credit, except such taxes as may be imposed on the overall net income of a Bank or its Lending Office or franchise taxes (imposed on or measured by income, earnings or retained earnings) imposed by the jurisdiction, or any political subdivision or taxing authority thereof, in which such Bank's principal executive office or its Lending Office is located; provided, that the Company shall not be required to pay, cause to be paid or reimburse or compensate any Bank for any taxes, levies, imposts or other charges that (A) are attributable to such Bank's failure to comply with the requirements of Section 2.03 or (B) are imposed on amounts payable to such Bank at the time such Bank becomes a party to this Agreement (or designate a new lending office), except to the extent that such Bank (or its assignor, if any), was entitled, at the time of designation of a new lending office (or assignment) to receive additional amounts from the Company with respect to such taxes pursuant to this paragraph. (ii) The Company shall pay immediately upon demand by any Bank, acting through the Administrative Agent, any applicable stamp and registration taxes, duties, official and sealed paper taxes, or similar charges due, in connection with any Loans or Letters of Credit or this Agreement or in connection with the enforcement hereof; provided, that the Company shall not be required to pay any such taxes on behalf of any Bank if such taxes are imposed at the time such Bank becomes a party to this Agreement (or designates a new lending office), except to the extent that such Bank (or its assignor, if applicable) was entitled at the time of designation of a new lending office (or assignment) to the payment of such taxes pursuant to this paragraph. (iii) If any Bank or the Administrative Agent receives a refund in respect of taxes for which such Bank or the Administrative Agent has received payment from the Company hereunder, it shall promptly notify the Company of such refund and if no Event of Default has occurred shall, within 30 days after receipt of such refund, repay such refund to the Company with interest if any interest is received thereon by such Bank or the Administrative Agent; 33 27 provided that the Company, upon the request of such Bank or the Administrative Agent, agrees to return such refund (plus penalties, interest or other charges) to such Bank or the Administrative Agent in the event such Bank or the Administrative Agent is required to repay such refund. (iv) (A) The Company shall reimburse or compensate each Bank upon demand by such Bank, acting through the Administrative Agent, for all costs incurred, losses suffered or payments made in connection with any CD Rate Loans or Eurodollar Loans or any part thereof which costs, losses or payments are a result of any future reserve, special deposit or similar requirement against assets of, liabilities of, deposits with or for the account of, or Loans by such Bank imposed on such Bank, its foreign lending branch or the interbank eurodollar market by any regulatory authority, central bank or other governmental authority, whether or not having the force of law, including Regulation D. (B) If as a result of (y) the introduction of or any change in or in the interpretation or administration of any law or regulation or (z) the compliance with any request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Bank (i) of agreeing to make or making, funding or maintaining Loans or (ii) issuing or acquiring participations in Letters of Credit, (other than with respect to taxes, levies, imposts and other charges covered by Sections 2.01(g)(i)-(ii) or Section 2.02 and changes in the rate of tax on the overall net income of such Bank) for which such Bank shall not have been reimbursed pursuant to the provisions of clause (A) above, then the Company shall from time to time, upon demand by such Bank, acting through the Administrative Agent, pay to such Bank additional amounts sufficient to indemnify such Bank against the full amount of such increased cost. (C) Any Bank claiming reimbursement or compensation under this Section 2.01(g)(iv) shall make its demand on or before 45 days after the end of each Interest Period during which any such cost is incurred, loss is suffered or payment is made and shall provide the Administrative Agent, who in turn shall provide the Company, with a written statement showing in reasonable detail the calculation of the amount and basis of its request, which statement, subject to Section 2.01(h), shall be conclusive absent demonstrable error; provided that in 34 28 the event any reimbursement or compensation demanded by a Bank under this Section 2.01(g) is a result of reserves actually maintained pursuant to the requirements imposed by Regulation D with respect to "Eurocurrency liabilities" (as defined or within the meaning of such Regulation), such demand shall be accompanied by a statement of such Bank in the form of Exhibit 2.01(g)(iv) attached hereto. No Bank may request reimbursement or compensation under this Section 2.01(g)(iv) for any period prior to the period for which demand has been made in accordance with the foregoing sentence. In preparing any statement delivered under this Section 2.01(g)(iv), such Bank may employ such assumptions and allocations of costs and expenses as it shall in good faith deem reasonable and may be determined by any reasonable averaging and attribution method. So long as any notice requirement provided for herein has been satisfied, any decision by the Administrative Agent or any Bank not to require payment of any interest, cost or other amount payable under this Section 2.01(g)(iv), or to calculate any amount payable by a particular method, on any occasion, shall in no way limit or be deemed a waiver of the Administrative Agent's or such Bank's right to require full payment of any interest, cost or other amount payable hereunder, or to calculate any amount payable by another method, on any other or subsequent occasion for a subsequent Interest Period. (v) If any Bank shall have determined in good faith that any applicable law, rule, regulation or guideline regarding capital adequacy now or hereafter in effect, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or any Lending Office of such Bank) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency has the effect of reducing the rate of return on such Bank's capital or the capital of any corporation Controlling such Bank as a consequence of its obligations hereunder to a level below that which such Bank would have achieved as a consequence of its obligations hereunder but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed in good faith by such Bank to be material, then from time to time, upon notice by the Bank requesting (through the Administrative Agent) compensation, under this Section 2.01(g)(v) within a 35 29 reasonable period of time after such Bank has obtained knowledge of such event, the Company shall pay to the Administrative Agent for the account of such Bank such additional amount or amounts as will compensate such Bank for such reduction. Any such claim by a Bank for compensation shall be made through the Administrative Agent and shall be accompanied by a certificate signed by an officer of such Bank authorized to so act on behalf of such Bank setting forth in reasonable detail the calculation upon which such claim is based. (vi) Notwithstanding the foregoing, in the event the Company is required to pay to, for or on behalf of any Bank amounts pursuant to Section 2.01(g)(i), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02, the Company may give notice to such Bank (with copies to the Administrative Agent) (A) that it wishes to seek one or more assignees (which may be one or more of the Banks) to assume the Commitment and any Swingline Commitment of such Bank and to purchase its outstanding Loans, in which case the Administrative Agent will use its best efforts to assist the Company in obtaining an assignee, or (B) in the case of any Bank that became a Bank pursuant to an assignment under Section 13.07, that it wishes to terminate the Commitment and any Swingline Commitment of such Bank; provided that if more than one Bank requests that the Company pay substantially and proportionately equal additional amounts under Section 2.01(g)(i), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02 and the Company elects to seek an assignee to assume, or to terminate, the Commitments and any Swingline Commitments of any such affected Banks, the Company must seek an assignee or assignees to assume, or must terminate, as the case may be, the Commitments and any Swingline Commitments of all such affected Banks. Each Bank requesting compensation pursuant to Section 2.01(g)(i), Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), or Section 2.01(g)(v) or Section 2.02 agrees to sell its Commitment and any Swingline Commitment, its outstanding Loans, Swingline Loans and interest in this Agreement in accordance with Section 13.07 to any such assignee for an amount equal to the sum of, and agrees that its Commitment and any Swingline Commitment shall be terminated as provided above upon payment to it by the Company of, the outstanding unpaid principal of and accrued interest on its outstanding Loans in Dollars plus all other fees and amounts (including, any compensation claimed by such Bank under Section 2.01(g)(i), Section 2.01(f), 36 30 Section 2.01(g)(iv)(A), Section 2.01(g)(iv)(B), Section 2.01(g)(v) or Section 2.02) due such Bank hereunder calculated, in each case, to the date such Commitment, Swingline Commitment, Loans and interest are purchased or such amounts are paid, as the case may be. Upon such sale or prepayment, each such Bank shall have no further Commitment, Swingline Commitment or other obligation to the Company hereunder. (vii) Any Bank claiming any amounts pursuant to this Section 2.01(g) or Section 2.02 shall use its reasonable good faith efforts (consistent with its internal policies and legal and regulatory restrictions) to avoid or minimize the payment by the Company of any amounts under this Section 2.01(g) or Section 2.02, including changing the jurisdiction of its Lending Office; provided that no such change or action shall be required to be made or taken if, in the reasonable judgment of such Bank, such change would be materially disadvantageous to such Bank; and, provided, further, that no Bank will receive compensation for expenses stemming from the change of jurisdiction of its Lending Office if such change is not required by law, regulation or order of regulatory authority. (viii) The aggregate amount payable, reimbursable or compensable by the Company to or for the account of a Bank under this Section 2.01(g) shall not include any cost covered by the amount received by such Bank from the Company through the Administrative Agent in connection with the calculation of the CD Rate. The Company agrees to indemnify and hold the Administrative Agent and each Bank harmless from and against any and all liabilities with respect to or resulting from any delay in the payment or omission to pay such amounts. The obligations of the Company under this Section 2.01(g) created in accordance with this Section 2.01(g) shall survive the termination of the Commitments, any Swingline Commitments, this Agreement and the payment of the Obligations hereunder. (h) Calculation Errors. Each calculation by the Administrative Agent or any Bank with respect to amounts owing or to be owing by the Company pursuant to this Agreement or any Loan or Letter of Credit shall be conclusive except in the case of error. In the event the Administrative Agent determines within a reasonable time that any such error shall have occurred in connection with the determination of the applicable interest rate for any Loan or Letter of Credit which results in the Company paying either more or less than the amount which would have 37 31 been due and payable but for such error, then (i) any Bank that received an overpayment shall promptly refund such overpayment to the Company and (ii) if any Bank received an underpayment, the Company shall promptly pay to such Bank the amount of such underpayment. In the event it is determined within a reasonable time that any Bank, acting through the Administrative Agent, has miscalculated any amount for which it has demanded reimbursement or compensation from the Company in respect of amounts owing by the Company (other than interest) which results in the Company paying more or less than the amount which would have been due and payable but for such error, such Bank or the Company, as the case may be, shall promptly refund or pay, as the case may be, to the other the full amount of such overpayment or underpayment. In the event it is determined within a reasonable time that the Company has miscalculated the Commitment Fees due under Section 4.02 which results in the Company paying more or less than the amount which would have been due and payable but for such error, (x) any Bank that received an overpayment shall promptly refund such overpayment to the Company and (y) if any Bank received an underpayment, the Company shall promptly pay to such Bank the amount of such underpayment. SECTION 2.02. Setoff, Counterclaims and Taxes. All payments (whether of principal, interest, fees, reimbursements or otherwise) under this Agreement shall be made by the Company without setoff or counterclaim and shall be made free and clear of and without deduction (except as specifically contemplated in Section 2.03 below) for any present or future tax, levy, impost, or other charge, of any nature whatsoever now or hereafter imposed by any governmental authority (including withholdings of United States taxes, subject to compliance by such payment's recipient with Section 2.03). Except as specifically provided in Section 2.03 below, if the making of such payments is prohibited by law unless such tax, levy, impost, or other charge is deducted or withheld therefrom, the Company shall (i) notwithstanding anything to the contrary in this Agreement, be entitled to deduct or withhold an amount equal to such tax, levy, impost or other charge from the amounts payable under this Agreement and make such tax payments as so required, and (ii) provided that such Bank has complied with the requirements of Section 2.03, pay to the Administrative Agent for the account of each Bank, on the date of each such payment, such additional amounts as may be necessary in order that the net amounts received by such Bank after such deduction or withholding shall equal the amounts in Dollars which 38 32 would have been received if such deduction or withholding were not required. The Company shall confirm that any applicable taxes imposed on this Agreement or transactions hereunder shall have been properly and legally paid by it to the appropriate taxing authorities by sending official tax receipts or notarized copies of such receipts (if receipts are issued therefor) to the Administrative Agent within 30 calendar days after receipt of request from the Administrative Agent regarding payment of any applicable tax. Upon request of any Bank, the Administrative Agent shall forward to such Bank a copy of such official receipt or a copy of such notarized copy of such receipt. SECTION 2.03. Withholding Tax Exemption. Each Bank that is not a corporation created or organized in the United States or under the laws of the United States or any state of the United States or the District of Columbia shall (i) deliver to the Company (with a copy to the Administrative Agent), at least five Business Days prior to the first date on which interest or fees are payable hereunder to such Bank, two original Internal Revenue Service Forms W-8BEN, W-8IMY or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, properly completed and duly executed under penalties of perjury, certifying that such Bank is completely exempt from or entitled to a zero rate of United States withholding tax on all payments by the Company to such Bank pursuant to this Agreement; (ii) deliver to the Company (with copies to the Administrative Agent) such new forms and documents prescribed by the Internal Revenue Service upon the expiration or obsolescence of any previously delivered forms or other documents referred to in this Section 2.03, or after the occurrence of any event requiring a change in the most recent forms or other documents delivered by such Bank, and (iii) promptly provide written notice to the Company (with a copy to the Administrative Agent) at any time it determines that it is no longer in a position to provide any previously delivered form or other document (or any other form of certification adopted by the Internal Revenue Service for such purpose). In no event will any withholding by the Company on any interest payable to any Bank as contemplated by this Section 2.03 give rise to a Default under Section 10.01 with respect to payments of interest. SECTION 2.04. Obligations Several, Not Joint. The obligations of the Banks hereunder are several and not joint. The failure of any Bank to make the Loan to be made by it as part of any Borrowing shall not relieve any other 39 33 Bank of its obligation to make its Loan on the date of such Borrowing, and no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on the date of any Borrowing. SECTION 2.05. Evidence of Debt. Any Bank may request that Loans made by it be evidenced by a promissory note. In such event, the Company shall prepare, execute and deliver to such Bank a promissory note payable to the order of such Bank (or, if requested by such Bank, to such Bank and its registered assigns) and in a form approved by the Administrative Agent and the Company. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 13.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.06. Discretionary Loans. (a) Each Bank may, in its sole discretion and on terms and conditions in writing satisfactory to it and the Company that are consistent with the provisions of this Agreement, make additional Loans to the Company under its Commitment on any one or more Business Days on or after the date hereof and prior to the Maturity Date, which Discretionary Loans will be payable to the appropriate Bank upon such terms and conditions; provided, however, that the Company will not permit to remain outstanding any Discretionary Loans from any Bank, and no Bank will make Discretionary Loans to the Company, if the sum of the aggregate principal amount of the Discretionary Loans and the Revolving Loans made by such Bank and such Bank's LC Exposure and Swingline Exposure exceeds such Bank's Commitment. Should any Discretionary Loan be outstanding from any Bank on a date on which a Borrowing is to be made, such Borrowing shall be made available only if the Company has paid or shall simultaneously with the making of such Borrowing pay such portions of Discretionary Loans (including the payment of the amount of any losses payable pursuant to Section 2.01(f) actually incurred by such Bank as a result of such prepayment) as shall be necessary to make available a portion of each Bank's Commitment at least equal to such Bank's Pro Rata Share of such Borrowing. No Discretionary Loan shall have a maturity date or interest period that extends beyond the Maturity Date. Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Bank resulting from each Discretionary Loan made by such Bank. The 40 34 entries made in the accounts maintained pursuant to this Section 2.06(a) shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Bank to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Discretionary Loans in accordance with their terms. (b) Promptly upon written request of the Administrative Agent, each Bank will certify in writing the borrowing date, the principal amount and the maturity date of any Discretionary Loans made during any period for which the Commitment Fees under Section 4.02 are to be calculated. The Company agrees to certify to the Administrative Agent at the request of the Administrative Agent on or before (i) each Borrowing and each Discretionary Borrowing, the borrowing date, the principal amount, the maturity date and the lending Bank for each outstanding Discretionary Loan and (ii) each Quarterly Date, the borrowing date, the principal amount, the maturity date and the lending Bank for all Discretionary Loans made during any period for which the Commitment Fees under Section 4.02 are to be calculated. SECTION 2.07. Swingline Loans. (a) On the terms, subject to the conditions and relying upon the representations and warranties herein set forth, each Swingline Lender agrees, severally and not jointly, at any time and from time to time on and after the date hereof and until the earlier of the Business Day immediately preceding the Maturity Date and the termination of the Swingline Commitment of such Swingline Lender, to make Swingline Loans to the Company in an aggregate principal amount at any time outstanding not to exceed such Swingline Lender's Swingline Commitment Percentage of the lesser of (i) the difference between (A) the Total Swingline Commitment and (B) the Swingline Loan Exposure, and (ii) the difference between (A) the Total Commitment and (B) the sum of (I) the outstanding aggregate principal amount of all Loans and (II) the LC Exposure. Each Swingline Loan shall be made as part of a Borrowing consisting of Swingline Loans made by the Swingline Lenders ratably in accordance with their respective Swingline Commitment Percentages (it being understood that (I) the failure of any Swingline Lender to make any Swingline Loan shall not in itself relieve any other Swingline Lender of its obligation to lend hereunder and (II) no Swingline Lender shall be responsible for the failure of any other Swingline Lender to make any Swingline Loan required to be made by such other Swingline Lender). 41 35 The Swingline Loans comprising any Swingline Borrowing shall be in an aggregate principal amount that is an integral multiple of $500,000 and not less than $2,000,000 (or an aggregate principal amount equal to the remaining balance of the available Swingline Commitments). Each Swingline Lender shall make its portion of each Swingline Borrowing available to the Company by means of a credit to the general deposit account of the Company with the Administrative Agent or a wire transfer to an account designated in writing by the Company, in each case by 3:00 p.m., New York City time, on the date such Swingline Borrowing is requested to be made pursuant to paragraph (b) below. Within the limits set forth in the first sentence of this paragraph, the Company may borrow, pay or prepay and reborrow Swingline Loans on or after the Closing Date and prior to the Maturity Date on the terms and subject to the conditions and limitations set forth herein. (b) The Company shall give the Administrative Agent telephonic, written or telecopy notice (in the case of telephonic notice, such notice shall be promptly confirmed by telecopy) no later than 11:30 a.m., New York City time, on the day of a proposed Swingline Borrowing. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount of such Swingline Borrowing. The Administrative Agent shall promptly advise the Swingline Lenders of any notice received from the Company pursuant to this paragraph (b). (c) The Company agrees to repay the principal amount of each Swingline Loan, together with all interest accrued thereon, on the Swingline Maturity Date of such Swingline Loan. If the Company does not fully repay a Swingline Borrowing on or prior to the last day of the applicable Swingline Maturity Date, the Administrative Agent shall promptly notify each Bank thereof (by telecopy or by telephone, confirmed in writing) and of its Applicable Percentage of such Swingline Borrowing. Upon such notice but without any further action, each Swingline Lender hereby agrees to grant to each Bank, and each Bank hereby agrees to acquire from each Swingline Lender, a participation in such Swingline Loan made by such Swingline Lender as part of such defaulted Swingline Borrowing equal to such Bank's Applicable Percentage of the principal amount of such Swingline Loan. In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally agrees, upon receipt of notice as 42 36 provided above, to pay to the Administrative Agent, for the account of the applicable Swingline Lender, such Bank's Applicable Percentage of each Swingline Borrowing that is not repaid on the Swingline Maturity Date applicable thereto. From and after the Swingline Maturity Date, each Swingline Loan shall bear interest at the Default Rate." Each Bank acknowledges and agrees that its obligation to acquire participations in such Swingline Loans made in accordance with the terms hereof pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default or the failure of any condition precedent set forth in Article VII, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Bank shall comply with its obligation under this paragraph in the same manner as provided in Section 2.01(b) with respect to Loans made by such Bank, and the Administrative Agent shall promptly pay to the Swingline Lenders their respective shares of the amounts so received by it from the Banks. The Administrative Agent shall notify the Company of any participations in any Swingline Loan acquired pursuant to this paragraph. Notwithstanding anything herein to the contrary, the purchase of participations in a Swingline Borrowing pursuant to this paragraph shall not relieve the Company of its default in respect of the payment of the Swingline Loans. (d) Upon written or telecopy notice to the Swingline Lenders and to the Administrative Agent, the Company may at any time permanently terminate, or from time to time in part permanently reduce, the Swingline Commitments of the Swingline Lenders. Each reduction of the Swingline Commitments shall be allocated pro rata among the Swingline Lenders in accordance with their respective Swingline Commitment Percentages. On the date of any termination or reduction of the Swingline Commitments pursuant to this paragraph (d), the Company shall pay or prepay so much of the Swingline Borrowings as shall be necessary in order that the aggregate outstanding principal amount of Swingline Loans will not exceed the Total Swingline Commitment after giving effect to such termination of reduction. (e) The Company may prepay any Swingline Borrowing in whole or in part at any time without premium or penalty; provided that the Company shall have given the Administrative Agent written or telecopy notice (or 43 37 telephone notice promptly confirmed in writing or by telecopy) of such prepayment not later than 10:30 a.m., New York City time, on the Business Day designated by the Company for such prepayment; and provided further that each partial payment shall be in an amount that is an integral multiple of $500,000 and not less than $2,000,000. Each notice of prepayment under this paragraph (e) shall specify the prepayment date and the principal amount of each Swingline Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Company to prepay such Swingline Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this paragraph (e) shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment. Each payment of principal of or interest on or any other amount in respect of Swingline Loans shall be allocated, as between the Swingline Lenders, pro rata in accordance with their respective Swingline Commitment Percentages. SECTION 2.08. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Company may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time prior to the date five Business Days prior to the Maturity Date. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Company to, or entered into by the Company with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Company shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to such Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), 44 38 the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the applicable Issuing Bank, the Company also shall submit a letter of credit application on such Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Company shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) the sum of the (I) outstanding aggregate principal amount of all Loans and (II) the LC Exposure shall not exceed the Total Commitments. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Banks or the Banks, each Issuing Bank hereby grants to each Bank, and each Bank hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Bank's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of each Issuing Bank, such Bank's Applicable Percentage of each LC Disbursement made by any Issuing Bank and not reimbursed by the Company on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Company for any reason. Each Bank acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made 45 39 without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Company shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Company shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Company prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Company receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Company receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, if such LC Disbursement is not less than the minimum borrowing amounts, the Company may, subject to the conditions to borrowing set forth herein, request that such payment be financed with an Alternate Base Rate Loan or Swingline Loan in an equivalent amount and, to the extent so financed, the Company's obligation to make such payment shall be discharged and replaced by the resulting Alternate Base Rate Loan or Swingline Loan. If the Company fails to make such payment when due, the Administrative Agent shall notify each Bank of the applicable LC Disbursement, the payment then due from the Company in respect thereof and such Bank's Applicable Percentage thereof. Promptly following receipt of such notice, each Bank shall pay to the Administrative Agent its Applicable Percentage of the LC Disbursement not reimbursed by the Company, in the same manner as provided in Section 2.01 with respect to Loans made by such Bank (and Section 2.01 shall apply, mutatis mutandis, to the payment obligations of the Banks), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Banks. Promptly following receipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Banks have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Banks and Issuing Banks as their interests may appear. Any payment made by a Bank pursuant to this paragraph to reimburse any Issuing Bank for any LC Disbursement (other than the funding of Alternate Base Rate Loans or a Swingline Loan as 46 40 contemplated above) shall not constitute a Loan and shall not relieve the Company of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The Company's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Banks under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Company's obligations hereunder. Neither the Administrative Agent, the Banks, the Issuing Banks, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Banks; provided that the foregoing shall not be construed to excuse the Issuing Banks from liability to the Company to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by the Issuing Banks' failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Banks (as finally determined by a court of competent jurisdiction), the Issuing Banks shall be deemed 47 41 to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Banks may, in their sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Issuing Bank shall promptly notify the Administrative Agent and the Company by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Company of its obligation to reimburse such Issuing Bank and the Banks with respect to any such LC Disbursement. (h) Interim Interest. If any Issuing Bank shall make any LC Disbursement, then, unless the Company shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Company reimburses such LC Disbursement, at the Default Rate. Interest accrued pursuant to this paragraph shall be for the accounts of the Issuing Banks, except that interest accrued on and after the date of payment by any Bank pursuant to paragraph (e) of this Section to reimburse any Issuing Banks shall be for the account of such Bank to the extent of such payment. (i) Replacement of the Issuing Banks. Any Issuing Bank may be replaced at any time by written agreement among the Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Banks of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From and after the effective date of any 48 42 such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Company receives notice from the Administrative Agent (or, if the maturity of the Loans has been accelerated, Banks with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Company shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Banks, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company described in Section 10.11 or 10.12. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Company under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Company's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Banks for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Company for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Banks with LC Exposure representing greater 49 43 than 50% of the total LC Exposure), be applied to satisfy other obligations of the Company under this Agreement. If the Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Company within three Business Days after all Events of Default have been cured or waived. ARTICLE III Optional and Required Prepayments; Interest Payment Date; Other Payments SECTION 3.01. Optional Prepayments. Loans may be prepaid in whole or from time to time in part at the option of the Company on any Business Day, without premium or penalty, notwithstanding that such Business Day is not an Interest Payment Date, provided that: (a) losses, if any, incurred by any Bank under Section 2.01(f) shall be payable with respect to each such prepayment of any such Eurodollar Loan or CD Rate Loan; and (b) all partial prepayments shall be in an aggregate principal amount of at least $2,000,000 and an integral multiple of $200,000; and (c) the Company shall give the Administrative Agent not less than one full Business Day's prior oral or written notice of each prepayment of any Eurodollar Loans or CD Rate Loans, or any portion thereof, and notice to the Administrative Agent not less than 9:00 a.m. (New York, New York time) on the same day of the prepayment of Alternate Base Rate Loans, or any portion thereof, proposed to be made pursuant to this Section 3.01, specifying the aggregate principal amount of the Loans to be prepaid and the prepayment date; provided, however, with respect to each oral notice of a prepayment, the Company shall deliver promptly (and in any event, no later than two Business Days after the giving of such oral notice) to the Administrative Agent a confirmatory written notice of such proposed prepayment. The Administrative Agent shall promptly notify the Banks of the principal amount to be prepaid and the prepayment date. Notice of such prepayment shall be irrevocable and having been given as aforesaid, the principal amount 50 44 specified in such notice, together with accrued and unpaid interest thereon to the date of prepayment, shall become due and payable on such prepayment date, and the provisions of Section 2.01(f) shall be applicable. The Company shall have no optional right to prepay the principal amount of any Loan other than as provided in this Section 3.01. SECTION 3.02. Required Prepayments. (a) If the Company shall reduce or terminate the respective Commitments of the Banks pursuant to Section 4.05, it will prepay to each Bank on the effective date of any such reduction or termination: (i) in the case of a reduction of the Commitments, that part of such unpaid principal amount outstanding of the Revolving Loans and the Discretionary Loans held by such Bank that exceeds the amount of the Commitment of such Bank immediately after such reduction, minus such Bank's LC Exposure and Swingline Loan Exposure; and (ii) in the case of termination of the Commitments, the entire unpaid principal amount of the Revolving Loans and the Discretionary Loans, as applicable; together, in each case, with accrued and unpaid interest on the amount being so prepaid and all other amounts accrued and owing under this Agreement on such date. (b) (i) If on any Borrowing Date the sum of the principal amount outstanding of the Loans (other than Swingline Loans), LC Exposure and Swingline Loan Exposure of any Bank shall exceed the Commitment of such Bank, the Company shall promptly pay to such Bank an amount equal to such excess, together with accrued and unpaid interest on the amount so prepaid and all other amounts accrued and owing under this Agreement on such date; and (ii) As of any date on which the Company or any Restricted Subsidiary sells, assigns, transfers or otherwise disposes of any Property (other than dispositions of inventory in the ordinary course of business or sales or transfers of Capital Stock or assets to the Company or a Restricted Subsidiary), if either (i) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02, to Pro Forma EBITDA, for the four consecutive fiscal quarter period ended on the 51 45 date of such balance sheet, is in excess of a ratio equal to the Leverage Ratio required to be maintained at such time under Section 8.01 less .5 (the "Mandatory Prepayment Ratio") or (ii) the Company is not in compliance with its obligations under Section 8.02, then 50% of the Net Cash Proceeds of such sale, assignment, transfer or disposition shall be immediately applied, on a pro-rata basis between this Agreement and the Facility A Credit Agreement, to the prepayment of the Utilized Loans, and the Commitments under this Agreement shall be reduced by such amount so prepaid, to the extent required in order that after such application the ratio of (i) Total Debt as of such balance sheet date minus the amount of Net Cash Proceeds so applied to (ii) Pro Forma EBITDA for such four consecutive fiscal quarter period would be less than the Mandatory Prepayment Ratio; provided that if in connection with the disposition of any such Property the Company shall advise the Administrative Agent that it intends to use the Net Cash Proceeds of such disposition to acquire Cash Flow Producing Assets to be owned by the Company or a Restricted Subsidiary, then (i) the Commitments will not be reduced as required by this Section 3.02(b) to the extent the amount prepaid or a portion thereof shall have been reborrowed within 12 months after the date of such disposition and used to acquire Cash Flow Producing Assets, and (ii) during such 12 month period an amount of the Commitments equal to the amount so prepaid will be restricted and the Company will be entitled to reborrow such amount as provided herein only upon a certification to the Administrative Agent that the proceeds of such borrowing will be promptly applied to acquire such Cash Flow Producing Assets. Notwithstanding the foregoing, such prepayment will not be required in the event and for so long as such Net Cash Proceeds are held by a "qualified intermediary" (as defined in ss. 1.103(k)-1( g)(4)(iii) of Title 26 of the Code of Federal Regulations) pursuant to a like kind exchange as provided for by ss. 1031 of the Internal Revenue Code of 1986; provided, however, that this sentence shall in no way limit or otherwise affect the Company's obligations under this Section 3.02(b) to reduce the Commitments by the amount of such prepayment of such Net Cash Proceeds in the event the notice and reinvestment provisions set forth above are not complied with. (c) As of any date on which the Company or any Restricted Subsidiary on a consolidated basis incurs Debt other than Debt incurred under this Agreement, if either (i) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02 on a 52 46 pro forma basis giving effect to such incurrence and any use of the proceeds thereof to repay Debt reflected on such balance sheet, to Pro Forma EBITDA, for the four consecutive fiscal quarter period ended on the date of such balance sheet, is in excess of the Mandatory Prepayment Ratio, or (ii) the Company is not in compliance with its obligations under Section 8.02, then 50% of the Net Cash Proceeds of such Debt shall be immediately applied, on a pro-rata basis between this Agreement and the Facility A Credit Agreement, to the prepayment of the Utilized Loans, and the Commitments under this Agreement shall be reduced by the amount so prepaid, to the extent required in order that after such application the ratio of (i) Total Debt as of such balance sheet date minus the amount of Net Cash Proceeds so applied to (ii) Pro Forma EBITDA for such four consecutive fiscal quarter period would be less than the Mandatory Prepayment Ratio; provided, however, that prepayments and reductions required under this Section 3.02(c) shall be made only at such time as the aggregate amount of payments and reductions required but not made shall equal an amount not less than $40,000,000, at which time Loans shall be prepaid and Commitments reduced in such aggregate amount. (d) Notwithstanding the foregoing, (i) no prepayment shall be required under Section 3.02(b) with respect to an aggregate of $10,000,000 or less of Net Cash Proceeds and (ii) in the event any prepayment required by Section 3.02(b) to be made under this Agreement and the Facility A Credit Agreement shall be in an amount less than $5,000,000, such prepayment may be deferred until the aggregate amount of the prepayments deferred in reliance on this provision and the corresponding provision of the Facility A Credit Agreement shall exceed $5,000,000, at which time all such prepayments shall be promptly made and the Commitments correspondingly reduced. In the event any prepayment required by Section 3.02(b) or (c) with respect to any Loan would become due on a date that is not an Interest Payment Date and as a result thereof the Company would incur liabilities under Section 2.01(f), then (A) at the Company's option, if the next Interest Payment Date for such Loan would occur within 90 days of the date on which such prepayment is otherwise due, such prepayment may be made on such Interest Payment Date and (B) if the next Interest Payment Date for such Loan would not occur within 90 days of such date on which such prepayment is due, the Company shall make such prepayment to the Administrative Agent on the due date; provided, however, that interest shall continue to accrue on any Loan so prepaid and shall 53 47 be paid by the Company to the Administrative Agent on the applicable Interest Payment Date, and, so long as no Default or Event of Default shall occur or shall have occurred and be continuing, the Administrative Agent shall hold the proceeds of such prepayment for the benefit of the Banks, in an interest bearing account, until such time as such proceeds can be applied towards payment of the Loans in accordance with the provisions of this Agreement without resulting in any liability to the Company under Section 2.01(f). All interest which may accrue on such amounts so held in escrow shall be held by the Administrative Agent for the benefit of the Company. (e) All prepayments made pursuant to the provisions of this Section 3.02 shall be applied, first, towards payment of all Alternate Base Rate Loans, as the Company directs, and secondly, and subject to the provisions of Section 2.01(f), towards payment of the appropriate amount of CD Rate Loans and Eurodollar Loans, as the Company directs. SECTION 3.03. Interest Payment Date. The Company shall repay the principal amount of each CD Rate Loan and Eurodollar Rate Loan on the last day of the Interest Period for such Loan, or if earlier, the Maturity Date; provided that the Company may reborrow in accordance with Section 2.01(a) or Section 2.06 for the purpose of refinancing any Loan made thereunder. All principal payments of Loans shall be accompanied by accrued and unpaid interest on the principal amount being repaid to the date of payment. SECTION 3.04. Place, Etc. of Payments and Prepayments. All payments and prepayments made in accordance with the provisions of this Agreement in respect of the Commitment Fees and the Administrative Agent's fee and of principal of and interest on the Revolving Loans shall be made to the Administrative Agent in Dollars at its office at 270 Park Avenue, New York, New York, 10017, in immediately available funds for the accounts of the Banks. The Administrative Agent will promptly distribute to the Banks, in accordance with each Bank's Pro Rata Share in immediately available funds, the amount of principal, interest and Commitment Fees received by the Administrative Agent for the account of the Banks, taking into account the effect of any Discretionary Loans; provided that if interest shall accrue on any Loan at a rate different from the rate applicable to any other Loan, payment and distribution of interest shall be based on the respective 54 48 accrual rates applicable to such Loan. Any payment to the Administrative Agent for the account of a Bank under this Agreement shall constitute payment by the Company to such Bank of the amounts so paid to the Administrative Agent, and any Loan or portions thereof so paid shall not be considered outstanding for any purpose after the date of such payment to the Administrative Agent. ARTICLE IV Fees; Reduction of Commitments SECTION 4.01. Administration Fee. Until payment in full of the Obligations and termination of the Commitments hereunder, the Company agrees to pay to the Administrative Agent an administration fee pursuant to the terms and conditions set forth in the Agent's Fee Letter. SECTION 4.02. Commitment Fees. The Company agrees to pay to the Administrative Agent for the account of each Bank in Dollars, Commitment Fees, computed on a daily basis of a year of 365 or 366 days, as the case may be, from the date of this Agreement to and including the Maturity Date at a rate per annum equal to the applicable Commitment Fee Rate from time to time in effect on the daily average unused amount of the Commitment of such Bank (taking into account all Revolving Loans and Discretionary Loans of such Bank outstanding and the LC Exposure of such Bank, but not the Swingline Exposure of such Bank, on the dates covered by such calculation). Each such Commitment Fee shall be payable on or before the 15th day following each Quarterly Date and on the Maturity Date or on such earlier date as the Commitment of such Bank shall terminate pursuant to the terms of this Agreement. SECTION 4.03. Utilization Fees. The Company agrees to pay to the Administrative Agent for the account of each Bank (ratably in accordance with the outstanding Loans (other than Swingline Loans), LC Exposures and Swingline Exposures of the Banks), in Dollars, a utilization fee ("Utilization Fee") (i) equal to 0.10% times the sum of the aggregate principal amount of the outstanding Loans and the LC Exposure for any date on which the sum of the outstanding aggregate principal amount of the (a) Loans and the LC Exposure plus (b) loans under the Facility A Credit Agreement (such sum, the "Utilized Loans") is greater than the sum of 33 1/3% of the (x) Total Commitment hereunder plus (y) aggregate amount of the 55 49 commitments of the lenders under the Facility A Credit Agreement (such sum, the "Aggregate Commitments") but less than or equal to 66 2/3% of the Aggregate Commitments, and (ii) equal to 0.15% times the aggregate amount of the outstanding Loans and the LC Exposure for any date on which the amount of the Utilized Loans exceeds 66 2/3% of the Aggregate Commitments. Any Utilization Fee accrued during any quarter will be payable, on a 360-day basis, on the last business day of such quarter. SECTION 4.04. LC Participation Fees. The Company agrees to pay (i) to the Administrative Agent for the account of each Bank a participation fee ("L/C Participation Fee") with respect to its participations in Letters of Credit, which shall accrue at a rate based on the applicable Margin on the average daily amount of such Bank's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Bank's Commitment terminates and the date on which such Bank ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily stated amount of the Letters of Credit issued by such Issuing Bank during the period from and including the Closing Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Banks pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). SECTION 4.05. Reduction or Termination of Commitments. The Company may at any time or from time to time reduce ratably in proportion to their respective 56 50 Commitments and Swingline Commitments or terminate in whole, the respective Commitments and Swingline Commitments of the Banks hereunder by giving not less than three full Business Days' prior written notice to such effect to the Administrative Agent; provided that any partial reduction shall be in an aggregate amount of not less than $5,000,000 and an integral multiple of $1,000,000; provided, further, that the Commitments may not be reduced to an amount less than the sum of the Swingline Exposure, the Letter of Credit Exposure and the aggregate principal amount of Loans outstanding at such time, unless simultaneously therewith the Company shall make a prepayment in accordance with Section 3.02(a) hereof. In the event of any prepayment of the Loans outstanding hereunder pursuant to Section 3.02(b) or (c), the Commitments shall be ratably reduced by the amount of such prepayment to the extent provided in Section 3.02(b) or (c). The Administrative Agent shall promptly notify each Bank of its Pro Rata Share of and of the date of each reduction of the Commitments. After each such reduction, the Commitment Fees and Utilization Fees owing to each Bank shall be calculated upon the Commitment of such Bank as so reduced. In the event of acceleration of the date on which any Loan is payable in accordance with Article X, the Commitments hereunder of the Banks shall thereupon automatically terminate without notice. Each reduction or any termination of the Commitments, and each notice thereof, under this Agreement shall be irrevocable. ARTICLE V Application of Proceeds The Company agrees that the proceeds of the Loans hereunder shall be used by the Company for general corporate purposes (including acquisitions) and to repay any amounts outstanding under the Existing Facility. The Letters of Credit will be used for general corporate purposes. ARTICLE VI Representations and Warranties The Company represents and warrants that: SECTION 6.01. Organization; Qualification; Subsidiaries. The Company and each Restricted Subsidiary (a) is duly organized, validly existing and in good 57 51 standing under the laws of its jurisdiction of organization, (b) has the organizational power to own its Properties and to carry on its business as now conducted, and (c) is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where failure to be duly qualified would result, in the aggregate, in a Materially Adverse Effect. Attached hereto as Exhibit 6.01 is a correct and complete list (determined in good faith by the Company) setting forth, as of date hereof: (i) the name of and jurisdiction of organization of each Restricted Subsidiary, (ii) the title and number of such outstanding shares of Capital Stock of each Restricted Subsidiary, if any, owned by Persons other than the Company or any Restricted Subsidiary and (iii) the name and address of each such other Persons. All shares of Capital Stock of Restricted Subsidiaries owned by the Company or any Restricted Subsidiary are owned thereby free and clear of all liens, claims and encumbrances. No shares of Capital Stock of any Restricted Subsidiary are owned by any Unrestricted Subsidiary. SECTION 6.02. Financial Statements. The Company has furnished each Bank with the consolidated financial statements for the Company and the Subsidiaries as at and for its fiscal year ended December 31, 1999, accompanied by the opinion of Deloitte & Touche LLP, and quarterly consolidated financial statements as at and for the period ended March 31, 2000. Such statements have been prepared in conformity with GAAP consistently applied throughout the period involved, except as may be explained in such opinion. Such statements fairly present in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated. There have been no events or occurrences which would, in the aggregate, have a Materially Adverse Effect since December 31, 1999. SECTION 6.03. Actions Pending. Except as disclosed in Exhibit 6.03 attached hereto, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any Restricted Subsidiary before any court or administrative agency or other governmental authority which could reasonably be expected to in the aggregate result in any Materially Adverse Effect. SECTION 6.04. Default. Neither the Company nor any Restricted Subsidiary is (a) in default under the 58 52 provisions of any instrument evidencing any Debt or any other liability, contingent or otherwise, or of any agreement relating thereto or (b) in default under or in violation of any order, writ, injunction or decree of any court, or in default under or in violation of any order, regulation or demand of any governmental instrumentality, other than for such defaults or violations under clauses (a) and (b) above which taken in the aggregate do not and could not reasonably be expected to result in any Materially Adverse Effect. SECTION 6.05. Title to Assets; Licenses; Intellectual Property. (a) The Company and each Restricted Subsidiary (i) have good and marketable title to their respective real property assets and (ii) good title to their respective personal property assets, in each case subject to no liens, security interests or other encumbrances except those permitted by Section 9.01. (b) Each of the Company and the Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents, licenses and other intellectual property material to its business, and the use thereof by the Company and the Restricted Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, in the aggregate, could not reasonably be expected to result in a Materially Adverse Effect. SECTION 6.06. Payment of Taxes. The Company and each Subsidiary have filed all Federal and all material state income and franchise tax returns (or extensions therefor) required to be filed and have paid all material taxes and all material assessments required to have been paid by it (other than those the amount or validity of which are currently being contested in good faith by appropriate proceedings and for which adequate reserves in conformity with GAAP have been set aside on the books of the Company or the Subsidiary, as applicable). The Company and its officers know of no claims by any governmental authority for any unpaid taxes which claims in the aggregate could reasonably be expected to result in a Materially Adverse Effect. SECTION 6.07. Conflicting or Adverse Agreements or Restrictions. Neither the Company nor any Restricted Subsidiary is a party to any contracts or agreements or subject to any restrictions which in the aggregate have a Materially Adverse Effect. Neither the execution nor 59 53 delivery of this Agreement nor compliance with the terms and provisions hereof or of any instruments required hereby will be contrary to the provisions of, or constitute a default under, (a) the charter or by-laws of the Company or any Restricted Subsidiary or (b) any law or any regulation, order, writ, injunction or decree of any court or governmental authority or any material agreement to which the Company or any Restricted Subsidiary is a party or by which it is bound or to which it is subject if such noncompliance or defaults referred to in this clause (b) could reasonably be expected in the aggregate to have a Materially Adverse Effect. SECTION 6.08. Purpose of Loans. Neither the Company nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. This Agreement and the transactions contemplated hereby comply in all respects with Regulations U, T and X and all other regulations of the Board of Governors of the Federal Reserve System. Neither the Company nor any agent acting on its behalf has taken or will take any action which would cause this Agreement to violate Regulation U, T or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect on the date of any Loan. SECTION 6.09. Authority; Validity. The Company has the corporate power and authority to make and carry out this Agreement and the transactions contemplated herein, to make the borrowings provided for herein and to perform its obligations hereunder; and all such action has been duly authorized by all necessary corporate proceedings on its part. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights and general principles of equity. SECTION 6.10. Consents or Approvals. No order, consent, approval, license, authorization or validation of any governmental authority and no registration or filing with or notice to any governmental authority is necessary to authorize or permit, or is required in connection with, the execution and delivery of this Agreement, the making of 60 54 borrowings pursuant hereto or the performance of the obligations of the Company hereunder other than the filing of this Agreement with the FCC and the consent of the FCC upon the exercise of remedies hereunder to the extent such exercise would involve a change of control of the Company or the transfer of any license, permit or authorization issued by the FCC. SECTION 6.11. Compliance with Law. Neither the Company nor any of the Restricted Subsidiaries are in violation of any Federal, state or local laws or orders affecting the Company or any Subsidiary or any of their respective businesses and operations which violations in the aggregate, could reasonably be expected to have a Materially Adverse Effect. Neither the Company nor any Restricted Subsidiary has failed to obtain any license, permit, franchise, consent or authorization of any governmental authority necessary to the ownership of its properties or the operation of its business, which failure could reasonably be expected to have a Materially Adverse Effect. SECTION 6.12. ERISA. The Company and the Subsidiaries are in compliance in all material respects with the applicable provisions of ERISA. Neither the Company nor any Subsidiary, taken individually or in the aggregate, has incurred any material accumulated funding deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue Code of 1986, as amended, or has incurred any material liability to the Pension Benefit Guaranty Corporation established under ERISA, or any successor thereto under ERISA (the "PBGC"), in connection with any Plan other than a material accumulated funding deficiency or any material liability that no longer exists or is no longer outstanding. SECTION 6.13. Investment Company Act. Neither the Company nor any Subsidiary (i) is an investment company as that term is defined in the Investment Company Act of 1940, (ii) directly or indirectly Controls or is Controlled by a company which is an investment company as that term is defined in the Investment Company Act of 1940 or (iii) is otherwise subject to regulation under the Investment Company Act of 1940. SECTION 6.14. Disclosure. All material information furnished by or on behalf of the Company in writing to the Administrative Agent or any Bank pursuant to the terms of this Agreement (a) in the Confidential 61 55 Information Memorandum dated June, 2000 or (b) after the date hereof and, in either case, concerning the historical operations of the Company and the Subsidiaries, did not or will not, as the case may be, when made, include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were or are made, not materially misleading when made. SECTION 6.15. Insurance. The Company and each Restricted Subsidiary maintains insurance of such types as is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated with financially sound and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdiction in which its operations are carried on) and in such amounts (and with co-insurance and deductibles) as such insurance is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. SECTION 6.16. Environmental and Safety Matters. The Company and each Restricted Subsidiary has complied in all material respects with all Federal, state, local and other statutes, ordinances, orders, judgments, rulings and regulations relating to environmental pollution or to environmental regulation or control or to employee health or safety. To the best knowledge of the Company's executive officers, neither the Company nor any Restricted Subsidiary has received notice of any material failure so to comply. The Company's and the Restricted Subsidiaries' plants do not manage any hazardous wastes, hazardous substances, hazardous materials, toxic substances, toxic pollutants or substances similarly denominated, as those terms or similar terms are used in the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other applicable law relating to environmental pollution or employee health and safety generally, in violation in any material respect of any law or any regulations promulgated pursuant thereto. The Company is aware of no events, conditions or circumstances involving environmental pollution or contamination or employee health or safety that could reasonably be expected to result in a Materially Adverse Effect. 62 56 ARTICLE VII Conditions SECTION 7.01. Conditions Precedent to Closing. The effectiveness of this Agreement is subject to the satisfaction on the Closing Date of the following conditions: (a) the Company shall have duly and validly executed and delivered to the Administrative Agent this Agreement; (b) the Administrative Agent shall have received on behalf of the Banks from Counsel for the Company, its opinion, dated the Closing Date, substantially in the form attached hereto as Exhibit 7.01(b); (c) the Administrative Agent shall have received on behalf of the Banks an Officer's Certificate, dated the Closing Date, substantially in the form attached hereto as Exhibit 7.01(c); (d) no Default shall have occurred and be continuing or shall occur after giving effect to the Company's execution of this Agreement; (e) after giving effect to the Company's execution of this Agreement, the representations and warranties made by the Company in Article VI shall be true on and as of the Closing Date (other than those that expressly relate to an earlier date, in which case such representation or warranty shall be true as of such date); (f) no material adverse change shall have occurred in the business, properties, operations or financial condition of the Company and the Subsidiaries on a consolidated basis since December 31, 1999; (g) there shall not exist any litigation or regulatory proceedings or other legal or regulatory development, actual or threatened, that, in the good faith judgment of the Banks, could reasonably be expected to result in a Materially Adverse Effect; provided that solely for purposes of this clause (g), any litigation or regulatory proceeding or other legal 63 57 or regulatory development shall be deemed to have a Materially Adverse Effect as contemplated above if, after giving effect to such proceeding or development on a pro forma basis over the succeeding twelve month period, a Default would occur hereunder; (h) the Administrative Agent shall have received from the Company certificates of appropriate officials as to the existence and good standing of the Company in its jurisdiction of incorporation and any and all jurisdictions where the Property owned or the business transacted by the Company makes such qualification necessary and where the failure to be so duly qualified would have a Materially Adverse Effect, all in form and substance satisfactory to the Administrative Agent and counsel for the Administrative Agent; (i) the Administrative Agent shall have received all such information as the Administrative Agent shall request concerning the insurance maintained by the Company described in Section 6.15 hereof; (j) the Administrative Agent shall have received all fees and other amounts due and payable to the Administrative Agent and to the Banks on or prior to the Closing Date, including (i) such fees and amounts due and payable pursuant to the terms and conditions set forth in the Agent's Fee Letter and (ii) to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Company hereunder; and (k) on the date hereof, the Company shall have repaid, or shall repay from the initial Loans hereunder, in full the principal of all loans outstanding and other amounts accrued and not yet paid under the Existing Facility, and the Company shall have effectively terminated all the commitments then outstanding in accordance with Section 4.03 of the Existing Facility and replaced them with the Commitments as set forth in Schedule 2.01(a) hereto (and, solely for the purposes of permitting such termination, the notice requirements of Section 14.02 of the Existing Facility are hereby waived). 