-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tSRLODvMH77YSjXVghuaiVP/tXcyfDRooWqCcV7Ro9BSiVTve4mjzAzEX2V3Ne41 gJxWr+XbNX1JxsK9aEHa8A== 0000950123-95-000134.txt : 19950608 0000950123-95-000134.hdr.sgml : 19950608 ACCESSION NUMBER: 0000950123-95-000134 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950127 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000355787 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 132991700 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08309 FILM NUMBER: 95503457 BUSINESS ADDRESS: STREET 1: 45 ROCKEFELLER PLZ STREET 2: STE 3201 CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2127575600 MAIL ADDRESS: STREET 1: 45 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10020 10-K 1 PRICE COMMUNICATIONS CORPORATION FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) /X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 1994 or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from ________________to ______________ Commission file number 1-8309. PRICE COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) New York 13-2991700 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 45 Rockefeller Plaza, New York, New York 10020 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 757-5600 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered - ------------------- --------------------- Common Stock, par value $.01 per share American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under its Plan of Reorganization as confirmed by the court. Yes X No ----- ----- 2 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 the filing requirements for the past 90 days. YES X NO . ----- ----- Page 1 of ____ Pages The Exhibit Index Appears on Page ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. / / AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF THE COMPANY Aggregate market value of the Common Stock held by non-affiliates of the Company, based on the last sale price on the American Stock Exchange ("AMEX") on January 23, 1995 ($6 3/8 as reported in the Wall Street Journal): approximately $15.5 million. (For this purpose, all outstanding shares of Common Stock have been considered held by non-affiliates, other than the shares beneficially owned by directors, executive officers and principal shareholders of the Company; certain of such persons disclaim that they are affiliates of the Company.) Indicate the number of shares outstanding of each of the Company's classes of common stock as of the latest practicable date: 8,972,445 shares of Common Stock, par value $.01 per share, were outstanding as of January 23, 1995. DOCUMENTS INCORPORATED BY REFERENCE: None. 3 PART I Item 1. Business. GENERAL The Company is a nationwide communications company whose current primary business is owning and operating television stations through wholly-owned indirect subsidiaries. The Company's television properties currently consist of one ABC affiliated television station, WHTM-TV (which was acquired by the Company during September 1994), serving Harrisburg/Lancaster/ Lebanon/York, Pennsylvania; and three NBC affiliated television stations, KSNF-TV, serving Joplin, Missouri/Pittsburg, Kansas; KJAC-TV, serving Beaumont/Port Arthur, Texas; and KFDX-TV, serving Wichita Falls, Texas/Lawton, Oklahoma. During 1994, the Company sold its three AM and three FM radio stations serving the Fort Wayne, Indiana; Buffalo, New York; and West Palm Beach, Florida markets. The Company intends to continue to investigate potential media acquisitions involving television and radio properties and, possibly, outdoor advertising and newspapers. The Company's business strategy is to acquire communications properties at prices it considers attractive, finance such properties on terms satisfactory to it, manage such properties in accordance with its operating strategy and dispose of them if and when the Company determines such disposition to be in its best interest. See "Recent Developments" regarding sales and acquisitions of properties since the beginning of 1994. For the foregoing reasons, the results of the Company's historical operations are not comparable to or indicative of results in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company was organized in New York in 1979 and began active operations in 1981. Its principal executive offices are located at 45 Rockefeller Plaza, New York, New York 10020, and its telephone number is (212) 757-5600. References to the "Company" or "Price" in this report include Price Communications Corporation and its subsidiaries, unless the context otherwise indicates. RECENT DEVELOPMENTS In February, 1994, the Company entered into an agreement to purchase WHTM-TV, Channel 27, serving Harrisburg/Lancaster/ Lebanon/York, Pennsylvania, the nation's 44th largest television market, at a purchase price based (subject to adjustment) on a 7.25 multiple of the station's cash flow during a 12-month period preceding the closing. The purchase was consummated on September 16, 1994, at which time the Company paid cash consideration of approximately $47 million plus a $4 million working capital adjustment. The funds utilized to make such acquisition were I-1 4 principally supplied under an amended and restated line of credit agreement (the "Amended Line of Credit") with Bank of Montreal. The Amended Line of Credit provided a seven year revolving credit facility of up to $45 million, which amount is permanently reduced periodically over its term. On October 17, 1994, the net proceeds from the sale of the Company's radio stations in West Palm Beach, Florida, were used to repay $22.5 million of borrowings under the Amended Line of Credit, at which time the facility was reduced to $22.5 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." During 1994, the Company consummated the sale of all of its radio properties as described below (see Note 3 of Notes to Consolidated Financial Statements), realizing gains on such dispositions and utilizing the proceeds of such sales principally to reduce indebtedness. The Company continues to investigate acquisitions of media properties and may reenter radio broadcasting. On April 14, 1994, the Company sold substantially all of the assets of radio stations WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash. A pre-tax gain of approximately $3.2 million was recognized on the sale. On October 17, 1994, the Company sold substantially all of the assets of radio stations WBZT-AM and WIRK-FM, West Palm Beach, Florida, for approximately $23 million in cash. The Company realized a pre-tax gain of approximately $13.5 million on this transaction. On November 11, 1994, the Company sold substantially all of the assets of radio stations WOWO-AM, Fort Wayne, Indiana and WOWO-FM, Huntington, Indiana for approximately $2.3 million in cash. The Company recognized a pre-tax gain of approximately $.8 million on this transaction. In addition to the radio dispositions, the Company sold certain other properties during 1994 (see Note 3 of Notes to Consolidated Financial Statements), as follows: During February 1994, the Company sold its outdoor advertising business for a total sales price of $875,000, including $200,000 cash and a note from the buyer for $675,000. A pre-tax loss of approximately $350,000 was recognized in connection with the sale. On May 20, 1994, the Company sold to TLM Corporation, a former majority owned subsidiary of the Company, all of the capital stock of Eimar Realty Corporation, the sole asset of which is a Nashville, Tennessee office building, for a total purchase price of $815,000 including $275,000 in cash and a note from the buyer for I-2 5 $540,000. The Company had attempted unsuccessfully to find an unrelated buyer for the Eimar property during the approximately two years preceding such sale. A de minimis gain was recognized on the sale. On October 28, 1994 the Company sold its building in Red Bank, New Jersey for $1.7 million in cash. The Company realized a small gain on the sale. Prior to 1994, the Company had written off its investment in Fairmont Communications Corporation ("Fairmont"), which had filed for relief under Chapter 11 of the U.S. Bankruptcy Code, with the result that the Company's carrying value in such investment was zero. In January 1994, the Company entered into a settlement agreement with the various parties to the Fairmont bankruptcy proceedings whereby the Company agreed to desist in its challenge to the Fairmont plan of reorganization, Fairmont reimbursed the Company for $300,000 of legal fees previously incurred by the Company in connection with such bankruptcy proceeding, and, as an incentive to the manager of the Fairmont properties to maximize recovery, the Company agreed that any excess over a recovery of $5 million by the Company from the sale of Fairmont's properties would be split with such manager. Although the exact amount of any such recovery is uncertain at this time, the Company believes it will receive a cash payment of approximately $7 million in respect of such sale shortly, and anticipates that it may receive a smaller additional payment in the future upon the resolution by Fairmont of various state tax issues. See "Interests in Fairmont" below. Due to the developments described above, the Company's historical results of operations should not be regarded as indicative of its future results. SEGMENT DATA See Note 13 of Notes to Consolidated Financial Statements for segment data concerning the Company's television, radio and other operations. The Company's television and radio segments contributed 70 percent and 30 percent, respectively, of the Company's net revenue for the year ended December 31, 1994. The Company sold 75 percent of its interest in The New York Law Publishing Company at the end of 1992, and during 1993 accounted for its remaining 25 percent interest (which was disposed of during 1993) as an investment under the equity method of accounting. For the year ended December 31, 1993, the Company's television, radio, and other segments contributed 52 percent, 45 percent and 3 percent, respectively. For the year ended December 31, 1992, the Company's television, radio, and publishing and other segments contributed 21 percent, 17 percent and 62 percent, respectively. I-3 6 ACQUISITIONS AND DIVESTITURES Through its history, the Company has actively acquired and divested broadcasting and other properties. In pursuing its acquisition and divestiture strategy, the Company has no fixed formula for determining the purchase price of properties it seeks. With respect to media properties, to date, the Company generally concentrates its acquisition activities on properties that have a history of generating Media Cash Flow (operating profits before deductions for interest, depreciation, amortization and income taxes) or properties that have potential for growth. In seeking acquisitions of media properties, the Company generally gives greater weight to a property's Media Cash Flow than to its net income, because such Media Cash Flow is a standard widely used in the industry to evaluate media properties. The Company's strategy is to seek properties that can be purchased at attractive multiples of "trailing" Media Cash Flow, the Media Cash Flow for the twelve months immediately prior to such acquisition, either in anticipation that such Media Cash Flow will continue at historical levels, or in anticipation that the Company will be able to improve it. However, the Company may consider acquiring properties without such cash flow if it believes them to have sufficient potential for growth or to otherwise be consistent with the Company's objectives. Prices of media properties are affected by a number of factors in addition to a property's Media Cash Flow, including the characteristics and anticipated growth of the market area, the terms of purchase, programming, the competitive situation within the market area, the possibility of improving Media Cash Flow, the dial position and signal strength (in the case of radio stations), operating history, network affiliation and assigned signal frequency (in the case of television stations), and the value of the fixed assets acquired in connection with the purchase. To finance its acquisitions and to provide funds for other purposes, the Company may consider using a variety of sources, including borrowings from banks and other institutional lenders, the proceeds of debt sold to the public, seller financing, convertible preferred stock and common stock issued by the Company or its subsidiaries, and cash on hand. Historically, the Company often acquired properties through newly organized subsidiaries, based on the credit of the properties being acquired or by borrowing or issuing securities at the parent company level. From time to time brokers and potential buyers approach the Company with respect to the potential sale of certain of its media properties. The Company has generally not listed its properties with brokers, but management follows the practice of permitting potential responsible buyers to visit its media properties and of presenting bona fide offers from financially responsible parties to the Company's Board of Directors for consideration. Proceeds of asset sales will be used to retire outstanding debt, to repurchase equity, to finance the Company's I-4 7 investments in new properties or for other corporate purposes as determined by the Board of Directors. INTERESTS IN FAIRMONT In connection with the sale in 1987 of seven radio stations to Fairmont for an aggregate sale price of $120 million, the Company loaned $50 million to Fairmont (the "Fairmont Notes") and acquired a 27% equity interest in Fairmont. On August 28, 1992, Fairmont filed for voluntary relief under Chapter 11 of the U.S. Bankruptcy Code. The Fairmont Notes owned by the Company and the Company's equity investment in Fairmont had no book value as of December 31, 1994. By order dated September 10, 1993, the United States Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 plan of reorganization (the "Fairmont Plan") for Fairmont and the Fairmont Subsidiaries. Essentially, the Fairmont Plan provided for the orderly liquidation of the assets of Fairmont and the Fairmont Subsidiaries, and the distribution of the proceeds derived therefrom according to the relative priorities of the parties asserting interests therein. In January 1994, the Company entered into a settlement agreement with the various parties to the Fairmont bankruptcy proceedings whereby the Company agreed to desist in its challenge to the Fairmont Plan, Fairmont reimbursed the Company for $300,000 of legal fees previously incurred by the Company in connection with such bankruptcy proceeding, and, as an incentive to the manager of the Fairmont properties to maximize recovery, the Company agreed that any excess over a recovery of $5 million by the Company from the sale of Fairmont's properties would be split with such manager. Although the exact amount of any such recovery is uncertain at this time, the Company believes it will receive a cash payment of approximately $7 million in respect of such sale shortly, and anticipates that it may receive a smaller additional payment in the future upon resolution by Fairmont of various state tax issues. OPERATING STRATEGY At the outset, the Company develops specific plans for each property acquired in an effort to improve its efficiency. The Company attempts to increase the Media Cash Flow of its broadcasting properties and to make each property a significant one relative to its competitors. The Company's goal is to realize annual increases in the net revenue of its properties that exceed increases in operating expenses. The Company has sought both to elevate its television and radio stations' positions in their markets and to increase advertising rates, although the position of stations in their markets tends to fluctuate. Station revenue growth benefits from the advertising revenue growth of the markets themselves, which the I-5 8 Company believes can generally be measured by the growth in retail sales in the areas involved. Local demographic considerations and promotion play less of a role in television station programming than in the case of radio stations, because a significant portion of station programming is provided by the television networks to the Company's network affiliated television stations. The Company strives to improve or maintain the ratings of its television stations by fine tuning non-network programming and news coverage, improving promotional activities and upgrading physical and technical facilities where necessary. Within each radio market, the Company historically targeted key demographic groups (determined by age and/or sex), based on advertiser demand and the nature of competition in the market. Research was periodically conducted by outside consultants to help refine and improve the programming of each station, and the Company attempted to direct its sales efforts, both local and national, to obtain the largest possible share of advertising budgets. Although broadcast ratings normally reflect all listeners in a market and the Company's stations may have performed well in the overall ratings, the Company's emphasis was on superior performance in the targeted demographic group, which it believed could result in substantial improvement in revenues and Media Cash Flow by attracting advertisers interested in reaching the target groups. The Company also sought to generate radio revenues through promotional events and print-media tie-ins, techniques that may be particularly important as a station grows more successful and its ability to increase the number of commercials sold becomes more limited. THE TELEVISION BROADCASTING INDUSTRY Television station revenues are primarily derived from local, regional and national advertising and from compensation paid by television networks for the local broadcast of network programming, with a small percentage of revenue sometimes obtained from studio rental and programming-related activities. The primary costs involved in owning and operating television stations are salaries, programming, promotion, depreciation and amortization, and selling expenses. The majority of national and local advertising contracts are short-term, generally running for only a few weeks, while advertising contracts sold by networks are typically for longer periods. National spot and local advertising revenues are more susceptible to fluctuations in the economy than network compensation. Advertising rates charged by a television station vary, depending upon the population and number of television sets in the area served by the station, a program's popularity among the viewers an advertiser wishes to attract, the number of advertisers vying for available time, the prices being charged by competitors I-6 9 and the availability of alternative media in the market area. The number of television sets in an area and a program's popularity are reflected in surveys made by a rating service of the number of sets tuned to the station at various times. Advertising rates are highest during the most desirable viewing hours. Local and most regional sales of advertising time are made by a station's sales staff. National sales are made by a national "rep firm", specializing in television advertising sales on the national level, which is compensated on a commission-only basis. For most network programming that is broadcast by a network affiliate, the network pays the affiliate compensation, which varies in amount depending upon the time of day during which the program is broadcast. "Prime-time" programming (7 to 11 P.M. E.S.T. Sundays and 8 to 11 P.M. E.S.T. other days) generally earns the highest rates. Recent trends indicate a general increase in network compensation levels, and the Company has been attempting to negotiate increased compensation levels under its network affiliation agreements. In addition, a network often allocates portions of advertising time during network broadcasts for direct sale by the local station to advertisers and these time slots have generally been increasing. While revenues are spread over the calendar year, the first quarter generally reflects the lowest and the fourth quarter the highest revenue for the year. The increase in retail advertising each fall in preparation for the holiday season, combined with political advertising in election years and new fall television programming, tend to increase fourth quarter revenues. A significant portion of the programs broadcast by the Company's television stations is provided by their networks. Programming costs are generally lower for network affiliates than the independent television stations, and network programs generally achieve higher ratings than non-network programs. The Company's television stations also acquire programs from non- network sources. Programs obtained from non-network sources usually consists of syndicated television shows, some of which have been shown previously on a network, and feature films. The competitive position of a network affiliated television station is significantly affected by viewer acceptance of the network's programs. Network affiliation agreements have historically generally been for a term of one or two years (although the recent trend has been toward longer terms), and are generally renewed automatically. A network affiliate may reject particular network programs, which might then be offered to other stations in the area. Competitive factors, in addition to management experience, include a station's authorized transmitter power and antenna location, assigned frequency, network affiliation, carriage of the station's signal on local cable television systems, viewer I-7 10 acceptance of network and local programming and the strength of local competition. Generally a television broadcasting station in one market does not compete with stations in another market. During the past several years, there has been a steady growth of cable communications and a significant liberalization of FCC rules which allow cable systems, satellite master antenna systems, and MMDS services located in areas served by the stations to provide additional program choices. Additionally, direct broadcast satellite service is increasingly being made available on a nationwide basis. Moreover, the FCC has begun to issue authorizations for telephone companies to offer "video dialtone" service that will be similar in nature to that provided by cable communications systems. By federal statute, local telephone companies have been precluded from providing cable television service within their local service areas. However, several U.S. Courts of Appeals have ruled that the federal statutory ban is unconstitutional. To date, the existence of additional program services has not had a demonstrably adverse effect upon the Company's television stations. The FCC has adopted "must carry" and "retransmission consent" rules at the direction of Congress pursuant to the 1992 Cable Television Consumer Protection and Competition Act. Under this new regulatory regime, virtually all cable systems that carried the Company's television stations have continued to do so. Some systems have agreed to provide compensation to the Company's television stations in return for carriage on the cable system under the new regulations, although such compensation is not substantial. A number of cable television entities have appealed the must carry and retransmission consent rules. A three- judge panel of the U.S. District Court for the District of Columbia upheld the rules, but the U.S. Supreme Court decided to review the ruling and heard oral argument in January 1994. A decision by the Court is expected during 1995. In any event, the Company believes that cable subscriber demand for programming carried by the Company's television stations makes it unlikely that the stations will cease to be carried by cable systems served by those stations, even in the absence of must carry rules. Several other new technologies are in their developmental stages, such as high definition television capable of transmitting television pictures with higher resolution, truer color and wider aspect ratios. The FCC has recently determined that local television stations such as the Company's will be entitled to frequencies necessary to broadcast high definition television so long as those frequencies are used within a specified time period. These developing technologies have had no immediate impact on the television broadcast industry, and their potential impact on the Company's business cannot be predicted. I-8 11 THE RADIO BROADCASTING INDUSTRY As indicated above, the Company sold during 1994 all of its radio properties, although it continues to investigate possible radio acquisitions and may reenter radio broadcasting. Virtually all of the revenue of a radio station is derived from local and national advertising, and to a minor extent from network compensation. Local sales are made by a station's sales staff. National sales are made by a national "rep firm", specializing in radio advertising sales on the national level, which is compensated on a commission-only basis. Advertising rates charged by a radio station are based primarily on the station's ability to attract audiences in the market area. A station's listenership is reflected in rating service surveys of the number of radios tuned to the station at various times. The primary costs incurred in owning and operating radio stations are salaries, programming, depreciation and amortization, promotion and advertising, rental of premises for studios and transmitting equipment, music license royalty fees and selling expenses. Radio broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, broadcast and cable television, magazines, outdoor advertising, transit advertising and direct mail marketing. Competition within the radio broadcasting industry occurs primarily in individual market areas, so that a station in one market does not generally compete with stations in other market areas. In addition to management experience, factors that are material to competitive position include the station's rank in its market, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. FEDERAL REGULATION OF BROADCASTING Television and radio broadcasting (as well as some other potential communications investments of the Company) are subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended ("Communications Act"). The Communications Act, among other things, prohibits the assignment of a broadcast license or the transfer of control of a corporation holding a license without the prior approval of the FCC. Legislation has been introduced from time to time which would amend the Communications Act in various respects and the FCC from time to time considers new regulations or amendments to its existing regulations. During the 103rd Congress, legislation involving major revisions to the Communications Act passed the House of Representatives but was not acted on by the Senate. It is expected that one or more bills proposing a comprehensive revision of the Communications Act will be given substantial attention in the 104th Congress. The Company cannot predict the effect of any such new legislation or amendments on the Company. I-9 12 Television licenses are issued and renewable for terms of five years. The Company's licenses have the following expiration dates, until renewed: KSNF-TV . . . . . . . . . . . . . . February 1, 1998 KJAC-TV . . . . . . . . . . . . . . * KFDX-TV . . . . . . . . . . . . . . August 1, 1998 WHTM-TV . . . . . . . . . . . . . . August 1, 1999 * The license term for KJAC-TV was to have expired on August 1, 1993. KJAC-TV filed a timely application for renewal, thereby extending the license term until action is taken on the renewal application. That application remains pending due to a viewer complaint about the Phil Donahue program. The Company expects the station's license to be renewed during 1995 for a term ending August 1, 1998. In the vast majority of cases, broadcast licenses are renewed by the FCC. Current FCC regulations permit cognizable ownership by one entity of up to 12 television stations, 20 FM radio stations and 20 AM radio stations. With respect to television stations, however, there is an additional ownership limit based on audience reach. Under the audience reach limitation, an entity may acquire cognizable ownership interests in up to 12 television stations only if the aggregate number of television households reached by the television stations does not exceed 25% of the national television household audience as determined by the Arbitron ADI market rankings. The percentage of the national television household audience reached by the Company's television stations is significantly under these limitations. On December 15, 1994, the FCC commenced a rulemaking proceeding to review its television ownership rules. The FCC has proposed to relax its national ownership limitations with regard to the number of stations an entity may own and to permit a higher national audience reach. Any new rules are not likely to take effect until late 1995 or early 1996. The Company is unable to predict at this time the impact of this initiative on its television broadcast operations. The FCC's rules generally prohibit the common ownership of a television station and an AM radio station, an FM radio station or general circulation daily newspaper in the same market, although ownership of up to two AM and two FM stations is generally permitted. Ownership of a CATV system and television station in the same market is also prohibited. These rules apply to entities such as the Company, that seek new authorizations or approval of a transfer of an existing combination. The FCC has relaxed its ownership restrictions such that common ownership of television and radio stations may be permissible in the 25 largest markets. In I-10 13 its review of the television ownership rules, the FCC has proposed to relax or eliminate the current restriction outside the 25 largest markets on common ownership of a television station and radio stations in the same market and has also proposed to permit common ownership of two television stations in some large markets. Any new rules are not likely to take effect until late 1995 or early 1996. The Company is unable to predict at this time the impact of these initiatives on its television broadcast operations. The FCC requires the attribution to a broadcast company not only of licenses held by the Company, but also of licenses attributable to its officers and directors and certain of its stockholders and their affiliates, such that there would be a violation of FCC regulations where such an officer, director, stockholder or stockholder's affiliate together held attributable interest in more than the permitted number of stations on a nationwide or local market basis. The Company's By-Laws state that the Board of Directors shall prohibit any voting or transfer of its capital stock, including its Common Stock, which would cause the Company to violate the Communications Act or FCC regulations. The foregoing is only a brief summary of certain provisions of the Communications Act and the regulations of the FCC. Reference is made to the Communications Act, FCC regulations and the public notices promulgated by the FCC for further information. The Company is unable to predict what impact, if any, changes in these laws would have on its operations. EMPLOYEES As of December 31, 1994, the Company employed approximately 222 full time persons at its television stations. The stations have not experienced any significant labor problems under the Company's ownership and the Company considers its labor relations on the whole to be good. The Company relies on experienced managers for its broadcasting operations, who are given considerable authority at the local level. Where appropriate, the Company has also hired new management in an effort to improve the operations of a particular property. ITEM 2. PROPERTIES. The Company and its subsidiaries own their studio and production facilities and own or lease space for other offices, antenna sites and certain equipment for each of its stations. The Company believes that its other facilities are suitable and adequate for carrying on its broadcasting and other operations and that no major capital improvements will be necessary over the next year. (See Note 16 of the Notes to Consolidated Financial Statements for information on minimum lease payments of the Company and its subsidiaries for the next five years.) I-11 14 ITEM 3. LEGAL PROCEEDINGS. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the executive officers of the Company, their respective ages, the year in which each was first elected an executive officer and the office of the Company held by each. Each executive officer will hold office until removed or until their respective successors have been duly elected and qualified.
