<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COX RADIO, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4832 58-1620022
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
1400 LAKE HEARN DRIVE, N.E., ATLANTA, GEORGIA 30319
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
---------------------
MARITZA C. PICHON
CHIEF FINANCIAL OFFICER
COX RADIO, INC.
1400 LAKE HEARN DRIVE, N.E.
ATLANTA, GEORGIA 30319
(404) 843-5000
(Name, address, including zip code, and telephone number, including area code,
of Registrant's agent for service)
---------------------
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
STUART A. SHELDON, ESQ.
DOW, LOHNES & ALBERTSON, PLLC
1200 NEW HAMPSHIRE AVENUE, N.W.
WASHINGTON, D.C. 20036
(202) 776-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
6.250% Notes due 2003............... $100,000,000 100% $100,000,000 $29,500.00
6.375% Notes due 2005............... $100,000,000 100% $100,000,000 $29,500.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act of 1933, as amended.
---------------------
THE REGISTRANT HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement covers the registration of the $100,000,000
aggregate principal amount of 6.250% Notes due 2003 (the "2003 Notes") and of
the $100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005
Notes" and, together with the 2003 Notes, the "New Notes"), which are being
issued by Cox Radio, Inc. (the "Company") in exchange for 6.250% Notes due 2003
and the 6.375% Notes due 2005 with terms substantially identical to the New
Notes (collectively, the "Old Notes"). The Old Notes were previously issued and
sold by the Company in an offering exempt from the registration requirements of
the Securities Act of 1933, as amended. The complete Prospectus contained herein
relates to the issuance and exchange of the New Notes for the Old Notes.
ii
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
SUBJECT TO COMPLETION DATED AUGUST 10, 1998
(COX RADIO INC. LOGO)
OFFER TO EXCHANGE 6.250% NOTES DUE 2003
AND 6.375% NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OUTSTANDING 6.250% NOTES DUE 2003
AND 6.375% NOTES DUE 2005
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED
Cox Radio, Inc. ("Cox Radio" or the "Company") hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange $1,000 principal amount of 6.250% Notes due 2003 (the "2003 New Notes")
and $1,000 principal amount of 6.375% Notes due 2005 (the "2005 New Notes" and,
together with the 2003 New Notes, the "New Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement (as defined herein) of which this Prospectus
constitutes a part, in exchange, respectively, for each $1,000 principal amount
of 6.250% Notes due 2003 (the "2003 Old Notes") and $1,000 principal amount of
6.375% Notes due 2005 (the "2005 Old Notes" and, together with the 2003 Old
Notes, the "Old Notes" and, collectively with the New Notes, the "Notes"),
respectively. As of the date of this Prospectus, $100,000,000 aggregate
principal amount of 2003 Old Notes and $100,000,000 aggregate principal amount
of 2005 Old Notes are outstanding.
The form and terms of the New Notes are the same in all material respects as
the form and terms of the Old Notes for which they are to be exchanged, except
that (i) the issuance of the New Notes will have been registered under the
Securities Act and, therefore, the New Notes will not bear legends restricting
the transfer thereof and (ii) holders of the New Notes will not be entitled to
certain rights of holders of Old Notes under the Registration Rights Agreement
(as defined herein). The New Notes will evidence the same debts as the Old Notes
(which they replace) and will be issued under and be entitled to the benefits of
the Indenture dated as of May 26, 1998 (the "Indenture") by and between the
Company and The Bank of New York, as Trustee (the "Trustee"), governing the Old
Notes. See "The Exchange Offer" and "Description of the Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the Expiration Date.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. However, the Exchange Offer is
subject to certain conditions, which may be waived by the Company, and to the
terms and provisions of the Registration Rights Agreement. Old Notes may be
tendered only in denominations of $1,000 and integral multiples thereof. The
Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1998 (the "Expiration Date"), unless the Company, in its sole
discretion, extends the Exchange Offer (in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer is extended).
Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to 5:00 p.m. New York City time on the business day prior to the
Expiration Date; otherwise such tenders are irrevocable.
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The New Notes are redeemable, at the option of the Company, in whole at any
time or in part from time to time, at a redemption price equal to the greater of
(i) 100% of their principal amount and (ii) the sum of the present values of the
principal amount and the remaining scheduled payments of interest thereon,
discounted to the redemption date on a semiannual basis at the Treasury Rate (as
defined herein) plus 10 basis points in the case of the 2003 New Notes and 15
basis points in the case of the 2005 New Notes, plus in either case, accrued
interest thereon to the date of redemption. See "Description of the Notes." The
New Notes will mature on May 15, 2003 with respect to the 2003 New Notes and May
15, 2005 with respect to the 2005 New Notes, unless redeemed prior thereto.
The New Notes are senior unsecured obligations of the Company and rank pari
passu with all existing and future unsecured and unsubordinated obligations of
the Company. Each of the Company's subsidiaries (the "Note Guarantors") that
guarantees amounts payable by the Company under the Credit Agreement (as defined
herein) or under any future senior, unsecured credit facility between the
Company and its lenders thereunder will fully and unconditionally guarantee
(each, a "New Note Guarantee") all amounts payable under the New Notes as long
as such Subsidiary is a guarantor under the Credit Agreement or such future
credit facility. The New Note Guarantees, if any, will be senior unsecured
obligations of the applicable Note Guarantors and will rank pari passu with all
existing and future unsecured and unsubordinated obligations of such Note
Guarantors. The New Note Guarantees, if any, will be the same in all material
respects as the form and terms of the guarantees in respect of the Old Notes.
The current note guarantors for the Old Notes are WSB, Inc. and WHIO, Inc., each
a Delaware corporation (collectively, the "Initial Note Guarantors").
August , 1998
<PAGE> 4
(Cover page continued)
The Exchange Offer is being made to satisfy certain obligations of the
Company under the Registration Rights Agreement dated as of May 26, 1998 (the
"Registration Rights Agreement") among the Company, the Initial Note Guarantors
and NationsBanc Montgomery Securities LLC ("NationsBanc"), Chase Securities Inc.
("Chase") and J.P. Morgan Securities Inc. ("J.P. Morgan" and together with
NationsBanc and Chase, the "Initial Purchasers"). Upon consummation of the
Exchange Offer, holders of Old Notes that were not prohibited from participating
in the Exchange Offer and did not tender their Old Notes will not have any
registration rights under the Registration Rights Agreement with respect to such
untendered Old Notes and, accordingly, such Old Notes will continue to be
subject to the restrictions on transfer contained in the legend thereon.
Based upon interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties, the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any holder thereof (other than a broker-dealer, as set
forth below, or any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act")) without compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and that such holder
has no arrangement or understanding with any person to participate in the
distribution of such New Notes. See "The Exchange Offer -- Resale of the New
Notes." Holders of Old Notes wishing to accept the Exchange Offer must represent
to the Company, as required by the Registration Rights Agreement, that such
conditions have been met and that such holder is not an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act. Each
broker-dealer that is the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
New Notes for its own account pursuant to the Exchange Offer (a "Participating
Broker-Dealer") must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by any broker-dealer (other than an affiliate of the
Company) in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of up to 90 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." Any holder who tenders in the Exchange Offer
with the intention to participate, or for the purpose of participating, in a
distribution of the New Notes or who is an affiliate of the Company may not rely
on the position of the staff of the Commission enunciated in Exxon Capital
Holdings Corporation (May 13, 1988) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Failure to comply with such requirements in such
instance may result in such holder incurring liability under the Securities Act
for which the holder is not indemnified by the Company. No affiliate of the
Company may rely on such no-action letters and any such affiliate must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer.
The Old Notes were originally issued and sold on May 26, 1998 in an
offering of $200,000,000 aggregate principal amount of the Old Notes (the
"Offering"). The Offering was exempt from registration under the Securities Act
in reliance upon the exemptions provided by Rule 144A under the Securities Act
and Section 4(2) of the Securities Act. Accordingly, the Old Notes may not be
reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an exemption from the registration
requirements of the Securities Act and applicable state securities laws is
available.