64 58 SECTION 7.02. Conditions Precedent to Each Borrowing. The obligation of the Banks to fund each Borrowing (including the initial Borrowing), of the Swingline Lenders to make Swingline Loans and of the Issuing Banks to issue Letters of Credit hereunder is subject to the following (Borrowings that do not have the effect of increasing the aggregate amount of Loans outstanding are subject only to (a) through (c), below): (a) No Default shall have occurred and be continuing or shall occur after giving effect to such Borrowing and the application of the proceeds thereof, and each Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date to such effect. (b) The Administrative Agent shall have received by telecopy, or otherwise, the Notice of Borrowing required by Section 2.01(b). (c) The Company shall have delivered to the Administrative Agent and each Bank such certificates and other documents as are otherwise required under this Agreement. (d) After giving effect to such Borrowing and the application of the proceeds thereof, the representations and warranties contained in Article VI, other than the representations and warranties made by the Company in the last sentence of Section 6.02, and in Sections 6.03 and 6.04 or expressly relating to a prior date, in which case such representation or warranty shall be true as of such date, shall be true on and as of the particular Borrowing Date as though made on and as of such date and each such Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date as to the matters set forth in Article VI (other than the representations and warranties made by the Company in the last sentence of Section 6.02, and in Sections 6.03 and 6.04). (e) Except as otherwise set forth therein, or in certificates accompanying such financial statements, the most recent financial statements delivered to the Banks pursuant to Section 8.02 together with the reconciliation adjustments made thereto pursuant to Section 8.02(a)(ii) or Section 8.02(b)(ii), as the case may be, fairly present in all material respects 65 59 the financial condition of the Company and the Restricted Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated. Each Borrowing shall be deemed to constitute a representation and warranty by the Company on the applicable Borrowing Date to such effect. ARTICLE VIII Affirmative Covenants The Company covenants and agrees that, until payment in full of the Obligations and termination of the Commitments and Swingline Commitments hereunder and until all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Company will: SECTION 8.01. Certain Financial Covenants. Maintain at all times: (a) a Leverage Ratio as of the last day of and for any four consecutive fiscal quarter period ending during a period set forth below not in excess of the ratio set forth opposite such period:
Period Ratio ------ ----- Closing Date through December 30, 2001 5.5 to 1.0 December 31, 2001, through December 30, 2002 5.25 to 1.0 Thereafter 5.0 to 1.0
(b) an Interest Coverage Ratio for any four consecutive fiscal quarter (commencing with such period ending on June 30, 2000) period of not less 2.0 to 1.0. 66 60 SECTION 8.02. Financial Statements and Information. Deliver to each of the Banks in duplicate: (a) as soon as available, and in any event within 90 days, after the end of each fiscal year (i) a copy of the consolidated annual audited financial statements of the Company and the Subsidiaries for such fiscal year containing a balance sheet, an income statement, a statement of shareholders' equity and a consolidated statement of cash flows, all in reasonable detail, together with the unqualified opinion of Deloitte & Touche LLP or another independent certified public accountant of nationally recognized standing, that such statements have been prepared in accordance with GAAP, consistently applied, except as may be explained in such opinion, and fairly present in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated and (ii) a copy of the reconciliation sheet, certified by the chief financial officer of the Company, setting forth the adjustments required to the consolidated audited financial statements of the Company and the Subsidiaries referred to above in this paragraph (a) in order to arrive at the consolidated financial statements of the Company and the Restricted Subsidiaries; (b) as soon as available, and in any event within 60 days, after the end of each of the first three quarterly accounting periods in each fiscal year (i) a copy of the consolidated unaudited financial statements of the Company and the Subsidiaries as at the end of such quarter and for the period then ended, containing a balance sheet, an income statement, a statement of shareholders' equity and a consolidated statement of cash flows, all in reasonable detail and certified by a financial officer of the Company to have been prepared in accordance with GAAP, consistently applied (subject to year end audit adjustments and except for the absence of footnotes), except as may be explained in such certificate, and as fairly presenting in all material respects the financial condition of the Company and the Subsidiaries on a consolidated basis and the results of its and their operations as at the dates and for the periods indicated and (ii) a copy of the reconciliation sheet, certified by the chief financial 67 61 officer of the Company, setting forth the adjustments required to the consolidated quarterly financial statements of the Company and the Subsidiaries referred to above in this paragraph (b) in order to arrive at the consolidated financial statements of the Company and the Restricted Subsidiaries; (c) promptly after the filing thereof, copies of all statements and reports filed with the Securities and Exchange Commission other than Form S-8 registration statements and other reports relating to employee benefit plans, supplements to registration statements relating solely to the pricing of securities offerings for which registration statements were previously filed and delivered and Forms D; (d) promptly after any officer of the Company obtains knowledge of an Event of Default or Default, an Officer's Certificate specifying the nature of such Event of Default or Default, the period of existence thereof, and what action the Company has taken and proposes to take with respect thereto; (e) promptly upon the Company's or any Subsidiary's receipt thereof, copies of all notices received from the FCC regarding the termination, cancelation, revocation or taking of any other materially adverse action with respect to any Material FCC Licenses; and (f) promptly after request, such additional financial or other information as the Administrative Agent or any Bank acting through the Administrative Agent may reasonably request from time to time. All financial statements specified in clauses (a) and (b) above shall be furnished with comparative consolidated figures for the corresponding period in the preceding year. Together with each delivery of financial statements required by clauses (a) and (b) above, the Company will deliver to each Bank (i) such schedules, computations and other information as may be required to demonstrate that the Company is in compliance with its covenants in Sections 8.01, 9.01(f), 9.02, 9.06 and 9.07 or reflecting any non-compliance therewith as at the applicable date, and (ii) an Officer's Certificate stating that, to the knowledge of such officer, there exists no Event of Default or Default, or, if to the knowledge of such officer, any such Event of Default or Default exists, 68 62 stating the nature thereof, the period of existence thereof, and what action the Company has taken and proposes to take with respect thereto. Together with each delivery of financial statements required by clause (a) above, the Company will deliver to each Bank a written statement of said accountants that, in making the audit necessary to the certification of such financial statements, they have obtained no knowledge of any Event of Default or Default, or, if such accountants shall have obtained knowledge of any Event of Default or Default, they shall specify the nature and period of existence thereof in such statement; provided that such accountants shall not be liable directly or indirectly to any Bank for failure to obtain knowledge of any Event of Default or Default; and provided, further, that in issuing such statement, such accountants shall not be required to go beyond normal auditing procedures conducted in connection with their opinion referred to above. Each Bank is authorized to deliver a copy of any financial statement delivered to it to any regulatory body having jurisdiction over it and to any other Person as may be required by applicable law, rules and regulations. SECTION 8.03. Existence; Laws; Obligations. Maintain its corporate existence, comply and cause the Subsidiaries to comply, in all respects material to the business, properties, operations and financial condition of the Company and the Restricted Subsidiaries on a consolidated basis, with all applicable laws and regulations and pay and cause the Restricted Subsidiaries to pay all taxes, assessments, governmental charges and other obligations which if unpaid might become a lien against any material portion of the Property of the Company or a Restricted Subsidiary, except such obligations being contested in good faith by appropriate proceedings. SECTION 8.04. Notice of Litigation and Other Matters. Promptly notify the Administrative Agent in writing of (i) any action, suit or proceeding pending or to the knowledge of the Company threatened, before any governmental authority (including any bankruptcy or similar proceeding by or against the Company or any Restricted Subsidiary) which could reasonably be expected to have a Materially Adverse Effect, (ii) any action or development which could reasonably be expected to have a Materially Adverse Effect, (iii) the failure of any Unrestricted Subsidiary to pay when due (after giving effect to any grace period permitted from time to time) any Debt of such Unrestricted Subsidiary, the outstanding amount of which exceeds, singularly or in the aggregate, $20,000,000, or 69 63 the holder of which Debt declares, or may declare, such Debt due prior to its stated maturity because of the occurrence of a default or other event thereunder or with respect thereto and (iv) any revocation, suspension or expiration of FCC licenses which, in the aggregate, are material to the operations of the Company and the Restricted Subsidiaries on a consolidated basis (the "Material FCC Licenses"). SECTION 8.05. Books and Records. Maintain, and cause the Subsidiaries to maintain, proper books of record and account in accordance with GAAP, consistently applied. SECTION 8.06. Inspection of Property and Records. Permit any Person designated in writing by the Administrative Agent, or any Bank (at the expense of the Administrative Agent or such Bank) (i) to visit and inspect any properties of the Company or any Restricted Subsidiary and discuss its and their respective affairs and finances with its and their respective principal officers and to inspect any corporate books and financial records of the Company and any Restricted Subsidiary and (ii) from and after the occurrence of an Event of Default, to make copies of and abstracts from the books and records of account of the Company and the Restricted Subsidiaries, in each case all upon reasonable prior notice and at such times as the Administrative Agent or any Bank may reasonably request. SECTION 8.07. Maintenance of Property, Insurance. Cause its Property and the Property of the Subsidiaries to be maintained, preserved and protected and kept in good repair, working order and condition so as not to materially and adversely affect the business carried on in connection therewith and maintain, and cause the Subsidiaries to maintain, insurance with responsible companies in such amounts and against such risks as is reasonably deemed appropriate by the Company. SECTION 8.08. ERISA. Comply, and cause each Subsidiary to comply, in all material respects with the applicable provisions of ERISA and furnish to the Administrative Agent (i) as soon as possible, and in any event within 30 days after the Company or a duly appointed administrator of a Plan files or is required to file, with respect to any Plan, any notice of a "reportable event" (as such term is defined in Section 4043 of ERISA) for which the notice requirement has not been waived by the PBGC (provided that notice shall be required for reportable events arising from the disqualification of a Plan or the 70 64 distress termination of a Plan (in accordance with ERISA Section 4041(c)) without regard to the waiver of notice provided by the PBGC by regulation or otherwise), a statement of the chief financial officer of the Company setting forth details as to such reportable event and the action which the Company, or such Subsidiary, as the case may be, proposes to take with respect thereto, together with a copy of the notice, if any, of such reportable event given to the PBGC and (ii) promptly after receipt thereof, a copy of any notice the Company, any Subsidiary or any member of the Controlled group of corporations may receive from the PBGC relating to the intention of the PBGC to terminate any Plan pursuant to Section 4042 of ERISA. SECTION 8.09. Maintenance of Business Lines. Maintain and cause the Restricted Subsidiaries to maintain lines of business only in radio broadcasting and related lines of business that are similar in scope to the existing business lines and operations of the Company and the Restricted Subsidiaries. SECTION 8.10. Restricted/Unrestricted Designation of Subsidiaries. The Company will be permitted to designate a Restricted Subsidiary as an Unrestricted Subsidiary or an Unrestricted Subsidiary as a Restricted Subsidiary by the delivery to the Administrative Agent of a written notice certifying that all conditions set forth in this Section 8.10 are satisfied as of the effective date of such designation, which certification shall state the effective date of such designation and shall set forth the computations and information as may be required to demonstrate that the Company is in compliance with this Section 8.10 and shall be signed by a financial officer of the Company; provided that (a) no Default or Event of Default shall exist immediately before or after the effective date of any such designation and the Company (other than with respect to designations of a Subsidiary involved in, and in connection with, a merger, an acquisition of an entity or a business or a joint venture in connection with any such transaction) shall be in Pro Forma Compliance with respect to such designation; and (b) the Company shall not designate as Unrestricted Subsidiaries during any period of 12 consecutive months Restricted Subsidiaries as to which the Attributable Amount shall exceed 15% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the balance sheet most recently delivered pursuant to Section 8.02 excluding therefrom the Attributable Amount of the Unrestricted Subsidiaries which have been designated as 71 65 Restricted Subsidiaries during such period. Promptly after receiving any written notice from the Company regarding the designation thereby of a Restricted Subsidiary or an Unrestricted Subsidiary, the Administrative Agent will provide notice thereof to the Banks. SECTION 8.11. Compliance