Executive Officer's Name Age Position Officer Since -------------- --- -------- ------------- Robert Price 62 President, Chief Executive 1979 Officer and Treasurer Kim I. Pressman 38 Executive Vice President and 1984 Secretary Bill Bengtson 63 Senior Vice President/Television 1989 James Lyndon Kreps 34 Vice President and Controller 1995
Robert Price (Director, President, Chief Executive Officer and Treasurer of the Company), an attorney, is a former General Partner of Lazard Freres & Co. He has served as an Assistant United States Attorney, practiced law in New York and served as Deputy Mayor of New York City. After leaving public office, Mr. Price became Executive Vice President of The Dreyfus Corporation and an Investment Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co. Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant, Inc., and is currently a member of The Council on Foreign Relations. Mr. Price is also a Director and President of TLM Corporation, and a Director and President of PriCellular Corporation. Kim I. Pressman, a certified public accountant, is a graduate of Indiana University and holds an M.B.A. from New York University. Before assuming her present office as Executive Vice President and Secretary in October 1994, Ms. Pressman was Vice President and I-12 15 Treasurer of the Company from November 1987 to December 1989, and Senior Vice President of the Company from January 1990 to September 1994. She was also Secretary of the Company from July 1989 to February 1990. Ms. Pressman was Vice President- Broadcasting and Vice President, Controller, and Assistant Treasurer of the Company from 1984 to October 1987. Prior to joining the Company in 1984, Ms. Pressman was employed by Peat, Marwick, Mitchell & Co., a national certified public accounting firm, was Supervisor, Accounting Policies for International Paper Company and then Manager, Accounting Operations for Corinthian Broadcasting Division of Dun & Bradstreet Company, a large group owner of broadcasting stations. Ms. Pressman is a Director, Vice President, Treasurer and Secretary of TLM Corporation, and a Director, Vice President and Secretary of PriCellular Corporation. Bill Bengtson has held a variety of positions in the broadcasting industry for 34 years and assumed his current position in July 1989. Mr. Bengtson is also Vice President and General Manager of KSNF-TV, the Company's NBC affiliate in Joplin, Missouri/Pittsburg, Kansas, a position he has held since April 1987. From January 1985 to March 1987, he was Vice President and General Manager of KRCG-TV, a CBS affiliate in Jefferson City/Columbia, Missouri formerly owned by the Company. Prior to joining the Company in 1985, Mr. Bengtson was Vice President and General Manager of KOAM-TV in Pittsburg, Kansas for 12 years. Mr. Bengtson has served on the National Association of Broadcasters' Television Board of Directors, and as President of the Pittsburg, Kansas Chamber of Commerce, President of the Pittsburg, Kansas Industrial Development Corporation and Mayor of Pittsburg, Kansas. James Lyndon Kreps, a certified public accountant and graduate of Bucknell University, assumed his current position in July 1994. Prior to joining the Company in 1994, Mr. Kreps was Vice President of Promotional Concept Group, Inc. From June 1989 to September 1992 Mr. Kreps served in various positions at Paramount Pictures Corporation including Director of Financial Reporting and Analysis for the Television Group. From April 1988 to June 1989, Mr. Kreps was a Supervisor of Internal Audit for Gulf & Western (Paramount Communications Corporation). Mr. Kreps also spent four years with Coopers & Lybrand. I-13 16 PART II ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS a) Market for Common Stock The Company's Common Stock is listed for trading on the American Stock Exchange ("AMEX") under the ticker symbol "PR". The range of high and low last sale prices for the Company's Common Stock on the AMEX for each of the four quarters of 1994 and 1993, as reported by the AMEX was:
1994 1993 ------------------------- ------------------------ Quarter High Low High Low ------- ---- --- ---- --- First 4-5/8 3-5/8 2-7/8 2 Second 4-5/16 3-1/2 2-15/16 2 Third 5-7/8 4-1/8 3-3/16 2-3/8 Fourth 7-1/4 4-11/16 4-3/8 2-3/4
The high and low last sale prices for the Company's Common Stock on the AMEX for January 23, 1995, as reported by the AMEX were 6 1/2 and 6 3/8, respectively. The Company's Common Stock has been afforded unlisted trading privileges on the Pacific Stock Exchange under the ticker symbol "PR.P", on the Chicago Stock Exchange under the ticker symbol "PR.M" and on the Boston Stock Exchange under the ticker symbol "PR.B". b) Holders On January 23, 1995, there were 705 holders of record of the Company's Common Stock. The Company estimates that brokerage firms hold Common Stock in street name for approximately 3,000 persons. c) Dividends The Company, to date, has paid no cash dividends on its Common Stock. The Board of Directors will determine future dividend policy based on the Company's earnings, financial condition, capital requirements and other circumstances. It is not anticipated that dividends will be paid on its Common Stock in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA. The following table sets forth certain selected consolidated financial data with respect to the Company for each of the five II-1 17 years in the period ended December 31, 1994, derived from audited consolidated financial statements of the Company and Notes thereto. On December 30, 1992, the Company's consensual Plan of Reorganization, which had been approved by the United States Bankruptcy Court in the Southern District of New York in July of that year, became effective. A vertical black line has been placed to separate pre-reorganization consolidated operating statement and balance sheet items from the post-reorganization consolidated operating statement and balance sheet items since they are not prepared on a comparable basis (see Note 1 of Notes to Consolidated Financial Statements). II-2 18 CONSOLIDATED OPERATING STATEMENT ITEMS (in thousands, except for per share amounts)
Year Ended December 31(2) ------------------------------------------------------------- Reorganized Company Predecessor Company -------------------- ------------------------------- 1994(1) 1993 1992 1991 1990 ---- ---- ---- ---- ---- Net Revenue $24,039 $22,790 $ 53,957 $48,452 $48,150 Operating Expenses 14,962 16,335 39,567 37,182 37,146 Corporate Expenses 4,475 3,649 4,973 6,123 5,189 Other Expense (Income) - Net (16,245) 539 (35) 12,925 19,535 Interest Expense 813 1,485 17,768 41,473 40,184 Amortization of Debt Discount and Deferred Debt Expense 646 766 1,004 2,039 2,534 Depreciation and Amortization 3,312 2,343 4,873 5,132 4,957 Unrealized Noncash (Recovery) Loss on Marketable Securities(3) Share of Loss of Partially Owned Companies - 1,118 2,934 9,005 9,546 ------- ------- -------- -------- -------- Income (Loss) Before Reorganization Items, Income Taxes, and Extraordinary Items 16,076 (3,591) (16,981) (56,951) (71,831) Reorganization Items - - (5,983) - - ------- ------- -------- -------- -------- Income (Loss) Before Income Taxes and Extraordinary Items 16,076 (3,591) (22,964) (56,951) (71,831) Income Tax (Expense) Benefits (1,652) (124) (499) 327 (591) ------- ------- -------- -------- -------- Income (Loss) Before Extraordinary Items 14,424 (3,715) (23,463) (56,624) (72,422) Extraordinary Items (Net of Income Taxes): Gain on Early Extinguishments of Debt - 2,010 - - 5,287 Gain on Forgiveness of Debt and Partial Sale of Subsidiary - - 312,678 - - ------- ------- -------- -------- -------- Net Income (Loss) $14,424 ($1,705) $289,215 ($56,624) ($67,135) ======= ======= ======== ======== ======== Per Share Amounts(4): Income (loss) Before Extraordinary Items $1.44 ($0.31) Extraordinary Items - 0.17 ----- ----- Net Income (Loss) $1.44 (0.14) ===== =====
(1) Reflects results of operations of WHTM-TV since its acquisition during September 1994 and the results of the properties disposed of through their respective dates of sale. See Notes to 2 and 3 to Consolidated Financial Statements. (2) Due to the acquisition and dispositions discussed under "Business-Recent Developments," the borrowings incurred to effect such acquisition, the retirement of the Company's Secured Notes, the consummation of the Plan of Reorganization and the adoption of Fresh Start Reporting, the Company's historical results should not be regarded as indicative of its future results. (3) See Note 1 of Notes to Consolidated Financial Statements. (4) Per share amounts for the Predecessor Company are neither comparable nor meaningful due to the forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting. II-3 19 CONSOLIDATED BALANCE SHEET ITEMS (in thousands, including notes)
As of December 31 ---------------------------------------------------------------- Reorganized Company Predecessor Company --------------------------------- ------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Total Current Assets $ 9,093 $8,925 $28,494 $18,464 $23,895 Total Assets 90,852 37,272 74,327 92,347 114,887 Total Current Liabilities(1) 9,076 3,292 11,373 338,274 297,605 Long-Term Debt(2) 21,310 3,200 22,100 41,198 45,310 Shareholders' Equity (Deficit) 39,079 30,705 40,646 (287,823) (231,199)
- ----------------------------------- (1) Net of unamortized original issue discount of $5,124 and $6,203 as of December 31, 1991 and 1990, respectively. (2) Net of unamortized original issue discount of $8,705 as of December 31, 1992, respectively. II-4 20 ITEM 7. Management's Discussion and Analysis of Financial Condition and Result of Operations. The Company reorganized and emerged from bankruptcy proceedings on December 30, 1992 and adopted Fresh Start Reporting in accordance with the guidelines established by the American Institute of Certified Public Accountants in Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code". Under Fresh Start Reporting, assets and liabilities were recorded at their estimated fair market value and the historical deficit was eliminated. Accordingly, the Company's financial statements have been prepared as if it is a new reporting entity and a vertical black line has been placed to separate the pre- reorganization consolidated statements of operations and cash flows from the post-reorganization consolidated statements of operations and cash flows since they are not prepared on a comparable basis. Due to the acquisition and dispositions discussed under "Business - Recent Developments," the borrowings incurred to effect the acquisition, the retirement of the Company's Secured Notes, the consummation of the Plan of Reorganization and the adoption of Fresh Start Reporting, the Company's historical results of operations should not be regarded as indicative of its future results. The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto. RESULTS OF OPERATIONS - GENERAL The comparability of results for future periods will be affected by the acquisition and dispositions during 1994 (see Notes 2 and 3 of Notes to Consolidated Financial Statements) and by the nature and timing of any future acquisitions or dispositions. Future acquisitions could substantially increase the Company's operating expenses, depreciation and amortization charges and, if additional financing is required, interest expense, as well as increasing revenues. For these reasons, the results of the Company's historical operations may not be comparable from period to period or indicative of results in the future. 1994 COMPARED TO 1993 The Company's net revenue, operating expenses, depreciation and amortization, and interest expense for the year ended December 31, 1994 are not comparable to the year ended December 31, 1993 due to the acquisition of WHTM-TV and the borrowings under the Amended Line of Credit to effect such acquisition, and the dispositions of the Company's radio properties and other assets (see Notes 2 and 3 of Notes to Consolidated Financial Statements). During 1994, net revenue increased by 5% to $24.0 million from $22.8 million. This increase was due to the acquisition of WHTM-TV during September of 1994 which resulted in an increase in television segment revenues of 42.7% to $16.8 million from $11.7 million during 1993. This II-5 21 increase was partially offset by a decline in net revenue from radio and other segment to $7.3 million from $11.0 million. Television revenues during 1994 were impacted by a large influx of political dollars which contributed to increases in the Company's stations. Operating expenses of the Company decreased overall to $15.0 million from $16.3 million due to the dispositions and despite the acquisition largely as a result of the higher operating margins in television broadcasting as compared to radio broadcasting. Depreciation and amortization expense rose to $3.3 million from $2.3 million primarily as a result of the write off of the portion of the reorganization value remaining on the Company's balance sheet after adjustment for dispositions (see Note 1(e) of Notes to Consolidated Financial Statements) and amortization of intangibles associated with the acquisition of WHTM-TV. The Company recognized net income of approximately $14.4 million in 1994, primarily as a result of the net gains on the sales of properties during the year of approximately $17.2 million. Additionally, the Company did not have a share of loss of partially owned companies since it disposed of its interest in PriCellular Corporation during the fourth quarter of 1993 and interest expense decreased by approximately $670,000 due to the retirement of the Secured Notes at the end of 1993. For a substantial portion of 1994, the Company had little or no long-term debt outstanding until the acquisition of WHTM-TV during September of 1994. These improvements were offset, in part, by the increase in depreciation and amortization noted above, and by an increase in corporate expenses of approximately $800,000 and an increase in income taxes of $1.5 million. The increase in corporate expenses was primarily attributable to increased legal, consulting and fees of investment advisors due to the acquisition of WHTM-TV and the exploration by the Company of various business opportunities, as well as to the write off of deferred compensation attributable to an employment agreement related to the Plan of Reorganization which was renegotiated. The increase in income taxes was attributable mainly to the state tax consequences of gains the Company recognized on the sale of properties. The Company had net income per share according to generally accepted accounting principles of $1.44 in 1994, as opposed to a net loss per share of $.14 in 1993. During 1993 net loss includes an extraordinary gain of $.17 due to the extinguishment of debt. No such extraordinary item existed during 1994. 1993 COMPARED TO 1992 The Company's net revenue, operating expenses and depreciation and amortization for the year ended December 31, 1993 are not comparable to the year ended December 31, 1992 due to the sale of 75 percent of its stock of The New York Law Publishing Company as part of the Plan. The Company's net revenue decreased by approximately $31.2 million and operating expenses by $23.2 million II-6 22 as the result of that sale. However, net revenue from the broadcasting segment increased by $1.5 million or 7.1 percent, due to an overall improvement in the market for broadcast advertising, the impact of political revenues and an improvement in market shares at certain of the Company's properties. Operating expenses for the broadcasting segment increased 4% primarily as the result of programming additions at the Company's radio properties. The Company's corporate expenses decreased from 1992 primarily because professional fees and administrative expenses incurred during the Company's reorganization negotiations, excluding those that are classified as reorganization items, decreased during 1993. Interest expense and the amortization of debt discount during 1993 decreased from 1992 primarily because the Company's long-term debt was substantially reduced as a result of its Plan of Reorganization. Additionally, approximately $23.2 million face amount of the new Secured Notes was retired in October 1993, further reducing those expenses. The Company's share of loss of partially owned companies decreased in 1993 primarily because the Company ceased to record losses on its share of PriCellular Corporation, once that investment was reduced to its realizable value of $11 million, the amount that the Company sold it for in October of 1993. The decrease was offset, in part, by losses related to The New York Law Publishing Company which was accounted for under the equity method in 1993. The Company's "Other (income) expense, net" decreased to an expense of $539,000 in 1993, as a result of the purchase of 2,249,086 shares of the Company's Common Stock from Huff (see Note 14 of Notes to Consolidated Financial Statements) on which a loss of approximately $4.0 million was recognized. This loss was offset in part by the sale of the Company's preferred and common stock in NTG for $2.4 million which resulted in a gain of the same amount since the stock was carried at a book value of zero. Additionally, the Company had a recovery of approximately $300,000 on the repayment of the note from LL Broadcasting which had been recorded at $2.9 million under Fresh Start Reporting. As a result of the foregoing, the Company recognized a loss before extraordinary items of approximately $3.7 million as compared to a loss of $23.5 million in 1992. The 1992 loss also includes net reorganization expense items totalling approximately $6 million relating to the Company's period under Chapter 11. Extraordinary income for 1992 was approximately $313 million due to the forgiveness of debt and the partial sale of The New York Law Publishing Company as part of the Company's Plan of Reorganization. Extraordinary income for 1993 was approximately $2 million due to the early extinguishment of the Company's Secured Notes. The Company had net loss per share before extraordinary item of $.31 and net loss per share of $.14 for 1993. Per share amounts for prior periods are not comparable or meaningful due to the II-7 23 forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting. LIQUIDITY AND CAPITAL RESOURCES The Company had approximately $1.1 million in cash and cash equivalents and positive net working capital at December 31, 1994. Long-term debt of $22.5 million was owed by the Company as of December 31, 1994. During September 1994, certain of the Company's subsidiaries entered into an Amended Line of Credit with the Bank of Montreal ("BMO"). The Amended Line of Credit was for $45 million, which the Company permanently reduced upon the sale of its West Palm Beach radio stations to $22.5 million. The Amended Line of Credit is permanently reduced quarterly by varying amounts, beginning on September 30, 1995, bears interest at a rate equal to the BMO base rate, as defined, plus up to a maximum of .75% and is secured by the assets of the Company's subsidiaries who are the borrowers on the Amended Line of Credit. See Note 10 of Notes to Consolidated Financial Statements. If the Company's acquisition strategy (see "Business-Acquisitions and Divestitures") continues to be successful the Company may require substantial capital to finance them. The Company may use a variety of sources including the proceeds of debt sold to the public, additional borrowings from banks and other institutional lenders, seller financing, convertible preferred stock and common stock issued at the parent company or subsidiary level. There can be no assurance that the Company will be successful in obtaining funds from those sources. Although the Company has incurred substantial depreciation and amortization expenses as a result of the purchase of its properties, it does not anticipate the need to make major capital expenditures in respect of its existing media properties (see "Properties") during 1995 and it does not believe that such lack of major capital expenditures will affect its competitive position. Capital expenditures for 1994 were approximately $750,000. The Company's sources of funds to serve its debt and meet its other obligations historically have been provided by its liquid assets, cash flow from its operating and investment activities, proceeds from the sale of properties and proceeds from loans and financings. The Company intends to seek to improve cash flow from operations by continuing to impose stringent budget procedures on its media properties and by continuing to seek to increase revenues at its properties in excess of increases in operating expenses. On February 10, 1994, the Company's Board of Directors authorized the repurchase by the Company of up to 2,000,000 shares of its Common Stock. The Company is authorized to make such purchases from time to time in the market or in privately II-8 24 negotiated transactions. During the year ended December 31, 1994, the Company repurchased approximately 996,000 shares pursuant to that authorization. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Price Communications Corporation and Subsidiaries Consolidated Financial Statements are set forth on the following pages of this Part II. INDEX TO FINANCIAL STATEMENTS ___________ PRICE COMMUNICATIONS CORPORATION and SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Auditors II-11-1 Consolidated Balance Sheets at December 31, 1994 and 1993 II-11-3 Consolidated Statements of Operations for Years ended December 31, 1994, 1993 and 1992 II-11-5 Consolidated Statements of Shareholders' Equity (Deficit) for Years ended December 31, 1994, 1993 and 1992 II-11-6 Consolidated Statements of Cash Flows for Years ended December 31, 1994, 1993 and 1992 II-11-7 Notes to Consolidated Financial Statements II-11-9
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. II-9 25 AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Price Communications Corporation and Subsidiaries December 31, 1994 and 1993 and for each of the three years in the period ended December 31, 1994 with Reports of Independent Auditors 26 [KPMG PEAT MARWICK LLP LETTERHEAD] INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Price Communications Corporation: We have audited the accompanying consolidated balance sheet of Price Communications Corporation and subsidiaries as of December 31, 1994, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for the year then ended (Reorganized Company) and the consolidated statements of operations, shareholders' equity (deficit), and cash flows for the year ended December 31, 1992 (Predecessor Company). In connection with our audits of the consolidated financial statements, we have also audited the related financial statement schedules as listed in Part IV, Item 14(a). These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Price Communications Corporation and subsidiaries as of December 31, 1994, and the results of their operations and their cash flows for the years ended December 31, 1994 and 1992 in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information set forth therein. As discussed in note 4 to the consolidated financial statements, effective December 30, 1992, Price Communications Corporation was reorganized under a plan confirmed by the Federal Bankruptcy Court and adopted a new basis of accounting whereby all remaining assets and liabilities were revalued at their estimated fair values. As discussed in notes 1 and 11, Price Communications Corporation and subsidiaries (Reorganized Company) have changed their method of accounting for income taxes in 1992 to adopt the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." /s/ KPMG Peat Marwick LLP ------------------------- KPMG PEAT MARWICK LLP NEW YORK, NEW YORK JANUARY 20, 1995 1 27 Report of Independent Auditors The Board of Directors and Shareholders Price Communications Corporation We have audited the accompanying consolidated balance sheet of Price Communications Corporation and subsidiaries (the "Company") as of December 31, 1993 and the related consolidated statements of operations, shareholders' equity (deficit) and cash flows for the year then ended. Our audit also included the financial statement schedules listed in Part IV, Item 14(a). These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Price Communications Corporation and subsidiaries at December 31, 1993 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information set forth therein. /s/ Ernst & Young LLP March 8, 1994 28 Price Communications Corporation and Subsidiaries Consolidated Balance Sheets
December 31 ----------------------------------- 1994 1993 ----------------------------------- ASSETS: Current assets: Cash and cash equivalents $ 1,136,010 $ 1,395,102 Accounts receivable, net of allowance for doubtful accounts of $395,012 in 1994 and $487,576 in 1993 5,073,450 4,006,801 Film broadcast rights 1,990,874 565,929 Prepaid expenses and other current assets 892,303 2,957,235 ----------------------------------- Total current assets 9,092,637 8,925,067 ----------------------------------- Property and equipment, at cost, less accumulated depreciation (Note 7) 11,499,936 13,728,171 Broadcast licenses and other intangibles, less accumulated amortization of $760,666 in 1994 and $406,441 in 1993 (Notes 1 and 2) 67,528,870 12,797,559 Film broadcast rights 1,867,096 138,383 Notes receivable 817,500 - Other assets 46,091 470,031 Reorganization value in excess of amounts allocable to identifiable assets, less accumulated amortization of $63,805 in 1993 (Note 1) - 1,212,289 ----------------------------------- Total assets $ 90,852,130 $ 37,271,500 ===================================
(continued) 3 29 Price Communications Corporation and Subsidiaries Consolidated Balance Sheets - continued
December 31 ---------------------------------- 1994 1993 ---------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses (Note 8) $ 3,602,734 $ 2,249,404 Accrued interest - 7,233 Current portion of long-term debt (Note 10) 1,209,493 - Other current liabilities (Note 9) 4,264,326 1,035,585 ---------------------------------- Total current liabilities 9,076,553 3,292,222 ---------------------------------- Long-term debt (Note 10) 21,310,356 3,200,000 Deferred tax effect of basis difference arising on acquisition* (Note 11) 18,435,308 - Other liabilities (Note 9) 2,950,585 74,747 Commitments and contingencies (Note 16) Shareholders' equity (Notes 14 and 15): Common stock, par value $.01 per share; authorized 40,000,000 shares; outstanding 8,970,888 shares in 1994 and 9,883,717 shares in 1993 89,709 98,837 Additional paid-in capital 26,270,661 32,310,285 Retained earnings (deficit) 12,718,958 (1,704,591) --------------------------------- Total shareholders' equity 39,079,328 30,704,531 --------------------------------- Total liabilities and shareholders' equity $ 90,852,130 $ 37,271,500 =================================
*The Company also has net operating loss carryforwards which may mitigate federal income taxes, if any, resulting from disposition of the acquired assets during the carryforward period (see Note 11). See accompanying notes to consolidated financial statements. 4 30 Price Communications Corporation and Subsidiaries Consolidated Statements of Operations
Year ended December 31 -------------------------------------------------- Reorganized Company Predecessor ------------------------------ Company 1994 1993 1992 ------------------------------ ------------- Revenue $ 28,053,341 $ 26,010,294 $ 57,178,019 Agency and representatives' commissions 4,014,209 3,220,102 3,221,385 Net revenue ------------------------------ ------------- 24,039,132 22,790,192 53,956,634 ------------------------------ ------------- Operating expenses 14,961,399 16,334,761 39,567,392 Corporate expenses 4,474,787 3,648,524 4,973,287 Other (income) expense, net (Note 12) (16,244,568) 539,289 (35,492) Interest expense (contractual interest was $43,105,988 in 1992) 813,493 1,485,389 17,768,032 Amortization of debt discount and deferred debt expense 645,835 766,075 1,003,578 Depreciation and amortization 3,312,049 2,343,015 4,873,136 Unrealized noncash loss (recovery) on marketable securities - 145,884 (145,884) Share of loss of partially owned companies (Notes 5 and 6) - 1,118,293 2,933,763 ------------------------------ ------------- 7,962,995 26,381,230 70,937,812 ------------------------------ ------------- Income (loss) before reorganization items, income taxes and extraordinary item 16,076,137 (3,591,038) (16,981,178) Reorganization items: Interest income - - 357,000 Professional fees and other - - (1,312,579) Valuation adjustment (Note 1) - - (5,026,967) Income (loss) before income taxes and ------------------------------ ------------- extraordinary item 16,076,137 (3,591,038) (22,963,724) Income tax expense (Note 11) (1,652,588) (123,885) (499,326) ------------------------------ ------------- Income (loss) before extraordinary item 14,423,549 (3,714,923) (23,463,050) Extraordinary item, net of income taxes of $0 in 1993 and $900,000 in 1992 (Notes 4, 10, and 11) - 2,010,332 312,678,036 ------------------------------ ------------- Net income (loss) $ 14,423,549 $ (1,704,591) $ 289,214,986 Income (loss) per share (Note 1): ============================== ============= Income (loss) before extraordinary item $ 1.44 $ (.31) * Extraordinary item - .17 * ------------------------------ ------------- Net income (loss) $ 1.44 $ (.14) * ============================== =============
*Per share amounts for the Predecessor Company are neither comparable nor meaningful due to forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting. See accompanying notes to consolidated financial statements. 5 31 Price Communications Corporation and Subsidiaries Consolidated Statements of Shareholders' Equity (Deficit) Years ended December 31, 1994, 1993 and 1992
Predecessor Company ------------------------------------------------ Common Stock Junior Common Stock ------------------------------------------------ No. of Par Value No. of Par Shares Shares Value ------------------------------------------------- Balance, December 31, 1991 9,028,890 $90,289 500,000 $5,000) Net income - - - - Treasury stock (552,182) (5,522) - - Reorganized Company common stock issued on conversion of Predecessor Company common stock and junior common stock (8,476,708) (84,767) (500,000) (5,000) Reorganized Company common stock issued on conversion of debentures - - - - Elimination of deficit under Fresh Start Reporting - - - - REORGANIZED COMPANY: ------------------------------------------------- Balance, December 31, 1992 - - - - Net loss - - - - Fractional shares issued on conversion of Predecessor Company common stock - - - - Purchase and retirement of common stock - - - - Stock options exercised - - - - ------------------------------------------------- Balance, December 31, 1993 - - - - Net income - - - - Purchase and retirement of common stock - - - - Stock options exercised - - - - ------------------------------------------------ Balance, December 31, 1994 - $ - - $ - ================================================ Predecessor Company ----------------------------------------------- Reorganized Company Treasury Stock Common Stock ----------------------------------------------- No. of Par Value No. of Par Value Shares Shares ----------------------------------------------- Balance, December 31, 1991 608,800 $(489,298) - $ - Net income - - - - Treasury stock (608,800) 489,298 - - Reorganized Company common stock issued on conversion of Predecessor Company common stock and junior common stock - - 666,027 6,660 Reorganized Company common stock issued on conversion of debentures - - 11,443,556 114,436 Elimination of deficit under Fresh Start Reporting - - - - REORGANIZED COMPANY: ----------------------------------------------- Balance, December 31, 1992 - - 12,109,583 121,096 Net loss - - - - Fractional shares issued on conversion of Predecessor Company common stock - - 2,168 22 Purchase and retirement of common stock - - (2,249,089) (22,491) Stock options exercised - - 21,055 210 ----------------------------------------------- Balance, December 31, 1993 - - 9,883,717 98,837 Net income - - - - Purchase and retirement of common stock - - (996,092) (9,961) Stock options exercised - - 83,263 833 ----------------------------------------------- Balance, December 31, 1994 - $ - 8,970,888 $ 89,709 =============================================== Additional Retained Paid-in Earnings Capital (Deficit) Total ----------------------------------------------------- Balance, December 31, 1991 $28,393,444 $(315,823,065) $(287,823,630) Net income - 289,214,986 289,214,986 Treasury stock (438,272) - 45,504 Reorganized Company common stock issued on conversion of Predecessor Company common stock and junior common stock 883,107 - 800,000 Reorganized Company common stock issued on conversion of debentures 38,295,115 - 38,409,551 Elimination of deficit under Fresh Start Reporting (26,608,079) 26,608,079 - REORGANIZED COMPANY: ------------------------------------------------------ Balance, December 31, 1992 40,525,315 - 40,646,411 Net loss - (1,704,591) (1,704,591) Fractional shares issued on conversion of Predecessor Company common stock (22) - - Purchase and retirement of common stock (8,271,014) - (8,293,505) Stock options exercised 56,006 - 56,216 ----------------------------------------------------- Balance, December 31, 1993 32,310,285 (1,704,591) 30,704,531 Net income - 14,423,549 14,423,549 Purchase and retirement of common stock (6,261,103) - (6,271,064) Stock options exercised 221,479 - 222,312 ----------------------------------------------------- Balance, December 31, 1994 $26,270,661 $ 12,718,958 $ 39,079,328 =====================================================
See accompanying notes to consolidated financial statements. 6 32 Price Communications Corporation and Subsidiaries Consolidated Statements of Cash Flows
Year ended December 31 ------------------------------- Reorganized Company ------------------------------- 1994 1993 ------------------------------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income (loss) $ 14,423,549 $ (1,704,591) ------------------------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Items not affecting cash: Amortization of debt discount and deferred debt expense 645,835 766,075 Depreciation and amortization 3,312,049 2,343,015 Share of loss of partially owned companies - 1,118,293 Loss on disposition of equipment 47,529 425 Deficiency of film broadcast rights amortization over payments - - Unrealized noncash loss (recovery) on marketable securities - 145,884 Valuation adjustment, net of working capital valuation - - Change in assets and liabilities, net of effects of reorganization: Decrease (increase) in net accounts receivable 307,979 (354,058) Decrease (increase) in prepaid expenses and other assets 1,581,117 (297,915) Decrease in film broadcast rights 536,910 209,948 Decrease in due from broker/dealer - - Increase (decrease) in accounts payable and accrued expenses 1,563,455 (1,859,013) (Decrease) increase in accrued interest payable, net of forgiveness (1,023,932) (343,602) Increase (decrease) in other liabilities 1,013,375 (1,080,826) Reclassification of transactions to investing and financing activities: (17,219,231) - Gain on sale of properties, net - 3,976,597 Loss on purchase of common stock - (2,010,332) Gain on early extinguishment of debt - - Gain on forgiveness of debt and partial sale of - (6,609) subsidiary 737,500 (2,730,432) Gain on sale of securities ---------------------------- Reserve (recovery) on notes receivable Total adjustments (8,497,414) (122,550) ---------------------------- Net cash provided by (used in) operating activities 5,926,135 (1,827,141) ---------------------------- CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES: Sale of businesses and equipment, net of cash retained 32,451,283 11,000,214 Investment in businesses, net of cash acquired (50,270,793) (454,337) Purchases of securities under agreements to resell - (8,050,811) Capital expenditures (751,965) (577,918) Purchase of marketable securities - (36,704,873) Proceeds from sale of marketable securities - 54,394,512 (Disbursements of) proceeds from notes receivable (390,000) 5,630,432 ---------------------------- Net cash (used in) provided by investing activities (18,961,475) 25,237,219 ============================ Year ended December 31 --------------- Predecessor Company 1992 --------------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income (loss) $ 289,214,986 --------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Items not affecting cash: Amortization of debt discount and deferred debt expense 1,003,578 Depreciation and amortization 4,873,136 Share of loss of partially owned companies 2,933,763 Loss on disposition of equipment 364,024 Deficiency of film broadcast rights amortization over payments (103,320) Unrealized noncash loss (recovery) on marketable securities (145,884) Valuation adjustment, net of working capital valuation 6,732,774 Change in assets and liabilities, net of effects of reorganization: Decrease (increase) in net accounts receivable (959,580) Decrease (increase) in prepaid expenses and other assets 395,910 Decrease in film broadcast rights 129,953 Decrease in due from broker/dealer 1,410,960 Increase (decrease) in accounts payable and accrued expenses 1,028,242 (Decrease) increase in accrued interest payable, net of forgiveness 15,243,681 Increase (decrease) in other liabilities (514,252) Reclassification of transactions to investing and financing activities: Gain on sale of properties, net - Loss on purchase of common stock - Gain on early extinguishment of debt (312,678,036) Gain on forgiveness of debt and partial sale of (6,940) subsidiary (387,588) Gain on sale of securities ------------ Reserve (recovery) on notes receivable Total adjustments (280,679,579) ------------ Net cash provided by (used in) operating activities 8,535,407 ------------ CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES: Sale of businesses and equipment, net of cash retained 4,738,627 Investment in businesses, net of cash acquired - Purchases of securities under agreements to resell - Capital expenditures (704,681) Purchase of marketable securities (10,476,315) Proceeds from sale of marketable securities 1,034,640 (Disbursements of) proceeds from notes receivable 654,707 ------------ Net cash (used in) provided by investing activities (4,753,022)
============ (continued) 7 33 Price Communications Corporation and Subsidiaries Consolidated Statements of Cash Flows (continued)
Year ended December 31 ------------------------------------------------------- Reorganized Company Predecessor --------------------------------- Company 1994 1993 1992 --------------------------------- ------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Repurchases and payments of long-term debt - (20,846,643) (5,300,960) Net borrowings under (repayment of) repurchase agreements - (4,930,083) 4,930,083 Payment of line of credit origination fee (475,000) - - Borrowings under line of credit agreements 45,000,000 3,020,065 - Repayments under line of credit agreements (25,700,000) - - Purchase of common stock (6,271,064) (8,434,058) - Proceeds from stock options exercised 222,312 56,216 - --------------------------------- ------------ Net cash provided by (used in) financing activities 12,776,248 (31,134,503) (370,877) --------------------------------- ------------ Net (decrease) increase in cash and cash equivalents (259,092) (7,724,425) 3,411,508 Cash and cash equivalents at beginning of year 1,395,102 9,119,527 5,708,019 --------------------------------- ------------ Cash and cash equivalents at end of year $ 1,136,010 $ 1,395,102 $ 9,119,527 ================================= ============