The Company will not receive any proceeds from the Exchange Offer.
i
<PAGE> 5
There has not previously been any public market for the Old Notes or the
New Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. The Initial Purchasers indicated to the Company that they intend to
effect offers and sales of the New Notes in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale, but
are not obligated to do so and such market-making activities may be discontinued
at any time. The Initial Purchasers may act as principal or agent in such
transactions. There can be no assurance that an active market for the New Notes
will develop or that such trading market will be liquid. See "Risk
Factors -- Lack of Public Market for the Notes." Moreover, to the extent that
Old Notes are tendered and accepted in the Exchange Offer, the trading market
for untendered and tendered but unaccepted Old Notes could be adversely
affected.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE OBLIGOR ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
---------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information....................................... iv
Incorporation of Certain Documents by Reference............. iv
Prospectus Summary.......................................... 1
Pro Forma Combined Statement of Operations.................. 14
Certain Definitions and Market and Industry Data............ 16
Risk Factors................................................ 17
Use of Proceeds............................................. 21
Capitalization.............................................. 22
The Company................................................. 23
Business.................................................... 24
Legislation and Regulation.................................. 32
Management.................................................. 33
Security Ownership of Certain Beneficial Owners............. 34
Description of Certain Indebtedness......................... 35
The Exchange Offer.......................................... 36
Description of the Notes.................................... 46
Certain United States Federal Income Tax Considerations..... 57
Plan of Distribution........................................ 63
Legal Matters............................................... 63
Experts..................................................... 63
</TABLE>
ii
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CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS REGARDING THE
COMPANY'S AND ITS SUBSIDIARIES EXPECTED FINANCIAL POSITION, BUSINESS AND
FINANCING PLANS ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY AND ITS
SUBSIDIARIES BELIEVE THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, THEY CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS
WILL PROVE TO HAVE BEEN CORRECT. ACTUAL RESULTS IN THE FUTURE COULD DIFFER
MATERIALLY AND ADVERSELY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS,
INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT
WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY, ITS
SUBSIDIARIES OR PERSON ACTING ON BEHALF OF ANY OF THEM ARE EXPRESSLY QUALIFIED
IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
iii
<PAGE> 7
AVAILABLE INFORMATION
As of the date of this Prospectus, the Company is subject to the
information reporting requirements of the Exchange Act. In addition, under the
Indenture governing the Notes, the Company will be required to furnish to the
Trustee and to registered holders of the Notes audited annual consolidated
financial statements, unaudited quarterly consolidated financial reports and
certain other reports. The Registration Statement, the exhibits and schedules
forming a part thereof and the reports and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected without charge and copied upon payment of certain
fees at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following Regional Offices of the Commission: New York Regional Office,
Seven World Trade Center, 13th Floor, New York, New York 10048, and Chicago
Regional Office, Northwestern Atrium, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Commission also maintains a World Wide Web site on
the Internet at http://www.sec.gov that contains reports and other information
regarding registrants that file electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
GENERAL
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Current Report on Form 8-K dated April 14, 1997
(Commission File No. 1-12187);
2. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (Commission File No. 1-12187);
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (Commission File No. 1-12187);
4. The Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders filed pursuant to Section 14(A) of the Exchange Act; and
5. The Company's Current Report on Form 8-K dated June 4, 1998
(Commission File No. 1-12187).
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of this Exchange Offer shall be deemed to be incorporated by
reference into this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the future documents incorporated by reference herein (other
than exhibits, unless such exhibits are specifically incorporated by reference
in such documents). Requests for such documents should be directed to: Maritza
Pichon, Chief Financial Officer, Cox Radio, Inc., 1400 Lake Hearn Drive, N.E.,
Atlanta, Georgia 30319.
iv
<PAGE> 8
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in, or incorporated by
reference in, this Prospectus. The information in, or incorporated by reference
in, this Prospectus, other than the historical financial data, gives effect to
certain planned acquisitions and dispositions by the Company. See
"Business -- Pending Transactions" and "-- Long Island Acquisition."
Consummation of the Pending Transactions (as defined herein) is contingent on
certain approvals; there can be no assurance that the approval of the Federal
Communications Commission ("FCC") to the Pending Transactions will be obtained
or that other closing conditions to the Pending Transactions will be satisfied
or waived.
THE COMPANY
Cox Radio, Inc., a Delaware corporation ("Cox Radio" or the "Company"), is
one of the ten largest radio broadcasting companies in the United States, based
on both net revenues and number of stations as of August 1, 1998. Cox Radio,
upon completion of the Pending Transactions, will own or operate, or provide
sales and marketing services for 59 radio stations (40 FM and 19 AM) clustered
in 13 markets, including the 18 stations acquired from NewCity Communications,
Inc. ("NewCity") during 1997 (the "NewCity Acquisition"). On a pro forma basis
after giving effect to the Recent Transactions, the Pending Transactions and the
Long Island Acquisition for the entire year, Cox Radio would have generated net
revenue of $237.4 million and Broadcast Cash Flow (as defined herein) of $80.2
million for the year ended December 31, 1997.
Cox Radio is an indirect majority-owned subsidiary of Cox Enterprises,
Inc., a Delaware corporation ("CEI"). CEI indirectly owns approximately 69% of
the Company's Common Stock (as herein defined) and has approximately 96% of the
voting power of Cox Radio. The Company has two classes of common stock
outstanding, Class A Common Stock, par value $1.00 per share (the "Class A
Common Stock"), and Class B Common Stock, par value $1.00 per share (the "Class
B Common Stock"), collectively defined as the "Common Stock." The Class A Common
Stock is publicly traded on The New York Stock Exchange ("NYSE") under the
symbol "CXR." CEI's wholly-owned subsidiary, Cox Broadcasting, Inc., a Delaware
corporation ("Cox Broadcasting"), is the sole stockholder of the shares of the
Company's Class B Common Stock. CEI, a privately-held corporation headquartered
in Atlanta, is one of the largest media companies in the United States, with
consolidated 1997 revenues of approximately $4.9 billion. CEI, which has
approximately 100 years of experience in the media and communications industry
and over 60 years experience in the radio broadcasting business, publishes 16
daily and 11 weekly newspapers, owns and/or operates eleven television stations
and owns approximately 75% of Cox Communications, Inc. ("CCI"), a publicly
traded broadband communications company (NYSE: COX) with approximately 3.4
million cable television customers. CEI is also the world's largest operator of
auto auctions through Manheim Auctions.
Cox Radio, as part of CEI, has been a pioneer in radio broadcasting,
building its first radio station in 1934, acquiring its flagship station, WSB-AM
in Atlanta in 1939 and launching its first FM station, WSB-FM in Atlanta in
1948. Prior to Cox Radio's initial public offering in September 1996, CEI
transferred all of its U.S. radio operations to Cox Radio (the "Cox Radio
Consolidation").
Cox Radio seeks to maximize the revenues and Broadcast Cash Flow of its
radio stations by operating and developing clusters of stations in
demographically attractive and rapidly growing markets, including major markets
such as Los Angeles and Atlanta and Sunbelt markets such as Miami, Tampa,
Orlando, San Antonio and Birmingham. During the past five years, the 13 markets
in which the Company's stations currently operate generated, on an aggregate
basis, greater radio advertising revenue growth than the average of 5.3%, which
was calculated using revenue projections obtained from the Radio Advertising
Bureau, for the U.S. radio industry as a whole. The NewCity Acquisition enhanced
the clustering of the Company's radio stations by increasing the total number of
markets in which Cox Radio owned and/or operated radio stations to 12 and by
strengthening the Company's penetration in those markets. The Long Island
Acquisition increased the number of markets where Cox Radio owns and/or operates
radio stations to 13. Cox Radio owns or operates four or more stations in 10 of
its 13 markets.
1
<PAGE> 9
As a result of the Company's management, programming and sales efforts, the
Company's radio stations are characterized by strong ratings and above average
power ratios. The Company's stations are diversified in terms of format, target
audience, geographic location and stage of development. Cox Radio has a track
record of acquiring, repositioning and improving the operating performance of
previously underperforming stations. Management believes that a number of the
Company's stations have significant growth opportunities or turnaround potential
and can therefore be characterized as start-up or developing stations.
Generally, the Company considers start-up or developing stations to include
those which have been recently acquired by the Company and offer the greatest
potential for growth. Currently, the Company considers 28 of its stations to be
start-up or developing stations. Cox Radio believes these stations can achieve
significant Broadcast Cash Flow growth by employing the Company's operating
strategy. Management believes that its mix of stations in different stages of
development enables it to maximize the Company's growth potential.
Cox Radio's senior operating management is comprised of six individuals
with an average of over 24 years of experience in the radio broadcasting
industry, including an average of over 15 years with Cox Radio. The Company
believes that this experienced senior management team is well positioned to
manage larger radio station clusters and take advantage of new opportunities
arising in the U.S. radio broadcasting industry.
The following table sets forth certain information with respect to Cox
Radio and its markets:
<TABLE>
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PRO FORMA COMPANY DATA MARKET DATA
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1997
COMBINED POWER 1997
NUMBER 1997 STATION RATIO FOR MARKET 1997 ADVERTISING
OF COMBINED GROUP RADIO RADIO MARKET REVENUE 1997
STATIONS STATION AUDIENCE STATIONS ADVERTISING RADIO GROWTH METRO
--------- GROUP MARKET OWNED OR REVENUE ADVERTISING CAGR MARKET
MARKET FM AM MARKET SHARE SHARE(A) OPERATED(B) RANK(C) REVENUE(D) 1992-97 RANK(E)
- ------ --- --- ------------ -------- ----------- ----------- ----------- ----------- -------
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Los Angeles.......... 3 1 13.2 9.1 1.5 1 $575 6.3% 2
Atlanta.............. 2 2 30.6 18.5 1.7 10 222 14.8 12
Miami................ 2 -- 9.9 11.0 0.9 12 198 12.7 11
Tampa................ 2 2 13.3 13.9 1.0 19 102 10.0 21
Orlando.............. 5 2 31.7 30.6 1.0 28 76 9.2 38
San Antonio.......... 5 3 33.9 30.5 1.1 32 68 8.7 33
Long Island.......... 3 1 27.0(f) 9.6 2.8 48 41 5.7 16
Louisville........... 3 -- 7.3 8.5 0.9 47 41 7.2 52
Birmingham........... 5 2 41.5 36.3 1.1 50 40 9.2 55
Tulsa................ 3 2 40.0 32.8 1.2 55 35 10.1 60
Dayton............... 3 2 31.2 22.8 1.4 58 34 7.2 54
Syracuse............. 3 2 49.9 32.1 1.6 71 24 4.8 71
Bridgeport........... 1 -- 18.8 14.6 1.3 90 17 7.2 114
</TABLE>
- ---------------
(a) Audience share data based upon all persons aged 25-54.