with Material FCC Licenses. The Company will maintain, and will cause each Subsidiary to maintain, in full force and effect at all times during the term of this Agreement, and will materially comply with, and will cause each Subsidiary to materially comply with, the terms and provisions of, the Material FCC Licenses. ARTICLE IX Negative Covenants Until payment in full of the Obligations and termination of the Commitments and Swingline Commitments hereunder and until all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed hereunder: SECTION 9.01. Mortgages, Etc. The Company will not and will not permit any Restricted Subsidiary to create or permit to exist any lien, encumbrance, or security interest (including the charge upon assets purchased under a conditional sales agreement, purchase money mortgage, security agreement, or other title retention agreement) upon any of its assets, whether now owned or hereafter acquired, or assign or otherwise convey any right to receive income, except: (a) liens for taxes, assessments, governmental charges and other obligations not yet due or which are being contested in good faith by appropriate proceedings and for which adequate reserves in conformity with GAAP have been set aside on the Company's books; (b) other liens, encumbrances and security interests incidental to the conduct of its business or the ownership of its assets which were not incurred in connection with the borrowing of money, and which do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; 72 66 (c) liens and security interests on assets of a Restricted Subsidiary to secure obligations of such Restricted Subsidiary to the Company or a Wholly Owned Restricted Subsidiary; (d) liens and security interests existing on the date hereof which are (i) both (y) described in Exhibit 9.01(d) attached hereto and (z) reflected in the consolidated financial statements of the Company referred to in Section 6.02 and (ii) liens and security interests on Property that were existing at the time of the acquisition thereof by the Company or any Restricted Subsidiary or placed thereon to secure a portion of the purchase price thereof described in Exhibit 9.01(d); (e) liens and security interests on Property acquired after the date hereof existing at the time of acquisition thereof by the Company or any Restricted Subsidiary or placed thereon within one year of such acquisition to secure a portion of the purchase price thereof, provided that no such lien or security interest may encumber or cover any other Property of such Restricted Subsidiary, the Company or any other Restricted Subsidiary; and (f) other liens and security interests (in addition to those permitted pursuant to Section 9.01(e)) on Property of the Company and the Restricted Subsidiaries that secure Debt of the Company and the Restricted Subsidiaries in an amount which, when taken together with all other outstanding secured Debt incurred in reliance on this clause (f) and, without duplication, all outstanding Debt of Restricted Subsidiaries incurred in reliance on Section 9.07(b) ("Section 9.01(f) Debt"), does not at the time such lien or security interest comes into existence exceed 20% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the balance sheet most recently delivered pursuant to Section 8.02; and (g) liens, encumbrances and security interests on shares of Capital Stock of Unrestricted Subsidiaries. SECTION 9.02. Merger; Consolidation; Disposition of Assets. The Company will not merge or consolidate with any Person unless the Company shall be the continuing or surviving corporation and both before and after giving 73 67 effect to such merger or consolidation no Default or Event of Default shall exist. The Company will not and will not permit any Restricted Subsidiary to sell, lease or transfer or otherwise dispose of (whether in one transaction or a series of transactions) any Cash Flow Producing Assets, other than sales of inventory in the ordinary course of business and Capital Stock of Unrestricted Subsidiaries to any Person and other than dispositions to the Company and the Restricted Subsidiaries, unless both before and after giving effect to such disposition no Default or Event of Default shall exist. The Company will not and will not permit any Restricted Subsidiary to directly or indirectly acquire (by purchase, merger or otherwise) any Property in any transaction or series of transactions involving a purchase price in excess of $10,000,000, unless both before and after giving effect to such acquisition no Default or Event of Default shall exist. SECTION 9.03. Restricted Payments. If on any date either (a) the ratio of Total Debt, as of the date of the balance sheet most recently delivered pursuant to Section 8.02, to Pro Forma EBITDA (as reduced by the amount of any payment, declaration, redemption or acquisition described below), for the four consecutive fiscal quarter period ended on the date of such balance sheet, is in excess of 4.5 to 1.0 or (b) the Company is not in compliance with its obligations under Section 8.02, then the Company will not, and will not permit any Restricted Subsidiary to, pay or declare dividends (exclusive of (i) stock dividends and (ii) cash dividends paid by the Subsidiaries to the Company or to Restricted Subsidiaries) or redeem or acquire, directly or indirectly, any Capital Stock of the Company or such Subsidiary or any warrant or option to purchase any such Capital Stock. SECTION 9.04. Limitation on Margin Stock. The Company will not and will not permit any Subsidiary to own or acquire Margin Stock such that at any time (a) Margin Stock of the Company and the Subsidiaries represents more than 25% of the value of the assets of the Company and the Subsidiaries on a consolidated basis that are subject to Section 9.01 or Section 9.02, or (b) any Loan or Loans shall be in violation of Regulation U of the Federal Reserve Board. SECTION 9.05. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly enter into any transaction or series of transactions, whether or not in 74 68 the ordinary course of business, with any Affiliate other than (a) of the type specified in Section 9.06 that are not prohibited by such Section 9.06, (b) transactions on terms and conditions substantially as favorable to the Company or such Restricted Subsidiary as would be obtainable by the Company or such Restricted Subsidiary at the time in comparable arm's length transactions with Persons other than Affiliates, (c) transactions involving the Company and the Restricted Subsidiaries exclusively, (d) any executive or employee incentive or compensation plan, contract or other arrangement (including any loans or extensions of credit in connection therewith) if such plan, contract or arrangement is approved either by the stockholders of the Company (in accordance with such voting requirements as may be applicable) or by the Board of Directors of the Company at a meeting at which a quorum of disinterested directors is present and (e) any tax sharing agreement with Cox Enterprises, Inc., or its Affiliates, provided, however, that any such tax sharing agreement shall apportion tax liabilities between or among the parties based on factors customarily used in similar agreements to determine such apportionment. SECTION 9.06. Loans and Advances to and Investments in Unrestricted Subsidiaries. At any time when (a) the Company shall not have outstanding Index Debt that is investment grade rated by Moody's and S&P and (b) the Leverage Ratio for the four consecutive fiscal quarter period most recently ended exceeds (or would exceed on a pro forma basis after giving effect to a transaction of the sort referred to in this Section 9.06 as if it had occurred at the beginning of such period and as if loans, investments, capital contributions and other investments are deductions to EBITDA) 4.5 to 1.0, the Company will not and will not permit any Restricted Subsidiary to make any loan or advance to, or make any capital contribution to or other investment in, any Unrestricted Subsidiary unless (i) in the case of a loan, advance, capital contribution or other investment, such loan, advance, capital contribution or other investment is on terms which are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than would obtain in a comparable arm's length transaction with an unaffiliated Person, and (ii) in each case at the time of the making of any such loan, advance, capital contribution or investment no Default or Event of Default has occurred and is continuing and after giving effect to such loan, advance, capital contribution or investment no Default or Event of Default would occur. 75 SECTION 9.07. Debt. The Company will not permit any Restricted Subsidiary to create, incur or suffer to exist any Debt except: (a) Debt outstanding on the date hereof which is both (i) described on Exhibit 9.07(a) attached hereto and (ii) reflected in the consolidated financial statements of the Company referred to in Section 6.02; and (b) additional Debt in an amount which, when taken together with all other outstanding Debt incurred in reliance on this clause (b) and, without duplication, all outstanding Debt of the Company and the Restricted Subsidiaries secured by liens incurred in reliance on clause (g) of Section 9.01, does not at the time it is incurred exceed 20% of Pro Forma EBITDA for the four consecutive fiscal quarter period ended on the date of the balance sheet most recently delivered pursuant to Section 8.02. ARTICLE X Events of Default Upon (i) the occurrence of any Event of Default specified in Sections 10.10, 10.11, 10.12 or 10.13, (x) the unpaid principal amount of, and all accrued but unpaid interest on, all Loans outstanding (including all Discretionary Loans) and any other amounts payable hereunder shall automatically become immediately due and payable without presentment, demand, protest, notice of intent to accelerate or other notice of any kind to the Company, all of which are hereby expressly waived and (y) the obligation of the Banks to make Loans and of the Issuing Banks to Issue Letters of Credit hereunder shall immediately terminate and (ii) the occurrence and during the continuance of any other Event of Default and upon the written request of the Majority Banks, the Administrative Agent shall, by notice to the Company, (x) declare the obligation of the Banks to make Loans and of the Issuing Banks to Issue Letters of Credit hereunder to be immediately terminated, and the same shall forthwith be terminated, and/or (y) declare all Loans then outstanding (including all Discretionary Loans) and any other amounts payable hereunder to be, and the same shall forthwith become, immediately due and payable without presentment, demand, protest, notice of intent to accelerate or other 76 notice of any kind to the Company, all of which are hereby expressly waived. An Event of Default will occur if: SECTION 10.01. Failure To Pay Principal or Interest. The Company does not pay or prepay any principal of any Loan or any LC Disbursement on the date due (whether at stated maturity, by acceleration, by notice of prepayment, under Section 2.01, 3.01 or 3.02 or otherwise) or the Company does not pay or prepay any interest on any Loan (a) on or before five days after actual receipt of oral or written notice from the Administrative Agent, or the applicable Bank with respect to any Discretionary Loan, as to the amount of interest due, but in no event shall the Company be required to pay or prepay any such interest prior to the date due, or (b) within 10 days after the due date thereof if no notice is actually received by the Company from the Administrative Agent with respect to the amount of interest due; or SECTION 10.02. Failure To Pay Other Sums. The Company does not pay any sums (other than payments of principal and interest on any Loan or LC Disbursements covered by Section 10.01) payable to the Administrative Agent or any Bank under the terms of this Agreement within 10 days after the date due (or, in the case of administration fees payable to the Administrative Agent pursuant to Section 4.01 or the Commitment Fees, L/C Participation Fees or Utilization Fees payable to the Administrative Agent for the account of each Bank pursuant to Section 4.02, 10 days after written notice of nonpayment has been received by the Company from the Administrative Agent or any Bank); or SECTION 10.03. Failure To Pay Other Debt. (a) The Company or any Restricted Subsidiary does not pay when due any other Debt of the Company or any Restricted Subsidiary, the outstanding amount of which exceeds, singularly or in the aggregate, $25,000,000, in respect of which any applicable grace period has expired; or (b) the Company or any Restricted Subsidiary shall otherwise default under any other Debt of the Company or any Restricted Subsidiary (or any other event shall have occurred that would cause, or give the holders thereof the right to cause, such Debt to become due prior to the maturity thereof), the outstanding amount of which exceeds, singularly or in the aggregate, $25,000,000, in respect of which any applicable notice has been given and such Debt has been declared or become due prior to any maturity thereof; provided that during the continuance of any applicable grace period with respect thereto, such event 77 shall constitute a Default (but not an Event of Default) hereunder; or SECTION 10.04. Misrepresentation or Breach of Warranty. (i) Any representation or warranty made by the Company herein when made or deemed made by the Company pursuant hereto shall be incorrect in any material respect or (ii) any other information (other than projections and similar forward-looking information) provided by the Company pursuant to this Agreement after the date hereof, shall, when made, include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not materially misleading; or SECTION 10.05. Violation of Certain Covenants. The Company violates any covenant, agreement or condition contained in Article V or Section 8.01 or Section 8.02(d) or Article IX; or SECTION 10.06. Violation of Other Covenants, Etc. The Company violates any other covenant, agreement or condition contained herein and such violation shall not have been remedied within 30 days after written notice has been received by the Company from the Administrative Agent or any Bank; or SECTION 10.07. Undischarged Judgment. Final judgment for the payment of money in excess of $25,000,000 (which judgment is not covered by insurance, subject to normal deductible amounts) shall be rendered against the Company or any Restricted Subsidiary and the same shall remain undischarged for a period of 30 days during which period execution shall not be effectively stayed; or SECTION 10.08. ERISA. (a) A "reportable event" (as such term is defined in Section 4043 of ERISA) shall have occurred with respect to any Plan with respect to which a statement by the chief financial officer of the Company is required to be submitted under Section 8.08 and within 30 days after the reporting of any such reportable event to the Administrative Agent, the Administrative Agent shall have notified the Company in writing that the Majority Banks have made a reasonable determination that, on the basis of such reportable event, there is a substantial likelihood that such Plan will be terminated by the PBGC or (b) the PBGC has instituted proceedings to terminate any Plan and the effect of either 78 of the foregoing would reasonably be expected to have a Materially Adverse Effect; or SECTION 10.09. Change of Control. A Change of Control shall have occurred; or SECTION 10.10. Assignment for Benefit of Creditors or Nonpayment of Debts. The Company or any Restricted Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or SECTION 10.11. Voluntary Bankruptcy. The Company or any Restricted Subsidiary petitions or applies to any tribunal for or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, of the Company or any Restricted Subsidiary, or of any substantial part of the assets of the Company or any Restricted Subsidiary, or commences any case or proceedings relating to the Company or any