See accompanying notes to consolidated financial statements. 8 34 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Presentation - The consolidated financial statements include the accounts of Price Communications Corporation (the "Company" or "Price") and its subsidiaries. All significant intercompany items and transactions have been eliminated. b. Fresh Start Reporting - The Company reorganized and emerged from Chapter 11 bankruptcy proceedings on December 30, 1992 (the "Effective Date"-see Note 4), and adopted Fresh Start Reporting in accordance with the guidelines established by the American Institute of Certified Public Accountants in Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Under Fresh Start Reporting, assets and liabilities are recorded at their estimated fair market value and the historical deficit is eliminated. Accordingly, the Company's financial statements were prepared as if it were a new reporting entity (referred to as the "Reorganized Company") as of the Effective Date. A vertical black line has been placed to separate the consolidated statements of operations and cash flows of the Company prior to the reorganization (referred to as the "Predecessor Company") from those of the Reorganized Company, since they are not prepared on a comparable basis. The Company's operations for the two-day period of December 30 and December 31, 1992 were insignificant. Accordingly, December 31, 1992 was used as the cut-off date for financial reporting purposes in lieu of the Effective Date. The revaluation of the Company's assets and liabilities as of December 31, 1992 was based on an independent appraisal, modified as appropriate, and resulted in a reduction in net carrying values of assets and liabilities of approximately $5,027,000. c. Depreciation and Amortization - Depreciation is computed on the straight-line method on the basis of estimated useful lives, as follows: Buildings-15 to 25 years Broadcasting equipment-10 to 12 years Leasehold improvements-the life of the underlying lease Furniture and fixtures-3 to 10 years Transportation equipment-3 years 9 35 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) d. Intangible Assets: i. Excess of purchase price over the fair value of net assets acquired includes FCC licenses, station call letters, and goodwill. These assets are integral determinants of a communications property's economic value, and have long and productive lives. In connection with Fresh Start Reporting, unamortized goodwill related to acquisitions prior to December 31, 1992 was eliminated and corresponding FCC licenses were restated at their approximate fair value as of December 31, 1992. The Predecessor Company amortized such intangible assets over a 40-year period, the maximum life allowable under Accounting Principles Board Opinion No. 17. The Reorganized Company continues to amortize such assets over a 40-year life commencing from the original date of acquisition. ii. Deferred expenses associated with debt instruments were amortized under the straight-line method over their respective lives. Debt discounts were amortized under the effective interest method. As of December 31, 1992, the unamortized carrying value of deferred debt expense and unamortized debt discount associated with debt forgiven or exchanged under the Company's Plan of Reorganization (the "Plan"-see Note 4) was eliminated. e. Reorganization Value in Excess of Amounts Allocable to Identifiable Assets-The reorganization value in excess of amounts allocable to identifiable assets, which resulted from the implementation of Fresh Start Reporting was amortized using the straight-line method over 20 years. During the year ended December 31, 1994, the portion of this asset remaining after adjustment for dispositions (approximately $670,000) was written off. f. Per Share Data-Primary income per common share is based on income for the period divided by the weighted average number of shares of common stock and common stock equivalents outstanding, which was approximately 9.9 million shares for 1994 and 11.9 million shares for 1993. Per share amounts for the Predecessor Company are not presented because they are neither comparable nor meaningful due to forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting. 10 36 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) g. Allowance for Doubtful Accounts-The Company provides an allowance for doubtful accounts based on reviews of its customers' accounts. Included in operating expense is bad debt expense of approximately $319,000, $264,000, and $514,000 for the years ended December 31, 1994, 1993, and 1992, respectively. h. Barter Transactions-Revenue from barter transactions (advertising provided in exchange for goods and services) is recognized as income when advertisements are broadcast, and merchandise or services received are charged to expense when received or used. i. Advertising Revenues-Sales of advertisements are recognized as income when advertisements are broadcasted or printed. j. Film Broadcast Rights-The capitalized cost of film broadcast rights is amortized on the basis of the estimated number of showings or, if unlimited showings are permitted, over the term of the broadcast license agreements. Unamortized film broadcast rights are classified as current or noncurrent on the basis of their estimated future usage. Amortization of film broadcast rights is included in operating expenses and amounted to approximately $1,077,000, $800,000, and $940,000 for the years ended December 31, 1994, 1993, and 1992, respectively. k. Cash and Cash Equivalents-For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments, including Treasury bills, purchased with maturities of three months or less at the time of purchase to be cash equivalents. l. Marketable Securities-Dividend and interest income are accrued as earned. Net realized gains (losses) on the sale of marketable securities are based upon weighted average cost (see Note 12). 11 37 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) m. Income Taxes-Effective December 31, 1992, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109"), issued by the Financial Accounting Standards Board (see Note 11). The cumulative effect of this change had no significant impact on the Company's consolidated financial statements, including income tax expense. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Prior to December 31, 1992, the Company accounted for income taxes pursuant to the deferred method under APB Opinion 11. Under the deferred method, deferred income taxes were recognized for income and expense items that were reported in different years for financial reporting purposes and income tax purposes using the tax rate applicable for the year of calculation. 2. ACQUISITION OF WHTM-TV On September 16, 1994, the Company acquired all of the outstanding shares of the corporation which owns all of the assets of WHTM- TV, the ABC affiliate serving the Harrisburg-York-Lancaster-Lebanon, Pennsylvania television market for approximately $47 million plus a working capital adjustment of approximately $4 million. The acquisition has been accounted for under the purchase method, and accordingly, the operating results of WHTM-TV have been included in the consolidated operating results since the date of acquisition. The purchase price is subject to adjustment in the Company's favor based upon resolution of contemplated arbitration proceedings. Funds for the acquisition were provided by cash on hand and a credit facility from the Bank of Montreal ("BMO") of $45 million (see Note 10), which was reduced to $22.5 million upon the sale of the Company's radio properties in West Palm Beach during October of 1994 (see Note 3). The acquisition resulted in intangible assets, primarily broadcast licenses of approximately $44.2 million and goodwill of approximately $19.7 million, both of which are being amortized over a forty year period. Condensed pro forma financial information regarding this acquisition and dispositions during 1994 are included under Note 3. 12 38 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 3. DISPOSITIONS In February 1994, the Company sold its outdoor advertising business for a total of $875,000 in cash and notes receivable. (see Note 5). This disposition resulted in a pretax loss of $350,000. In April 1994, the Company sold substantially all of the assets of its radio properties, WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash. The Company realized a pretax gain of approximately $3.2 million on this transaction. In May 1994, the Company sold all of the stock of Eimar Realty Corporation, its then wholly owned subsidiary, owning a building in Nashville, Tennessee, to TLM Corporation, a former subsidiary of the Company. The purchase price was $815,000 including a note from the purchaser of $540,000 (see Note 5). The Company's pretax gain on the transaction was de minimis. In October 1994, the Company sold substantially all of the assets, together with certain liabilities of radio stations WBZT-AM and WIRK-FM, West Palm Beach, Florida, for approximately $23 million in cash. The Company realized a pretax gain of approximately $13.5 million on this transaction. The net proceeds were used to retire $22.5 million under the BMO credit facility (see Note 10). In October 1994, the Company sold its building in Red Bank, New Jersey for $1.7 million in cash. The Company realized a de minimis gain on the sale. In November 1994, the Company sold substantially all of the assets of radio stations WOWO- AM and WOWO-FM in Fort Wayne and Huntington, Indiana, respectively, for $2.3 million in cash. The Company recognized a pretax gain on the sale of approximately $.8 million. The gains and losses on the dispositions outlined above have been included in other (income) expense, net on the Company's statement of operations for the year ended December 31, 1994. 13 39 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 3. DISPOSITIONS (CONTINUED) The following unaudited pro forma financial information has been prepared based on the assumption that the aforementioned 1994 acquisition had occurred on January 1, 1994 and 1993:
Year Ended December 31, ----------------------------------------------------------- 1994 1993 ---------------------------------------- ------------- Reflects Acquisition & Reflects REFLECTS Dispositions* Acquisitions ACQUISITIONS ---------------------------------------- ------------- Net revenue $ 26,390,566 $ 33,623,990 $ 35,730,813 Income (loss) before extraordinary item (1,743,754) 14,217,887 (3,400,873) Net income (loss) (1,743,754) 14,217,887 (1,342,697) Income (loss) before extraordinary item per share $ (.17) $ 1.42 $ (.29) Net income (loss) per share $ (.17) $ 1.42 $ (.11) ---------------------------------------- -------------
*Further reflects the sales during 1994 of radio stations and other properties as if they had occurred on January 1, 1994. The pro forma information reflects adjustments for changes in depreciation, amortization, interest expense and income taxes resulting from the acquisition and dispositions. The proforma financial information is not necessarily indicative either of results of operations that would have occurred had the acquisition and dispositions been made at the beginning of the periods, or of future results of operations of the Company. 14 40 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 4. REORGANIZATION On December 30, 1992, The Plan of Reorganization ("the Plan"), which had been approved by the United States Bankruptcy Court for the Southern District of New York became effective. Under the Plan, the following occurred: a. Holders of approximately $31 million principal amount of the Company's senior debt received new $31 million face amount seven-year 5% Senior Secured Notes (the "Secured Notes"-see Notes 6 and 10). b. Apollo Investment Fund, L.P. and James Finkelstein purchased 75% of Alexandra Publishing Corporation, which owns The New York Law Publishing Company, in exchange for the cancellation of approximately $19 million principal amount of senior debt, the payment to the Company of $7.5 million in cash and the assumption of certain liabilities of the Company of approximately $45 million. See note 14 for subsequent disposal of the remaining 25% interest in the publishing subsidiaries. c. The holders of the existing subordinated debt received 94.5% of the common stock of Price. d. Shareholders received shares which constituted 3.5% of the common stock of the Reorganized Company, and Robert Price, President of the Company, received 2% of such common stock in exchange for the junior common stock, all of which was held by Mr. Price. The gain on the partial sale of publishing companies and the gain from cancellation of indebtedness resulted in extraordinary income of approximately $312.7 million which is net of a tax provision of $900,000 relating to the sale of the publishing companies. The gain resulting from the forgiveness of debt is not taxable for Federal income tax purposes. In a related transaction, on August 5, 1992, the Company exchanged its interest in TLM Corporation (until then a 90.7% owned subsidiary) for 90.7% of the assets of TLM Corporation. These assets consisted of cash and common stock and certain public debt securities of the Company. The Company's loss from the transaction was de minimis. 15 41 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 5. NOTES RECEIVABLE Investments in notes receivable include the following: a. In connection with the sale in 1987 of seven radio stations to Fairmont Communications Corporation ("Fairmont") for an aggregate sale price of $120 million, the Company loaned $50 million to Fairmont (the "Fairmont Notes") and acquired a 27% equity interest in Fairmont. The Fairmont Notes were issued in three series of 12 1/2% increasing rate subordinated notes due in 1992, extendible at Fairmont's option to 1994. Interest on the notes was payable quarterly in cash or additional notes at Fairmont's election. During 1992, Fairmont filed for voluntary relief under Chapter 11 of the U.S. Bankruptcy Code. At that time the Company ceased to record additional notes related to interest paid in kind since it was not entitled to interest after that date under the Bankruptcy Code. The $94.8 million principal amount of Fairmont Notes owned by the Company (which includes accrued interest paid in additional Fairmont Notes) and the Company's equity investment in Fairmont had no book value as of December 31, 1994 and 1993. During September 1993, the United States Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 Plan of Reorganization (the "Fairmont Plan") for Fairmont and its subsidiaries. Essentially, the Fairmont Plan provides for the orderly liquidation of the assets of Fairmont and its subsidiaries, and the distribution of the proceeds derived therefrom according to the relative priorities of the parties asserting interests therein. The Company believes that the level of asset sales will be sufficiently high to provide for some recovery upon the Fairmont Notes, although the exact amount of any such recovery is uncertain at this time. b. During February 1994, in connection with the sale of its outdoor advertising business, the Company received a note from the buyer, Midwest Media, Inc., for a total of $675,000 (see Note 3). The note bears interest at the rate of 8% and is payable quarterly. Principal is payable in quarterly installments of varying amounts beginning in November 1994 through November 1997 with the balance of the principal of $465,000 due in February 1998. During 1994, the Company set up a partial reserve of $337,500 against this note. 16 42 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 5. NOTES RECEIVABLE (CONTINUED) c. During May 1994, in connection with the sale of Eimar Realty Corporation, the Company received a note from the buyer, TLM Corporation (a former subsidiary of the Company-see Note 3), in the amount of $540,000. The note bears interest at the rate of 5% per annum, payable quarterly, with principal payable on May 20, 1998. 6. INVESTMENT IN PARTIALLY OWNED COMPANIES a. Alexandra Publishing Corporation ("Alexandra") On December 30, 1992, the Company, in connection with its Plan of Reorganization, sold 75% of Alexandra (see Note 4). The Company retained a 25% interest in Alexandra which owns 100% of The New York Law Publishing Company. In November 1993, in connection with the repurchase of common stock (see Note 14), the Company transferred its remaining 25% interest in Alexandra, which had a carrying value of approximately $3.8 million. For the year ended December 31, 1992, these subsidiaries were consolidated in the statements of operations and cash flows of the Predecessor Company. Based upon audited financial information, Alexandra had net revenue, operating expenses, and depreciation and amortization of approximately $32.6 million, $23.9 million (including intercompany expenses of $1.3 million), and $1.6 million, respectively, for the year ended December 31, 1992. For the year ended December 31, 1993, the 25% interest in such subsidiaries was accounted for by the equity method and the Reorganized Company recognized a charge to operations of approximately $230,000 for its period of ownership. b. PriCellular Corporation ("PriCellular") During 1992 and 1993, the Company accounted for its investment in PriCellular under the equity method of accounting as it believed its control in PriCellular to be temporary. The Company recognized 75% of PriCellular's losses as a charge to operations to the extent of its investment in PriCellular representing $2.9 million for the year ended December 31, 1992. Prior to Fresh Start Reporting, the Predecessor Company's investment in PriCellular had been reduced to zero book value. In accordance with the court approved Plan, the Company transferred 1% of PriCellular's common stock to Robert Price, reducing the Company's interest to 74%. In connection with fresh start reporting, this investment was reflected at an approximate fair market value of $11.5 million at December 31, 1992. 17 43 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 6. INVESTMENT IN PARTIALLY OWNED COMPANIES (CONTINUED) On October 1, 1993, the Company sold its remaining 74% interest in PriCellular to a subsidiary of PriCellular for $11 million in cash. The proceeds from the sale were used to repurchase a portion of the Secured Notes, in accordance with the terms of the indenture of such notes (see Note 10). During 1993, the Company recognized a charge of approximately $890,000 related to its share of PriCellular's losses through October 1, 1993, and realized no gain or loss from the sale of its interest in PriCellular. 7. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
December 31 1994 1993 --------------------------------- Land $ 685,000 $ 2,328,000 Buildings 2,403,409 3,468,209 Broadcasting equipment 9,487,151 7,720,940 Outdoor fixtures - 801,320 Leasehold improvements 115,000 229,783 Furniture and fixtures 510,252 619,870 Transportation equipment 500,222 432,814 ---------------------------------- 13,701,034 15,600,936 Less, accumulated depreciation (2,201,098) (1,872,765) ---------------------------------- Net property and equipment $ 11,499,936 $ 13,728,171 ==================================
18 44 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following:
December 31 1994 1993 --------------------------------- Accounts payable-suppliers $ 1,594,571 $ 906,770 Accrued professional fees 869,669 299,113 Other 1,138,494 1,043,521 -------------------------------- $ 3,602,734 $ 2,249,404 ================================
9. OTHER LIABILITIES Other liabilities consist of:
December 31 1994 1993 ---------------------------------- Liability for film broadcast rights $ 4,572,569 $ 507,603 Income and franchise taxes payable 2,001,801 522,512 Other 640,541 80,217 ---------------------------------- 7,214,911 1,110,332 Less, amounts due currently 4,264,326 1,035,585 ---------------------------------- $ 2,950,585 $ 74,747 ==================================
19 45 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 10. LONG-TERM DEBT Long-term debt consists of the following notes payable by wholly-owned subsidiaries of the Company at December 31, 1994 and 1993 as follows:
DECEMBER 31 1994 1993 ------------------------------------- Atlantic Broadcasting Corporation, Federal Broadcasting Corporation, Southeast Texas Broadcasting Corporation and Tri-State Broadcasting Corporation: Note payable to BMO under term loan $ 22,500,000 $ - agreement(A) Atlantic Broadcasting Corporation, Southeast Texas Broadcasting Corporation, Texoma Broadcasting Corporation and Tri-State Broadcasting Corporation: Note payable to BMO under term loan agreement(B) - 3,200,000 Other long-term debt 19,849 - ------------------------------------- Total debt 22,519,849 3,200,000 Less amount due currently 1,209,493 - ------------------------------------- $ 21,310,356 $ 3,200,000 =====================================
(A) On September 16, 1994, certain subsidiaries of the Company entered into an Amended and Restated Line of Credit Agreement with BMO (the "Amended Line of Credit"). The Amended Line of Credit was for $45 million, permanently reduced by $22.5 million upon the sale of the Company's radio stations in West Palm Beach (see Note 3) and reduced further quarterly, in varying amounts through the year 2001 as follows: 1995 $ 1.2 million 1996 2.4 million 1997 2.9 million 1998 3.4 million 1999 4.1 million 2000 4.8 million 2001 3.7 million
20 46 Price Communication Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 10. LONG-TERM DEBT (CONTINUED) Borrowings under the Amended Line of Credit bear interest at the BMO Base Rate, as defined, plus up to a maximum of .75%, and are secured by the assets of the subsidiaries, which have a book value of approximately $81.3 million as of December 31, 1994. There is also a fee of .5% on the unused portion, if any, of the Amended Line of Credit. On December 31, 1994 the effective interest rate was 9.25%. The terms of the Amended Line of Credit require the Company to maintain certain financial ratios, restrict the declaration of dividends and require the Company to apply the proceeds from future asset sales to the outstanding balance due. (B) In December 1993, certain subsidiaries of the Company entered into a $10 million Line of Credit Agreement (the "Line of Credit") with BMO. Borrowings under the Line of Credit bore interest at the BMO Base Rate, as defined (or at other rates at the borrowers' option), and were secured by the assets of the subsidiaries. Borrowings of $5.6 million under the Line of Credit were used to retire the remaining Secured Notes issued in connection with the Plan of Reorganization. Also in December 1993, the Company used proceeds of $2.4 million from the sale of its position in Northstar Television Group, Inc. ("NTG") to repay borrowings under the Line of Credit (see Note 12). (C) In connection with the Plan, the Company issued $30,805,000 face amount of 5% Senior Secured Notes. The Company recorded these notes net of a discount of $8,705,000 under Fresh Start Reporting (see Note 1). During October and December 1993, the Company repurchased all of the notes for approximately $20.8 million, plus accrued interest, and realized a gain of approximately $2.0 million, net of taxes of zero. 21 47 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 11. INCOME TAXES As discussed in Note 1, the Company adopted Statement 109 as of December 31, 1992. The cumulative effect of this change had no significant impact on the Company's consolidated financial statements, including tax expense, for the year then ended. Provision (benefit) for income taxes is approximately:
YEAR ENDED DECEMBER 31 1994 1993 1992 ---------------------------------------------------- Current: Federal $ 300,000 $ - $ - State and local 1,489,000 124,000 499,000 ---------------------------------------------------- 1,789,000 124,000 499,000 ---------------------------------------------------- Deferred: Federal (97,000) - - State and local (39,000) - - ---------------------------------------------------- (136,000) - - Tax provision $ 1,653,000 $ 124,000 $ 499,000 ====================================================
In addition, a provision of $900,000, primarily for Federal alternative minimum tax, has been included in extraordinary items for the year ended December 31, 1992 (see Note 4). For the years ended December 31, 1992 and 1993, the Company was unable to utilize the tax benefit of capital and net operating losses, and accordingly, no amounts were provided therefor. For the year ended December 31, 1994, the provision for income taxes differs from the amount computed by applying the federal income tax rate (35%) because of the effect of the following items: Tax at federal income tax rate $ 5,627,000 State taxes, net of federal income tax benefit 942,000 Benefits of utilization of operating loss carryforwards (5,120,000) Amortization of goodwill and other intangibles 309,000 Other (105,000) ------------- $ 1,653,000 =============
22 48 Price Communication Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 11. INCOME TAXES (CONTINUED) The Company had, as of December 31, 1994 and 1993, deferred tax assets which were subject to a valuation allowance of approximately $39,529,000 and $46,031,000, respectively, and deferred tax liabilities of approximately $21,154,000 and $3,943,000, respectively. The allowance has been recognized to offset the related deferred tax asset due to the uncertainty of the realization of benefit of such amount. These deferred tax assets and liabilities consist of the following:
DECEMBER 31 DEFERRED TAX ASSETS 1994 1993 ----------------------------------- Accounts receivable, principally due to allowance for doubtful accounts $ 134,000 $ 166,000 Notes from and investment in partially owned companies 15,251,000 15,251,000 Minimum tax credit carryforward 642,000 642,000 Capital loss carryforwards 14,350,000 19,905,000 Net operating loss carryforwards 11,520,000 13,910,000 Investment tax credit carryforwards 100,000 100,000 Note receivable, principally due to reserves 251,000 - ---------------------------------- $ 42,248,000 $ 49,974,000 ==================================
DECEMBER 31 DEFERRED TAX LIABILITIES 1994 1993 ----------------------------------- Property and equipment, principally due to differences in depreciation and the effect of Fresh Start Reporting $ 2,719,000 $ 3,662,000 Intangible asset FCC license 18,435,000 281,000 ----------------------------------- $ 21,154,000 $ 3,943,000 ===================================
Net operating loss carryforwards aggregating approximately $32.9 million are available for federal income tax purposes at December 31, 1994. These carryforwards expire in the years 2002 through 2006. The Company also has available investment tax credit carryforwards of approximately $100,000 expiring in the year 2000 and capital loss carryforwards of approximately $41 million expiring in the year 1998. A portion of these carryforwards arose prior to the reorganization and are subject to the limitations of Internal Revenue Code Sections 382 and 383. 23 49 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 12. OTHER (INCOME) EXPENSE-NET Other (income) expense-net consists of:
YEAR ENDED DECEMBER 31 1994 1993 1992 --------------------------------------------------- Gains on sales of properties,net (Note 3) $ (17,219,231) $ - $ - Interest income (201,896) (715,918) (543,252) Loss on disposition of equipment 47,529 425 364,024 Reserve (recovery) for losses on notes receivable 737,500 (2,730,432) (387,588) Loss on purchase of common stock (Note 14) - 3,976,597 - Other, net 391,530 8,617 531,324 --------------------------------------------------- $ (16,244,568) $ 539,289 $ (35,492) ===================================================
As of December 31, 1992, in conjunction with the adoption of Fresh Start Reporting, the investment in common and preferred stock of NTG was removed from the Company's consolidated balance sheet since its estimated realizable value was zero (see Note 1). In December 1993, the Company sold its investment in NTG for approximately $2.4 million in cash and recognized a gain of approximately $2.4 million on the sale. 24 50 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 13. SEGMENT DATA The Reorganized Company's business operations are classified into two segments: Television and Radio Broadcasting and Other. The Company sold its radio stations during 1994 and has no current contracts to acquire any other radio stations (see Note 3). The Predecessor Company's business operations included Publishing with Other. The Company's Publishing operations were transferred to third parties in 1992 (see Note 4) and therefore, are no longer consolidated in the Reorganized Company's operations. There are no transfers between segments of the Company. The segment data follows:
YEAR ENDED DECEMBER 31, 1994 -------------------------------------------------------------------- BROADCASTING -------------------------------- TELEVISION RADIO OTHER CONSOLIDATED -------------------------------------------------------------------- Net revenue $ 16,756,288 $ 7,233,424 $ 49,420 $ 24,039,132 Operating expenses 9,651,752 5,250,629 59,018 14,961,399 Depreciation and amortization 2,464,785 577,430 269,834 3,312,049 -------------------------------------------------------------------- Operating income (loss)* $ 4,639,751 $ 1,405,365 $ (279,432) $ 5,765,684 ====================================================================
25 51 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 13. SEGMENT DATA (CONTINUED)
YEAR ENDED DECEMBER 31, 1993 ----------------------------------------------------------------------- BROADCASTING ------------------------------- TELEVISION RADIO OTHER CONSOLIDATED ----------------------------------------------------------------------- Net Revenue $ 11,744,547 $ 10,271,892 $ 773,753 $ 22,790,192 Operating Expenses 7,484,486 8,226,346 623,929 16,334,761 Depreciation and amortization 1,153,860 834,346 354,809 2,343,015 ----------------------------------------------------------------------- Operating income (loss)* $ 3,106,201 $ 1,211,200 $ (204,985) $ 4,112,416 ======================================================================= YEAR ENDED DECEMBER 31, 1992 ----------------------------------------------------------------------- BROADCASTING ------------------------------- PUBLISHING AND TELEVISION RADIO OTHER CONSOLIDATED ----------------------------------------------------------------------- Net revenue $ 11,239,395 $ 9,309,229 $ 33,408,010 $ 53,956,634 Operating expenses 7,570,105 7,544,032 24,453,255 39,567,392 Depreciation and amortization 1,683,309 1,074,407 2,115,420 4,873,136 ----------------------------------------------------------------------- Operating income* $ 1,985,981 $ 690,790 $ 6,839,335 $ 9,516,106 =======================================================================
*Operating income (loss) is before corporate expenses, other (expense) income-net, interest expense, amortization of debt discount and deferred debt expense, unrealized non-cash loss (recovery) on marketable securities, share of loss of partially owned companies, reorganization items, income taxes and extraordinary items. 26 52 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 13. SEGMENT DATA (CONTINUED)
IDENTIFIABLE CAPITAL ASSETS EXPENDITURES ------------------------------------ 1994: Television broadcasting $ 88,645,508 $ 694,159 Radio broadcasting 293,711 50,708 Other 867,500 - Corporate 1,045,411 7,098 ------------------------------------ Consolidated $ 90,852,130 $ 751,965 ==================================== IDENTIFIABLE CAPITAL ASSETS EXPENDITURES ------------------------------------ 1993: Television broadcasting $ 16,208,021 $ 397,604 Radio broadcasting 13,988,511 200,600 Other 3,673,912 50,069 Corporate 3,401,056 3,885 ------------------------------------ Consolidated $ 37,271,500 $ 652,158 ==================================== IDENTIFIABLE CAPITAL ASSETS EXPENDITURES ------------------------------------ 1992: Television broadcasting $ 17,067,971 $ 354,779 Radio broadcasting 17,584,247 253,442 Publishing and other 19,322,971 273,955 Corporate 20,351,715 19,959 ------------------------------------ Consolidated $ 74,326,904 $ 902,135
==================================== 27 53 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 14. SHAREHOLDERS' EQUITY (DEFICIT) a. Refer to notes 1 and 4 for a description of changes to shareholders' equity (deficit) pursuant to the Plan of Reorganization. b. On November 24, 1993, the Company purchased from investment advisory clients of W.R. Huff Asset Management Co., L.P. ("Huff") a block of 2,249,086 shares of its common stock. The purchase price consisted of $3.75 per share in cash, plus the stock of its indirect wholly-owned subsidiary, Price Publishing Corporation, which held the remaining 25% interest in the New York Law Publishing Company (see Note 4). The stock of Price Publishing Corporation had a book value of approximately $3,836,000 at such date which in the opinion of management approximated its fair value (see Note 6). In connection with this transaction, the Company recorded a loss of approximately $3,977,000 reflecting the difference between the value of the cash and stock of Price Publishing Corporation transferred to Huff and the then current trading market price of the common stock. The loss has been included in other expense (income) for 1993 in the accompanying statement of operations (see Note 12), and the common stock purchased from Huff has been treated as constructively retired in the accompanying balance sheet at December 31, 1993. c. In connection with the Plan, warrants on the Company's common stock, originally issued on April 12, 1990, were amended. The warrants will be exercisable for approximately 124,000 shares of the Reorganized Company's common stock at an exercise price of $4.23 per share during the five-year period commencing October 1, 1993. d. In October 1994, the Company's Board of Directors enacted a Stockholders Rights Plan designed to protect the interests of the Company's shareholders in the event of a potential takeover for a price which does not reflect the Company's full value or which is conducted in a manner or on terms not approved by the Board as being in the best interests of the Company and its shareholders. The Board has declared a dividend distribution of One Common Stock Purchase Right on each outstanding share of Common Stock of the Company. The Rights provide, in substance, that should any person or group acquire 20% or more of the Company's Common Stock, each Right, other than Rights held by the acquiring person or group, would entitle its holder to purchase a specified number of Price Communications Corporation common shares for 50% of their then-current market value. In addition, the Rights may be exercised, at the holders option, at a purchase price of $22.50 per share at any time prior to the termination of the Plan. Unless a 20% acquisition has occurred, the Rights may be redeemed by the Company at any time prior to the termination date of the Plan. e. On February 10, 1994, the Company's Board of Directors authorized the repurchase by the Company of up to 2,000,000 shares of its Common Stock. The Company is authorized to make such purchases from time to time in the market or in privately negotiated transactions 28 54 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 14. SHAREHOLDERS' EQUITY (DEFICIT) - CONTINUED when it is legally permissible to do so or believed to be in the best interests of its shareholders. During the year ended December 31, 1994, the Company repurchased approximately 996,000 shares pursuant to that authorization. Repurchased common stock of the Company has been treated as constructively retired in the accompanying balance sheet as of December 31, 1994. 15. STOCK OPTION PLAN A long-term incentive plan, (the "1992 Long Term Incentive Plan") was established under the Plan, which provides for granting incentive stock options, as defined under current tax law, and other stock-based incentives to key employees and officers. The maximum number of shares of the Company that are subject to awards granted under the 1992 Long Term Incentive Plan is 1,000,000. The exercise of such options, other than those granted on December 10, 1992, will be exercisable at a price not less than the fair market value on the date of the grant, for a period up to ten years. New incentive stock options were granted on December 10, 1992 under the 1992 Long Term Incentive Plan to key employees and officers. The number of options issued represents essentially a 1 for 2 reverse split for all previously awarded stock options granted, which were canceled pursuant to the Plan, except for options previously awarded to Robert Price which were surrendered by Mr. Price. Options granted on December 10, 1992 represent 170,911 shares and the exercise price was set at $2.67 per share. The following table sets forth information with respect to the Company's stock options for the years ended December 31, 1994 and 1993:
NUMBER OF SHARES UNDER OPTION OPTION 1994 1993 PRICE RANGE ------------------------------------------- Exercised 83,263 21,055 $ 2.67 Cancelled 30,374 - 2.67-3.75 Granted 562,000 - 3.75 Outstanding 588,993 140,630 2.67-3.75 Reserved for Issuance 306,689 838,315
29 55 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 16. COMMITMENTS AND CONTINGENCIES The Company is involved in various claims and litigation arising in the ordinary course of business. In the opinion of legal counsel and management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial condition. The Company has an employment agreement with Robert Price covering base salary and incentive compensation. The agreement is for a term of three years commencing October 1994 at a base salary of $300,000 and is extendable for periods of three years at the Company's option. Cash performance bonuses and stock options awards are determined solely at the discretion of the Board of Directors or the Stock Option Committee, respectively. The Company and its subsidiaries lease a variety of assets used in their operations, including office space and antenna sites. Renewal options are available in the majority of leases. The following is a schedule of the Company's minimum rental commitment for operating leases of real and personal property for each of the five years subsequent to 1994 and in the aggregate:
OPERATING LEASES ----------- Year: 1995 $ 218,880 1996 214,776 1997 217,356 1998 216,415 1999 216,415 Thereafter - ----------- Total minimum lease payments $ 1,083,842 ===========
Rental expense for operating leases was approximately $312,000, $312,000, and $1,468,000 for the years ended December 31, 1994, 1993, and 1992, respectively. At December 31, 1994, the Company is committed to the purchase of film broadcast rights of various syndicated programming aggregating approximately $1,602,000, $1,141,000, $378,000, and $111,000 for the years 1995, 1996, 1997, and 1998, respectively. 30 56 Price Communications Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 17. SUPPLEMENTAL CASH FLOW INFORMATION The following is supplemental disclosure cash flow information for the years ended December 31, 1994, 1993, and 1992:
1994 1993 1992 ----------------------------------------------------------- Cash paid for: Income taxes paid, net of refunds $ 240,102 $ 158,878 $ 255,225 Interest paid 813,493 1,828,991 3,170,272 Chapter 11 items: Interest received - - 357,000 Professional and administrative expenses paid - 26,085 505,144 Noncash investing activities: Fairmont (Note 5): Notes received - - 8,983,281 Deferred income - - (8,983,281) NTG (Note 12): Dividends accumulated - - 11,030,660 Deferred income - - (11,030,660) Noncash operating activities: Barter Revenue 1,117,218 1,475,733 1,569,802 Barter Expense 962,356 1,421,342 1,646,539
31 57 PART III The information called for by Items 10, 11, 12 and 13 is incorporated herein by reference from the following portions of the definitive proxy statement to be filed by the Company in connection with its 1995 Meeting of Shareholders.