(b) A station's or station group's power ratio is defined as such station's or
station group's revenue market share divided by audience market share of
adults 25-54.
(c) Ranking of the principal radio market served by the stations among all radio
markets in the United States by 1997 market revenue, according to BIA's
Investing in Radio, 1998 ("BIA").
(d) In millions of dollars.
(e) Ranks assigned by BIA based on population in the market.
(f) Revenue market share obtained from Inside Radio's Who Owns What, May 4,
1998.
OPERATING STRATEGY
The following is a summary of the key elements of the Company's operating
strategy:
Clustering of Stations. Cox Radio operates its stations in clusters
to (i) enhance net revenue growth by increasing the appeal of the Company's
stations to advertisers and enabling such stations to compete more
effectively with other forms of advertising and (ii) achieve operating
efficiencies by consolidating broadcast facilities, eliminating duplicative
positions in management and production and
2
<PAGE> 10
reducing overhead expenses. Management believes that operating several
radio stations in each of its markets will enable its sales teams to offer
advertisers more attractive advertising packages.
Development of Underperforming Stations. The Company's management has
demonstrated its ability to acquire underperforming radio stations and
develop them into consistent ratings and revenue leaders. The Company's
historic margins reflect the acquisition and continued development of
underperforming stations, as well as the fact that increases in net revenue
are typically realized subsequently to increases in audience share.
Implementation of the Company's Management Philosophy. The Company's
local station operations are supported by a lean corporate staff which
employs a management philosophy emphasizing (i) market research and
targeted programming; (ii) a customer-focused selling strategy; and (iii)
marketing and promotional activities.
Market Research and Targeted Programming. Cox Radio's research,
programming and marketing strategy combines extensive research with an
assessment of competitors' vulnerabilities and market dynamics in order
to identify specific audience opportunities within each market. Cox
Radio also retains consultants and research organizations to continually
evaluate listener preferences. Using this information, Cox Radio tailors
the programming, marketing and promotions of each Cox Radio station to
maximize its appeal to its target audience. Cox Radio's disciplined
application of market research enables each of its stations to be
responsive to the changing preferences of its targeted listeners.
Customer-Focused Selling Strategy. The Company utilizes a unique,
customer-focused approach to selling advertising known as the
Consultative Selling System. The Company's sales personnel are trained
to approach each advertiser with a view towards solving the marketing
needs of the customer. In this regard, the sales staff consults with
customers, attempts to understand their business goals and offers
comprehensive marketing solutions, including the use of radio
advertising. Instead of merely selling station advertising time, the
Company's sales personnel are encouraged to develop innovative marketing
strategies for the station's advertising customers.
Marketing and Promotional Activities. The Company's stations
regularly engage in significant local promotional activities, including
advertising on local television and in local print media, participating
in telemarketing and direct mailings and sponsoring contests, concerts
and events. Cox Radio also engages in joint promotional activities with
other media in its markets to further leverage the Company's promotional
spending.
Strong Management Teams. In addition to relying upon its experienced
senior operating management, the Company places great importance on the
hiring and development of strong local management teams and has been
successful in retaining experienced management teams that have strong ties
to their communities and customers. The Company invests significant
resources in identifying and training employees to create a talented team
of managers at all levels of station operations. Local managers are
empowered to run the day-to-day operations of their stations and to develop
and implement policies that will improve station performance and establish
long-term relationships with listeners and advertisers.
ACQUISITION STRATEGY
In the ordinary course of its business, Cox Radio seeks opportunities to
acquire radio stations that it believes will provide added value to the Company.
During the last several years, the Company has implemented its strategy of
clustering radio stations in several of its existing markets by acquiring
additional radio stations. The radio stations acquired by Cox Radio in the past
have primarily been underperforming, and Cox Radio has generally improved the
operating and financial performance of such stations. The Company intends to
continue to make acquisitions where permissible in the markets in which it
operates and may also make opportunistic acquisitions in additional markets in
which the Company believes that it can cost-effectively achieve a leading
position in terms of audience and revenue share. The nature and timing of
further acquisitions are uncertain and difficult to estimate.
3
<PAGE> 11
RECENT TRANSACTIONS
Orlando Acquisition
In March 1997, the Company exchanged WCKG-FM and WYSY-FM in Chicago for
WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition"). The Orlando
Acquisition resulted in a pre-tax gain of approximately $49 million. In addition
to receiving the three Orlando stations, Cox Radio also received cash proceeds
of approximately $20 million. Prior to the NewCity Acquisition, the Orlando
stations were operated by NewCity since July 1996 under an LMA (as defined
herein).
Tampa Acquisition
In March 1997, the Company acquired WFNS-AM in Tampa for an aggregate
consideration of $1.5 million (the "Tampa Acquisition"). The Company had been
operating this station pursuant to an LMA or a JSA (as defined herein) since
June 1995.
Los Angeles Acquisition
In April 1997, Cox Radio completed its acquisition of the license and
certain assets of KRTO-FM in Los Angeles for $19 million in cash (the "Los
Angeles Acquisition").
NewCity Acquisition
In April 1997, the Company, through the merger of its wholly owned
subsidiary, New Cox Radio II, Inc., with and into NewCity, with NewCity
surviving as a wholly owned subsidiary of Cox Radio, acquired all of the issued
and outstanding capital stock of NewCity in the NewCity Acquisition. Cox Radio
purchased the stock of NewCity for an aggregate consideration of approximately
$253 million, including approximately $87 million in assumption of NewCity
indebtedness and approximately $3 million in working capital adjustments. To
consummate the NewCity Acquisition, the Company utilized approximately $56
million of amounts due from CEI and borrowed approximately $110 million pursuant
to the Company's $300 million, five-year, senior, unsecured revolving credit
facility with certain banks (the "Credit Agreement"), including Chase Bank of
Texas, N.A. (formerly Texas Commerce Bank National Association), as
Administrative Agent. On April 2, 1997, NewCity was merged with and into the
Company, with the Company as the surviving corporation. NewCity's subsidiaries
were subsequently consolidated into Cox Radio. In October 1997, the Company
disposed of the assets of American Comedy Network, a former subsidiary of
NewCity, for aggregate proceeds of approximately $1.1 million including certain
non-compete agreements.
Birmingham Acquisition II and Birmingham Disposition
In May 1997, the Company agreed to acquire WENN-FM and WAGG-AM in
Birmingham, Alabama, for consideration of $15 million (the "Birmingham
Acquisition II"). In July 1997, the Company assigned its right to purchase
WENN-FM for consideration of $14.5 million to a third party (the "Birmingham
Disposition"). The Company consummated these transactions during November 1997.
San Antonio Transactions
In September 1997, the Company acquired KISS-FM, KSMG-FM and KLUP-AM in San
Antonio, Texas for an aggregate consideration of $30.4 million plus certain
non-compete agreements (the "San Antonio Acquisition I").
In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio for
$23 million (the "San Antonio Acquisition II").
In December 1997, the Company acquired an option to purchase radio station
KRIO-FM, serving the San Antonio market, for a purchase price of $9 million. The
Company entered into an agreement to assign this option in January 1998 for an
aggregate consideration of $250,000 (the "San Antonio Disposition"). The closing
of the San Antonio Disposition occurred in May 1998.
4
<PAGE> 12
The Orlando Acquisition, the Tampa Acquisition, the Los Angeles
Acquisition, the NewCity Acquisition, the Birmingham Acquisition II, the
Birmingham Disposition, the San Antonio Acquisition I, the San Antonio
Acquisition II and the San Antonio Disposition are collectively referred to
herein as the "Recent Transactions".
PENDING TRANSACTIONS
Birmingham Transactions
In May 1997, the Company agreed to acquire radio stations WBHJ-FM and
WBHK-FM in Birmingham, Alabama (the "Birmingham Acquisition I") for an aggregate
consideration of $17 million, consisting of $5 million paid for an option to
purchase the stations and $12 million issued to the seller as a station
investment note receivable. On August 1, 1997, the Company began operating
WBHJ-FM and WBHK-FM under an LMA. Pending certain regulatory approvals, the
Company anticipates closing the Birmingham Acquisition I in the second half of
1998.
In September 1997, the Company announced that it had entered into an
agreement in principle with a third party to construct, program and own WEDA-FM,
a new Class A FM radio station, in Homewood, Alabama to serve the Birmingham
market (the "Birmingham Acquisition III"). The FCC has approved the third
party's application for the new construction permit and settlement of the
comparative hearing among the three applicants for the construction permit. As
part of the agreement in principle, the third party would construct the station,
the Company would enter into an LMA for the new station and the Company would
acquire an option to purchase the station for an aggregate consideration of $5.5
million and the assumption of debt in an amount not to exceed $200,000. The
Company expects to consummate the Birmingham Acquisition III in the second half
of 1998.