Restricted Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction; or SECTION 10.12. Involuntary Bankruptcy. An involuntary proceeding is commenced or an involuntary petition is filed in a court of competent jurisdiction seeking (i) relief in respect of the Company or any Restricted Subsidiary, or of a substantial part of the Property or assets of the Company or a Restricted Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Restricted Subsidiary or for a substantial part of the Property or assets of the Company or Restricted Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or SECTION 10.13. Dissolution. Any order is entered in any proceeding against the Company or any Restricted Subsidiary decreeing the dissolution or split-up of the Company or such Restricted Subsidiary, and such order remains unstayed and in effect for 60 days. 79 ARTICLE XI Modifications, Amendments or Waivers Any of the provisions of this Agreement may from time to time be modified or amended by, or waived with the written consent of, the Majority Banks; provided that no such waiver, modification or amendment may be made which will: (a) Reduce or increase the amount or alter the term of the Commitment of any Bank hereunder, other than as permitted by Section 4.05, without the prior written consent of such Bank; or (b) Extend the stated maturity of or the time for payment of interest on any Loan or the time for payment of any fee, or waive an Event of Default with respect to payment of any principal, interest, or fee, or reduce the principal amount of or the rate of interest on any Loan, or reduce the amount of any fee, or otherwise affect the terms of payment of any such fee, without the prior written consent of each affected Bank; or (c) Change the definition of Majority Banks without the prior written consent of all the Banks; or (d) Waive, modify or amend the provisions of this Article XI, Section 13.07(a) or any other provision of this Agreement requiring the ratable distribution of payments among the Banks without the prior written consent of all the Banks; (e) Waive, modify or amend the provisions of Article XII without the prior written consent of the Administrative Agent and the Majority Banks, or waive, modify or amend any provisions of this Agreement affecting the rights or obligations of the Issuing Banks or Swingline Lenders without the prior written consent of each Issuing Bank or Swingline Lender, as the case may be. No failure or delay on the part of the Administrative Agent or any Bank in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy or any abandonment or discontinuance of steps to enforce such a power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy hereunder. 80 74 The remedies provided for in this Agreement are cumulative and not exclusive of any remedies provided by law or in equity. No modification or waiver of any provision of this Agreement or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. ARTICLE XII The Administrative Agent SECTION 12.01. Appointment of Administrative Agent. Each of the Banks irrevocably appoints and authorizes the Administrative Agent to act on its behalf under this Agreement, and to exercise such powers hereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof, together with such powers as may be reasonably incidental thereto. As to any matters not expressly provided for by this Agreement, the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Banks; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. SECTION 12.02. Indemnification of Administrative Agent. The Administrative Agent shall not be required to take any action hereunder or to prosecute or defend any suit in respect of this Agreement, unless indemnified to its reasonable satisfaction by the Banks against loss, cost, liability and expense. If any indemnity furnished to the Administrative Agent shall become impaired, it may call for additional indemnity and cease to do the acts indemnified against until such additional indemnity is given. In addition, the Banks agree to indemnify the Administrative Agent (to the extent not reimbursed by the Company), ratably according to the respective principal amounts of the Loans then held by each of them (or if no Loans are at the time outstanding, ratably according to the 81 75 respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, 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 wilful misconduct. SECTION 12.03. Limitation of Liability. Neither the Administrative Agent nor any of its directors, officers, employees, attorneys or agents shall be liable for any action taken or omitted by it or them hereunder, or in connection herewith, (i) with the consent or at the request of the Majority Banks, or (ii) in the absence of its or their own gross negligence or wilful misconduct. Without limitation of the generality of the foregoing (but subject to the immediately preceding clause (ii)), the Administrative Agent: (v) may consult with legal counsel (including Counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such Counsel, accountants or experts; (w) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations made in or in connection with this Agreement; (x) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, or to inspect the Property (including the books and records) of the Company; (y) shall not be responsible to any Bank for the due execution, legality, validity, enforceability and genuineness of this Agreement, or any other instrument or document furnished pursuant hereto; and (z) shall incur no liability under or in respect of the Agreement by acting upon any notice or consent (whether oral or written and whether by telephone, telegram, cable or facsimile), certificate or other instrument or writing (which may be by telegram, cable or facsimile) believed by it to be genuine and communicated, signed or sent by the proper Person or Persons. SECTION 12.04. Independent Credit Decision. Each Bank agrees that it has relied solely upon its independent review of the financial statements of the Company and all 82 other representations and warranties made by the Company herein or otherwise in making the credit decisions preliminary to entering into this Agreement and agrees that it will continue to rely solely upon its independent review of the facts and circumstances of the Company in making future decisions with respect to this Agreement and the Loans. Each Bank agrees that it has not relied and will not rely upon the Administrative Agent or any other Bank respecting the ability of the Company to perform its obligations pursuant to this Agreement. SECTION 12.05. Rights of Chase. With respect to its Commitments, Swingline Commitments, participations in Letters of Credit and the Loans made by it, Chase shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Administrative Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include Chase in its individual capacity. Chase and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of the Subsidiaries and any Person or entity who may do business with or own securities of any of them or of their subsidiaries, all as if Chase were not the Administrative Agent and without any duty to account therefor to the Banks. SECTION 12.06. Successor to the Administrative Agent. The Administrative Agent may resign at any time as Administrative Agent under this Agreement, by giving 30 days' prior written notice thereof to the Banks and the Company and may be removed as Administrative Agent under this Agreement, at any time with or without cause by the Company and the Majority Banks. Upon any such resignation or removal, the Company (with the consent of the Majority Banks) shall have the right to appoint a successor Administrative Agent thereunder. If no successor Administrative Agent shall have been so appointed by the Company (with the consent of the Majority Banks), and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Banks' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $1,000,000,000. Upon the acceptance of any appointment as Administrative Agent under this Agreement by a successor Administrative Agent, such 83 77 successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation or removal as Administrative Agent under this Agreement, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. ARTICLE XIII Miscellaneous SECTION 13.01. Payment of Expenses. Any provision hereof to the contrary notwithstanding, and whether or not the transactions contemplated by this Agreement shall be consummated, the Company agrees to pay on demand (i) all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Agreement and all amendments hereto (including waivers hereunder and workouts with respect to Loans hereunder) and the other instruments and documents to be delivered hereunder or with respect to any amendment hereto, including the reasonable fees and out-of-pocket expenses of any counsel for the Administrative Agent with respect thereto; provided, however, that so long as no Default or Event of Default has occurred and is continuing, such reasonable counsel expenses shall be limited to the reasonable expenses of one counsel for the Administrative Agent, (ii) all reasonable increases in costs and expenses of the Administrative Agent and the Banks or any Bank (including reasonable counsel fees and expenses, including reasonable allocated costs of in-house legal counsel to the Administrative Agent or any Bank), if any, in connection with the administration of this Agreement after the occurrence of a Default or Event of Default and so long as the same is continuing, (iii) all reasonable costs and expenses of the Administrative Agent and the Banks or any Bank (including reasonable counsel fees and expenses, including reasonable allocated costs of in-house legal counsel to the Administrative Agent or any Bank), if any, in connection with the enforcement of this Agreement and the other instruments and documents to be delivered hereunder and (iv) all reasonable out-of-pocket expenses incurred by the applicable Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder. The 84 78 obligations of the Company under this Section 13.01 shall survive the termination of this Agreement and the payment of the obligations hereunder. SECTION 13.02. Notices. The Administrative Agent or any Bank giving consent or notice to the Company provided for hereunder (other than in connection with any Discretionary Loans) shall notify each Bank and the Administrative Agent thereof. In the event that any Bank shall transfer any Loan in accordance with Section 13.07(c), it shall immediately so advise the Administrative Agent which shall be entitled to assume conclusively that no transfer of any Loan has been made by any Bank unless and until the Administrative Agent receives written notice to the contrary. Except as otherwise specifically permitted by this Agreement with respect to oral Notices of Borrowing or oral notices regarding the payment of interest under Section 10.01, notices and other communications provided for herein shall be in writing (including telegraphic, facsimile or cable communication) and shall be delivered, mailed, telegraphed, transmitted or cabled addressed to the addresses set forth on Exhibit 13.02 attached hereto (or, as to the Company or the Administrative Agent, at such other address as shall be designated by such party to the other parties in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given upon receipt, in each case addressed to such party as provided in this Section 13.02 or in accordance with the latest unrevoked direction from such party. The Administrative Agent and the Banks may at any time waive any requirement for notice hereunder. SECTION 13.03. Setoff. If one or more Events of Default as defined herein shall occur, any Bank or commercial bank which is owed any obligation hereunder (a "Depositary") shall have the right, in addition to all other rights and remedies available to it, and is hereby authorized, to the extent permitted by applicable law, at any time and from time to time, during the continuance of such Event of Default without notice to the Company (any such notice being hereby expressly waived by the Company), to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness (whether or not then due and payable) at any time owing by the Depositary to or for the 85 credit or the account of the Company, against any of or all the Obligations of the Company now or hereafter existing under this Agreement irrespective of whether or not the Depositary shall have made any demand for satisfaction of such Obligations and although such Obligations may be unmatured. Each Depositary agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Depositary under this Section are in addition to other rights and remedies (including other rights of setoff which such Depositary may have hereunder or under any applicable law). Each Depositary agrees that (i) if it shall exercise any such right of banker's lien, setoff, counterclaim or similar right pursuant hereto, it will apply the proceeds thereof to the payment of Loans outstanding hereunder and (ii) if it shall through the exercise of a right of banker's lien, setoff, counterclaim or otherwise obtain payment of a proportion of the Loans held by it in excess of the proportion of the Loans of each of the other Depositaries being paid simultaneously, it shall be deemed to have simultaneously purchased from each other Depositary a participation in the Loans owed to such other Depositaries so that the amount of unpaid Loans and participations therein held by all Depositaries shall be proportionate to the original principal amount of the Loans owed to them, and in each case it shall promptly remit to each such Depositary the amount of the participation thus deemed to have been purchased. The Company expressly consents to the foregoing arrangements, and in furtherance thereof, agrees that at such time as an Event of Default hereunder has occurred, the Administrative Agent shall provide to each Bank a schedule setting forth the Commitment of each Bank hereunder to permit each Bank to correctly determine the portion which its Commitment hereunder bears to the aggregate of all Commitments hereunder. If all or any portion of any such excess payment is thereafter recovered from the Depositary which received the same, the purchase provided for herein shall be deemed to have been rescinded to the extent of such recovery, without interest. SECTION 13.04. Indemnity and Judgments. The Company agrees to indemnify the Administrative Agent and each of the Banks and Issuing Banks and each of their respective directors, officers, employees, agents, attorneys, advisors, Controlling Persons and Affiliates from and hold each harmless against any and all losses, costs, liabilities, claims, damages and expenses incurred by any of the foregoing Persons (collectively, the 86 "Indemnified Liabilities"), including reasonable attorneys' fees, settlement costs, court costs and other legal expenses, arising out of or by reason of any investigation, litigation, claim or proceeding related to or arising out of any participation in, or any action or omission in connection with this Agreement (and, with respect to Chase and CSI and each of their officers, directors, employees and Affiliates, any action or omission in connection with the Commitment Letter dated as of June 23, 2000 (the "Commitment Letter"), by and among the Company and such parties) or any Loan by a Bank or issuance of any Letter of Credit by any Issuing Bank (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit) hereunder or to any use or proposed use to be made by the Company or any Subsidiary of the Loans or Letters of Credit and to the extent that the Indemnified Liabilities arise out of or by reason of claims made by Persons other than the Administrative Agent or any Bank; provided that no such Person shall be entitled to be indemnified and held harmless against any such Indemnified Liabilities arising out of or by reason of the gross negligence or wilful misconduct of such Person. The parties acknowledge that the indemnification provisions set forth in the Commitment Letter shall be superseded by this Section 13.04. SECTION 