Item Incorporated from ---- ----------------- ITEM 10. Directors and Executive "Directors and Executive Officers of the Company Officers" ITEM 11. Executive Compensation "Executive Compensation" and "Certain Relationships and Related Transactions" ITEM 12. Security Ownership of "Principal Shareholders" Certain Beneficial and "Security Ownership of Owners and Management Management" ITEM 13. Certain Relationships "Executive Compensation" and Related Transactions and "Certain Relationships and Related Transactions"
III-1 58 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) and (2) List of financial statements and financial statement schedules: Independent Auditors' Reports Consolidated Balance Sheets at December 31, 1994 and 1993 Consolidated Statements of Operations for Years ended December 31, 1994, 1993 and 1992 Consolidated Statements of Shareholders' Equity (Deficit) for Years ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows for the Years ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements III. Condensed Financial Information of Registrant VIII. Valuation and Qualifying Accounts (Schedules other than those listed are omitted for the reason that they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.) (3) Exhibits See Exhibit Index at page E-1, which is incorporated herein by reference. (b) Reports on Form 8-K. During the quarter ended December 31, 1994, Registrant filed the following Current Reports on Form 8-K: On October 6, 1994, the Company filed a Form 8-K to report an event of September 16, 1994. The report included an Item 2 discussion of the purchase of WHTM-TV, Harrisburg, Pennsylvania. On October 14, 1994, Registrant filed a report on Form 8-K wherein a change of the Company's Certifying Accountants on October 6, 1994, was reported at Item 4. On October 24, 1994, Registrant filed an amended Form 8-K to its Current Report on Form 8-K filed on October 14, 1994, regarding a change in the Registrant's Certifying Accountants at Item 4. IV-1 59 On December 5, 1994, Registrant filed a report on Form 8-K wherein adoption of the Registrant's Shareholder Rights Plan was reported in Item 5. IV-2 60 PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT Balance Sheets December 31, 1994 and 1993
1994 1993 ---- ---- ASSETS: Cash and cash equivalents $777,284 $912,044 Prepaid expenses and other current assets 171,387 2,023,123 ----------- ----------- Total current assets 948,671 2,935,167 Investments in and receivables from subsidiaries* 40,683,842 28,709,979 Property and equipment, net 96,740 166,693 Other - 299,196 ----------- ----------- $41,729,253 $32,111,035 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable and accrued expenses $1,989,516 $885,599 Other current liabilities 660,409 520,905 ----------- ----------- Total current liabilities 2,649,925 1,406,504 Shareholders' equity 39,079,328 30,704,531 ----------- ----------- $41,729,253 $32,111,035 =========== ===========
- --------------- * Eliminated in consolidation 61 PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT Statements of Operations
Year Ended December 31 ------------------------------------------------------------- Predecessor Reorganized Company Company ------------------------------------ ------------ 1994 1993 1992 ---- ---- ---- Corporate expenses $4,474,787 $3,648,524 $4,973,287 Other expense, net 615,608 3,473,391 173,898 Interest expense 9,731 1,465,315 14,531,762 Amortization of debt discount and deferred debt expense - 756,975 877,139 Depreciation and amortization 77,051 75,192 47,480 Unrealized noncash loss (recovery) on marketable securities - 145,884 (145,884) Earnings of unconsolidated subsidiaries (19,978,726) (5,850,243) (3,273,853) ----------- ----------- ------------ Income (loss) before reorganization items, income taxes and extraordinary item 14,801,549 (3,715,038) (17,183,829) Reorganization items - - (5,802,959) ----------- ----------- ------------ Income (loss) before income taxes and extraordinary item 14,801,549 (3,715,038) (22,986,788) Income tax (expense) benefit (378,000) 115 (122,887) ----------- ----------- ------------ Income (loss) before extraordinary item 14,423,549 (3,714,923) (23,109,675) Extraordinary item, net of income tax expense of - 2,010,332 312,324,661 $0 in 1993 and $900,000 in 1992 ----------- ----------- ------------ Net income (loss) $14,423,549 ($1,704,591) $289,214,986 =========== =========== ============
62 PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT Statements of Cash Flows
Year Ended December 31 ----------------------------------- Reorganized Company ----------------------------------- 1994 1993 ---- ---- Cash flows used in operating activities: Net income (loss) $14,423,549 ($1,704,591) ----------- ------------ Adjustments to reconcile net income (loss) to net cash used in operating activities: Items not affecting cash: Amortization of debt discount and deferred debt expense - 756,975 Depreciation and amortization 77,051 75,192 Unrealized noncash loss (recovery) on marketable securities - 145,884 Reserve on note receivable 400,000 - Earnings of unconsolidated subsidiaries (19,978,726) (5,850,243) Valuation adjustment, net of working capital valuation - - Change in assets and liabilities, net of effects of reorganization: Decrease (increase) in prepaid expenses and other assets 2,150,932 (458,316) Decrease in due from broker/dealer - - Increase (decrease) in accounts payable and accrued expenses 1,103,917 (1,646,172) Increase (decrease) in other liabilities, net of forgiveness 139,504 (729,095) (Decrease) increase in accrued interest, net of forgiveness - (350,835) Reclassification of transactions to investing and financing activities: - Loss on purchase of common stock - 3,976,597 Gain on early extinguishments of debt - (2,010,332) Gain on forgiveness of debt and partial sale of subsidiary - - Gain on sale of securities, net - (6,609) Recovery on note receivable - - ----------- ----------- Total adjustments (16,107,322) (6,096,954) ----------- ----------- Net cash used in operating activities (1,683,773) (7,801,545) ----------- ----------- Cash flows provided by investing activities: Cash received from subsidiaries* 8,004,863 24,828,406 Purchases of marketable securities and mutual funds - (36,704,873) Purchases of securities under agreements to resell - (8,050,811) Proceeds from sales of marketable securities and mutual funds - 54,394,512 Capital expenditures (7,098) (3,885) Investment in partially owned company - (66,805) (Disbursement of ) proceeds from notes receivable (400,000) - ----------- ----------- Net cash provided by investing activities 7,597,765 34,396,544 ----------- ----------- Cash flows (used in) provided by financing activities: Repurchases of long-term debt - (20,846,643) Purchases of common stock (6,271,064) (8,434,058) Proceeds from stock options exercised 222,312 56,216 Net (repayments of) borrowings under repurchase agreements - (4,930,083) ----------- ----------- Net cash (used in) provided by financing activities (6,048,752) (34,154,568) ----------- ----------- Net (decrease) increase in cash and cash equivalents (134,760) (7,559,569) Cash and cash equivalents at beginning of year 912,044 8,471,613 ----------- ----------- Cash and cash equivalents at end of year $777,284 $912,044 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the year for: Income taxes, net of refunds $240,102 $158,251 =========== =========== Interest $813,493 $1,816,150 =========== =========== Chapter 11 items: Interest received - - =========== =========== Professional and administrative expenses paid - $26,085 =========== =========== Year Ended December 31 ------------ Predecessor Company ------------ 1992 ---- Cash flows used in operating activities: Net income (loss) $289,214,986 ------------ Adjustments to reconcile net income (loss) to net cash used in operating activities: Items not affecting cash: Amortization of debt discount and deferred debt expense 877,139 Depreciation and amortization 47,480 Unrealized noncash loss (recovery) on marketable securities (145,884) Reserve on note receivable - Earnings of unconsolidated subsidiaries (3,273,853) Valuation adjustment, net of working capital valuation 5,515,443 Change in assets and liabilities, net of effects of reorganization: Decrease (increase) in prepaid expenses and other assets (100,557) Decrease in due from broker/dealer 237,498 Increase (decrease) in accounts payable and accrued expenses 1,774,500 Increase (decrease) in other liabilities, net of forgiveness (347,038) (Decrease) increase in accrued interest, net of forgiveness 14,477,864 Reclassification of transactions to investing and financing activities: Loss on purchase of common stock - Gain on early extinguishments of debt - Gain on forgiveness of debt and partial sale of subsidiary (312,324,661) Gain on sale of securities, net - Recovery on note receivable (50,000) ------------ Total adjustments (293,312,069) ------------ Net cash used in operating activities (4,097,083) ------------ Cash flows provided by investing activities: Cash received from subsidiaries* 12,671,261 Purchases of marketable securities and mutual funds (9,632,215) Purchases of securities under agreements to resell - Proceeds from sales of marketable securities and mutual funds - Capital expenditures (19,959) Investment in partially owned company - (Disbursement of ) proceeds from notes receivable 50,000 ---------- Net cash provided by investing activities 3,069,087 ---------- Cash flows (used in) provided by financing activities: Repurchases of long-term debt - Purchases of common stock - Proceeds from stock options exercised - Net (repayments of) borrowings under repurchase agreements 4,930,083 ---------- Net cash (used in) provided by financing activities 4,930,083 ---------- Net (decrease) increase in cash and cash equivalents 3,902,087 Cash and cash equivalents at beginning of year 4,569,526 ---------- Cash and cash equivalents at end of year $8,471,613 ========== Supplemental disclosure of cash flow information: Cash paid during the year for: Income taxes, net of refunds $53,898 ========== Interest $16,054 ========== Chapter 11 items: Interest received $357,000 ========== Professional and administrative expenses paid $505,144 ==========
- --------------- * Eliminated in consolidation. 63 PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS DECEMBER 1994, 1993 AND 1992
Balance at Additions Beginning Charged to Balance at Description of Period Expenses Deductions(a) End of Period ----------- ---------- ---------- ------------- ------------- For the year ended December 31, 1994: Allowance for doubtful accounts $487,576 $319,204 ($411,768)(b) $395,012 For the year ended December 31, 1993: Allowance for doubtful accounts $565,351 $263,909 ($341,684) $487,576 For the year ended December 31, 1992: Allowance for doubtful accounts $612,438 $513,908 ($560,995)(c) $565,351
--------------- (a) Amounts written off as uncollectible and payments. (b) Includes adjustments for the disposition of properties and the acquisition of WHTM-TV. (c) $85,000 relates to the partial sale of companies in 1992. 64 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PRICE COMMUNICATIONS CORPORATION By /s/ Robert Price ------------------------------------- Robert Price, President Dated: January 26, 1995 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Robert Price as his attorney-in-fact to sign and file in his behalf individually and in each capacity stated below any and all amendments to this Annual Report. Dated: January 26, 1995 By /s/ Robert Price -------------------------------------- Robert Price, Director and President (Principal Executive Officer, Financial Officer and Accounting Officer) Dated: January 26, 1995 By /s/ George H. Cadgene -------------------------------------- George H. Cadgene, Director Dated: January 26, 1995 By /s/ Robert F. Ellsworth -------------------------------------- Robert F. Ellsworth, Director Dated: January 26, 1995 By /s/ Robert Paul -------------------------------------- Robert Paul, Director Dated: January 26, 1995 By /s/ Kim I. Pressman -------------------------------------- Kim I. Pressman, Director Dated: January 26, 1995 By /s/ Steven Price -------------------------------------- Steven Price, Director 65 EXHIBIT INDEX ITEM 14(a)(3) PRICE COMMUNICATIONS CORPORATION Annual Report on Form 10-K for the year ended December 31, 1994 Page(1) ---- (3)(a) Restated Certificate of Incorporation of the Registrant as filed with the Secretary of State of the State of New York on December 29, 1992, incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K for the year ended December 31, 1992. (b) Restated By-laws of the Registrant, incorporated by reference to Exhibit 3(b) to the Registrant's Form 10-K for the year ended December 31, 1993. (4)(a) Indenture dated as of December 30, 1992 between the Registrant and IBJ Schroder Bank & Trust Company, as trustee, relating to the Company's 5% Senior Secured Notes due 1999 (the "Indenture"), incorporated by reference to Exhibit 4(a) to Registrant's Form 10-K for the year ended December 31, 1992. (b) Pledge, Intercreditor and Collateral Agency Agreement dated as of December 30, 1992, among the Registrant, IBJ Schroder Bank & Trust Company, as Trustee under the Indenture, and IBJ Schroder Bank & Trust Company, as Collateral Agent, incorporated by reference to Exhibit 4(b) to Registrant's Form 10-K for the year ended December 31, 1992. (10)(a) The Registrant's 1992 Long Term Incentive Plan, incorporated by reference to Exhibit 10(a) to - -------------------- 1 Page numbers are sequentially numbered pages. E-1 66 Page ---- Registrant's Form 10-K for the year ended December 31, 1992. (b) Amended and Restated Employment Agreement dated as of May 8, 1992 between The New York Law Publishing Company and Robert Price, incorporated by reference to Exhibit 10(b) to Registrant's Form 10-K for the year ended December 31, 1992. (c) Employment Agreement with Robert Price, dated May 8, 1992, incorporated by reference to Exhibit 10(c) to Registrant's Form 10-K for the year ended December 31, 1992. (d) Agreement dated May 8, 1992 between the Registrant and Robert Price with respect to PriCellular Corporation, incorporated by reference to Exhibit 10(d) to Registrant's Form 10-K for the year ended December 31, 1992. (e) Amended and Restated Stock Purchase Agreement dated as of May 8, 1992 among the Registrant, Price Publishing Corporation, Alexandra Publishing Corporation, The New York Law Publishing Company and Apollo Investment Fund, L.P., incorporated by reference to Exhibit 10(e) to Registrant's Form 10-K for the year ended December 31, 1992. (f) Amended and Restated Shareholders Agreement dated as of May 8, 1992 among the Registrant, Apollo Investment Fund, L.P., Price Publishing Company, Alexandra Publishing Corporation and The New York Law Publishing Company, incorporated by reference to Exhibit 10(f) to Registrant's Form 10-K for the year ended December 31, 1992. (g) Registration Rights Undertaking, incorporated by reference to Exhibit E-2 67 Page ---- 10(g) to Registrant's Form 10-K for the year ended December 31, 1992. (h) Warrant Agreement dated April 12, 1990 between Price Communications Corporation and Warner Communications Investors, Inc., incorporated by reference to Exhibit (4) to Registrant's Form 8-K filed to report an event of April 12, 1990. (i) Form of Amendment to Time Warner Warrant, incorporated by reference to Exhibit 10(i) to Registrant's Form 10-K for the year ended December 31, 1992. (j) Stock Purchase Agreement, dated as of April 27, 1987, among Registrant, Republic Broadcasting Corporation and Fairfield Broadcasting, Inc., as amended July 16, 1987, incorporated by reference to Annex I to Registrant's Definitive Proxy Statement dated July 27, 1987. (k) Notes and Stock Purchase Agreement between and among Fairfield Broadcasting, Inc., Price Communications Corporation and Republic Broadcasting Corporation dated as of September 30, 1987, as amended, incorporated by reference to Exhibit 10(a) to Registration Statement on Form S-1 (File No. 33-30318). (l) Stockholders' Agreement among Fairfield Broadcasting, Inc., Price Communications Corporation, Citicorp Venture Capital Ltd., Osborn Communications Corporation and Prudential-Bache Interfunding Inc., dated as of September 30, 1987, incorporated by reference to Exhibit 10(b) to Registration Statement on Form S-1 (File No. 33-30318). (m) Asset Purchase Agreement by and among E-3 68 Page ---- NTG, Inc., Price Communications Corporation and Western Michigan Broadcasting Corporation, Rhode Island Broadcasting Corporation, Magnolia Broadcasting Corporation and Keystone Broadcasting Corporation, dated as of June 28, 1989, incorporated by reference to Exhibit 10(c) to Registration Statement on Form S-1 (File No. 33-30318). (n) Stock Purchase Agreement between NTG Holdings, Inc. and Price Communications Corporation, dated as of June 28, 1989, incorporated by reference to Exhibit 10(d) to Registration Statement on Form S-1 (File No. 33-30318). (o) Network Affiliation Agreement, dated September 10, 1982, between National Broadcasting Company, Inc., and Tri-State Broadcasting Corporation, as amended (KSNF-TV), incorporated by reference to Exhibit 10(v) to Registration Statement on Form S-1 (File No. 33-30318). (p) Network Affiliation Agreement, dated April 22, 1989, between National Broadcasting Company, Inc. and Continental Broadcasting Corporation (KJAC-TV), incorporated by reference to Exhibit 10(w) to Registration Statement on Form S-1 (File No. 33-30318). (q) Network Affiliation Agreement, dated January 1, 1981, between National Broadcasting Company, Inc. and Clay Broadcasting Corporation of Texas, as amended (KFDX-TV), incorporated by reference to Exhibit 10(x) to Registration Statement on Form S-1 (File No. 33-30318). (r) Stock Purchase Agreement dated March 1, 1990 among Time Warner Inc., Warner Communications Investors, Inc., Price Communications Corporation, and PriCellular Corporation, incorporated by reference to Exhibit (1) to E-4 69 Page ---- Registrant's Form 8-K filed to report events of April 12, 1990. (s) Amendment No. 1 to Stock Purchase Agreement dated April 6, 1990, among Time Warner Inc., Warner Communications Investors, Inc., Price Communications Corporation, and PriCellular Corporation, incorporated by reference to Exhibit (2) to Registrant's Form 8-K filed to report an event of April 12, 1990. (t) Stock Option Agreement, dated April 12, 1990 between PriCellular Corporation and Warner Communications Investors, Inc., incorporated by reference to Exhibit (3) to Registrant's Form 8-K filed to report an event of April 12, 1990. (u) Line of Credit Agreement, dated as of December 21, 1993 among Atlantic Broadcasting Corporation, Southeast Texas Broadcasting Corporation, Texoma Broadcasting Corporation, Tri-State Broadcasting Corporation, the Lenders Parties Thereto and the Bank of Montreal, incorporated by reference to Exhibit 10(u) to the Registrant's Form 10-K for the year ended December 31, 1993. (v) Securities Purchase Agreement, dated December 30, 1993, among Apple Publishing Corporation, Price Communications Corporation, Equity-Linked Investors, L.P. and Equity-Linked Investors-II, incorporated by reference to Exhibit 10(v) to the Registrant's Form 10-K for the year ended December 31, 1993. (w) Agreement dated November 19, 1993, between Price Communications Corporation, Apple Publishing Corporation, the Sellers listed on Exhibit A thereto and W.R. Huff Asset Management Co., L.P., incorporated by reference to Exhibit 10(w) to the E-5 70 Page ---- Registrant's Form 10-K for the year ended December 31, 1993. (x) Stock Purchase Agreement, dated as of October 1, 1993, by and between Price Communications Cellular, Inc., Price Communications Corporation and Atlas Cellular Corporation, incorporated by reference to Exhibit 10 to Registrant's Form 8-K filed to report an event of October 1, 1993. (y) Form of Indemnification Agreement between Registrant and its officers and directors, incorporated by reference to Exhibit 10(y) to the Registrant's Form 10-K for the year ended December 31, 1993. (z) Amended and Restated Line of Credit Agreement among the Co- Borrowers named therein, the Several Lenders named therein, and Bank of Montreal, as Agent, dated as of September 16, 1994. (aa) Employment Agreement, dated as of October 6, 1994, between the Registrant and Robert Price. (bb) Employment Agreement, dated as of January 5, 1995, between the Registrant and Kim Pressman. (cc) Stock Option Agreement, dated as of February 10, 1994, between the Registrant and Robert Price. (dd) Rights Agreement dated as of October 6, 1994 between the Registrant and Harris Trust Company of New York, incorporated by reference to Exhibit 4 to Registrant's Form 8-K filed to report an event on October 6, 1994. (ee) Amendment dated January 12, 1995 to Rights Agreement dated as of October 6, 1994 between the Registrant and Harris Trust Company of New York, incorporated by reference to Exhibit 4 to E-6 71 Page ---- Registrant's Form 8-K filed to report an event on January 12, 1995. (ff) Securities Purchase Agreement, dated as of February 15, 1994, between the stockholders and warrant holders of Smith Acquisition Corp. and the Registrant, incorporated by reference to Exhibit 10 to the Registrant's Form 8-K filed to report an event of September 16, 1994. (11) Statement regarding computation of per share earnings (omitted; computation can be clearly determined from material contained in the Report). (21) Subsidiaries of Registrant. (24) The powers of attorney to sign amendments to this Report appear on the signature page. (27) Financial Data Schedule. E-7 EX-10.Z 2 AMENDED AND RESTATED LINE OF CREDIT AGREEMENT 1 ================================================================================ AMENDED AND RESTATED LINE OF CREDIT AGREEMENT AMONG ATLANTIC BROADCASTING CORPORATION, FEDERAL BROADCASTING CORPORATION, SOUTHEAST TEXAS BROADCASTING CORPORATION, TEXOMA BROADCASTING CORPORATION, TRI-STATE BROADCASTING CORPORATION, AS CO-BORROWERS, The Several Lenders from Time to Time Parties Hereto, and BANK OF MONTREAL, AS AGENT DATED AS OF SEPTEMBER 16, 1994 ================================================================================ 2 TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 12 SECTION 2. AMOUNT AND TERMS OF . . . . . . . . . . . . . . . . . . . . . . . 12 2.1 Line of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . 13 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.5 Termination or Reduction of Line of Credit Amounts . . . . . . . 14 2.6 Optional and Mandatory Prepayments . . . . . . . . . . . . . . . 15 2.7 Conversion and Continuation Options . . . . . . . . . . . . . . . 16 2.8 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . . . . 16 2.9 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . 16 2.10 Computation of Interest and Fees . . . . . . . . . . . . . . . . 17 2.11 Inability to Determine Interest Rate . . . . . . . . . . . . . . 17 2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . 18 2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.14 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . 19 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 22 3.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 22 3.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . 22 3.4 Corporate Power; Authorization; Enforceable Obligations . . . . . 23 3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . 23 3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . 23 3.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 24 3.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . 24 3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . 24 3.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.14 Investment Company Act; Other Regulations . . . . . . . . . . . 25 3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3
Page ---- 3.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . 25 3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 25 3.18 Broadcast Licenses, etc. . . . . . . . . . . . . . . . . . . . . 26 3.19 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.20 Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 27 4.1 Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . 27 SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 30 5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . 30 5.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5.4 Financial Condition Covenants . . . . . . . . . . . . . . . . . . 32 5.5 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . 32 5.6 Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 5.7 Limitation on Restricted Payments . . . . . . . . . . . . . . . . 32 SECTION 6. OFFERING BASIS . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 7. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 7.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 7.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 33 7.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . 33 7.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . 34 7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 34 7.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . . 34 7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 35 7.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . 35 7.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 36 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 37 8.4 Survival of Representations and Warranties . . . . . . . . . . . 37 8.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . 37 8.6 Successors and Assigns; Participations; Purchasing Lenders . . . 38 8.7 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-ii- 4
Page ---- 8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 40 8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 40 8.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 40 8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 40 8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . 41 8.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . 41 8.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 42 8.15 Joint and Several Liability . . . . . . . . . . . . . . . . . . 42 8.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 42 8.17 Consent to Supplement to Security Agreement . . . . . . . . . . 42
SCHEDULES 1.1 Line of Credit Amounts; Addresses for Notices 3.1 Certain Transactions 3.18 Broadcast Licenses, Etc. EXHIBITS A - Note B - Assignment and Acceptance C-1 - Opinion of Proskauer Rose Goetz & Mendelsohn C-2 - Opinion of Roberts & Eckard D - Supplement to Stock Pledge Agreement E - Acknowledgement and Consent F - Supplement to Security Agreement G - Federal Subordination Agreement -iii- 5 AMENDED AND RESTATED LINE OF CREDIT AGREEMENT, dated as of September 16, 1994, among: (i) ATLANTIC BROADCASTING CORPORATION, a Delaware corporation ("Atlantic"), FEDERAL BROADCASTING CORPORATION, a New York corporation ("Federal"), SOUTHEAST TEXAS BROADCASTING CORPORATION, a Texas corporation ("Southeast"), TEXOMA BROADCASTING CORPORATION, a Texas corporation ("Texoma"), and TRI-STATE BROADCASTING CORPORATION, a Delaware corporation ("Tri-State"), jointly and severally (collectively, the "Co-Borrowers" and each a "Co-Borrower"), (ii) the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders") and (iii) BANK OF MONTREAL, as agent for the Lenders hereunder (in such capacity, the "Agent"). W I T N E S S E T H: WHEREAS, the Co-Borrowers (other than Federal), the Agent and certain banks and other financial institutions (the "Existing Lenders") are parties to the Credit Agreement, dated as of December 21, 1993 (as amended, supplemented or otherwise modified to the date hereof, the "Existing Credit Agreement"), pursuant to which the Existing Lenders made loans to the Co-Borrowers (other than Federal); and WHEREAS, Federal intends to acquire all the outstanding warrants and stock issued by Smith Acquisition Corp., a Delaware corporation ("Smith"), which owns WHTM - TV, Inc. which owns a television station located in Harrisburg, Pennsylvania and other assets specified in the Acquisition Agreement (as defined below) for a purchase price not exceeding $52,000,000 (including fees and expenses); and WHEREAS, the Co-Borrowers have requested that the Agent and the Existing Lenders amend and restate the Existing Credit Agreement, inter alia, to include Federal as a Co-Borrower and to provide a $36,000,000 increase in the Co-Borrowers' outstanding line of credit to finance the WHTM Acquisition (as defined below), to pay related fees and expenses, and for working capital and general corporate purposes; and WHEREAS, the Agent and the Lenders are willing so to amend and restate the Existing Credit Agreement, but only on the terms and conditions hereof; NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, effective as of the Closing Date, the parties hereto hereby amend and restate the Existing Credit Agreement to read in its entirety as follows: 6 2 SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Acquisition Agreement": the Securities Purchase Agreement, dated as of February 15, 1994, between PCC and the stockholders and warrant holders of Smith, together with all schedules and exhibits thereto (as the same has been amended, supplemented or otherwise modified to the date hereto), as assigned to Federal pursuant to the Assignment Agreement, dated as of September 16, 1994, between Federal and PCC. "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agreement": the Existing Credit Agreement, as amended and restated by this Amended and Restated Credit Agreement, as further amended, supplemented or otherwise modified from time to time. "Applicable Margin": for each Type of Loan during the Margin Period immediately following each fiscal quarter, the rate per annum set forth under the relevant column heading below opposite the applicable ratio of aggregate Indebtedness outstanding on the last day of such fiscal quarter to Operating Cash Flow for the four consecutive fiscal quarters ended on such day:
Ratio Base Rate Loans Eurodollar Loans ----- --------------- ---------------- greater than or equal to 3.5 x .75% 2.00% <3.5 x greater than or equal to 3.00 x .50% 1.75% <3.00 x greater than or equal to 2.00 x .25% 1.50% <2.00 0.00% 1.25%
provided, however, that until the Margin Period relating to the fiscal quarter ending September 30, 1994, the Applicable Margin shall be .75% for Base Rate Loans and 2.00% for Eurodollar Loans, and provided, further, that if at any time the Co- Borrowers shall fail to deliver the financial statements required by subsection 5.1(b) 7 3 for any fiscal quarter or the related Applicable Margin Certificate required by subsection 5.2(e) on or before the date such statements and certificate are required to be delivered pursuant to such subsections, the aggregate Indebtedness to Operating Cash Flow ratio shall be deemed for purposes of this definition to be greater than 3.5 to 1.0 for the period which commences five Business Days after such required date of delivery and ends on the date which is five Business Days after such financial statements and certificate are actually delivered, after which the Applicable Margin shall be determined in accordance with the preceding schedule. "Applicable Margin Certificate": as defined in subsection 5.2(e). "Assignee": as defined in subsection 8.6(c). "Assignment and Acceptance": an assignment and acceptance entered into by a Lender or an assignee, substantially in the form of Exhibit B. "Available Cash Flow": for any period of four consecutive fiscal quarters, Operating Cash Flow for such period minus the sum of the aggregate Restricted Payments, Capital Expenditures and taxes paid in cash by the Co-Borrowers during such period. "Available Line of Credit": as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Line of Credit Amount over (b) the aggregate principal amount of all Loans made by such Lender then outstanding. "Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Agent as its prime rate in effect at its principal office in New York City (each change in the Prime Rate to be effective on the date such change is publicly announced); and " Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (b) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the 8 4 effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Base Rate Loans": Loans the rate of interest applicable to which is based upon the Base Rate. "Business": as defined in subsection 3.17. "Borrowing Date": any Business Day specified in a notice pursuant to subsection 2.3 as a date on which the Co- Borrowers request the Lenders to make Loans hereunder. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "Capital Expenditure": any cash expenditure made for the purpose of acquiring or constructing fixed assets, real property or equipment which in accordance with GAAP would be added as a debit to the fixed asset accounts of the Person making such expenditure. "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Closing Date": the date on which all of the conditions precedent specified in subsection 4.1 are satisfied. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with any Co- Borrower within the meaning of Section 4001(a)(14) of ERISA or is part of a group which includes any Co-Borrower and which is treated as a single employer under Section 414(b) or 414(c) of the Code. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Debt Service": for any period of four consecutive fiscal quarters, the sum of (i) aggregate interest expense of the Co-Borrowers for such period and (ii) the aggregate amount of all reductions of the Line of Credit Amounts required pursuant to subsection 2.5(b) during such period. "Default": a violation of, or the failure to observe or perform, any agreement, covenant, representation or condition of any Loan Party under the Loan Documents. 9 5 "Dollars" and "$": dollars in lawful currency of the United States of America. "Environmental Laws": any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member bank of the Federal Reserve System. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to be subject to such reserve requirements without the benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D. "Eurodollar Base Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate at which the Agent is offered Dollar deposits at or about 10:00 A.M., New York City time, two Working Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan to be outstanding during such Interest Period. "Eurodollar Loans": Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): Eurodollar Base Rate ---------------------------------------- 1.00 - Eurocurrency Reserve Requirements 10 6 "FCC": the Federal Communications Commission or any successor agency or authority. "Federal Subordination Agreement": the Intercompany Subordination Agreement, dated as of September 16, 1994, made by PCC and Federal in favor of the Agent, as the same may be amended, supplemented or otherwise modified from time to time, substantially in the form of Exhibit G. "Financing Lease": any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "GAAP": generally accepted accounting principles in the United States of America in effect from time to time. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) for which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation to induce the creation of such obligation, in either case guaranteeing or in effect guaranteeing any indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. "Hazardous Materials": any hazardous materials, hazardous wastes, hazardous constituents, hazardous or toxic substances, petroleum products (including crude oil or any fraction thereof), defined or regulated as such in or under any Environmental Law. "Indebtedness": of any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or 11 7 similar instrument and (c) Guarantee Obligations in respect of Indebtedness of other Persons. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Intercompany Subordination Agreement": the Intercompany Subordination Agreement, dated as of December 21, 1993, made by Atlas and Continental and each of the Co-Borrowers (other than Federal) in favor of the Agent, as the same may be amended, supplemented or otherwise modified from time to time. "Interest Payment Date": (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period and (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period. "Interest Period": with respect to any Eurodollar Loan: (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Co-Borrowers in their notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Co-Borrowers by irrevocable notice to the Agent not less than three Working Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (1) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Working Day, such Interest Period shall be extended to the next succeeding Working Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Working Day; 12 8 (2) any Interest Period that would otherwise extend beyond the Termination Date shall end on the Termination Date; (3) any Interest Period pertaining to a Eurodollar Loan that begins on the last Working Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Working Day of a calendar month; and (4) the Co-Borrowers shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan. "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Line of Credit Amount": as to any Lender, the amount of the line of credit made available by such Lender to the Co-Borrowers hereunder, as such amount is set forth opposite such Lender's name on Schedule 1.1 and as such amount may be reduced from time to time in accordance with the provisions of this Agreement. "Line of Credit Percentage": as to any Lender at any time, the percentage which such Lender's Line of Credit Amount then constitutes of the aggregate Line of Credit Amount (or, at any time after the line of credit made available hereunder shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Loans then outstanding constitutes of the aggregate principal amount of the Loans then outstanding). "Line of Credit Period": the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Lenders shall, in their sole and absolute discretion exercisable at any time, terminate the lines of credit made available hereunder. "Loan Documents": this Agreement, the Notes, the Security Documents, the Supplement to Stock Pledge Agreement, the Supplement to Security Agreement and the Intercompany Subordination Agreement. "Loans": all loans made pursuant to this Agreement. "Loan Parties": each of the Co-Borrowers, each of the Pledgors, PCC and WHTM-TV, Inc. 13 9 "Margin Period": in relation to any fiscal quarter, the period which (i) commences five Business Days after the date of delivery to the Agent of the financial statements required by subsection 5.1(b) for such quarter and the related Applicable Margin Certificate required by subsection 5.2(e), and (ii) ends four Business Days after the date of delivery to the Agent of such financial statements and related Applicable Margin Certificate for the next succeeding fiscal quarter. "Material Adverse Effect": a material adverse effect on (a) the business, assets or condition (financial or otherwise) of the Co-Borrowers taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agent or any of the Lenders hereunder or thereunder. "Material Environmental Amount": an amount payable by the Co-Borrowers in excess of $200,000 for remedial costs, compliance costs, compensatory damages, punitive damages, fines, penalties or any combination thereof. "Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Note": as defined in subsection 2.2. "Obligations": the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Co-Borrower, whether or not a claim for post-filing or post- petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of the Co-Borrowers to the Agent or to the Lenders, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the Notes or the other Loan Documents and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Agent or to the Lenders that are required to be paid by the Co-Borrowers pursuant to the terms of this Agreement) or otherwise. "Operating Cash Flow": for any date of determination, the aggregate net income of the Co-Borrowers for the four most recently ended fiscal quarters of the Co-Borrowers, plus the sum of the aggregate (i) barter expenses, (ii) interest expense, (iii) depreciation, (iv) amortization, (v) income taxes and (vi) other non-cash expenses of the Co-Borrowers, in each case for such period, minus the sum of the aggregate (x) 14 10 barter revenue of and (y) actual payments for programming made by, the Co-Borrowers, in each case for such period, all determined in accordance with GAAP. "PBGC": the Pension Benefit Guaranty Corporation (or any successor corporation) established pursuant to Subtitle A of Title IV of ERISA. "Participant": as defined in subsection 8.6(b). "PCC": Price Communications Corporation, a New York corporation. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which any Co- Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledgors": each of Atlas Broadcasting Corporation, a New York corporation, ("Atlas"), Continental Broadcasting Corporation, a Delaware corporation, ("Continental"), PCC, Federal and Smith as the pledgors under the Stock Pledge Agreement. "Properties": as defined in subsection 3.17. "Regulation U": Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than those events as to which the thirty day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615. "Required Lenders": at any time, Lenders the Line of Credit Percentages of which aggregate more than 66-2/3%. "Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 15 11 "Responsible Officer": as to any Person, the chief executive officer, the president, or any Senior Vice President of such Person or, with respect to financial matters, the chief financial officer of such Person. "Restricted Payments": as defined in subsection 5.7. "Security Agreement": the Security Agreement, dated as of December 21, 1993, made by the Co-Borrowers (other than Federal) in favor of the Agent for the ratable benefit of the Lenders and to which Federal, Smith and WHTM-TV, Inc. have become parties pursuant to the provisions of subsection 8.17 and the Supplement to Security Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Security Documents": the collective reference to the Security Agreement, the Stock Pledge Agreement and all other security documents hereafter delivered to the Agent granting a Lien on any asset or assets of any Person to secure the obligations and liabilities of the Co-Borrowers hereunder, under the Notes and/or under any of the other Loan Documents or to secure any guarantee of any such obligations and liabilities. "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Station": a television station or AM or FM radio station. "Stock Pledge Agreement": the Stock Pledge Agreement, dated as of December 21, 1993, made by the Pledgors (other than PCC, Federal and Smith) in favor of the Agent for the ratable benefit of the Lenders and to which PCC, Federal and Smith have become parties pursuant to the Supplement to Stock Pledge Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Subordinated Intercompany Loans": the collective reference to (i) the three intercompany loans made by Continental Broadcasting Corporation to Southeast, Texoma and Tri-State, in the principal amounts of approximately $16,470,000, $17,265,000 and $22,185,000, respectively, on November 30, 1993, (ii) the intercompany loans made by Atlas Broadcasting Corporation to Atlantic in the principal amount of approximately $10,224,000 on November 30, 1993 and (iii) Indebtedness of Federal to PCC. "Subsidiary": as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or 16 12 more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of PCC. "Supplement to Security Agreement": the Supplement to Security Agreement to be executed and delivered by Federal, Smith and WHTM-TV, Inc. substantially in the form of Exhibit F. "Supplement to Stock Pledge Agreement": the Supplement to Stock Pledge Agreement to be executed and delivered by PCC, Federal and Smith substantially in the form of Exhibit D. "Termination Date": September 30, 2001, or such earlier date on which the Line of Credit Amounts shall be terminated in accordance with subsection 2.5. "Tranche": the collective reference to Eurodollar Loans the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan. "WHTM Acquisition": the acquisition by Federal, from the stockholders and warrant holders of Smith pursuant to the Acquisition Agreement, of Smith, which owns 100% of the stock of WHTM-TV, Inc., a Pennsylvania corporation and the owner of WHTM-TV, a television station located in Harrisburg, Pennsylvania. "Working Day": any Business Day on which dealings in foreign currencies and exchange between banks may be carried on in London, England. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Notes or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in the Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to PCC and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 17 13 SECTION 2. AMOUNT AND TERMS OF LINE OF CREDIT 2.1 Line of Credit. (a) Subject to the terms and conditions hereof, each Lender is pleased to make severally available to the Co-Borrowers a line of credit in an amount equal to such Lender's Line of Credit Amount. During the Line of Credit Period the Co-Borrowers may, subject to the Lenders' continued satisfaction with all matters related to the credit, use the lines of credit made available hereunder by borrowing, prepaying the Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) The Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the Co-Borrowers and notified to the Agent in accordance with subsections 2.3 and 2.7, provided that no Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Termination Date. 2.2 Notes. The Loans made by each Lender shall be evidenced by a joint and several demand promissory note made by the Co-Borrowers, substantially in the form of Exhibit A, with appropriate insertions as to payee, date and principal amount (a "Note"), payable to the order of such Lender and in a principal amount equal to the lesser of (a) the initial Line of Credit Amount of such Lender and (b) the aggregate unpaid principal amount of all Loans made to the Co-Borrowers by such Lender. Each Lender is hereby authorized to record the date, Type and amount of each Loan made by such Lender to the Co-Borrowers, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal thereof and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedule annexed to and constituting a part of its Note, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Lender to make any such recordation shall not affect any of the Obligations of the Co-Borrowers under such Note or this Agreement. Each Note shall (x) be dated the Closing Date, (y) be stated to mature on demand and (z) provide for the payment of interest in accordance with subsection 2.9. 2.3 Procedure for Borrowing. Subject to the Lenders' continued satisfaction with all matters related to the credit, the Co-Borrowers may borrow under the Line of Credit Amount during the Line of Credit Period on any Business Day, provided that the Co-Borrowers shall give the Agent irrevocable notice (which notice must be received by the Agent prior to 10:00 A.M., New York City time, (a) three Working Days prior to the requested Borrowing Date, if all or any part of the requested Loans are to be initially Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the amount of such Type of Loan and the length of the initial Interest Period therefor. Each borrowing hereunder shall be in an amount equal to (x) in the case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess thereof or (y) in the case of Base Rate Loans, $100,000 or a whole multiple of $100,000 in excess thereof. Upon receipt of any such notice from the Co-Borrowers, the Agent shall promptly notify each Lender thereof. Each Lender will, subject to such Lender's continued satisfaction with all matters related to the credit, make the pro-rata share of each borrowing available to the Agent for the account of the Co-Borrowers at the office of the Agent specified in subsection 8.2 prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the Co-Borrowers in funds immediately available to Agent. Such borrowing will then be made available to the Co- 18 14 Borrowers by the Agent crediting the account of the Co-Borrowers on the books of such office with the aggregate of the amounts received by the Agent from the Lenders in like funds as received by the Agent. 2.4 Fees. (a) The Co-Borrowers jointly and severally agree to pay to the Agent for the account of each Lender a line of credit fee for the Line of Credit Period, computed at the rate of 1/2 of 1% per annum on the average daily amount of the Available Line of Credit of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Termination Date, commencing on the first of such dates to occur after the date hereof. (b) The Co-Borrowers shall pay on the Closing Date to the Agent a fee equal to $350,000. 2.5 Termination or Reduction of Line of Credit Amounts. (a) The Co-Borrowers shall have the right, upon not less than four Business Days' notice to the Agent, to terminate the lines of credit made available hereunder or, from time to time thereafter, to reduce the aggregate Line of Credit Amounts; provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, the aggregate principal amount of the Loans then outstanding would exceed the aggregate Line of Credit Amounts then in effect. Any such reduction shall be in an amount equal to $100,000 or a whole multiple thereof or, if less, the remaining Line of Credit Amounts and shall reduce permanently the Line of Credit Amounts then in effect. Voluntary reductions of the Line of Credit Amounts shall be applied to the latest remaining scheduled reductions of the Line of Credit Amounts set forth in subsection 2.5(b). (b) The aggregate Line of Credit Amounts will be automatically and permanently reduced on the dates and in the amounts set forth below:
Date Reduction Amount ---- ---------------- September 30, 1995 $ 600,000 December 31, 1995 $ 600,000 March 31, 1996 $ 600,000 June 30, 1996 $ 600,000 September 30, 1996 $ 600,000 December 31, 1996 $ 600,000 March 31, 1997 $ 720,000 June 30, 1997 $ 720,000 September 30, 1997 $ 720,000 December 31, 1997 $ 720,000
19 15
Date Reduction Amount ---- ---------------- March 31, 1998 $ 840,000 June 30, 1998 $ 840,000 September 30, 1998 $ 840,000 December 31, 1998 $ 840,000 March 31, 1999 $ 1,020,000 June 30, 1999 $ 1,020,000 September 30, 1999 $ 1,020,000 December 31, 1999 $ 1,020,000 March 31, 2000 $ 1,200,000 June 30, 2000 $ 1,200,000 September 30, 2000 $ 1,200,000 December 31, 2000 $ 1,200,000 March 31, 2001 $ 1,760,000 June 30, 2001 $ 1,760,000 September 30, 2001 $ 1,760,000 or any amount outstanding under the Line of Credit Amounts.
(c) The aggregate Line of Credit Amounts shall be further permanently reduced by an amount equal to the greater of 100% of the net proceeds received by Atlantic from the sale by Atlantic of WIRK-FM and WBZT-AM or $21,000,000 upon the earlier to occur of the sale by Atlantic of WIRK-FM and WBZT-AM or December 31, 1994. (d) If any Co-Borrower shall sell any asset (other than the sale by Atlantic of WIRK-FM and WBZT-AM), the aggregate Line of Credit Amounts will be permanently reduced by 75% of the greater of (i) the fair market value of the asset so sold and (ii) the aggregate cash consideration received therefor. Such reduction shall be applied pro rata to the remaining scheduled reductions of the Line of Credit Amounts set forth in subsection 2.5(b). (e) The aggregate Line of Credit Amounts shall be further permanently reduced by an amount equal to the amount of proceeds received by any Co-Borrower from the sale by any such Co-Borrower of any Capital Stock in such Co-Borrower. Such reduction shall be applied to the scheduled reductions set forth in subsection 2.5(b) in the order so scheduled. (f) The Required Lenders shall have the right at any time to terminate or reduce the aggregate Line of Credit Amounts. Any such termination or reduction shall be effective immediately upon notice to the Co-Borrowers and shall permanently terminate or reduce, as the case may be, the aggregate Line of Credit Amounts then in effect. Any such reduction shall be applied to such remaining scheduled reductions of the Line of Credit Amounts as the Required Lenders shall specify in such notice. 2.6 Optional and Mandatory Prepayments. (a) The Co-Borrowers may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty (other than as provided for in subsection 2.16), upon at least three (in the case of Eurodollar Rate Loans) or one (in the case of Base Rate Loans) Business Days' irrevocable notice to the 20 16 Agent, specifying the date and amount of prepayment and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice together with any amounts payable pursuant to subsection 2.16 shall be due and payable on the date specified therein. Partial prepayments shall be in an aggregate principal amount of $100,000 or a whole multiple thereof. (b) If at any time (including, without limitation, following a reduction in the Line of Credit Amounts pursuant to subsection 2.5) the aggregate principal amount of the Loans exceeds the aggregate Line of Credit Amounts then in effect, the Co- Borrowers shall immediately repay the Loans in an aggregate amount equal to such excess. 2.7 Conversion and Continuation Options. (a) Subject to the Lenders' continued satisfaction with all matters related to the credit, the Co-Borrowers may elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving the Agent at least two Business Days' prior irrevocable notice of such election, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Co-Borrowers may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the Agent at least three Working Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Agent shall promptly notify each Lender thereof. All or any part of outstanding Eurodollar Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Loan when the Agent or any Lender has determined that such a conversion is not appropriate, (ii) any such conversion may only be made if, after giving effect thereto, subsection 2.8 shall not have been contravened and (iii) no Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Termination Date. (b) Subject to the Lenders' continued satisfaction with all matters related to the credit, any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Co-Borrowers giving notice to the Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan may be continued as such (i) when the Agent or any Lender has determined that such a continuation is not appropriate, (ii) if, after giving effect thereto, subsection 2.8 would be contravened or (iii) after the date that is one month prior to the Termination Date and provided, further, that if the Co-Borrowers shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. 2.8 Minimum Amounts of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the 21 17 aggregate principal amount of the Loans comprising each Tranche shall be equal to $500,000 or a whole multiple of $100,000 in excess thereof. 2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. (c) If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable thereon or (iii) any line of credit fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, upon demand or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of overdue interest, line of credit fee or other amount, the Base Rate plus 2%, in each case from the date of such non-payment until such amount is paid in full (as well after as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date and on the Termination Date, provided that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand. 2.10 Computation of Interest and Fees. Interest on Base Rate Loans (when based on the Prime Rate) and interest on overdue interest, line of credit fees and other amounts payable hereunder shall be calculated on the basis of a 365 day (or 366 day, as the case may be) year for the actual days elapsed. Interest on Eurodollar Loans, Base Rate Loans (when based on the Federal Funds Effective Rate) and line of credit fees shall be calculated on the basis of a 360-day year for the actual days elapsed. The Agent shall as soon as practicable notify the Co-Borrowers and the Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change becomes effective. The Agent shall as soon as practicable notify the Co-Borrowers and the Lenders of the effective date and the amount of each such change in interest rate. 2.11 Inability to Determine Interest Rate. If prior to the first day of any Interest Period: (a) the Agent shall have determined (which determination shall be conclusive and binding upon the Co-Borrowers) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not 22 18 adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Agent shall give telecopy or telephonic (which is promptly confirmed in writing) notice thereof to the Co-Borrowers and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Co-Borrowers have the right to convert Base Rate Loans to Eurodollar Loans. 2.12 Pro Rata Treatment and Payments. (a) Each borrowing by the Co-Borrowers from the Lenders hereunder, each payment on account of any line of credit fee hereunder and any reduction of the Line of Credit Amounts of the Lenders shall be made pro rata according to the respective Line of Credit Percentages of the Lenders. Each payment (including each prepayment) by the Co- Borrowers on account of principal of and interest on the Loans shall be made pro rata according to the respective outstanding principal amounts of the Loans then held by the Lenders. All payments (including prepayments) to be made by the Co-Borrowers hereunder and under the Notes, whether on account of principal, interest, fees or otherwise, shall be made without set-off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Agent, for the account of the Lenders, at the Agent's office specified in subsection 8.2, in Dollars and in immediately available funds. The Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Working Day, the maturity thereof shall be extended to the next succeeding Working Day (and interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Working Day. (b) Unless the Agent shall have been notified in writing by any Lender prior to a Borrowing Date that such Lender will not make the amount that would constitute its Line of Credit Percentage of the borrowing on such date available to the Agent, the Agent may assume that such Lender has made such amount available to the Agent on such Borrowing Date, and the Agent may, in reliance upon such assumption, make available to the Co-Borrowers a corresponding amount. If such amount is made available to the Agent on a date after such Borrowing Date, such Lender shall pay to the Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate during such period, times (ii) the amount of such Lender's Line of Credit Percentage of such borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such 23 19 Borrowing Date to the date on which such Lender's Line of Credit Percentage of such borrowing shall have become immediately available to the Agent and the denominator of which is 360. A certificate of the Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Line of Credit Percentage of such borrowing is not in fact made available to the Agent by such Lender within three Business Days of such Borrowing Date, the Agent shall be entitled to recover such amount with interest thereon at a rate per annum equal to the higher of (i) the rate applicable to such borrowing and (ii) the daily average Federal Funds Effective Rate from the Co-Borrowers. 2.13 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the willingness of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Co-Borrowers shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 2.16. 2.14 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (in each case except for taxes covered by subsection 2.15 and changes in the rate of tax on the overall net income of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Co-Borrowers shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost 24 20 or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Co-Borrowers, through the Agent, of the event by reason of which it has become so entitled. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Co-Borrowers (with a copy to the Agent) of a written request therefore, the Co-Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. 2.15 Taxes. (a) All payments made by the Co-Borrowers under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Agent and each Lender, taxes on the overall net income of the Agent or such Lender and franchise taxes (imposed in lieu of such net income taxes) imposed on the Agent or such Lender, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Agent or such Lender (excluding a connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under the Notes, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by any Co-Borrower, as promptly as possible thereafter the Co-Borrowers shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy, if available, of an original official receipt received by the Co-Borrowers showing payment thereof. If any Co- Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Co-Borrowers shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the 25 21 Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Lender agrees that it will, on or prior to the date of execution and delivery of this Agreement or the date on which such Lender becomes a Lender pursuant to an Assignment and Acceptance, as the case may be, deliver to the Co-Borrowers and the Agent (i) if applicable, two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form. Each such Lender also agrees to deliver to the Co-Borrowers and the Agent two further copies of the said Form 1001 or 4224, if applicable, and Form W-8 or W-9, or successor applicable forms or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Co-Borrowers, and such extensions or renewals thereof as may reasonably be requested by the Co-Borrowers or the Agent, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Co-Borrowers and the Agent. Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from United States backup withholding tax. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of the rate applicable to the Lender's assignor on the date of the Assignment and Acceptance pursuant to which it became a Lender, withholding tax attributable solely to such excess rate shall be considered excluded from Taxes. 2.16 Indemnity. The Co-Borrowers jointly and severally agree to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Co-Borrowers in payment when due of the principal amount of or interest on any Eurodollar Loan, (b) default by the Co-Borrowers in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Co-Borrowers have given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by the Co-Borrowers in making any prepayment after the Co-Borrowers have given a notice thereof in accordance with the provisions of this Agreement or (d) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto, including, without limitation, in each case, any such loss or expense arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained. Calculation of all amounts payable to a Lender under this subsection 2.16 shall be made as though such Lender had actually funded its relevant Eurodollar Loan through the purchase of a deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its Eurodollar Loans in any manner it sees fit, and the foregoing 26 22 assumption shall be utilized only for the calculation of amounts payable under this subsection 2.16. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agent and the Lenders to enter into this Agreement and to induce the Lenders to make available the line of credit hereunder, each Co-Borrower hereby represents and warrants to the Agent and each Lender that: 3.1 Financial Condition. The consolidated balance sheet of PCC and its consolidated Subsidiaries as at December 31, 1993 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by Ernst & Young, copies of which have heretofore been furnished to each Lender, are complete and correct and present fairly the consolidated financial condition of PCC and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of PCC and its consolidated Subsidiaries as at June 30, 1994 and the related unaudited consolidated statements of income and of cash flows for the six-month period ended on such date, certified by a Responsible Officer of PCC, copies of which have heretofore been furnished to each Lender, are complete and correct and present fairly the consolidated financial condition of PCC and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the six-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Neither PCC nor any of its consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto. During the period from June 30, 1994 to and including the date hereof there has been no sale, transfer or other disposition by PCC or any of its consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of PCC and its consolidated Subsidiaries at June 30, 1994, other than as set forth in Schedule 3.1. 3.2 No Change. Except as set forth on Schedule 3.1, since June 30, 1994, (a) there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect and (b) no dividends or other distributions have been declared, paid or made upon the Capital Stock of PCC nor has any of the Capital Stock of PCC been redeemed, retired, purchased or otherwise acquired for value by PCC or any of its Subsidiaries. 27 23 3.3 Corporate Existence; Compliance with Law. Each of the Co-Borrowers (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 3.4 Corporate Power; Authorization; Enforceable Obligations. Each of the Co-Borrowers has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and the Notes and to authorize the execution, delivery and performance of the Loan Documents to which it is a party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which any Co-Borrower is a party, other than consents, authorizations, filings, notices and acts which have been obtained, made or effected on or prior to the date hereof. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered on behalf of each Co-Borrower. This Agreement constitutes, and each other Loan Document to which the Co- Borrowers are party when executed and delivered will constitute, a legal, valid and binding obligation of the Co-Borrowers enforceable against the Co-Borrowers in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate any material Requirement of Law or material Contractual Obligation of any Co-Borrower and will not result in, or require, the creation or imposition of any material Lien on any of the Co-Borrowers' respective properties or revenues pursuant to any such material Requirement of Law or material Contractual Obligation. 3.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Co-Borrowers, threatened by or against any Co-Borrower or against any of the Co-Borrowers' respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) which could reasonably be expected to have a Material Adverse Effect. 28 24 3.7 No Default. No Co-Borrower is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. 3.8 Ownership of Property; Liens. Each of the Co-Borrowers has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any material Lien except pursuant to the Security Documents. 3.9 Intellectual Property. Each of the Co-Borrowers owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Co-Borrower know of any valid basis for any such claim. The use of such Intellectual Property by the Co-Borrowers does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of any Co-Borrower could reasonably be expected to have a Material Adverse Effect. 3.11 Taxes. Each of PCC and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Co-Borrowers, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of PCC or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of the Co-Borrowers, no claim is being asserted, with respect to any such tax, fee or other charge. 3.12 Federal Regulations. No part of the proceeds of any Loans will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect or for any purpose which violates the provisions of the Regulations of such Board of Governors. 3.13 ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five- 29 25 year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits. Neither any Co-Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan, and neither any Co-Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA if such Co-Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. 3.14 Investment Company Act; Other Regulations. None of the Co-Borrowers is (a) an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended or (b) a "holding company" as defined in, or otherwise subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. None of the Co-Borrowers is subject to regulation under any Federal or State statute or regulation which limits its ability to incur Indebtedness. 3.15 Subsidiaries. Other than Federal, none of the Co-Borrowers has any Subsidiaries. Each Co-Borrower is a wholly-owned Subsidiary of PCC. 3.16 Purpose of Loans. The proceeds of the Loans shall be used by the Co-Borrowers to consummate the WHTM Acquisition and for working capital purposes of the Co-Borrowers in the ordinary course of business. 3.17 Environmental Matters. (a) The facilities and properties owned, leased or operated by the Co-Borrowers (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, any Environmental Law except in either case insofar as such violation or liability, or any aggregation thereof, is not reasonably likely to result in the payment of a Material Environmental Amount. (b) The Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Co-Borrowers (the "Business") which could materially interfere with the continued operation of the Properties or materially impair the fair saleable value thereof. (c) None of the Co-Borrowers has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor do the Co-Borrowers have knowledge or reason to believe that any such notice will be received or is being threatened except insofar as such notice or threatened notice, or any 30 26 aggregation thereof, does not involve a matter or matters that is or are reasonably likely to result in the payment of a Material Environmental Amount. (d) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could reasonably be expected to give rise to liability under, any applicable Environmental Law except insofar as any such violation or liability referred to in this paragraph, or any aggregation thereof, is not reasonably likely to result in the payment of a Material Environmental Amount. (e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Co- Borrowers, threatened, under any Environmental Law to which any Co-Borrower is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business except insofar as such proceeding, action, decree, order or other requirement, or any aggregation thereof, is not reasonably likely to result in the payment of a Material Environmental Amount. (f) There has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Co-Borrowers in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could reasonably give rise to liability under Environmental Laws except insofar as any such violation or liability referred to in this paragraph, or any aggregation thereof, is not reasonably likely to result in the payment of a Material Environmental Amount. 