Dayton Acquisition
In February 1998, the Company entered into an agreement to acquire radio
stations WCLR-FM, WZLR-FM and WPTW-AM, serving the Dayton, Ohio market for
approximately $6 million (the "Dayton Acquisition"). The Company has been
operating these stations pursuant to an LMA since December 1997. In addition,
the Company has entered into a station investment note receivable with the
stations' seller for $6 million. Pending certain regulatory approvals, the
Company anticipates closing the Dayton Acquisition in the second half of 1998.
Orlando Exchange
In February 1998, the Company entered into an agreement to acquire the
assets of radio station WTLN-FM serving the Orlando, Florida market for
consideration of $14.5 million. In a related transaction, the Company entered
into an agreement to dispose of the assets of radio station WTLN-AM (formerly
known as WZKD-AM), also serving the Orlando, Florida market, for $500,000 (the
"Orlando Exchange"). Pending certain regulatory approvals, the Company
anticipates closing the Orlando Exchange in the second half of 1998 or the first
half of 1999.
The Birmingham Acquisition I, the Birmingham Acquisition III, the Dayton
Acquisition and the Orlando Exchange are collectively referred to herein as the
"Pending Transactions".
LONG ISLAND ACQUISITION
In May 1998, the Company acquired the assets of radio stations WBLI-FM,
WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New York market for
consideration of $48 million (the "Long Island Acquisition").
5
<PAGE> 13
THE EXCHANGE OFFER
Securities Offered......... $100,000,000 aggregate principal amount of 6.250%
Notes due 2003 (the "2003 New Notes") and
$100,000,000 aggregate principal amount of 6.375%
Notes due 2005 (the "2005 New Notes" and,
together with the 2003 New Notes, the "New
Notes").
The Exchange Offer......... $1,000 principal amount of 2003 New Notes will be
issued in exchange for each $1,000 principal
amount of 2003 Old Notes and $1,000 principal
amount of 2005 New Notes will be issued in
exchange for each $1,000 original principal
amount of 2005 Old Notes. As of the date hereof,
$200,000,000 principal amount of Old Notes are
outstanding. The Company will issue the New Notes
to holders on or promptly after the Expiration
Date.
Based upon interpretations by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that New
Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any holder of
such New Notes (other than a broker-dealer as set
forth below, or any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that such New Notes are acquired in the
ordinary course of such holder's business and
that such holder has no arrangement or
understanding with any person to participate in
the distribution of such New Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that is the
beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by any broker-dealer (other than an
affiliate of the Company) in connection with
resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. The
Company has agreed that, for a period of up to 90
days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use
in connection with any such resale. Any holder
who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the New Notes
or who is an affiliate of the Company may not
rely on the position of the staff of the
Commission enunciated in Exxon Capital Holdings
Corporation (May 13, 1988) or similar no-action
letters and, in the absence of an exemption
therefrom, must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with a secondary
resale transaction. Failure to comply with such
requirements in such instance may result in such
holder incurring
6
<PAGE> 14
liability under the Securities Act for which the
holder is not indemnified by the Company.
Expiration Date............ 5:00 p.m., New York City time, on , 1998
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company.
See "The Exchange Offer -- Conditions." The
Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being
tendered.
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof or transmit an Agents' Message
(as defined herein) in connection with a
book-entry transfer, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile on such Agent's
Message, together with the Old Notes and any
other required documentation to the Exchange
Agent (as defined herein) at the address set
forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. By executing the
Letter of Transmittal or Agent's Message, each
holder will represent to the Company that, among
other things, the New Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such New Notes, whether or not such
person is the holder, that neither the holder nor
any such other person has any arrangement or
understanding with any person to participate in
the distribution of such New Notes and that
neither the holder nor any such other person is
an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company. See "The Exchange
Offer -- Purpose and Effect of the Exchange
Offer" and "-- Procedures for Tendering."
Untendered Old Notes....... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate, but
who do not tender their Old Notes, will not have
any further exchange rights and such Old Notes
will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Old Notes could
be adversely affected.
Consequences of Failure to
Exchange................. The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, within the time period
referred to in Rule 144(k) under the Securities
Act, such Old Notes may be resold only (i) to the
Company, (ii) to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in compliance with Rule 144A,
(ii) inside the United States to an institutional
"accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities
Act) that, prior to such transfer, furnishes to
the Trustee a signed letter containing certain
representations and agreements relating to the
restrictions on transfer of the Old Notes (the
form of which letter can be obtained from the
Trustee and, if such transfer is in respect of an
aggregate principal amount of Old
7
<PAGE> 15
Notes of less than $100,000, an opinion of
counsel acceptable to the Company that such
transfer is in compliance with the Securities
Act, (iv) outside the United States in compliance
with Rule 904 under the Securities Act, (v)
pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if
available) or (vi) pursuant to an effective
registration statement under the Securities Act.
See "The Exchange Offer -- Consequences of
Failure to Exchange."
Shelf Registration
Statement.................. If, because of any change in law, regulation or in
the applicable interpretations of the staff of
the Commission, the Company is not permitted to
effect the Exchange Offer or, for any reason, the
Exchange Offer Registration Statement is not
declared effective within 180 days after the date
of issuance of the Old Notes or in certain other
circumstances, then the Company shall use its
best efforts to (a) as promptly as practicable,
file a shelf registration statement (the "Shelf
Registration Statement") covering the Old Notes,
(b) cause the shelf registration statement to be
declared effective under the Securities Act and
(c) keep the shelf registration statement
effective until the earlier of two years after
the initial sale of the Old Notes to the Initial
Purchasers (as defined herein) or such time as
all of the applicable Old Notes have been sold
thereunder or otherwise cease to be registrable
securities within the meaning of the Registration
Rights Agreement.
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and
delivering its Old Notes, either make appropriate
arrangements to register ownership of the Old
Notes in such owner's name or obtain a properly
completed bond power from the registered holder.
The transfer of registered ownership may take
considerable time. The Company will keep the
Exchange Offer open for not less than thirty
calendar days in order to provide for the
transfer of registered ownership.
Guaranteed Delivery
Procedures................. Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
8
<PAGE> 16
Acceptance of Old Notes and
Delivery of New Notes.... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Federal Income Tax
Consequences............. The exchange pursuant to the Exchange Offer will
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Consequences."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Exchange Agent............. The Bank of New York.
9
<PAGE> 17
THE NEW NOTES
The New Notes.............. $100,000,000 aggregate principal amount of 6.250%
Notes due 2003 (the "2003 New Notes") and
$100,000,000 aggregate principal amount of 6.375%
Notes due 2005 (the "2005 New Notes" and,
together with the 2003 New Notes, the "New
Notes").
General.................... The form and terms of the New Notes are the same in
all material respects as the form and terms of
the Old Notes (which they replace), except that
(i) the New Notes have been registered under the
Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and
(ii) the holders of New Notes will not be
entitled to certain rights under the Registration
Rights Agreement, including the provisions
providing for an increase in the interest rate on
the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights
will terminate when the Exchange Offer is
consummated. See "The Exchange Offer -- Purpose
and Effect of the Exchange Offer." The New Notes
will evidence the same debts as the Old Notes and
will be entitled to the benefits of the
Indenture. See "Description of the Notes."
Interest Payment Dates..... May 15 and November 15, commencing on November 15,
1998
Stated Maturity Dates...... May 15, 2003 in the case of the 2003 New Notes and
May 15, 2005 in the case of the 2005 New Notes
Note Guarantees............ Pursuant to the Note Guarantees, the New Notes will
be fully and unconditionally guaranteed by the
Note Guarantors (as defined herein). The Note
Guarantors will be each subsidiary of the Company
that guarantees amounts payable under the Credit
Agreement or under any future senior unsecured
credit facility between the Company and the third
party lenders thereunder on the date hereof or in
the future. Each Note Guarantor's Note Guarantee
shall terminate immediately upon the termination
of such Note Guarantor's guarantee pursuant to
the Credit Agreement or any such future credit
facility without further action by any party.
Optional Redemption........ The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time or
from time to time, for an amount equal to the
greater of (i) 100% of the principal amount of
the New Notes to be redeemed, and (ii) the sum,
as determined by the Quotation Agent, of the
present values of the principal amount and the
remaining scheduled payments of interest on the
New Notes to be redeemed from the redemption date
to May 15, 2003 in the case of the 2003 New Notes
and May 15, 2005 in the case of the 2005 New
Notes, in each case, discounted on a semiannual
basis (assuming a 360-day year consisting of
30-day months) at the Treasury Rate plus 10 basis
points in the case of the 2003 New Notes and 15
basis points in the case of the 2005 New Notes,
plus in either case, accrued interest thereon to
the date of redemption. See "Description of the
Notes -- Optional Redemption."
Ranking.................... The New Notes will be senior unsecured obligations
of the Company ranking pari passu in right of
payment with all other existing and future
unsubordinated unsecured indebtedness of the
Company, which, as of March 31, 1998, on a pro
forma basis after giving effect to
10
<PAGE> 18
the Offering, the application of the net proceeds
of the Offering, the Pending Transactions and the
Long Island Acquisition totalled approximately
$315.2 million. The New Notes will be effectively
subordinated to all indebtedness and other
liabilities of the Company's subsidiaries, except
in respect of the Note Guarantees of the Note
Guarantors.