13.05. Interest. Anything in this Agreement to the contrary notwithstanding, the Company shall never be required to pay unearned interest on any Loan and shall never be required to pay interest on any Loan at a rate in excess of the Highest Lawful Rate, and if the effective rate of interest which would otherwise be payable under this Agreement would exceed the Highest Lawful Rate, or if any Bank shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable under this Agreement to a rate in excess of the Highest Lawful Rate, then (i) in lieu of the amount of interest which would otherwise be payable under this Agreement, the Company shall pay the Highest Lawful Rate, and (ii) any unearned interest paid by the Company or any interest paid by the Company in excess of the Highest Lawful Rate shall be credited on the principal of such Loan, and, thereafter, refunded to the Company. It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by any Bank under this Agreement that are made for the purpose of determining whether such rate 87 81 exceeds the Highest Lawful Rate applicable to such Bank (such Highest Lawful Rate being such Bank's "Maximum Permissible Rate"), shall be made, to the extent permitted by usury laws applicable to such Bank (now or hereafter enacted), by amortizing, prorating and spreading in equal parts during the period of the full stated term of the Loans all interest at any time contracted for, charged or received by such Bank in connection therewith. If at any time and from time to time (y) the amount of interest payable to any Bank on any date shall be computed at such Bank's Maximum Permissible Rate pursuant to this Section 13.05 and (z) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Bank would be less than the amount of interest payable to such Bank computed at such Bank's Maximum Permissible Rate, then the amount of interest payable to such Bank in respect of such subsequent interest computation period shall continue to be computed at such Bank's Maximum Permissible Rate until the total amount of interest payable to such Bank shall equal the total amount of interest which would have been payable to such Bank if the total amount of interest had been computed without giving effect to this Section. SECTION 13.06. Governing Law; Submission to Jurisdiction; Venue. (a) THIS AGREEMENT AND OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS EXECUTED BY THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS UNDER THE LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF SAID STATE AND OF THE UNITED STATES. Without limitation of the foregoing, nothing in this Agreement shall be deemed to constitute a waiver of any rights which any Bank may have under applicable Federal law relating to the amount of interest which such Bank may contract for, take, receive or charge in respect of any Loans, including any right to take, receive, reserve and charge interest at the rate allowed by the laws of the state where such Bank is located. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of New York sitting in New York City or of the United States for the Southern District of New York, and by execution and delivery of this Agreement, the Company hereby irrevocably accepts for itself and in respect of its Property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The Company 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 88 82 registered or certified mail, postage prepaid, to the Company at its address for notices pursuant to Section 13.02, such service to become effective 15 days after such mailing. Nothing herein shall affect the right of the Administrative Agent or any Bank to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (b) The Company 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 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. SECTION 13.07. Survival of Representations and Warranties; Binding Effect; Assignment. (a) All representations, warranties and covenants contained herein or made in writing by the Company in connection herewith shall survive the execution and delivery of this Agreement, and will bind and inure to the benefit of the respective successors and assigns of the parties hereto, whether so expressed or not. This Agreement shall become effective when it shall have been executed by the Company, the Administrative Agent and each of the Banks, and thereafter shall be binding upon and inure to the benefit of the Company, the Administrative Agent and the Banks and each of their respective successors and assigns, except that the Company shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of each Bank. (b) Each Bank may grant participations to one or more other banks or other Persons in or to all or any part of its rights and obligations under this Agreement (including all or a portion of its Commitment or Swingline Commitment or participations in Letters of Credit) pursuant to such participation agreements and certificates as are customary in the banking industry; provided, however, that (i) such Bank's obligations under this Agreement (including its Commitment and Swingline Commitment to the Company hereunder) shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company the Administrative Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this 89 83 Agreement, including such Bank's rights under Article XI hereof. In connection with any such participation, each Bank may deliver such financial information concerning the Company and the Subsidiaries to permit such participant to make an informed and independent credit decision concerning such participation; provided, however, each such Bank shall obtain from each such participant an agreement to the effect that all such information delivered to it in connection with such participation shall be considered confidential and shall not be further distributed or delivered to any other Person except any regulatory body having jurisdiction over such participant or to any director, officer, employee, Affiliate or representative (including accountants and attorneys acting for such participants) or as may otherwise be required by legal process or applicable law, rules and regulations. Upon request of the Company, each Bank shall give prompt notice to the Company of each such participation to banks or other Persons that are not Affiliates of such Bank identifying each such participant and the interest acquired by each such participant. This Agreement shall not be construed so as to confer any right or benefit upon any Person, including any Person acquiring a participation in any Loan, other than the parties to this Agreement, except that any Person acquiring a participation shall be entitled to the benefits conferred upon the Banks by Section 2.01(f)-(g) (provided that such Person shall have complied with the requirements of Section 2.03 and that the cost to the Company is not in excess of what such cost would have been had such participation not been granted). (c) Subject (except in the case of assignments to Bank Affiliates) to the prior written consent of the Company (which consent shall not be unreasonably withheld) and the Administrative Agent, each Bank may assign to a bank or other Person a portion of its rights and obligations under this Agreement (including a portion of its Commitment and Swingline Commitment); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Bank's rights and obligations under this Agreement and shall be in an amount equal to or greater than $5,000,000 of the assigning Bank's Commitment and Swingline Commitment (except in the case of assignments to Affiliates of any Bank or unless otherwise agreed by the Company) and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance in substantially the form of Exhibit 13.07(c) attached hereto (the "Assignment and Acceptance"), together 90 84 with a processing and recordation fee of $3,500; provided, however, that such recordation fee shall not be payable if such transfer is made pursuant to Sections 2.01(e) or (g)(vi), and provided, further, that any consent of the Company required under this paragraph shall not be required if an Event of Default has occurred and is continuing. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be the date on which such Assignment and Acceptance is accepted by the Administrative Agent, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank under this Agreement and (y) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto). (d) Notwithstanding anything to the contrary contained herein, any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Company, the option to provide to the Company all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Company pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, 91 85 reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 13.07(c) or Section 13.07(d), any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loan to the Granting Bank or to any financial institutions (consented to by the Company and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section may not be amended without the written consent of the SPC. (e) By executing and delivering an Assignment and Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any other instrument or document furnished pursuant thereto, (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its respective obligations under this Agreement, (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Sections 6.02 and 8.02 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with 92 86 such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with its terms all the obligations which by the terms of this Agreement are required to be performed by it as a Bank. (f) The Administrative Agent shall maintain at its address referred to in Section 13.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Commitment and any Swingline Commitment of, and principal amount of the Loans owing to, each Bank from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent demonstrable error, and the Company, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank at any reasonable time and from time to time upon reasonable prior notice. (g) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit 13.07(c) attached hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. (h) Notwithstanding any other provision in this Agreement, any Bank may at any time, without the consent of the Company, assign all or any portion of its rights under this Agreement (including the Loans) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System; provided that no such assignment shall release a Bank from any of its obligations hereunder or substitute any such Federal Reserve Bank for such Bank as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the Company shall, at the request of the assigning Bank, duly execute and deliver to the assigning Bank a promissory note or notes evidencing the Loans made to the Company by the assigning Bank hereunder. SECTION 13.08. Counterparts. This Agreement may be executed in several counterparts, and by the parties hereto on separate counterparts. When counterparts executed by all the parties shall have been delivered to 93 87 the Administrative Agent, this Agreement shall become effective, and at such time the Administrative Agent shall notify the Company and each Bank. Each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. SECTION 13.09. Severability. Should any clause, sentence, paragraph or section of this Agreement be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement, and the parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such part or parts had never been included herein. SECTION 13.10. Descriptive Headings. The section headings in this Agreement have been inserted for convenience only and shall be given no substantive meaning or significance whatever in construing the terms and provisions of this Agreement. SECTION 13.11. Representation of the Banks. Each Bank hereby represents and warrants that it is not relying upon any Margin Stock as collateral in extending or maintaining the credit to the Company represented by this Agreement. SECTION 13.12. Final Agreement of the Parties. This Agreement (including the Exhibits hereto) represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no oral agreements between the parties. SECTION 13.13. Waiver of Jury Trial. THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 94 88 IN WITNESS WHEREOF this Agreement has been executed by the duty authorized signatories of the parties hereto in several counterparts all as of the day and year first above written. COX RADIO, INC., by /s/ Richard J. Jacobson ---------------------------------- Name: Richard J. Jacobson Title: Treasurer THE CHASE MANHATTAN BANK, Individually and as Administrative Agent, by /s/ Constance M. Loosemore ---------------------------------- Name: Constance M. Loosemore Title: Vice President BANK OF AMERICA, N.A., Individually and as Syndication Agent, by /s/ Patrick Honey ---------------------------------- Name: Patrick Honey Title: Vice President CITIBANK, N.A., Individually and as Documentation Agent, by /s/ Maureen Maroney ---------------------------------- Name: Maureen Maroney Title: Vice President 95 89 ABN AMRO BANK N.V., by /s/ Ann Schwalbenberg ---------------------------------- Name: Ann Schwalbenberg Title: Vice President by /s/ Frances O'R. Logan ---------------------------------- Name: Frances O'R. Logan Title: Senior Vice President THE BANK OF NEW YORK, by /s/ John C. Lambert ---------------------------------- Name: John C. Lambert Title: Vice President COMMERZBANK AG NEW YORK AND GRAND CAYMAN BRANCHES, by /s/ Brian J. Campbell ---------------------------------- Name: Brian J. Campbell Title: Vice President by /s/ W. David Suttles ---------------------------------- Name: W. David Suttles Title: Vice President CREDIT SUISSE FIRST BOSTON, by /s/ Tom Muoio ---------------------------------- Name: Tom Muoio Title: Vice President by /s/ Vitaly Butenko ---------------------------------- Name: Vitaly Butenko Title: Asst. Vice President 96 90 THE DAI-ICHI KANGYO BANK, LTD., by /s/ Nancy Stengel ---------------------------------- Name: Nancy Stengel Title: Vice President DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, by /s/ Brian Schneider ---------------------------------- Name: Brian Schneider Title: Assistant Vice President by /s/ Jane A. Majeski ---------------------------------- Name: James A. Majeski Title: First Vice President FIRST UNION NATIONAL BANK, by /s/ Jeffrey M. Graci ---------------------------------- Name: Jeffrey M. Graci Title: Director FLEET NATIONAL BANK, by /s/ Tanya M. Crossley ---------------------------------- Name: Tanya M. Crossley Title: Vice President 97 91 BAYERISCHE HYPO-UND VEREINSBANK AG NEW YORK BRANCH, by /s/ Eric N. Pelletier ---------------------------------- Name: Eric N. Pelletier Title: Director by /s/ Cheryl K. Chiappetta ---------------------------------- Name: Cheryl K. Chiappetta Title: Associate Director THE INDUSTRIAL BANK OF JAPAN, LIMITED, by /s/ James W. Masters ---------------------------------- Name: James W. Masters Title: Senior Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Dennis Wilczek ---------------------------------- Name: Dennis Wilczek Title: Associate THE SUMITOMO BANK, LTD., by /s/ Leo E. Pagarigan ---------------------------------- Name: Leo E. Pagarigan Title: Vice President SUNTRUST BANK, by /s/ Thomas C. Palmer ---------------------------------- Name: Thomas C. Palmer Title: Director 98 92 WACHOVIA BANK, N.A., by /s/ J. Timothy Toler ---------------------------------- Name: J. Timothy Toler Title: Senior Vice President WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, by /s/ Lucie L. Guernsey ---------------------------------- Name: Lucie L. Guernsey Title: Director by /s/ Barry S. Wadler ---------------------------------- Name: Barry S. Wadler Title: Associate EX-27.1 8 ex27-1.txt FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 90,288 0 86,791 (3,406) 0 271,519 100,324 (42,238) 1,160,425 39,141 200,125 0 0 32,784 740,370 1,160,425 0 171,547 0 106,973 21,034 0 14,141 78,345 32,010 46,335 0 0 0 46,335 0.53 0.53
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