3.18 Broadcast Licenses, etc. Set forth in Schedule 3.18 hereto is a complete and correct list of all FCC permits and/or licenses held by the Co-Borrowers, the applicable expiration dates and permitted renewal periods (if any) for each such permit or license, and the name of the Person holding each such permit or license. In addition, said Schedule 3.18 sets forth, with respect to each Station, the respective frequency and call letters of such Station, and the name of the Person owning the material assets used in connection with the operation of such Station. Except as set forth in Schedule 3.18 hereto, each Co-Borrower holds all FCC licenses and permits necessary for the operation of its Stations. Except as set forth in Schedule 3.18 hereto, the Co- Borrowers are not aware of any basis for challenging or questioning, or any circumstance which could impede or delay, the timely renewal of any such license or permit. Except as set forth in Schedule 3.18 hereto, each such license and permit is valid and in full force and effect, and no Co-Borrower has received any notice of proceedings relating to the revocation, termination, suspension, non-renewal or modification of any such license or permit. 31 27 3.19 Indebtedness. The Co-Borrowers have no material Indebtedness other than (i) Indebtedness under this Agreement, (ii) trade accounts payable in the ordinary course of business and (iii) the Subordinated Intercompany Loans. 3.20 Stations. (a) As of the Closing Date, Atlantic owns and operates WIRK-FM and WBZT-AM (West Palm Beach, Florida). (b) Southeast owns and operates KJAC-TV (Beaumont and Port Arthur, Texas); Federal owns 100% of Smith which owns WHTM-TV, Inc., a Pennsylvania corporation which operates WHTM-TV, Harrisburg, Pennsylvania; Texoma owns and operates KFDX-TV (Wichita Falls, Texas); and Tri-State owns and operates KSNF-TV (Joplin, Missouri). Each of the foregoing representations and warranties shall automatically be deemed to be restated by each Co- Borrower on the date of each Loan as if made on such date. SECTION 4. CONDITIONS PRECEDENT 4.1 Conditions to Effectiveness. The effectiveness of this Agreement is subject to the satisfaction on or before October 15, 1994 of the following conditions precedent: (a) WHTM Acquisition. The WHTM Acquisition shall have been (or shall simultaneously with the effectiveness of this Agreement be) consummated for an aggregate purchase price (including the repayment of Company Debt (as defined in the Acquisition Agreement), fees and expenses) not exceeding $52,000,000 (of which up to $7,000,000 shall have been paid for with the proceeds of an equity investment by PCC in, or a subordinated loan by PCC to, Federal) in cash, and the Agent shall have received, with a counterpart for each Lender, (i) a certified copy of the Acquisition Agreement (including any schedules and exhibits thereto) relating to the WHTM Acquisition, which shall be in form and substance satisfactory to the Required Lenders and (ii) certificates signed by a Responsible Officer of each of PCC and Federal to the effect that all conditions precedent and other material transactions contemplated by the Acquisition Agreement relating to the WHTM Acquisition have been satisfied or consummated, as the case may be, without amendment, waiver or modification of the terms thereof. (b) Loan Documents. The Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of each of the Co-Borrowers, with a counterpart for each Lender, (ii) for the account of each Lender, a Note conforming to the requirements hereof and executed by a duly authorized officer of each of the Co-Borrowers (iii) the Supplement to Security Agreement executed by a duly authorized officer of each of the parties thereto, (iv) the Supplement to Stock Pledge Agreement executed by a duly authorized officer of the parties thereto and (v) the 32 28 Federal Subordination Agreement executed by a duly authorized officer of the parties thereto. (c) Corporate Proceedings of the Co-Borrowers. The Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Agent, of the Board of Directors of each of the Co- Borrowers authorizing (i) the execution, delivery and performance of this Agreement, the Notes and the other Loan Documents to which such Co-Borrower is a party, (ii) the borrowings contemplated hereunder, (iii) the granting by it of the Liens created pursuant to the Security Documents to which such Co-Borrower is a party and (iv) the amendment to the Security Agreement contemplated by the Supplement to Security Agreement, certified by the Secretary or an Assistant Secretary of such Co-Borrower as of the Closing Date, which certificate shall be in form and substance satisfactory to the Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (d) Corporate Proceedings of Smith and WHTM-TV, Inc., as Additional Parties to the Security Agreement. The Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Agent, of the Board of Directors of each of Smith and WHTM-TV, Inc. in their capacity as parties to the Security Agreement as contemplated by the Supplement to Security Agreement authorizing (i) the execution and delivery of the Supplement to Security Agreement and the performance of the Supplement to Security Agreement and the Security Agreement and (ii) the granting by them of the Liens created pursuant to the Supplement to Security Agreement and the Security Agreement, certified by the Secretary or an Assistant Secretary of Smith and WHTM-TV, Inc. as of the Closing Date, which certificates shall be in form and substance satisfactory to the Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (e) Corporate Proceedings of PCC, Federal and Smith as Pledgors. The Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Agent, of the Board of Directors of each of PCC, Federal and Smith in their capacity as Pledgors as contemplated by the Supplement to Stock Pledge Agreement authorizing (i) the execution and delivery of the Supplement to Stock Pledge Agreement and the performance of the Supplement to Stock Pledge Agreement and the Stock Pledge Agreement and (ii) the granting by them of the guarantees and Liens created pursuant to the Supplement to Stock Pledge Agreement and the Stock Pledge Agreement, certified by the Secretary or an Assistant Secretary of such Pledgors as of the Closing Date, which certificates shall be in form and substance satisfactory to the Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (f) Corporate Proceedings of Atlas and Continental. The Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Agent, of the Board of Directors of each of Atlas and 33 29 Continental authorizing (i) the amendment to the Stock Pledge Agreement contemplated by the Supplement to Stock Pledge Agreement and (ii) the increase in the Obligations hereunder, certified by the Secretary or an Assistant Secretary of Atlas and Continental, as of the Closing Date, which certificates shall be in form and substance satisfactory to the Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (g) Incumbency Certificates. The Agent shall have received, with a counterpart for each Lender, a Certificate of each of the Loan Parties, dated the Closing Date, as to the incumbency and signature of the officers of such Loan Party executing any Loan Document satisfactory in form and substance to the Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of such Loan Party. (h) Corporate Documents. The Agent shall have received, with a counterpart for each Lender, true and complete copies of the certificate of incorporation and by-laws of each Loan Party, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Loan Party. (i) Fees. The Agent shall have received the fees to be received on the Closing Date referred to in subsection 2.4(b). (j) Legal Opinions. The Agent shall have received, with a counterpart for each Lender, one or more executed legal opinions of Proskauer Rose Goetz & Mendelsohn substantially in the form of Exhibit C-1, and the executed legal opinion of Roberts & Eckard substantially in the form of Exhibit C-2, and/or other counsel to the Co-Borrowers and the other Loan Parties reasonably satisfactory to the Agent. (k) Pledged Stock; Stock Powers. The Agent shall have received the certificates representing the shares pledged pursuant to the Stock Pledge Agreement as amended by the Supplement to Stock Pledge Agreement, together with an undated stock power for each such certificate executed in blank by, a duly authorized officer of the pledgor thereof. (l) Acknowledgment and Consent. The Agent shall have received an Acknowledgement and Consent in the form attached hereto as Exhibit E, duly executed by WHTM-TV, Inc. (m) Actions to Perfect Liens. The Agent shall have received evidence in form and substance satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1, necessary or, in the opinion of the Agent, desirable to perfect the Liens created by the Security Documents shall have been completed. (n) Lien Searches. The Agent shall have received the results of a recent search by a Person satisfactory to the Agent, of the Uniform Commercial Code, 34 30 judgement and tax lien filings which may have been filed with respect to personal property of each the Co-Borrowers, and the results of such search shall be satisfactory to the Agent. (o) Operating Cash Flow Certificate. The Agent shall have received, with a counterpart for each Lender, and each Lender shall be satisfied with the contents of, a statement, certified by a Responsible Officer of PCC, setting forth the Operating Cash Flow of the Co-Borrowers for the twelve month period most recently ended prior to the Closing Date. SECTION 5. COVENANTS The Co-Borrowers hereby agree that, so long as this Agreement remains in effect, any Note remains outstanding and unpaid or any other amount is owing to any Lender or the Agent hereunder: 5.1 Financial Statements. The Co-Borrowers shall cause to be furnished to each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of PCC, a copy of the consolidated balance sheet of PCC and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young or other independent certified public accountants of nationally recognized standing not unacceptable to the Agent; (b) as soon as available, but in any event within 60 days after the end of each fiscal quarter of PCC, a copy of the unaudited consolidated balance sheet of PCC and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer of PCC as being fairly stated in all material respects (subject to normal year-end audit adjustments); and (c) as soon as available, but in any event not later than 30 days after the end of each of the first eleven months of each fiscal year of PCC, the unaudited balance sheet of each Co-Borrower as at the end of such month and the related unaudited statements of income and of cash flows of each Co-Borrower for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the figures for the previous year and the figures projected in the applicable budget provided pursuant to subsection 5.2(d), certified by a Responsible Officer of PCC as being fairly stated in all material respects (subject to normal year-end audit adjustments); 35 31 all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 5.2 Certificates; Other Information. The Co-Borrowers shall cause to be furnished to each Lender: (a) concurrently with the delivery of the financial statements referred to in subsection 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsection 5.1(a), copies of each Co-Borrower's year-end unaudited financial statements used in the preparation of such statements; (c) concurrently with the delivery of the financial statements referred to in subsections 5.1(a), 5.1(b) and 5.1(c), a certificate of a Responsible Officer stating that, to the best of such officer's knowledge, no Default has occurred during such period, except as specified in such certificate; (d) not later than 30 days after the end of each fiscal year of PCC, a copy of the projections by PCC of the operating budget and cash flow budget of PCC and its Subsidiaries for such fiscal year, such projections to be accompanied by a certificate of a Responsible Officer of PCC to the effect that such projections have been prepared on the basis of sound financial planning practice and that such officer has no reason to believe they are incorrect or misleading in any material respect; and (e) concurrently with the delivery of the financial statements referred to in subsection 5.1(b), a certificate of a Responsible Officer showing in detail the computations necessary to calculate the Applicable Margin (the "Applicable Margin Certificate"). (f) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 5.3 Notices. The Co-Borrowers shall promptly give notice to the Agent and each Lender of: (a) the occurrence of any Default; (b) any (i) default or event of default under any Contractual Obligation of any Co-Borrower or (ii) non-frivolous litigation, investigation or proceeding which may exist at any time between any Co-Borrower and any Governmental Authority, which in 36 32 either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; (c) any non-frivolous litigation or proceeding affecting any Co-Borrower in which the amount involved is $500,000 or more and not covered by insurance or in which injunctive or similar relief is sought; (d) the following events, as soon as possible and in any event within 30 days after any Co-Borrower knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or any Co-Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; and (e) any development or event which could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Co-Borrowers propose to take with respect thereto. 5.4 Financial Condition Covenants. The Co-Borrowers shall not permit (a) the ratio of (i) the aggregate Indebtedness of the Co-Borrowers to (ii) Operating Cash Flow to (x) exceed 4.0 to 1.0 from the Closing Date through December 30, 1996, (y) exceed 3.5 to 1.0 from December 31, 1996 through December 30, 1997 and (z) exceed 3.0 to 1.0 from December 31, 1997 through the Termination Date or (b) at any time the ratio of (i) Available Cash Flow for any period of four consecutive fiscal quarters to (ii) Debt Service for such period to be less than 1.2 to 1.0. 5.5 Limitation on Indebtedness. The Co-Borrowers shall not create, incur, assume or suffer to exist any material Indebtedness, except (i) the Indebtedness under this Agreement, (ii) trade accounts payable in the ordinary course of business and (iii) the Subordinated Intercompany Loans. 5.6 Asset Sales. The Co-Borrowers shall not sell any asset unless cash consideration is received in an amount equal to the fair market value thereof. 5.7 Limitation on Restricted Payments. The Co-Borrowers shall not declare or pay any dividend (other than dividends payable solely in common stock of the Co-Borrowers) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of any Co-Borrower or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in 37 33 respect thereof, or make any optional payment on the Subordinated Intercompany Loans, either directly or indirectly, whether in cash or property or in obligations of any Co-Borrower (such declarations, payments, setting apart, purchases, redemptions, defeasances, retirements, acquisitions, distributions and optional payments being herein called "Restricted Payments"), except for Restricted Payments permitted to be made pursuant to the Intercompany Subordination Agreement. SECTION 6. OFFERING BASIS NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT OR THE PAYMENT BY THE CO- BORROWERS OF ANY FEES SPECIFIED HEREIN OR THE EXISTENCE OR NONEXISTENCE OF ANY DEFAULT, ALL LOANS MADE BY EACH LENDER SHALL BE PAYABLE ON WRITTEN DEMAND BY SUCH LENDER, AND EACH LENDER SHALL HAVE THE RIGHT TO TERMINATE ITS LINE OF CREDIT AND/OR REFUSE TO MAKE ANY REQUESTED LOAN AT ANY TIME FOR ANY REASON, WITHOUT, IN ANY SUCH CASE, ANY PRIOR NOTICE WHATSOEVER. THE CO-BORROWERS ACKNOWLEDGE THAT CERTAIN COVENANTS HAVE BEEN INCLUDED IN SECTION 5 TO EMPHASIZE CERTAIN MATTERS WHICH ARE OF PARTICULAR CONCERN TO THE LENDERS BUT THAT SUCH INCLUSION SHALL NOT IN ANY WAY BE UNDERSTOOD TO MEAN THAT THE RIGHT OF THE LENDERS TO DEMAND PAYMENT OF OUTSTANDING LOANS OR TO TERMINATE THE LINE OF CREDIT MADE AVAILABLE HEREUNDER OR TO REFUSE TO MAKE ANY REQUESTED LOAN SHALL BE LIMITED TO TIMES WHEN THE CO-BORROWERS ARE IN DEFAULT UNDER SUCH COVENANTS. SECTION 7. THE AGENT 7.1 Appointment. Each Lender hereby irrevocably designates and appoints Bank of Montreal as the Agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes Bank of Montreal, as the Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 7.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent 38 34 shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 7.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Co-Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the Notes or any other Loan Document or for any failure of any Co-Borrower to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Co-Borrower. 7.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any Co-Borrower), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except to the extent arising solely from the gross negligence or willful misconduct of the Agent. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. 7.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default hereunder unless the Agent has received notice from a Lender or any Co-Borrower referring to this Agreement, describing such Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall promptly give notice thereof to the Lenders. The Agent shall take such action with respect to such Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Agent shall have received such directions, the Agent may 39 35 (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interests of the Lenders. 7.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of each Loan Party and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of each Loan Party. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 7.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Co-Borrowers and without limiting the obligation of the Co-Borrowers to do so), ratably according to their respective Line of Credit Percentages in effect on the date on which indemnification is sought under this subsection, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes) be imposed on, incurred by or asserted against the Agent with respect to or in any way arising out of the execution, delivery, enforcement, performance or administration of this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Notes and all other amounts payable hereunder. 7.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Co-Borrowers as though the Agent were not the Agent hereunder and under the other Loan 40 36 Documents. With respect to its Loans made or renewed by it and any Note issued to it, the Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. 7.9 Successor Agent. The Agent may resign as Agent upon 10 days' notice to the Lenders. If the Agent shall resign as Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, whereupon such successor agent shall succeed to the rights, powers and duties of the Agent, and the term "Agent" shall mean such successor agent effective upon such appointment and approval, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Notes. After any retiring Agent's resignation as Agent, the provisions of this subsection shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents. SECTION 8. MISCELLANEOUS 8.1 Amendments and Waivers. Neither this Agreement, any Note, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Agent may, from time to time, (a) enter into with the Co-Borrowers written amendments, supplements or modifications hereto and the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Co-Borrowers hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of any Note or of any installment thereof, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Line of Credit Amount, in each case without the consent of each Lender affected thereby, or (ii) amend, modify or waive any provision of this subsection or Section 6 or waive any failure of the Co-Borrowers to make any payment of interest or principal when due or reduce the percentage specified in the definition of Required Lenders, or consent to the assignment or transfer by any Co-Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, in each case without the written consent of all the Lenders, or (iii) amend, modify or waive any provision of Section 7 without the written consent of the then Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon each Co-Borrower, the Lenders, the Agent and all future holders of the Notes. 41 37 8.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or 2 days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Co-Borrowers and the Agent, and as set forth in Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes: The Co-Borrowers: c/o Price Communications Corporation 45 Rockefeller Plaza New York, New York 10020 Attention: Robert Price, President Telecopy: (212) 397-3755 The Agent: Bank of Montreal 430 Park Avenue New York, New York 10022 Attention: Gretchen Shugart John Decoufle Telecopy: (212) 605-1618
provided that any notice, request or demand to or upon the Agent or the Lenders pursuant to subsection 2.3, 2.5, 2.6, 2.7 or 2.12 shall not be effective until received. 8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 8.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Notes. 8.5 Payment of Expenses and Taxes. Each Co-Borrower jointly and severally agrees (a) to pay or reimburse the Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the Notes and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all its reasonable costs and expenses 42 38 incurred in connection with the enforcement or preservation of any rights under this Agreement, the Notes, the other Loan Documents and any such other documents, including, without limitation, the fees and disbursements of counsel to the Agent and to the several Lenders, and (c) to pay, indemnify, and hold each Lender and the Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay by the Co-Borrowers in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the Notes, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Agent harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to or in any way arising out of the execution, delivery, enforcement, performance or administration of this Agreement, the Notes the other Loan Documents and any such other documents and the transactions contemplated hereby or thereby (all the foregoing in this clause (d), collectively, the "indemnified liabilities"); provided, that no Co-Borrower shall have any obligation under this subsection 8.5 to the Agent or any Lender with respect to costs, expenses, fees, liabilities or other indemnified liabilities arising solely from the gross negligence or willful misconduct of the party to be indemnified. The agreements in this subsection shall survive repayment of the Notes and all other amounts payable hereunder. 8.6 Successors and Assigns; Participations; Purchasing Lenders. (a) This Agreement shall be binding upon and inure to the benefit of the Co-Borrowers, the Lenders, the Agent, all future holders of the Notes and their respective successors and assigns, except that no Co-Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Any Lender may, in the ordinary course of its commercial lending business and in accordance with applicable law, at any time sell to one or more banks or other financial or lending institution ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Line of Credit Amount of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement and the other Loan Documents, and the Co-Borrowers and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. Each Co-Borrower agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Note, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the 43 39 Lenders the proceeds thereof as provided in subsection 8.7 as fully as if it were a Lender hereunder. The Co-Borrower also agrees that each Participant shall be entitled to the benefits of subsections 2.14, 2.15 and 2.16 with respect to its participation in the Line of Credit Amounts and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. Participants shall not be granted any voting rights or veto power over any action by the participating Lender, except that such Lender may agree not to (i) extend the maturity of its Note, (ii) reduce the amount of any payment in respect thereof or (iii) reduce the rate of any interest or fee. (c) Any Lender may, in the ordinary course of its commercial lending business and in accordance with applicable law, at any time and from time to time assign to any Lender or any Affiliate thereof or, with the consent of the Agent (which shall not be unreasonably withheld), to an additional bank or financial or lending institution (an "Assignee") all or any part of its rights and obligations under this Agreement and the Notes pursuant to an Assignment and Acceptance, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an Affiliate thereof, by the Agent) and delivered to the Agent for its acceptance and recording in the Register. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with Line of Credit Amounts as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, 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 Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). (d) The Agent shall maintain at its address referred to in subsection 8.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Line of Credit Amounts of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Co-Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Co-Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Agents) the Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Co-Borrowers. On or prior to such effective date, the Co-Borrowers, at their own expense, shall execute and deliver to the Agent (in exchange for the 44 40 Notes of the assigning Lender) a new Note to the order of such Assignee in an amount equal to the Line of Credit Amount assumed by such Purchasing Lender pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Line of Credit Amount hereunder, a Note to the order of the assigning Lender in an amount equal to the Line of Credit Amount retained by such Lender hereunder. Such new Notes shall be dated the Closing Date and shall otherwise be in the form of the Note replaced thereby. (f) Subject to the provisions of subsection 8.16, the Co-Borrowers authorize each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Co-Borrowers and their Affiliates which has been delivered to such Lender by or on behalf of the Co- Borrowers pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Co-Borrowers in connection with such Lender's credit evaluation of the Co-Borrowers and their Affiliates prior to becoming a party to this Agreement. (g) Nothing herein shall prohibit any Lender from pledging or assigning any Note to any Federal Reserve Bank in accordance with applicable law. 8.7 Adjustments. If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to any bankruptcy or insolvency proceeding, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. 8.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Co-Borrowers and the Agent. 8.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 45 41 8.10 Integration. This Agreement and the other Loan Documents represent the agreement of each Co-Borrower, the Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 8.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 8.12 Submission To Jurisdiction; Waivers. Each Co-Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Co-Borrower at its address set forth in subsection 8.2 or at such other address of which the Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 8.13 Acknowledgements. Each Co-Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the Notes and the other Loan Documents; 46 42 (b) neither the Agent nor any Lender has any fiduciary relationship with or duty to such Co-Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Agent and Lenders, on one hand, and such Co-Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture exists among the Lenders or among such Co-Borrower and the Lenders. 8.14 WAIVERS OF JURY TRIAL. EACH CO-BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 8.15 Joint and Several Liability. (a) Subject to paragraph (b) of this subsection, each Co-Borrower hereby agrees that the obligations of the Co-Borrowers hereunder and under the other Loan Documents shall be joint and several in all circumstances, notwithstanding anything herein or in such other Loan Documents to the contrary. Without limiting the generality of the foregoing, each Co-Borrower agrees that the obligations of the Co-Borrowers hereunder and under the other Loan Documents shall be enforceable against such Co-Borrower even if this Agreement or any other Loan Document may be unenforceable against any other Co- Borrower for any reason. (b) Anything herein or in any Loan Document to the contrary notwithstanding, the maximum liability of each Co- Borrower for the obligations of the other Co-Borrowers shall in no event exceed the amount on which such former Co-Borrower can become liable under applicable federal and state laws relating to the insolvency of debtors. (c) Notwithstanding anything in this Agreement or the other Loan Documents, each Co-Borrower further agrees that any notice or action hereunder or under the other Loan Documents which is required to be given to or by, or taken by, one or more of the Co-Borrowers may be given to or by, or taken by, any Co-Borrower alone, with or without the knowledge or agreement of the other Co-Borrowers, and, if such notice or action is so given or taken, all of the Co-Borrowers shall be bound thereby as if such notice or action was given to or by, or taken by, as the case may be, all of the Co-Borrowers. 8.16 Confidentiality. Each Lender agrees to keep confidential any non-public written or oral information (a) provided to it by or on behalf of any Co-Borrower pursuant to or in connection with this Agreement or (b) obtained by such Lender based on a review of the books and records of any Co-Borrower; provided that nothing herein shall prevent any Lender from disclosing any such information (i) to the Agent or any other Lender, (ii) to any Transferee or prospective Transferree which agrees to comply with the provisions of this subsection, provided that the Co-Borrowers shall be promptly notified of any such disclosure to a Transferee or prospective Transferee, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any 47 43 Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. 8.17 Consent to Supplement to Security Agreement. By executing this Agreement, the Co-Borrowers consent to the Supplement to Security Agreement. 48 44 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. ATLANTIC BROADCASTING CORPORATION, as a Co-Borrower By: /s/ Kim I. Pressman ------------------------------ Title: FEDERAL BROADCASTING CORPORATION, as a Co-Borrower By: /s/ Kim I. Pressman ------------------------------ Title: SOUTHEAST TEXAS BROADCASTING CORPORATION, as a Co-Borrower By: /s/ Kim I. Pressman ------------------------------ Title: TEXOMA BROADCASTING CORPORATION, as a Co-Borrower By: /s/ Kim I. Pressman ------------------------------ Title: TRI-STATE BROADCASTING CORPORATION, as a Co-Borrower By: /s/ Kim I. Pressman ------------------------------ Title: BANK OF MONTREAL, as Agent By: /s/ Kim I. Pressman ------------------------------ Title: 49 43 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. ATLANTIC BROADCASTING CORPORATION, as a Co-Borrower By: ------------------------------ Title: FEDERAL BROADCASTING CORPORATION, as a Co-Borrower By: ----------------------------- Title: SOUTHEAST TEXAS BROADCASTING CORPORATION, as a Co-Borrower By: ----------------------------- Title: TEXOMA BROADCASTING CORPORATION, as a Co-Borrower By: ----------------------------- Title: TRI-STATE BROADCASTING CORPORATION, as a Co-Borrower By: ----------------------------- Title: BANK OF MONTREAL, as Agent By: /s/ Gretchen Shugert ----------------------------- Title: Gretchen Shugert Director 50 44 BANK OF MONTREAL, CHICAGO BRANCH, as a Lender By: /s/ Gretchen Shugert ----------------------------- Title: Gretchen Shugert Director EX-10.AA 3 EMPLOYMENT AGREEMENT - ROBERT PRICE 1 EMPLOYMENT AGREEMENT AGREEMENT dated as of October 6, 1994 by and between Price Communications Corporation, a New York corporation with its principal place of business at 45 Rockefeller Plaza, New York, New York 10020 (together with its successors and assigns hereinafter referred to as "Employer"), and Robert Price, an individual residing at 25 East 86th Street, Apartment 8D, New York, New York 10028 ("Employee"). WHEREAS, Employee is currently employed by Employer pursuant to an Employment Agreement dated May 8, 1992, as amended to date (the "Existing Employment Agreement"); and WHEREAS, as an executive, director and shareholder of Employer, Employee has extensive and valuable knowledge of the business to be carried on by Employer, and Employer desires to continue the employment of Employee as chief executive officer and a director of Employer. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, it is mutually agreed as follows: 1. Employment. Employer hereby agrees to employ Employee during the Term (as hereinafter defined), and Employee hereby accepts such employment, upon the terms and conditions set forth herein. During the Term, Employee shall be employed as, and shall have the title of, Chairman of the Board, President and Chief Executive Officer of Employer and shall be a member of the Board of Directors of and shall perform services for Employer and each of Employer's direct and indirect subsidiaries (collectively, the "Companies"). Employee shall report only to the Boards of Directors of the Companies and shall have supervision and control over, and complete responsibility for, the general management and operation of the Companies, and such other powers and duties as may, from time to time, be prescribed by such Boards, provided that such duties are substantially and reasonably consistent with Employee's duties with the Companies prior to the date hereof and are of the type usually assigned to the Chairman of the Board of a company (i.e., chairing meetings of shareholders and directors) and to the President and Chief Executive Officer in charge of the general management of similar companies. 