Certain Covenants.......... The Indenture contains covenants for the New Notes
including, but not limited to, covenants with
respect to the following matters: (i) limitations
on liens of the Company and Restricted
Subsidiaries (as defined herein); (ii)
limitations on consolidation, merger and sale of
assets by the Company and the Note Guarantors;
and (iii) limitations on the indebtedness of the
Company's Restricted Subsidiaries. See
"Description of the Notes -- Certain Covenants."
RISK FACTORS
Potential investors should consider carefully certain factors relating to
an investment in the New Notes. See "Risk Factors."
11
<PAGE> 19
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following summary consolidated financial and other data have been
derived from the Consolidated Financial Statements of Cox Radio. The
consolidated statement of operations data and other operating data for the years
ended December 31, 1993, 1994, 1995, 1996 and 1997 and the consolidated balance
sheet data as of December 31, 1994, 1995, 1996 and 1997 have been derived from
the audited Consolidated Financial Statements of Cox Radio. The statement of
operations data and other operating data for the six-month periods ended June
30, 1997 and 1998, and the balance sheet data as of December 31, 1993 and June
30, 1997 and 1998 have been derived from unaudited Consolidated Financial
Statements of Cox Radio, which, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's results of operations for such period or
financial position at such date. The pro forma combined financial data for the
year ended December 31, 1997 assume the Recent Transactions, the Pending
Transactions and the Long Island Acquisition had occurred at the beginning of
the year. See "Incorporation of Certain Documents by Reference." See "Certain
Definitions and Market Industry Data" following "Pro Forma Combined Statement of
Operations" for certain defined terms and information concerning market and
industry data used herein.
<TABLE>
<CAPTION>
AS OF AND
FOR THE
SIX MONTH PERIOD
AS OF AND FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------ -----------------
PRO FORMA
1993 1994 1995 1996 1997 1997 1997 1998
------ ------ ------ ------ ------ --------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(1).................. $ 95.0 $111.5 $123.6 $132.9 $199.6 $237.4 $ 83.5 $121.2
Station operating expenses....... 67.9 76.3 90.0 91.9 129.8 157.1 55.6 80.4
Corporate general and
administrative expenses(2)..... 2.5 2.7 5.9 5.3 6.9 7.4 3.5 3.9
Depreciation and amortization.... 7.3 6.9 7.2 8.1 17.5 22.0 7.2 11.0
------ ------ ------ ------ ------ ------ ------ ------
Operating income................. 17.3 25.6 20.5 27.6 45.4 50.9 17.2 25.9
Interest expense................. 5.6 5.2 6.0 4.6 9.4 19.4 2.1 7.7
Net income (loss)................ (1.1)(3) 11.2 8.2 14.9 49.7(4) 17.0 38.1(4) 9.1
Basic earnings (loss) per common
share.......................... (.06) .57 .42 .69 1.75 .60 1.35 .32
Diluted earnings (loss) per
common share................... (.06) .57 .42 .69 1.75 .60 1.34 .32
BALANCE SHEET DATA:
Cash and cash equivalents........ $ 1.7 $ 1.9 $ 1.7 $ 10.6(5) $ 6.2 $ 6.2 $ 11.6 $ 7.1
Intangible assets, net........... 114.2 120.1 126.8 138.1 518.9 622.3 496.0 578.7
Total assets..................... 168.3 180.0 191.8 261.7 654.6 735.0 620.8 736.1
Total debt (including amounts due
to/from CEI)................... 89.7 120.3 125.1 -- 232.6 315.6 222.2 287.8
Shareholders' equity............. 64.2 40.4 47.2 235.8 287.3 254.6 274.2 297.3
OTHER OPERATING DATA AND
FINANCIAL DATA:
Broadcast cash flow(6)........... $ 27.1 $ 35.2 $ 33.6(7) $ 41.0 $ 69.8 $ 80.2 $ 27.9 $ 40.8
Broadcast cash flow margin(6).... 28.5% 31.6% 27.2% 30.9% 35.0% 33.8% 33.4% 33.7%
EBITDA........................... $ 24.6 $ 32.5 $ 27.7(7) $ 35.7 $ 62.9 $ 72.9 $ 24.4 $ 36.9
EBITDA to interest ratio......... 4.4x 6.3x 4.6x 7.8x 6.7x 3.8x 11.6x 4.8x
Debt to EBITDA ratio............. 3.6x 3.7x 4.5x -- 3.7x 4.3x 5.1x 3.8x
Earnings to fixed charges
ratio.......................... 3.1x 4.9x 3.4x 6.0x 4.8x 2.6x 8.2x 3.4x
Net cash provided by operating
activities..................... $ 11.4 $ 14.1 $ 14.0 $ 26.9 $ 42.2 $ 52.6 $ 12.4 $ 17.1
Net cash used in investing
activities..................... (6.1) (12.3) (17.3) (62.6) (285.1) (368.1) (285.3) (74.8)
Net cash provided by (used in)
financing activities........... (4.8) (1.6) 3.1 44.6 238.5 321.5 273.8 58.6
</TABLE>
12
<PAGE> 20
- ---------------
(1) Total revenues less advertising agency commissions.
(2) Certain executives participated in CEI's Unit Appreciation Plan ("UAP").
Because CEI is, and Cox Radio was, a private company, the benefits under the
UAP are generally payable in cash. This cash payment option resulted in
charges to compensation expense of $0.9 million, $0.8 million, $1.6 million,
and $2.5 million for the years ended December 31, 1993, 1994, 1995 and 1996,
respectively. This compensation expense is included in historical corporate
general and administrative expenses. Public companies traditionally
implement stock award plans that provide for the issuance of stock to
participants and do not result in compensation expense under applicable
accounting standards. The Company implemented the Cox Radio, Inc. Long-Term
Incentive Plan in 1996 and, therefore, has not incurred this expense since
1996. In addition, for the year ended December 31, 1995, corporate general
and administrative expenses include a nonrecurring corporate charge.
(3) Includes a $7.6 million noncash charge for the cumulative effect of
accounting changes.
(4) Includes an after-tax gain on the sale of WCKG-FM/WYSY-FM (Chicago) of
approximately $29.3 million.
(5) 1996 amount includes $9.1 million in restricted cash, representing the net
proceeds from the disposal of WIOD-AM (Miami), net of the cash used to
acquire radio stations KRAV-FM and KGTO-AM (Tulsa).
(6) "Broadcast cash flow" consists of operating income plus depreciation and
amortization and corporate general and administrative expenses. "Broadcast
cash flow margin" is broadcast cash flow as a percentage of net revenues.
"EBITDA" is operating income plus depreciation and amortization. Although
broadcast cash flow, broadcast cash flow margin and EBITDA are not
recognized under GAAP, they are accepted by the broadcasting industry as
generally recognized measures of performance and are used by analysts who
report publicly on the condition and performance of broadcasting companies.
For the foregoing reasons, the Company believes that these measures are
useful to investors. However, investors should not consider these measures
to be an alternative to operating income as determined in accordance with
GAAP, an alternative to cash flows from operating activities (as a measure
of liquidity) or an indicator of the Company's performance under GAAP.
(7) Declines in broadcast cash flow and EBITDA from the prior year are due
mainly to the impact of the baseball strike on advertiser spending, the cost
of sports programming rights in Atlanta, start-up costs related to
acquisitions or LMAs consummated in late 1994 and early 1995 and a
nonrecurring corporate charge in 1995.
13
<PAGE> 21
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
The pro forma combined statement of operations assumes the Recent
Transactions, the Pending Transactions and the Long Island Acquisition had
occurred at the beginning of the year. No pro forma adjustments have been made
for the Tampa Acquisition, the Birmingham III Acquisition and the Los Angeles
Acquisition due to immateriality. Additionally, a pro forma balance sheet at
June 30, 1998 and a pro forma statement of operations for the six months ended
June 30, 1998 are not included as the effect of pro forma adjustments is
immaterial.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------------------------------------------
PRO FORMA
ADJUSTMENTS
FOR THE RECENT
TRANSACTIONS
(EXCLUDING THE PRO FORMA FOR
NEWCITY THE RECENT
ACQUISITION), TRANSACTIONS,
PRO FORMA THE PENDING THE PENDING
ADJUSTMENTS FOR PRO FORMA FOR TRANSACTIONS TRANSACTIONS
HISTORICAL HISTORICAL THE NEWCITY THE NEWCITY AND THE LONG ISLAND AND THE LONG ISLAND
COX RADIO NEWCITY(1) ACQUISITION ACQUISITION(1) ACQUISITION(2) ACQUISITION
---------- ---------- --------------- --------------- ------------------- -------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net revenues.......... $199,572 $15,683 $ 547(3) $214,708 $ 22,650 $237,358
Costs and expenses:
Operating........... 50,220 5,628 -- 55,848 5,821 61,669
Selling, general and
administrative.... 79,544 6,625 (71)(3) 86,098 9,357 95,455
Corporate general
and
administrative.... 6,885 476 -- 7,361 -- 7,361
Depreciation and
amortization...... 17,456 837 1,063(4) 19,356 2,653 22,009
-------- ------- ------- -------- -------- --------
Operating income...... 45,467 2,117 (1,539) 46,046 4,819 50,865
Interest expense...... (9,364) (2,389) (499)(5) (12,252) (7,190) (19,442)
Other, net............ 48,428 (521) 521(6) 48,428 (49,129)(6) (701)
-------- ------- ------- -------- -------- --------
Income (loss) before
income taxes........ 84,531 (793) (1,517) 82,222 (51,500) 30,721
Income taxes(6)....... 34,807 250 (457) 34,600 (20,861) 13,738
-------- ------- ------- -------- -------- --------
Net income (loss)..... $ 49,724 $(1,043) $(1,059) $ 47,622 $(30,639) $ 16,983
======== ======= ======= ======== ======== ========
Per share data:
Basic and diluted
net income per
common share...... $ 1.75 $ .60
======== ========
Basic pro forma
shares
outstanding....... 28,344 28,344
======== ========
Diluted pro forma
shares
outstanding....... 28,494 28,494
======== ========
</TABLE>
- ---------------
(1) Represents the historical operations of NewCity for the three month period
ended March 31, 1997. Such financial statements were prepared in accordance
with generally accepted accounting principles.