2. Place of Employment. In connection with his employment hereunder, Employee shall be based at Employer's principal executive offices in New York City and Employer shall not, without the written consent of Employee, relocate its principal executive offices outside of New York City during the Term. 2 3. Term. The term of this Agreement (the "Term") shall commence on the date hereof (the "Effective Date") and shall terminate on the third anniversary of the Effective Date. The Term shall be automatically extended for successive additional three year periods on the expiration of the Term (including upon the expiration of any such additional three year period) unless the Employer shall at least one year prior to any such expiration date notify Employee in writing of its intention to terminate this Agreement upon such expiration date, in which event the Term shall terminate on such expiration date. 4. Compensation and Related Matters. (a) Base Salary. During the Term, Employee shall receive a bi-weekly base salary at the rate of $300,000 per annum; provided, however, that for each calendar year (or portion thereof) that this Agreement remains in effect after 1994, such base salary shall be equal to the (i) base salary for the immediately preceding calendar year multiplied by (ii) one plus a percentage equal to the percentage increase from the prior calendar year in the annual consumer price index in the New York-Northern New Jersey-Long Island Consolidated Metropolitan Statistical Area for all urban consumers (1982-84 equals 100), as published by the United States Department of Labor, Bureau of Labor Statistics, with respect to such immediately preceding calendar year. (b) Cash Performance Bonuses. In addition to the base salary set forth in paragraph 4(a) above, Employee shall receive cash performance bonuses solely as determined by the Board of Directors of the Employer. Payments of such bonuses shall be made by Employer to Employee no later than one hundred (100) days after the end of each calendar year for which such bonuses are determined by the Board. (c) Stock Options. In addition to the base salary and cash performance bonuses, if any, set forth in paragraphs 4(a) and 4(b) above, Employee may be awarded stock options solely as determined by the Board of Directors or Stock Option Committee of the Employer. (d) Expenses. Employee shall receive prompt reimbursement for all expenses reasonably incurred by Employee in performing his services hereunder. Employee shall provide such invoices or vouchers as Employer may reasonably request. (e) Services Furnished. Employer shall furnish Employee with office space, stenographic assistance and such other facilities, services and other indicia of his position as shall be commensurate with those furnished to him on the date hereof. 2 3 (f) Benefit Plans. Employer shall maintain in full force and effect, and Employee shall be entitled to continue to participate in, all employee benefit plans or arrangements in effect on the date hereof in which Employee now participates or plans and arrangements providing Employee with at least equivalent benefits thereunder. Subject to the preceding sentence, Employer shall not make any changes in such plans and arrangements which would adversely effect Employee's rights or benefits thereunder. Employee shall be entitled to participate in or receive benefits under any employee benefit plan or arrangement made available by Employer in the future to its officers and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Employer shall maintain in full force and effect, at Employer's expense, for the continued benefit of Employee, for a period of two (2) years after termination of the Agreement, all medical, life and health and accident insurance plans and programs in which Employee was entitled to participate immediately prior to the termination of this Agreement, or in the event Employee's continued participation in such plans or programs is not permitted under the terms and provisions thereof, then Employer shall arrange, at Employer's expense, to provide Employee with substantially similar benefits during such two year period. Insofar as Employee fails for any reason to obtain coverage comparable to that described in the preceding sentence prior to the expiration of the two-year period referred to in that sentence, the two-year period referred to in such preceding sentence shall be extended for two years in addition to such two-year period (or for any lesser portion of such two additional years as to which Employee fails to obtain such coverage). Nothing paid to Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary, incentive or other compensation payable to Employee pursuant to this Agreement. (g) Partial Year Payments. Any payments or benefits payable to Employee in respect of any calendar year or other period during which Employee is employed by Employer for less than the entire such year or period, shall be prorated in accordance with the number of days in such calendar year or period during which Employee is so employed. If Employee's employment is terminated for any reason before the actual payment date for any bonus or incentive payment previously awarded by the Board of Directors of the Employer, Employee shall still be entitled to such bonus or incentive payment for the previous year or period. (h) Vacation. Employee shall be entitled to three weeks of paid vacation (or salary equivalent thereto) in each calendar year and other paid absences for holidays, illness, 3 4 personal time or any similar purpose in accordance with the Employer's policies in effect on the date hereof. 5. Termination. (a) Right to Terminate. Employer may terminate Employee's employment hereunder only for "Cause" (as hereinafter defined). Employee may terminate his employment at any time following the occurrence of an event or condition constituting "Good Reason" (as hereinafter defined). Any such termination shall be effective immediately (subject to paragraph 5(f)(C) below) upon Employee's or Employer's, as the case may be, receipt of a "Notice of Termination" (as hereinafter defined). (b) Termination for "Cause" or Death. If Employee's employment hereunder is terminated by Employer for Cause, or as a result of or after Employee's death, Employer shall pay to Employee (or his estate or designee(s), as the case may be) a lump sum severance payment equal to one year's annual base salary as in effect on the date of termination. (c) Termination Without "Cause" or for "Good Reason". If Employee's employment hereunder is terminated by Employer without Cause or Employee terminates his employment hereunder for "Good Reason" then Employer shall pay to Employee a lump sum severance payment equal to three times his annual base salary as in effect on the date of termination. (d) Termination Without "Good Reason". If Employee terminates his employment hereunder without "Good Reason", Employer shall pay to Employee a lump sum severance payment equal to one year's annual base salary as in effect on the date of termination. (e) Other Compensation and Benefits. The provisions of this paragraph 5, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish Employer's or Employee's existing rights, or rights which would accrue solely as a result of the passage of time, under any benefit plan, incentive plan or securities plan, employment agreement or other contract, plan or arrangement, including without limitation any other provision of this Agreement. In the event of any termination of this Agreement for any reason, Employee shall still be entitled to receive all salary and benefits for the pro-rata portion of the year during which he was employed in accordance with the number of days in such year during which he was so employed. (f) Definitions. For purposes of this Agreement 4 5 (A) "Cause" shall mean any of the following, (i) Employee's commission of any felony or any misdemeanor that involves fraud, moral turpitude or material loss to the Employer or any subsidiary thereof or its business or reputation, (ii) Employee's embezzlement or misappropriation of funds or property of Employer or any subsidiary thereof, (iii) Employee's being sanctioned by state or federal authorities for material violation of laws, rules or regulations applicable to Employer's or any subsidiary's conduct of its business, (iv) Employee's willful misconduct in the performance of his reasonably assigned duties and obligations hereunder which is materially adverse to Employer or any subsidiary thereof or his unreasonable neglect or refusal to perform his reasonably assigned duties and obligations hereunder (unless significantly changed without his consent), (v) Employee's failure to perform the duties or obligations hereunder by reason of any physical or mental incapacity (as hereinafter defined). No act, or failure to act, on Employee's part shall be considered "willful" unless done, or omitted to be done, without good faith and without reasonable belief that the action or omission was in the best interest of Employer. (B) "Good Reason" shall mean the occurrence of any of the events or conditions described in clauses (i) - (v) hereof. (The enumeration of such events shall not imply that they are permitted under this Agreement or any other applicable agreement between the parties hereto.) (i) A material change in Employee's title, position or responsibilities (including reporting responsibilities) which represents an adverse change from his title, position or responsibilities as in effect on the Effective Date or the assignment to Employee of any duties or responsibilities which are inconsistent with his title, position or responsibilities as in effect on the Effective Date; (ii) A reduction in Employee's base salary or other compensation or benefits or any failure to pay or deliver to Employee any cash, stock or other compensation or benefits to which he is entitled within ten (10) days of the date due; (iii) Employer's requiring Employee to be based in any place outside of New York City, except for reasonably required travel on Employer's business; 5 6 (iv) The failure to elect to the Board of Directors or maintain in office at all times three directors designated by Employee (including Employee) or to comply with any provisions of this Agreement; or (v) The occurrence of a Change in Control (as hereinafter defined). (C) "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstance claimed to provide a basis for termination. Notwithstanding the foregoing, (A) Employee shall not be deemed to have been terminated for Cause unless and until (i) Employee shall have been given reasonable notice of (and in any instance where the act or omission constituting Cause may be curable) and a reasonable opportunity to cure any alleged basis for such termination and (ii) there has been delivered to Employer a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors at a meeting of the Board (after reasonable notice to Employee and opportunity for Employee together with his counsel, the reasonable fees and expenses of which shall be paid by Employer, to be heard at such meeting); and (B) Employee shall not be deemed to have terminated his employment for Good Reason unless and until Employer shall have been given reasonable notice of (and in any instance where the act or omission constituting Good Reason may be curable) and a reasonable opportunity to cure any alleged basis for such termination. (D) "Physical or mental incapacity" shall mean the inability of Employee by reason of a physical or mental illness to perform his duties hereunder for a period of 120 consecutive days or a total of 150 days in any twelve month period and such incapacity is determined by a physician selected by Employee (or his legal representatives) and acceptable to Employer to be such as prevents Employee from performing adequately his normal duties to the Employer. During any period that the Employee is unable to perform his duties by reason of physical or mental incapacity, Employee shall continue to receive his full compensation and benefits hereunder. (E) "Change of Control" shall mean and be deemed to have occurred upon the occurrence of any of the following events: 6 7 (i) Any acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares of common stock of the Employer (the "Common Stock") and/or other voting securities of the Employer entitled to vote generally in the election of directors ("Outstanding Company Voting Securities") after which acquisition such individual, entity or group is the beneficial owner of thirty percent (30%) or more of either (1) the then outstanding shares of Common Stock or (2) the Outstanding Company Voting Securities; excluding, however, the following: (1) any acquisition by the Employer, (2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Employer or (3) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar corporate transaction (in each case, a "Corporate Transaction"), if, pursuant to such Corporate Transaction, the conditions described in clauses (1), (2) and (3) of paragraph 5(f)(E)(iii) are satisfied; or (ii) A change in the composition of the Board of Directors of the Employer (the "Board") such that (w) the individuals who, as of the date hereof, comprise a class of directors of the Board cease for any reason to constitute at least a majority of the class or (x) if there shall at any time cease to be classes of directors of the Board, the individuals who, as of the date hereof, comprise the members of the Board cease for any reason to constitute at least a majority of the Board (the members of each class of directors of the Board as of the date hereof shall be hereinafter referred to as an "Incumbent Class" and the members of all of the Incumbent Classes (or if there shall cease at any time to be classes of directors of the Board, the members of the Board as of the date hereof) shall be hereinafter collectively referred to as the "Incumbent Board"); provided, however, for purposes of this subsection that any individual who becomes a member of a class of the Board or of the Board subsequent to the date hereof 7 8 whose election, or nomination for election (y) if by the Employer's shareholders, was approved in advance or contemporaneously with such election by the affirmative vote of at least a majority of those individuals who are members of the Incumbent Board (or deemed to be such pursuant to this proviso), and (z) if by the Board, was approved by the affirmative vote of at least a majority of those individuals who are members of the Incumbent Board (or deemed to be such pursuant to this proviso), shall be considered as though such individual were a member of the Incumbent Board and any applicable Incumbent Class; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or actual or threatened tender offer for shares of the Employer or similar transaction or other contest for corporate control (other than a tender offer by the Employer) shall not be so considered as a member of the Incumbent Board or any applicable Incumbent Class; (iii) The approval by the shareholders of the Employer of a Corporate Transaction or, if consummation of such Corporate Transaction is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the outstanding shares of Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than seventy percent (70%) of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction and the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors, (2) no Person (other 8 9 than the Employer), any employee benefit plan (or related trust) of the Employer or the corporation resulting from such Corporate Transaction and any Person beneficially owning, immediately prior to such Corporate Transaction, directly or indirectly, thirty percent (30%) or more of the outstanding shares of Common Stock or Outstanding Company Voting Securities, as the case may be) will beneficially own, directly or indirectly, thirty percent (30%) or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of board of directors of the corporation resulting from such Corporate Transaction; or (iv) The approval of the shareholders of the Employer of (1) a complete liquidation or dissolution of the Employer or (2) the sale or other disposition of all or substantially all of the assets of the Employer; excluding, however, such a sale or other disposition to a corporation, with respect to which following such sale or other disposition, (A) more than seventy percent (70%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding shares of Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition, (B) no Person (other than the Employer and any employee benefit plan (or related trust) of the Employer or such corporation and any Person beneficially owning, immediately prior to such sale or other acquisition, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock or Outstanding Company Voting 9 10 Securities, as the case may be) will beneficially own, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of such corporation. (g) Wrongful Termination. In the event it is determined that Employer did not have a basis upon which to terminate Employee's employment for "Cause", then Employer shall pay Employee severance pay as if this Agreement had been terminated without Cause. (h) Payment of Severance. All severance payments due to Employee pursuant to this paragraph 5 and all other unpaid amounts due to Employee under this Agreement as of the date of termination shall be paid in cash within thirty (30) days after the date of termination. If any payment made pursuant to this paragraph 5 is made as a result of Employee's death, such payments shall be in addition to any other payments Employee's spouse, beneficiaries, designees or estate may be entitled to receive pursuant to any employee benefit plan or life insurance policy maintained by the Employer. 6. No Mitigation. Employee shall not be required to mitigate damages or the amount of any payment provided for pursuant to this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for by this Agreement be reduced by any compensation earned by Employee as a result of employment by another employer after the date of termination or otherwise. 7. Releases. Upon payment of all severance amounts due hereunder and satisfaction of all other obligations under this Agreement, Employer and Employee shall each execute and deliver general releases to each other of all claims, rights or causes of action which each party may then have or may ever be able to assert against the other party hereto other than (a) any obligations the Employer amy have to indemnify Employee pursuant to this Agreement, the Certificate of Incorporation and By-laws of Employer or otherwise and (b) the commission by Employee of embezzlement or other misappropriation of Employer's (or any of its subsidiaries') funds or property for the personal benefit of Employee or for other malfeasance willfully and intentionally committed by Employee against the Employer (or any of its 10 11 subsidiaries) for Employee's personal benefit. In addition, in consideration of past and future services by the Employee to the Employer, the Employer hereby releases the Employee from any and all claims Employer may have (other than for the commission by Employee of embezzlement or other misappropriation of Employer's (or any of its subsidiaries') funds or property of the personal benefit of Employee or for other malfeasance willfully and intentionally committed by Employee against the Employer (or any of its subsidiaries) for Employee's personal benefit) arising (or which may hereafter arise) in any way out of Employee's relationship with or work performed for Employer on or prior to the Effective Date and whether arising in Employee's capacity as officer, director or employee of Employer or otherwise. 8. Miscellaneous. (a) No Setoff etc. Employer's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense or other claim, right or action which Employer may have against Employee or others (except insofar as the Employer's obligation to make such payments may be subject to setoff as a result of the commission by Employee of embezzlement or other misappropriation of the Employer's (or any of its subsidiaries') funds or property for the personal benefit of the Employee or for other malfeasance willfully and intentionally committed by the Employee against the Employer (or any of its subsidiaries) for his personal benefit), provided however, that Employer may deduct applicable withholding taxes with respect to all such payments. (b) Right to Reimbursement. Employee shall be entitled to reimbursement by Employer of any fees or expenses (including reasonable attorneys' fees) incurred by Employee in connection with contesting or disputing any wrongful termination of this Agreement by Employer or in seeking to obtain or enforce any of his rights or benefits to which he is entitled hereunder and as to which a judgment or award has been rendered in favor of Employee. (c) Notices. All notices or other communications required or permitted to be given hereunder shall be in writing, delivered by hand or first class mail, postage prepaid, addressed to the addresses specified above or such addresses later designated by any party hereto in writing in accordance with this paragraph and shall be deemed to have been duly given when received by the addressee. (d) Headings. The headings in this Agreement are for convenience only and shall not be considered as part of this 11 12 Agreement or as in any way limiting or amplifying the terms and provisions hereof. (e) Late Payments. Any sums due to Employee under this Agreement which are not paid when due shall bear interest from the date thereof to the date of payment at the prime or similar rate then in effect of Employer's then principal lending bank (or Citibank, N.A. if there is no such lending bank). (f) Governing Law. This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the internal laws of the State of New York without regard to its conflicts of law rules. (g) Indemnification. Employer shall indemnify and hold Employee harmless to the maximum extent permitted by the laws of the State of New York (and the law of any other appropriate jurisdiction after any reincorporation) against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by Employee, in connection with the defense of, or as a result of any action or proceeding (or any appeal from any action or proceeding) in which Employee is made or is threatened to be made a party by reason of the fact that he is or was an officer or director of Employer, regardless of whether such action or proceeding is one brought by or in the right of Employer to procure a judgment in its favor (or other than by or in the right of the Employer). (h) Counterparts. This Agreement may be executed in one or more counterparts each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (i) Binding Agreement; Successors and Assigns. (A) This Agreement and all of the rights of the Employee hereunder shall inure to the benefit of, and be enforceable by the Employee and Employee's personal representatives, executors, administrators, heirs, devices, legatees, successors and assigns. (B) Employer shall require any successor or assign to all or substantially all of the business and/or assets of Employer, by agreement in form and substance reasonably satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform it, if no succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement 12 13 and shall entitle Employee to compensation from Employer in the same amount and on the same terms as he would be entitled to hereunder if he terminated his employment for Good Reason. (j) Severability. If all or any part of any paragraph or subparagraph of this Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate all or any part of any paragraph or subparagraph not declared to be unlawful or invalid, all of which shall remain enforceable in accordance with their terms. Any paragraph or subparagraph or part thereof so declared to be unlawful or invalid shall be construed in a manner which will give effect to the terms of such paragraph or subparagraph or part thereof to the fullest extent possible while remaining lawful and valid. (k) Amendments. This Agreement shall not be altered, amended or modified except by written instruments executed by both Employer (approved by the Board of Directors of the Employer) and Employee. A waiver of any term, covenant, agreement or condition contained in this Agreement shall not be deemed a waiver of any other term, covenant, agreement or condition and any waiver of any default in any such term, covenant, agreement or condition shall not be deemed a waiver of any later default thereof or of any other term, covenant, agreement or condition. No waiver shall be effective unless in writing and signed by the party sought to be held to the terms thereof. (l) Consent to Jurisdiction. The parties hereto irrevocably submit to the exclusive jurisdiction of the Supreme Court of the State of New York, New York County, and of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding brought by any party or their respective successors or assigns arising out of any breach of any provision hereunder or otherwise relating to this Agreement or the obligations hereunder or the transactions contemplated herein and hereby waive, and agree not to assert by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that it or he is not personally subject to the jurisdiction of the above- named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement may not be enforced in or by such courts. Service of process given in the manner contemplated by and pursuant to the notice terms of this Agreement shall constitute valid service of process upon the parties, their successors and assigns in any action, suit or proceeding in 13 14 the Supreme Court of the State of New York, New York County, or the United States District Court for the Southern District of New York, or any other tribunal, wherever located having jurisdiction over the parties or any of their assets or properties with respect to any matters as to which they have submitted to jurisdiction as set forth in the immediately preceding paragraph. (m) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior negotiations and agreements except that the Existing Employment Agreement shall remain in full force and effect until the commencement of the Term. (n) Counterparts. This Agreement may be signed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 14 15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. PRICE COMMUNICATIONS CORPORATION By: --------------------------- --------------------------- Robert Price 15 EX-10.BB 4 EMPLOYMENT AGREEMENT - KIM PRESSMAN 1 EMPLOYMENT AGREEMENT AGREEMENT dated as of January 5, 1995 by and between Price Communications Corporation, a New York corporation with its principal place of business at 45 Rockefeller Plaza, New York, New York 10020 (together with its successors and assigns hereinafter referred to as "Employer"), and Kim I. Pressman, an individual residing at 7 Jan River Drive, Upper Saddle River, New Jersey 07458 ("Employee"). WHEREAS, as an executive and director of Employer, Employee has extensive and valuable knowledge of the business to be carried on by Employer, and Employer desires to continue the employment of Employee as Executive Vice President of Employer. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, it is mutually agreed as follows: 1. Employment. Employer hereby agrees to employ Employee during the Term (as hereinafter defined), and Employee hereby accepts such employment, upon the terms and conditions set forth herein. During the Term, Employee shall be employed as, and shall have the title of, Executive Vice President of Employer and shall perform services for Employer and each of Employer's direct and indirect subsidiaries (collectively, the "Companies"). Employee shall report only to the Chief Executive Officer and Boards of Directors of the Companies and shall have such powers and duties as may, from time to time, be prescribed by such Chief Executive Officer and Boards, provided that such duties are substantially and reasonably consistent with Employee's duties with the Companies prior to the date hereof and are consistent with her senior executive position with Employer. Employee shall provide her services on a part-time basis substantially consistent with her practice prior to the date hereof. 2. Place of Employment. In connection with her employment hereunder, Employee shall be based at Employer's principal executive offices in New York City. 3. Term. The term of this Agreement (the "Term") shall commence on the date hereof (the "Effective Date") and shall terminate on the third anniversary of the Effective Date. The Term shall be automatically extended for successive additional three year periods on the expiration of the Term (including upon the expiration of any such additional three year period) unless the Employer shall at least three months 2 prior to any such expiration date notify Employee in writing of its intention to terminate this Agreement upon such expiration date, in which event the Term shall terminate on such expiration date. 4. Compensation and Related Matters. (a) Base Salary. During the Term, Employee shall receive a base salary at the rate of $100,000 per annum in accordance with Employer's standard payroll practices; provided, however, that for each calendar year (or portion thereof) that this Agreement remains in effect after 1995, such base salary shall be equal to the (i) base salary for the immediately preceding calendar year multiplied by (ii) one plus a percentage equal to the percentage increase from the prior calendar year in the annual consumer price index in the New York-Northern New Jersey-Long Island Consolidated Metropolitan Statistical Area for all urban consumers (1982-84 equals 100), as published by the United States Department of Labor, Bureau of Labor Statistics, with respect to such immediately preceding calendar year. (b) Cash Performance Bonuses. In addition to the base salary set forth in paragraph 4(a) above, Employee may receive cash performance bonuses. (c) Stock Options. In addition to the base salary and cash performance bonuses, if any, set forth in paragraphs 4(a) and 4(b) above, Employee may be awarded stock options solely as determined by the Board of Directors or Stock Option Committee of the Employer. (d) Expenses. Employee shall receive prompt reimbursement for all expenses reasonably incurred by Employee in performing her services hereunder. Employee shall provide such invoices or vouchers as Employer may reasonably request. (e) Services Furnished. Employer shall furnish Employee with office space, stenographic assistance and such other facilities, services and other indicia of her position as shall be commensurate with those furnished to her on the date hereof. (f) Benefit Plans. Employer shall maintain in full force and effect, and Employee shall be entitled to continue to participate in, all employee benefit plans or arrangements in effect on the date hereof in which Employee now participates or plans and arrangements providing Employee with at least equivalent benefits thereunder. Subject to the preceding sentence, Employer shall not make any changes in such plans and arrangements which would adversely effect Employee's rights or benefits thereunder. Employee shall be 2 3 entitled to participate in or receive benefits under any employee benefit plan or arrangement made available by Employer in the future to its officers and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Employer shall maintain in full force and effect, at Employer's expense, for the continued benefit of Employee, for a period of two (2) years after termination of the Agreement, all medical, life and health and accident insurance plans and programs in which Employee was entitled to participate immediately prior to the termination of this Agreement, or in the event Employee's continued participation in such plans or programs is not permitted under the terms and provisions thereof, then Employer shall arrange, at Employer's expense, to provide Employee with substantially similar benefits during such two year period. Insofar as Employee fails for any reason to obtain coverage comparable to that described in the preceding sentence prior to the expiration of the two-year period referred to in that sentence, the two-year period referred to in such preceding sentence shall be extended for two years in addition to such two-year period (or for any lesser portion of such two additional years as to which Employee fails to obtain such coverage). Nothing paid to Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary, incentive or other compensation payable to Employee pursuant to this Agreement. (g) Partial Year Payments. Any payments or benefits payable to Employee in respect of any calendar year or other period during which Employee is employed by Employer for less than the entire such year or period, shall be prorated in accordance with the number of days in such calendar year or period during which Employee is so employed. If Employee's employment is terminated for any reason before the actual payment date for any bonus or incentive payment previously awarded by the Board of Directors of the Employer, Employee shall still be entitled to such bonus or incentive payment for the previous year or period. (h) Vacation. Employee shall be entitled to three weeks of paid vacation in each calendar year and other paid absences for holidays, illness, personal time or any similar purpose in accordance with the Employer's policies in effect on the date hereof. 