(2) Reflects the historical operations and related pro forma adjustments for the
Recent Transactions (excluding the NewCity Acquisition), the Pending
Transactions and the Long Island Acquisition. Pro forma adjustments have
been made for the Orlando Acquisition, consummated in March 1997; the
Birmingham Acquisition I, LMAs for WBHJ-FM and WBHK-FM effective in May
1997; the San Antonio Acquisition I, consummated in September 1997; the
Dayton Acquisition, LMAs for WCLR-FM, WZLR-FM and WPTW-AM effective in
December 1997; the San Antonio Acquisition II, consummated in March 1998;
the Long Island Acquisition, consummated in May 1998; and the Orlando
Exchange which is expected to be consummated in the second half of 1998 or
the first half of 1999. For each of the above acquisitions, amortization was
calculated assuming an amortization period of 40 years.
14
<PAGE> 22
(3) Represents LMA fees and expenses charged between the Company and NewCity
related to certain of the Company's stations that were operated under LMA
agreements by NewCity.
(4) Reflects additional amortization expense related to approximately $250
million in intangibles and goodwill arising from the NewCity Acquisition.
Intangible assets and goodwill are being amortized over 40 years.
(5) Reflects adjustments to interest expense resulting from the borrowing of
approximately $192.1 million to consummate the NewCity Acquisition and
related tender for certain senior subordinated notes issued by NewCity.
(6) Reflects adjustments to other expenses representing costs incurred by
NewCity directly related to the NewCity Acquisition.
(7) Reflects adjustments to the pre-tax gain on the disposition of WCKG-FM and
WYSY-FM related to the Orlando Acquisition.
(8) An effective tax rate of 45% was used to calculate the adjustments reflected
in footnotes 2, 3, 5, and 6. No tax effect is reflected for a portion of the
adjustment in footnote 4 because the amortization of goodwill arising from
the NewCity Acquisition is not deductible for tax purposes.
15
<PAGE> 23
CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA
The terms "Broadcast Cash Flow," "broadcast cash flow margin" and "EBITDA"
are referred to in various places in this Prospectus. Broadcast Cash Flow
consists of operating income plus depreciation and amortization and corporate
general and administrative expenses. Broadcast cash flow margin is Broadcast
Cash Flow as a percentage of net revenues. EBITDA consists of operating income
plus depreciation and amortization. Although Broadcast Cash Flow, broadcast cash
flow margin and EBITDA are not recognized under generally accepted accounting
principles ("GAAP"), the Company believes they are accepted by the broadcasting
industry as generally recognized measures of performance and are used by
analysts who report publicly on the condition and performance of broadcasting
companies. For the foregoing reasons, the Company believes that these measures
will be useful to investors. However, Broadcast Cash Flow, broadcast cash flow
margin and EBITDA should not be considered as an alternative or as a substitute
for net income, cash flows from operating activities and other income and cash
flow statement data prepared in accordance with GAAP, or as a measure of
liquidity or profitability.
Unless otherwise indicated herein, (i) market ranking by radio advertising
revenue, radio market advertising revenue and radio market advertising data used
to calculate compounded annual growth rate ("CAGR") have been obtained from
Investing in Radio 1998 Market Report, a publication of Broadcasting Investor
Analysts ("BIA"); (ii) total industry listener and revenue levels have been
obtained from the Radio Advertising Bureau ("RAB"); (iii) all audience share
data and audience rankings, including ranking by population, except where
specifically stated to the contrary, have been derived from surveys of Adults 25
to 54, listening Monday through Sunday, 6 a.m. to 12 midnight, and are based on
the average of the Winter, Spring, Summer and Fall Market Reports (each an
"Arbitron Market Report") either ending in the year presented or the four most
recent Arbitron Market Reports, as reported by Arbitron, Radio Market Reports,
Metro or Target Audience Trends, The Arbitron Company ("Arbitron"); (iv) revenue
share data in each market presented have been obtained from the Miller, Kaplan
Market Revenue Report (published monthly), a publication of Miller, Kaplan,
Arase & Co., Certified Public Accountants ("Miller Kaplan") or The Hungerford
Market Report, a publication of Hungerford, Aldrin, Nichols & Carter Certified
Public Accountants ("Hungerford"); and (v) total advertising revenue has been
obtained from Duncan's Radio Market Guide (1997 ed.) ("Duncan's") compiled by
Duncan's American Radio. Duncan's definition of "total advertising revenue"
includes television, radio, newspaper, outdoor and cable.
The terms local marketing agreement ("LMA") and joint sales agreement
("JSA") are referred to in various places in this Prospectus. An LMA refers to
an agreement under which a radio station agrees to provide, on a cooperative
basis, all or certain of the programming, sales, marketing and similar services
for a different radio station in the same market. A JSA refers to an agreement,
similar to an LMA, under which a radio station agrees to provide all or certain
of the sales and marketing services for another station while the owner of such
other radio station provides all of the programming for such other radio station
in the same market. The term "duopoly," as used in various places in this
Prospectus, refers to the ownership of two or more AM or two or more FM radio
stations in the same geographic market. A station's or station group's "power
ratio" is defined as such station's or station group's revenue market share
divided by audience market share of adults 25-54.
16
<PAGE> 24
RISK FACTORS
An investment in the New Notes offered hereby involves certain risks.
Prospective investors should carefully consider the following risk facts, in
addition to the other information contained elsewhere in this Prospectus prior
to making an investment in the New Notes.
CONSEQUENCES OF EXCHANGING OR FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legends thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. After the Exchange
Offer, the Company does not intend to register the Old Notes under the
Securities Act.
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes set forth in the legends thereon. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. Based upon
interpretations by the staff of the Commission set forth in certain no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any holder of such New Notes (other
than a broker-dealer, as set forth below, or any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and that such holder has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. Each Participating Broker-Dealer that is the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of New Notes for its
own account pursuant to the Exchange Offer must represent that the Old Notes
tendered in exchange therefor were acquired as a result of market-making
activities or other trading activities and must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by any
broker-dealer (other than an affiliate of the Company) in connection with
resales of New Notes received in exchange for Old Notes where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. Any holder who tenders
in the Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of the New Notes or who is an affiliate of the
Company may not rely on the position of the staff of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988) or similar
no-action letters and, in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Company.
See "Plan of Distribution." No affiliate of the Company may rely on such
no-action letters and any such affiliate must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of the New
Notes could not rely on the position of the staff of the Commission enunciated
in no-action letters and, in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Company.
17
<PAGE> 25
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer.
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register the New Notes prior to offering or
selling such New Notes. The Company currently does not intend to register or
qualify the sale of the New Notes in any such jurisdiction. Upon consummation of
the Exchange Offer, holders that were not prohibited from participating in the
Exchange Offer and did not tender their Old Notes will not have any registration
rights under the Registration Rights Agreement with respect to such nontendered
Old Notes, and accordingly, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. See "The Exchange
Offer -- Consequences of Failure to Exchange."
Issuance of the New Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Old Notes desiring to tender
such Old Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Old Notes for exchange. Old Notes
that are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof, and, upon consummation of the Exchange
Offer, certain registration rights with respect to the Notes under the
Registration Rights Agreement will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes may be deemed to have received restricted
securities, and if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that is the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act), of New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." To the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Old Notes could be adversely affected. See "The Exchange Offer."
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
A principal component of the Company's business strategy is the acquisition
of additional radio stations. In addition to the Pending Transactions, Cox Radio
intends to continue to evaluate the acquisition of additional radio stations or
radio station groups. There can be no assurance that future acquisitions will be
available on attractive terms. In addition, there can be no assurance that any
synergies or savings will be achieved as a result of any acquisitions, that the
integration of Cox Radio and new stations or management groups can be
accomplished successfully or on a timely basis or that the Company's acquisition
strategy can be implemented. Although Cox Radio has entered into definitive
agreements regarding the Pending Transactions, there can be no assurance that
any of the Pending Transactions will be consummated. Consummation of each of the
Pending Transactions is subject to certain closing conditions, including the
receipt of FCC approval, which receipt cannot be assured.