5. Termination. (a) Right to Terminate. Employer may terminate Employee's employment hereunder only for "Cause" (as hereinafter defined). Employee may terminate her employment at any time following the occurrence of an event or condition 3 4 constituting "Good Reason" (as hereinafter defined). Any such termination shall be effective immediately (subject to paragraph 5(f)(C) below) upon Employee's or Employer's, as the case may be, receipt of a "Notice of Termination" (as hereinafter defined). (b) Termination for "Cause" or Death. If Employee's employment hereunder is terminated by Employer for Cause, or as a result of or after Employee's death, Employer shall pay to Employee (or her estate or designee(s), as the case may be) a lump sum severance payment equal to one year's annual base salary as in effect on the date of termination. (c) Termination Without "Cause" or for "Good Reason". If Employee's employment hereunder is terminated by Employer without Cause or Employee terminates her employment hereunder for "Good Reason" then Employer shall pay to Employee a lump sum severance payment equal to three times her annual base salary as in effect on the date of termination. (d) Termination Without "Good Reason". If Employee terminates her employment hereunder without "Good Reason", Employer shall pay to Employee a lump sum severance payment equal to one year's annual base salary as in effect on the date of termination. (e) Other Compensation and Benefits. The provisions of this paragraph 5, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish Employer's or Employee's existing rights, or rights which would accrue solely as a result of the passage of time, under any benefit plan, incentive plan or securities plan, employment agreement or other contract, plan or arrangement, including without limitation any other provision of this Agreement. In the event of any termination of this Agreement for any reason, Employee shall still be entitled to receive all salary and benefits for the pro-rata portion of the year during which she was employed in accordance with the number of days in such year during which she was so employed. (f) Definitions. For purposes of this Agreement (A) "Cause" shall mean any of the following, (i) Employee's commission of any felony or any misdemeanor that involves fraud, moral turpitude or material loss to the Employer or any subsidiary thereof or its business or reputation, (ii) Employee's embezzlement or misappropriation of funds or property of Employer or any subsidiary thereof, (iii) Employee's being sanctioned by state or federal authorities for material violation of laws, rules or regulations applicable to 4 5 Employer's or any subsidiary's conduct of its business, (iv) Employee's willful misconduct in the performance of her reasonably assigned duties and obligations hereunder which is materially adverse to Employer or any subsidiary thereof or her unreasonable neglect or refusal to perform her reasonably assigned duties and obligations hereunder (unless significantly changed without her consent), (v) Employee's failure to perform the duties or obligations hereunder by reason of any physical or mental incapacity (as hereinafter defined). No act, or failure to act, on Employee's part shall be considered "willful" unless done, or omitted to be done, without good faith and without reasonable belief that the action or omission was in the best interest of Employer. (B) "Good Reason" shall mean the occurrence of any of the events or conditions described in clauses (i) - (iv) hereof. (The enumeration of such events shall not imply that they are permitted under this Agreement or any other applicable agreement between the parties hereto.) (i) A material change in Employee's title, position or responsibilities (including reporting responsibilities) which represents an adverse change from her title, position or responsibilities as in effect on the Effective Date or the assignment to Employee of any duties or responsibilities which are inconsistent with her title, position or responsibilities as in effect on the Effective Date; (ii) A reduction in Employee's base salary or other compensation or benefits or any failure to pay or deliver to Employee any cash, stock or other compensation or benefits to which she is entitled within ten (10) days of the date due, or the Employer's failure to comply with any provisions of this Agreement; (iii) Employer's requiring Employee to be based in any place outside of New York City, except for reasonably required travel on Employer's business; or (iv) The occurrence of a Change in Control (as hereinafter defined). (C) "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set 5 6 forth in reasonable detail the facts and circumstance claimed to provide a basis for termination. Notwithstanding the foregoing, (A) Employee shall not be deemed to have been terminated for Cause unless and until (i) Employee shall have been given reasonable notice of (and in any instance where the act or omission constituting Cause may be curable) and a reasonable opportunity to cure any alleged basis for such termination and (ii) there has been delivered to Employer a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors at a meeting of the Board (after reasonable notice to Employee and opportunity for Employee together with her counsel, the reasonable fees and expenses of which shall be paid by Employer, to be heard at such meeting); and (B) Employee shall not be deemed to have terminated her employment for Good Reason unless and until Employer shall have been given reasonable notice of (and in any instance where the act or omission constituting Good Reason may be curable) and a reasonable opportunity to cure any alleged basis for such termination. (D) "Physical or mental incapacity" shall mean the inability of Employee by reason of a physical or mental illness to perform her duties hereunder for a period of 120 consecutive days or a total of 150 days in any twelve month period and such incapacity is determined by a physician selected by Employee (or her legal representatives) and acceptable to Employer to be such as prevents Employee from performing adequately her normal duties to the Employer. During any period that the Employee is unable to perform her duties by reason of physical or mental incapacity, Employee shall continue to receive her full compensation and benefits hereunder. (E) "Change of Control" shall mean and be deemed to have occurred upon the occurrence of any of the following events: (i) Any acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares of common stock of the Employer (the "Common Stock") and/or other voting securities of the Employer entitled to vote generally in the election of directors ("Outstanding Company Voting Securities") after which acquisition such individual, 6 7 entity or group is the beneficial owner of thirty percent (30%) or more of either (1) the then outstanding shares of Common Stock or (2) the Outstanding Company Voting Securities; excluding, however, the following: (1) any acquisition by the Employer, (2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Employer or (3) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar corporate transaction (in each case, a "Corporate Transaction"), if, pursuant to such Corporate Transaction, the conditions described in clauses (1), (2) and (3) of paragraph 5(f)(E)(iii) are satisfied; or (ii) A change in the composition of the Board of Directors of the Employer (the "Board") such that (w) the individuals who, as of the date hereof, comprise a class of directors of the Board cease for any reason to constitute at least a majority of the class or (x) if there shall at any time cease to be classes of directors of the Board, the individuals who, as of the date hereof, comprise the members of the Board cease for any reason to constitute at least a majority of the Board (the members of each class of directors of the Board as of the date hereof shall be hereinafter referred to as an "Incumbent Class" and the members of all of the Incumbent Classes (or if there shall cease at any time to be classes of directors of the Board, the members of the Board as of the date hereof) shall be hereinafter collectively referred to as the "Incumbent Board"); provided, however, for purposes of this subsection that any individual who becomes a member of a class of the Board or of the Board subsequent to the date hereof whose election, or nomination for election (y) if by the Employer's shareholders, was approved in advance or contemporaneously with such election by the affirmative vote of at least a majority of those individuals who are members of the Incumbent Board (or deemed to be such pursuant to this proviso), and (z) if by the Board, was approved by the affirmative vote of at least a majority of those individuals who are members of the Incumbent Board (or deemed to be such pursuant to this proviso), shall be considered as though such 7 8 individual were a member of the Incumbent Board and any applicable Incumbent Class; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or actual or threatened tender offer for shares of the Employer or similar transaction or other contest for corporate control (other than a tender offer by the Employer) shall not be so considered as a member of the Incumbent Board or any applicable Incumbent Class; (iii) The approval by the shareholders of the Employer of a Corporate Transaction or, if consummation of such Corporate Transaction is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the outstanding shares of Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than seventy percent (70%) of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction and the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors, (2) no Person (other than the Employer), any employee benefit plan (or related trust) of the Employer or the corporation resulting from such Corporate Transaction and any Person beneficially owning, immediately prior to such Corporate Transaction, directly or indirectly, thirty percent (30%) or more of the outstanding shares of Common Stock or Outstanding Company Voting Securities, as the case may be) will beneficially own, directly or indirectly, thirty percent (30%) or more of, respectively, the outstanding shares of 8 9 common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of board of directors of the corporation resulting from such Corporate Transaction; or (iv) The approval of the shareholders of the Employer of (1) a complete liquidation or dissolution of the Employer or (2) the sale or other disposition of all or substantially all of the assets of the Employer; excluding, however, such a sale or other disposition to a corporation, with respect to which following such sale or other disposition, (A) more than seventy percent (70%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding shares of Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition, (B) no Person (other than the Employer and any employee benefit plan (or related trust) of the Employer or such corporation and any Person beneficially owning, immediately prior to such sale or other acquisition, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock or Outstanding Company Voting Securities, as the case may be) will beneficially own, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members 9 10 of the board of directors of such corporation. (g) Wrongful Termination. In the event it is determined that Employer did not have a basis upon which to terminate Employee's employment for "Cause", then Employer shall pay Employee severance pay as if this Agreement had been terminated without Cause. (h) Payment of Severance. All severance payments due to Employee pursuant to this paragraph 5 and all other unpaid amounts due to Employee under this Agreement as of the date of termination shall be paid in cash within thirty (30) days after the date of termination. If any payment made pursuant to this paragraph 5 is made as a result of Employee's death, such payments shall be in addition to any other payments Employee's spouse, beneficiaries, designees or estate may be entitled to receive pursuant to any employee benefit plan or life insurance policy maintained by the Employer. 6. No Mitigation. Employee shall not be required to mitigate damages or the amount of any payment provided for pursuant to this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for by this Agreement be reduced by any compensation earned by Employee as a result of employment by another employer after the date of termination or otherwise. 7. Releases. Upon payment of all severance amounts due hereunder and satisfaction of all other obligations under this Agreement, Employer and Employee shall each execute and deliver general releases to each other of all claims, rights or causes of action which each party may then have or may ever be able to assert against the other party hereto other than (a) any obligations the Employer may have to indemnify Employee pursuant to this Agreement, the Certificate of Incorporation and By-laws of Employer or otherwise and (b) the commission by Employee of embezzlement or other misappropriation of Employer's (or any of its subsidiaries') funds or property for the personal benefit of Employee or for other malfeasance willfully and intentionally committed by Employee against the Employer (or any of its subsidiaries) for Employee's personal benefit. In addition, in consideration of past and future services by the Employee to the Employer, the Employer hereby releases the Employee from any and all claims Employer may have (other than for the commission by Employee of embezzlement or other misappropriation of Employer's (or any of its subsidiaries') funds or property of the personal benefit of Employee or for other malfeasance willfully and intentionally committed by Employee against the Employer (or any of its subsidiaries) for Employee's personal benefit) arising (or which may hereafter arise) in any way out of Employee's relationship 10 11 with or work performed for Employer on or prior to the Effective Date and whether arising in Employee's capacity as officer, director or employee of Employer or otherwise. 8. Miscellaneous. (a) No Setoff etc. Employer's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense or other claim, right or action which Employer may have against Employee or others (except insofar as the Employer's obligation to make such payments may be subject to setoff as a result of the commission by Employee of embezzlement or other misappropriation of the Employer's (or any of its subsidiaries') funds or property for the personal benefit of the Employee or for other malfeasance willfully and intentionally committed by the Employee against the Employer (or any of its subsidiaries) for her personal benefit), provided however, that Employer may deduct applicable withholding taxes with respect to all such payments. (b) Right to Reimbursement. Employee shall be entitled to reimbursement by Employer of any fees or expenses (including reasonable attorneys' fees) incurred by Employee in connection with contesting or disputing any wrongful termination of this Agreement by Employer or in seeking to obtain or enforce any of her rights or benefits to which she is entitled hereunder and as to which a judgment or award has been rendered in favor of Employee. (c) Notices. All notices or other communications required or permitted to be given hereunder shall be in writing, delivered by hand or first class mail, postage prepaid, addressed to the addresses specified above or such addresses later designated by any party hereto in writing in accordance with this paragraph and shall be deemed to have been duly given when received by the addressee. (d) Headings. The headings in this Agreement are for convenience only and shall not be considered as part of this Agreement or as in any way limiting or amplifying the terms and provisions hereof. (e) Late Payments. Any sums due to Employee under this Agreement which are not paid when due shall bear interest from the date thereof to the date of payment at the prime or similar rate then in effect of Employer's then principal lending bank (or Citibank, N.A. if there is no such lending bank). (f) Governing Law. This Agreement shall in all respects be interpreted, construed and governed by and in accordance 11 12 with the internal laws of the State of New York without regard to its conflicts of law rules. (g) Indemnification. Employer shall indemnify and hold Employee harmless to the maximum extent permitted by the laws of the State of New York (and the law of any other appropriate jurisdiction after any reincorporation) against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by Employee, in connection with the defense of, or as a result of any action or proceeding (or any appeal from any action or proceeding) in which Employee is made or is threatened to be made a party by reason of the fact that she is or was an officer or director of Employer, regardless of whether such action or proceeding is one brought by or in the right of Employer to procure a judgment in its favor (or other than by or in the right of the Employer). (h) Counterparts. This Agreement may be executed in one or more counterparts each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (i) Binding Agreement; Successors and Assigns. (A) This Agreement and all of the rights of the Employee hereunder shall inure to the benefit of, and be enforceable by the Employee and Employee's personal representatives, executors, administrators, heirs, devices, legatees, successors and assigns. (B) Employer shall require any successor or assign to all or substantially all of the business and/or assets of Employer, by agreement in form and substance reasonably satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform it, if no succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle Employee to compensation from Employer in the same amount and on the same terms as she would be entitled to hereunder if she terminated her employment for Good Reason. (j) Severability. If all or any part of any paragraph or subparagraph of this Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate all or any part of any paragraph or subparagraph not declared to be unlawful or invalid, all of which shall remain enforceable in accordance with their terms. Any paragraph 12 13 or subparagraph or part thereof so declared to be unlawful or invalid shall be construed in a manner which will give effect to the terms of such paragraph or subparagraph or part thereof to the fullest extent possible while remaining lawful and valid. (k) Amendments. This Agreement shall not be altered, amended or modified except by written instruments executed by both Employer (approved by the Board of Directors of the Employer) and Employee. A waiver of any term, covenant, agreement or condition contained in this Agreement shall not be deemed a waiver of any other term, covenant, agreement or condition and any waiver of any default in any such term, covenant, agreement or condition shall not be deemed a waiver of any later default thereof or of any other term, covenant, agreement or condition. No waiver shall be effective unless in writing and signed by the party sought to be held to the terms thereof. (l) Consent to Jurisdiction. The parties hereto irrevocably submit to the exclusive jurisdiction of the Supreme Court of the State of New York, New York County, and of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding brought by any party or their respective successors or assigns arising out of any breach of any provision hereunder or otherwise relating to this Agreement or the obligations hereunder or the transactions contemplated herein and hereby waive, and agree not to assert by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that it or she is not personally subject to the jurisdiction of the above- named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement may not be enforced in or by such courts. Service of process given in the manner contemplated by and pursuant to the notice terms of this Agreement shall constitute valid service of process upon the parties, their successors and assigns in any action, suit or proceeding in the Supreme Court of the State of New York, New York County, or the United States District Court for the Southern District of New York, or any other tribunal, wherever located having jurisdiction over the parties or any of their assets or properties with respect to any matters as to which they have submitted to jurisdiction as set forth in the immediately preceding paragraph. (m) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior negotiations and agreements. 13 14 (n) Counterparts. This Agreement may be signed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 14 15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. PRICE COMMUNICATIONS CORPORATION By: ---------------------------- ---------------------------- Kim I. Pressman 15 EX-10.CC 5 STOCK OPTION AGREEMENT 1 STOCK OPTION AGREEMENT Agreement dated as of February 10, 1994 between Price Communications Corporation (the "Company"), a New York corporation with its principal office at 45 Rockefeller Plaza, New York, New York 10020, and Robert Price, residing at 25 East 86th Street, Apartment 8D, New York, New York 10028 ("Optionee"). 1. Grant of Option The Optionee has been granted, on the terms and conditions set forth below, options (the "Options") to purchase up to 500,000 shares (the "Shares") of the Company's Common Stock, par value $.01 (the "Common Stock"), for a price of $3.75 per share (the "Option Price"). The Options are granted pursuant to the Company's 1992 Long Term Incentive Plan (the "Plan") and are subject to the provisions of the Plan, which are incorporated herein by reference. Unless otherwise specified in this Agreement, all capitalized terms in this Agreement shall have the same meaning as set forth in the Plan. The Options, subject to the limits provided for under the Code, are intended to qualify as Incentive Stock Options. Any portion of the Options that do not qualify as Incentive Stock Options shall be treated as Non-Qualified Stock Options. 2. Terms and Conditions of Options (a) Term of Options Subject to the provisions of subparagraph 2(c) and paragraph 4, each Option may be exercised at any time in whole or in part, whether or not the Optionee is employed by the Company at the time of exercise, during the period (i) beginning on the earlier of (x) the day immediately succeeding the date on which the average Fair Market Value of the Common Stock for any period of ten consecutive trading days (i.e., the sum of such Fair Market Values for such ten days, divided by ten) first equals or exceeds $12 and (y) February 10, 2001, and (ii) terminating on February 10, 2004. (b) Non-Transferability of Options The Options shall not be transferable by the Optionee other than by will or by the laws of descent and distribution, and may be exercised during the Optionee's lifetime only by the Optionee. If any Options are exercised after the Optionee's death, the Company may require evidence reasonably satisfactory to it of the appointment and qualification of the Optionee's personal representatives and their authority, and of the right of any heir or distributee to exercise such Options. 2 (c) Termination of Employment (i) Incapacity; Good Reason; or Without Cause. If the Optionee's employment with the Company terminates by reason of (x) Disability or "physical or mental incapacity" (such term being defined herein as used in the Employment Agreement (the "Employment Agreement") dated as of May 8, 1992 by and between the Company and Optionee) (any of the foregoing being herein collectively referred to as "Incapacity"), (y) termination by the Company other than for Cause, or (z) termination by the Optionee for Good Reason, the Options shall, notwithstanding any other provision of this Agreement, immediately become exercisable in full (if not otherwise then exercisable) and may thereafter be exercised in whole or in part by the Optionee for a period of three years from the date of such termination or until the expiration of the remaining term of the Options, whichever is shorter; provided, however, that if the Optionee dies within such three year period, the Options shall be exercisable for a period of one year from the date of death or until the expiration of the remaining term of the Options, whichever is shorter; provided further, however, that if such termination of employment occurs on or after February 10, 2001, the options shall remain exercisable until the expiration of the remaining term of the Options. (ii) Death. If the Optionee's employment with the Company terminates by reason of the Optionee's death, the Options shall, notwithstanding any other provision of this Agreement, become immediately exercisable in full (if not otherwise then exercisable) and may thereafter be exercised in whole or in part by the legal representative of the Optionee's estate for a period of one year from the date of death or until the expiration of the remaining term of the Options, whichever is shorter; provided, however, that if the Optionee's death occurs on or after February 10, 2001, the Options shall remain exercisable until the expiration of the remaining term of the Options. (iii) Other Termination. If the Optionee's employment with the Company terminates by reason of (x) termination by the Company for Cause; or (y) termination by the Optionee prior to February 10, 2001 other than by reason of Incapacity or Good Reason, the Options shall thereupon terminate (provided, however, if the Optionee's employment with the Company terminates by reason of termination by the Optionee on or after February 10, 2001 other than by reason of Incapacity or Good Reason, the Options shall remain exercisable until the expiration of the remaining term of the Options). (d) Exercise of Options The Options may be exercised only by written notice to the Company at its then principal office, Attention: Secretary. Any notice of exercise of Options shall be accompanied by payment 2 3 in full of the aggregate Option Price of the Shares being purchased. Payment of such aggregate Option Price may be made, at the election of the Optionee: (i) in cash or by check, bank draft or money order payable to the order of the Company, (ii) through the delivery to the Company of shares of Common Stock owned by the Optionee (and for which the Optionee has good title free and clear of any liens and encumbrances) or (if any has been issued to the Optionee under the Plan) Restricted Stock, or (subject to compliance with such conditions, if any, as are necessary to prevent the reduction of such shares of Common Stock being subject to Section 16(b) of the Securities Exchange Act of 1934 ("Section 16(b)") by reduction in the number of shares of Common Stock issuable upon such exercise, based, in each case, on the Fair Market Value of the Common Stock on the date of payment (without regard to any forfeiture restrictions applicable to any Restricted Stock), or (iii) any combination of the foregoing. The Company shall have the right to require the Optionee to pay or otherwise satisfy any federal, state or local taxes required by law to be withheld in connection with such exercise prior to the issuance of the Shares purchased by such exercise. Subject to compliance with such conditions, if any, as are necessary to prevent the withholding of such shares of Common Stock from being subject to Section 16(b), the Optionee may elect to satisfy such withholding obligation by reducing the number of shares of Common Stock issuable upon such exercise, based on the Fair Market Value of the Common Stock on the date of payment. (e) Issuance of Shares The Committee may postpone the issuance of Shares for such reasonable period as will enable the Company to cause a registration statement with respect to such Shares to be filed or to become or remain effective under the Securities Act of 1933, as amended, or to cause compliance with applicable provisions of any state securities laws or the rules and regulations of any securities exchange on which the Common Stock may be listed. The Optionee agrees to comply with any and all legal requirements relating to the Optionee's resale or other disposition of any Shares acquired under this Agreement. (f) Rights of Shareholder The Optionee shall acquire none of the rights of a shareholder of the Company with respect to any Shares under this Agreement unless and until the Optionee has given written notice of exercise and has paid for such Shares as provided herein. 3. Adjustment in Case of Changes Affecting Shares In the event of any change in the capital stock of the Company by reason of any stock dividend or distribution, stock split or reverse stock split, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of 3 4 shares, distribution with respect to the outstanding Common Stock or capital stock other than Common Stock, reclassification of its capital stock, issuance of warrants or options to purchase any Common Stock or securities convertible into Common Stock, or rights offering to purchase capital stock at a price below fair market value, or any similar change affecting the capital stock of the Company; then the aggregate number and kind of shares that thereafter may be purchased upon the exercise of the Options, the Option Price and the $12 figure set forth in Section 2(a) hereof shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted hereunder, and any such adjustment determined by the Committee in good faith shall be conclusive and binding upon the Company, the Optionee and their respective heirs, executors, administrators, successors and assigns. 4. Change in Control (a) Exercisability In accordance with the Plan, in the event of a Change in Control of the Company, the outstanding Options shall become immediately exercisable in full (if not otherwise then exercisable), subject to the prior election by the Company to exercise the right to repurchase the Options provided in subparagraph 4(b) below. (b) Buy-Out of Options In its sole discretion, the Committee may provide for the purchase of any then outstanding Options by the Company or a Designated Subsidiary for an amount of cash equal to the excess of (i) the product of the Change in Control price (as defined below) and the number of Shares subject to the Options (ii) over the aggregate Option Price of such Options. For purposes of this subparagraph 4(b), the Change in Control price shall mean the higher of (i) the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company, or (ii) the highest Fair Market Value of the Common Stock at any time during the 60-day period preceding the Change in Control. (c) Parachute Payments In the event that any benefits to the Optionee under this Agreement, either alone or together with any other payments or benefits otherwise owed to the Optionee by the Company or a Designated Subsidiary on or after a Change in Control would, in the Board of Directors' good faith opinion, be deemed under Section 280G of the Code, or any successor provision, to be parachute payments, the benefits under this Plan shall be reduced to the extent necessary, in the Board of Directors' good faith opinion, so that no portion of the benefits provided herein shall 4 5 be considered excess parachute payments under Section 280G of the Code or any successor provision. The Board of Directors' good faith opinion shall be conclusive and binding upon the Optionee. 5. Certain Definitions. For purposes of this Agreement: (a) "Cause" shall mean any of the following, (i) Optionee's commission of any felony or any misdemeanor that involves fraud, moral turpitude or material loss to the Company or any subsidiary thereof or its business or reputation, (ii) Optionee's embezzlement or misappropriation of funds or property of the Company or any subsidiary thereof, (iii) Optionee's being sanctioned by state or federal authorities for material violation of laws, rules or regulations applicable to the Company's or any subsidiary's conduct of its business, (iv) Optionee's willful misconduct in the performance of the duties and obligations reasonably assigned to him by the Company's Board of Directors which is materially adverse to the Company or any subsidiary thereof, provided that such duties and obligations are consistent with his employment as the Chairman of the Board, President and Chief Executive Officer of the Company, include the supervision and control over, and complete responsibility for, the general management and operation of the Company and its subsidiaries (collectively, the "Companies"), are substantially and reasonably consistent with Optionee's duties with the Companies prior to the date of this Agreement, and are of the type usually assigned to the Chairman of the Board and the President and Chief Executive Officer in charge of companies similar to the Company, or (v) the Optionee's unreasonable neglect or refusal to perform such duties (unless significantly changed without his consent). No act, or failure to act, on the Optionee's part shall be considered "willful" unless done, or omitted from being done, without good faith and without reasonable belief that the act or omission was in the best interest of the Company. Any termination of the Optionee's employment by the Company as a result of Incapacity, whether or not constituting Disability, or for any reason other than those specifically enumerated above, shall be deemed to be termination other than for Cause. (b) "Good Reason" shall mean the occurrence of any of the events or conditions described in clauses (i) - (v) hereof. (The enumeration of such events shall not imply that they are permitted under any employment or other applicable agreement between the Company and the Optionee.) (i) A material change in the Optionee's title, position or responsibilities (including reporting responsibilities) which represents an adverse change from his title, position or responsibilities as in effect on the date of this Agreement, or the assignment to Optionee of any duties or responsibilities which are inconsistent with his title, position of responsibilities as in effect on the date of this Agreement; 5 6 (ii) A reduction in the Optionee's base salary or other compensation or benefits, or any failure to pay or deliver to the Optionee any cash, stock or other compensation or benefits to which he is entitled within ten (10) days of the date due; (iii) The Company's requiring the Optionee to be based in any place outside of New York City, except for reasonably required travel on the Company's business; or (iv) The failure to elect to the Board of Directors or maintain in office at all times three directors designated by the Optionee (including the Optionee) during the three year period commencing on the Effective Date (as defined in the Employment Agreement) or to comply with any provisions of this Agreement or any of the provisions of the Employment Agreement; or (v) In the case of any merger, consolidation or reorganization occurring prior to the third anniversary of the Effective Date involving the Company, the failure of the Optionee and the surviving corporation to agree upon a new and mutually satisfactory employment agreement. 6. General (a) This Agreement shall be interpreted in accordance with the terms of the Plan. Subject to the next sentence below, in the event of any conflict between the terms of the Plan and this Agreement, the terms of the Plan shall be controlling. To the extent that any of the terms of Section 2 hereof vary from those otherwise provided in Article SIX of the Plan, such variations were expressly provided for by the Committee at the time of grant in accordance with said Article SIX. (b) Any communication in connection with this Agreement shall be deemed duly given when delivered in person or three days after being mailed by certified or registered mail, return receipt requested, to the Optionee at his or her address listed above or such other address of which Optionee shall have advised the Company by similar notice; or to the Company at its then principal office: Attention: Secretary. (c) This Agreement (which incorporates the provisions of the Plan) sets forth the parties' final and entire agreement with respect to its subject matter, may not be changed or terminated orally, and shall be governed by and construed in accordance with the internal laws of the State of New York, regardless of the law that might otherwise govern under applicable New York principles of conflict of laws. This agreement shall bind and benefit the Optionee and the heirs, distributees and personal representatives of the Optionee, and the Company and its successors and assigns. 6 7 IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. PRICE COMMUNICATIONS CORPORATION By ----------------------------- Secretary ----------------------------- Robert Price 7 EX-21 6 SUBSIDIARIES OF REGISTRANT 1 Exhibit 21 SUBSIDIARIES* ------------- Atlas Broadcasting Corporation (New York) Atlantic Broadcasting Corporation Republic Broadcasting Corporation (New York) Dane Broadcasting Corporation Empire State Broadcasting Corporation Gulf Coast Broadcasting Corporation Huntington Broadcasting Corporation United Radio Corporation Wayne Broadcasting Corporation (Indiana) Federal Broadcasting Corporation (New York) Cardinal Broadcasting Corporation Keystone Broadcasting Corporation Eagle Broadcasting Corporation Western Michigan Broadcasting Corporation Rhode Island Broadcasting Corporation Continental Broadcasting Corporation Old North Broadcasting Corporation (West Virginia) Magnolia Broadcasting Corporation (Mississippi) Southeast Texas Broadcasting Corporation (Texas) Texoma Broadcasting Corporation (Texas) Tri-State Broadcasting Corporation Price Acquisition Corp. WHTM-TV, Inc. (Pennsylvania) Price Outdoor Media Corporation of America Price Outdoor Media of Missouri, Inc. Apple Publishing Corporation The Red Bank Register (New Jersy) * all incorporated in Delaware except as otherwise indicated. EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) 10-K AND IS QUALIFIED IN ITS ENTIRELY BY REFERENCE TO SUCH (B) 1000 YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 1,136 0 5,468 395 0 9,092 13,701 2,201 90,852 9,076 21,310 90 0 0 38,989 90,852 0 28,053 0 4,014 19,435 1,057 1,459 16,076 1,653 14,424 0 0 0 14,424 1.44 1.44
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