COMPETITION
The radio broadcasting industry is a highly competitive business. The
Company's radio stations compete against other radio stations and other media
(including new media technologies that are being developed or introduced) for
audience share and advertising revenue. Factors that are material to a station's
competitive position include management experience, the station's audience share
rank in its market, transmitter power, assigned frequency, audience
characteristics, local program acceptance, and the number and characteristics of
other stations in the market area. Recent changes in the law and in FCC rules
and policies have increased the number of radio stations a broadcaster may own
in a given market and permit, within limits, joint arrangements with other
stations in a market relating to programming, advertising sales, and station
operations. Management believes that radio stations that elect to take advantage
of these opportunities may, in certain circumstances, have lower operating costs
and may be able to offer advertisers more attractive rates
18
<PAGE> 26
and services. No assurance can be given that any of the Company's stations will
be able to maintain or increase its current audience ratings and advertising
revenue share.
GOVERNMENT REGULATION OF BROADCASTING INDUSTRY
The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules and policies limit the number of stations
that one entity can own in a given market. The Communications Act and FCC rules
and policies also require FCC approval for transfers of control of licensees and
assignments of FCC licenses. The filing of petitions or complaints against Cox
Radio or other FCC licensees could result in the FCC delaying the grant of, or
refusing to grant, its consent to the assignment of licenses to or from an FCC
licensee or the transfer of control of an FCC licensee. In certain
circumstances, the Communications Act and FCC rules will operate to impose
limitations on alien ownership and voting of the Common Stock. There can be no
assurance that there will not be changes in the current regulatory scheme, the
imposition of additional regulations or the creation of new regulatory agencies,
which changes could restrict or curtail the ability of Cox Radio to acquire,
operate and dispose of stations or, in general, to compete profitably with other
operators of radio and other media properties.
Each of the Company's radio stations operates pursuant to one or more
licenses issued by the FCC. Pursuant to Congress' mandate in the
Telecommunications Act of 1996 (the "1996 Act"), which significantly amended the
Communications Act, the FCC adopted a rule extending radio license terms from
seven to eight years. All licenses renewed as part of the current renewal cycle
will have a term of eight years. The Company's licenses expire at various times
through the year 2006. Although Cox Radio has applied or will apply to renew
these licenses, third parties may challenge the Company's renewal applications.
While Cox Radio is not aware of facts or circumstances that would prevent the
Company from having its current licenses renewed, there can be no assurance that
the licenses will be renewed. Failure to obtain the renewal of any of Cox
Radio's broadcast licenses or to obtain FCC approval for an assignment or
transfer to Cox Radio of a license in connection with a radio station
acquisition may have a material adverse effect on the Company's business and
operations. In addition, if Cox Radio or any of its officers, directors or
significant stockholders materially violates the FCC's rules and regulations or
the Communications Act, is convicted of a felony or is found to have engaged in
unlawful anticompetitive conduct or fraud upon another government agency, the
FCC may, in response to a petition from a third party or on its own initiative,
in its discretion, commence a proceeding to impose sanctions upon Cox Radio
which could involve the imposition of monetary fines, the revocation of Cox
Radio's broadcast licenses or other sanctions. If the FCC were to issue an order
denying a license renewal application or revoking a license, Cox Radio would be
required to cease operating the applicable radio station only after Cox Radio
had exhausted all rights to administrative and judicial review without success.
IMPORTANCE OF LOS ANGELES AND ATLANTA RADIO STATIONS
In 1997, the Company's four radio stations in Los Angeles and four radio
stations in Atlanta generated approximately 26.7% and 23.8%, respectively, of
Cox Radio's net revenues. On a pro forma basis after giving effect to the
Pending Transactions and the Long Island Acquisition, such radio stations in Los
Angeles and Atlanta would have generated approximately 24.3% and 21.5%,
respectively, of Cox Radio's net revenues in 1997. A significant decline in net
revenues from the Company's stations in these markets, as a result of a ratings
decline or otherwise, could have a material adverse effect on Cox Radio's
financial position and results of operations.
CONTROL BY CEI; POTENTIAL CONFLICTS OF INTEREST
CEI, through wholly-owned subsidiaries, owns approximately 69% of the
outstanding Common Stock and has approximately 96% of the voting power of Cox
Radio. As a result, CEI has sufficient voting power to elect all the members of
the Board of Directors of Cox Radio (the "Cox Radio Board") and effect
transactions without the approval of Cox Radio's public stockholders. Cox
Radio's Amended and Restated Certificate of Incorporation (the "Cox Radio
Certificate") and Amended and Restated Bylaws (the "Bylaws") also contain
certain anti-takeover provisions. The interests of CEI, which operates
businesses in other industries, including
19
<PAGE> 27
television broadcasting, broadband communications, auto auctions and newspapers,
may from time to time diverge from the interests of Cox Radio. In addition, from
time to time, the Company enters into transactions with CEI or its affiliates
and has entered into a credit facility with CEI. Conflicts of interest between
Cox Radio and CEI could arise with respect to business dealings between them,
including potential acquisitions of businesses or properties, the issuance of
additional securities and the election of new or additional members of the Cox
Radio Board. The Audit Committee of the Cox Radio Board consists of independent
directors and addresses certain potential conflicts of interest that may arise
between the Company and CEI. There can be no assurance that any conflicts of
interest will be resolved in favor of Cox Radio.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALES
There presently is no active trading market for the Notes and none may
develop. If the New Notes are traded after their initial issuance, they may
trade at a discount from their initial offering price, depending upon prevailing
interest rates, the market for similar securities, the financial condition,
performance and prospects of the Company and other factors beyond the control of
the Company, including general economic conditions. There can be no assurance as
to the development or liquidity of any market for the New Notes.
FORWARD LOOKING STATEMENTS
This Prospectus contains forward-looking statements which can be identified
by terminology such as "believes," "anticipates," "intends," "expects" and words
of similar import. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results, events
or developments to be materially different from any future results, events or
developments expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions, both nationally and in the regions in which the Company operates;
technology changes; competition; changes in business strategy or development
plans; the ability to attract and retain qualified personnel; existing
governmental regulations and changes in, or the failure to comply with,
governmental regulations; liability and other claims asserted against the
Company; and other factors referenced in this Prospectus, including, without
limitation, under the captions "Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." GIVEN THESE UNCERTAINTIES, PROSPECTIVE INVESTORS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future results, events or developments.
20
<PAGE> 28
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement.
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes contemplated in
this Prospectus, the Company will receive Old Notes in like principal amount,
the form and terms of which are the same in all material respects as the form
and terms of the New Notes (which replace such Old Notes), except as otherwise
described herein.
The net proceeds to the Company from the Offering were approximately $198.4
million, after deducting the discount due the Initial Purchasers and commissions
and other expenses payable by the Company. The Company used the net proceeds
from the Offering to repay indebtedness outstanding under the Credit Agreement,
as a result of which the aggregate principal amount of borrowings outstanding
under the Credit Agreement, as of June 30, 1998 was approximately $100.0 million
and, as of June 30, 1998, approximately $200.0 million was available for the
Company to borrow on a revolving basis to finance future acquisitions
thereunder. The weighted average per annum interest rate applicable to
borrowings under the Company's Credit Agreement for the six months ended June
30, 1998 was 6.5%, and the maturity date for such borrowings was March 7, 2002.
See "Description of Certain Indebtedness." Affiliates of NationsBanc Montgomery
Securities LLC, Chase Securities Inc. and J.P. Morgan Securities Inc. are
lenders under the Credit Agreement and received their proportionate share of the
repayment thereof.
21
<PAGE> 29
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998. Such capitalization reflects the proceeds from the sale of the Old
Notes, which occurred on May 26, 1998. No effect on the capitalization of the
Company will occur upon consummation of the Exchange Offer herein.
<TABLE>
<CAPTION>
AS OF JUNE 30,
1998
--------------
(IN THOUSANDS)
ACTUAL
--------------
<S> <C>
LONG-TERM DEBT:
Credit Agreement............................................ $100,000
Amounts due from CEI........................................ (12,612)
Other long-term debt........................................ 740
2003 Notes.................................................. 99,910
2005 Notes.................................................. 99,725
--------
Total long-term debt.............................. 287,763
SHAREHOLDERS' EQUITY:
Preferred Stock, $1.00 par value;
5,000,000 shares authorized; none outstanding............... --
Common Stock
Class A Common Stock, $1.00 par value;
70,000,000 shares authorized
8,874,361 shares issued and outstanding................ 8,874
Class B Common Stock, $1.00 par value;
45,000,000 shares authorized
19,577,672 shares issued and outstanding............... 19,578
Additional paid-in capital.................................. 251,454
Retained earnings........................................... 17,355
--------
Total shareholders' equity........................ 297,261
--------
Total capitalization.............................. $585,024
========
</TABLE>
22
<PAGE> 30
THE COMPANY
Cox Radio, Inc. ("Cox Radio" or the "Company") is one of the ten largest
radio broadcasting companies in the United States, based on both net revenues
and number of stations as of August 1, 1998. Upon completion of all the Pending
Transactions, Cox Radio will own or operate, or provide sales and marketing
services for, 59 radio stations (40 FM and 19 AM) clustered in 13 markets,
including 18 stations acquired from NewCity Communications, Inc. ("NewCity")
during 1997 (the "NewCity Acquisition"). On a pro forma basis, after giving
effect to the Recent Transactions, the Pending Transactions and the Long Island
Acquisition, Cox Radio would have generated net revenue of $237.4 million and
Broadcast Cash Flow of $80.2 million for the year ended December 31, 1997.
Cox Radio is an indirect majority-owned subsidiary of Cox Enterprises, Inc.
("CEI"). CEI indirectly owns approximately 69% of the Company's Common Stock
(defined below) and has approximately 96% of the voting power of Cox Radio. The
Company has two classes of common stock outstanding, Class A Common Stock, par
value $1.00 per share (the "Class A Common Stock"), and Class B Common Stock,
par value $1.00 per share (the "Class B Common Stock"), collectively defined as
the "Common Stock." CEI's wholly-owned subsidiary, Cox Broadcasting, Inc. ("Cox
Broadcasting"), is the sole stockholder of shares of the Company's Class B
Common Stock. CEI, a privately-held corporation headquartered in Atlanta,
Georgia, is one of the largest media companies in the United States, with
consolidated 1997 revenues of approximately $4.9 billion. Prior to Cox Radio's
initial public offering in September 1996, CEI transferred all of its U.S. radio
operations to Cox Radio (the "Cox Radio Consolidation"). Cox Radio, as part of
CEI, was a pioneer in radio broadcasting, building its first station in 1934,
acquiring its flagship station, WSB-AM (Atlanta), in 1939 and launching its
first FM station, WSB-FM (Atlanta), in 1948.
The Company's principal executive offices are located at 1400 Lake Hearn
Drive, N.E., Atlanta, Georgia 30319, and its telephone number is (404) 843-5000.
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BUSINESS
Cox Radio seeks to maximize the revenues and Broadcast Cash Flow of its
radio stations by operating and developing clusters of stations in
demographically attractive and rapidly growing markets, including major markets
such as Los Angeles and Atlanta and Sunbelt markets such as Miami, Tampa,
Orlando, San Antonio and Birmingham. During the past five years, the 13 markets
in which the Company's stations now operate have generated, on an aggregate
basis, greater radio advertising revenue growth than the average of 5.3%, which
was calculated using revenue projections obtained from the Radio Advertising
Bureau (the "RAB"), for the U.S. radio industry as a whole. The NewCity
Acquisition enhanced the clustering of the Company's radio stations by
increasing the total number of markets in which Cox Radio owned and/or operated
radio stations to 12 and by strengthening the Company's penetration in those
markets. The Long Island Acquisition increased the number of markets in which
Cox Radio owns or operates radio stations to 13. Cox Radio operates four or more
radio stations in 10 of its 13 markets.
As a result of the Company's management, programming and sales efforts, the
Company's radio stations are characterized by strong ratings and above average
power ratios (defined as revenue share divided by audience share). The Company's
stations are diversified in terms of format, target audience, geographic
location and stage of development. Cox Radio has a track record of acquiring,
repositioning and improving the operating performance of previously
underperforming stations. Management believes that a number of the Company's
stations have significant growth opportunities or turnaround potential and can
therefore be characterized as start-up or developing stations. Generally, the
Company considers start-up or developing stations to include those which have
been recently acquired by the Company and offer the greatest potential for
growth. Currently, the Company considers 28 of its stations to be start-up or
developing stations. Cox Radio believes these stations can achieve significant
Broadcast Cash Flow growth by employing the Company's operating strategy.
Management believes that its mix of stations in different stages of development
enables it to maximize the Company's growth potential.
Cox Radio's senior operating management is comprised of six individuals
with an average of over 24 years of experience in the radio broadcasting
industry, including an average of over 15 years with Cox Radio. The Company
believes that this experienced senior management team is well positioned to
manage larger radio station clusters and take advantage of new opportunities
arising in the U.S. radio broadcasting industry.
OPERATING STRATEGY
The following is a description of the key elements of the Company's
operating strategy:
Clustering of Stations. Cox Radio operates its stations in clusters
to (i) enhance net revenue growth by increasing the appeal of the Company's
stations to advertisers and enabling such stations to compete more
effectively with other forms of advertising and (ii) achieve operating
efficiencies by consolidating broadcast facilities, eliminating duplicative
positions in management and production and reducing overhead expenses.
Management believes that operating several radio stations in each of its
markets will enable its sales teams to offer advertisers more attractive
advertising packages. Furthermore, as radio groups achieve significant
audience share, they can deliver to advertisers the audience reach that
historically only television and newspapers could offer, with the added
benefit of frequent exposure to advertisers' target customers. Management
believes that the Company's clusters of stations, and their corresponding
audience share, provide opportunities to capture an increased share of
total advertising revenue in each of the Company's markets.
Development of Underperforming Stations. The Company's management has
demonstrated its ability to acquire underperforming radio stations and
develop them into consistent ratings and revenue leaders. The Company's
historic margins reflect the acquisition and continued development of
underperforming stations, as well as the fact that increases in net revenue
are typically realized subsequently to increases in audience share.
Management believes that a number of the Company's stations have
significant growth opportunities or turnaround potential and can therefore
be characterized as developing stations.
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<PAGE> 32
Implementation of the Company's Management Philosophy. The Company's
local station operations are supported by a lean corporate staff which
employs a management philosophy emphasizing (i) market research and
targeted programming; (ii) a customer-focused selling strategy; and (iii)
marketing and promotional activities.
Market Research and Targeted Programming. Cox Radio's research,
programming and marketing strategy combines extensive research with an
assessment of competitors' vulnerabilities and market dynamics in order
to identify specific audience opportunities within each market. Cox
Radio also retains consultants and research organizations to continually
evaluate listener preferences. Using this information, Cox Radio tailors
the programming, marketing and promotions of each Cox Radio station to
maximize its appeal to its target audience. Cox Radio's disciplined
application of market research enables each of its stations to be
responsive to the changing preferences of its targeted listeners. This
approach focuses on the needs of the listener and its community and is
designed to improve ratings and maximize the impact of advertising for
the Company's customers. Through its research, programming and
marketing, Cox Radio also seeks to create a distinct and marketable
local identity for each of its stations in order to enhance audience
share and listener loyalty and to protect against direct format
competition. To achieve this objective, the Company employs and promotes
distinct high-profile on-air personalities and local sports programming
at many of its stations. For example, the Company broadcasts (i) "Dr.
Laura" in Los Angeles, Atlanta, Dayton, Syracuse, Tulsa and Orlando;
(ii) "Rush Limbaugh" in Los Angeles, Orlando, Syracuse and Tulsa; (iii)
"Clark Howard" in Atlanta, Orlando, Dayton and Syracuse; (iv) the
Atlanta Braves in Atlanta and Tampa; and (v) the Orlando Magic in
Orlando.
Customer-Focused Selling Strategy. The Company utilizes a unique,
customer-focused approach to selling advertising known as the
Consultative Selling System. The Company's sales personnel are trained
to approach each advertiser with a view towards solving the marketing
needs of the customer. In this regard, the sales staff consults with
customers, attempts to understand their business goals and offers
comprehensive marketing solutions, including the use of radio
advertising. Instead of merely selling station advertising time, the
Company's sales personnel are encouraged to develop innovative marketing
strategies for the station's advertising customers.
Marketing and Promotional Activities. The Company's stations
regularly engage in significant local promotional activities, including
advertising on local television and in local print media, participating
in telemarketing and direct mailings and sponsoring contests, concerts
and events. Special events may include charitable athletic events,
events centered around a major local occasion or local ethnic group and
special community or family events. Cox Radio also engages in joint
promotional activities with other media in their markets to further
leverage the Company's promotional spending. These promotional efforts
help the Company's stations add new listeners and increase the amount of
time spent listening to the stations.
Strong Management Teams. In addition to relying upon its experienced
senior operating management, the Company places great importance on the
hiring and development of strong local management teams and has been
successful in retaining experienced management teams that have strong ties
to their communities and customers. The Company invests significant
resources in identifying and training employees to create a talented team
of managers at all levels of station operations. These resources include:
(i) Gallup/SRI, which helps the Company identify and select talented
individuals for management and sales positions; (ii) Center for Sales
Strategy ("CSS"), an independent sales and management training company
which trains and develops managers and sales executives; and (iii) a
program of leadership development conducted by the Company's senior
operating management and outside consultants. Local managers are empowered
to run the day-to-day operations of their stations and to develop and
implement policies that will improve station performance and establish
long-term relationships with listeners and advertisers. The compensation of
the senior operating management team and local station managers is largely
dependent upon financial performance and linked to participation in the
Company's Long-Term Incentive Plan.
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<PAGE> 33
ACQUISITION STRATEGY
In the ordinary course of its business, Cox Radio seeks opportunities to
acquire radio stations that it believes will provide added value to the Company.
During the last several years, the Company has implemented its strategy of
clustering radio stations in several of its existing markets. The radio stations
acquired by Cox Radio in the past have primarily been underperforming, and Cox
Radio has generally improved the operating and financial performance of such
stations. The Company intends to continue to make acquisitions where permissible
in the markets in which it operates and may also make opportunistic acquisitions
in additional markets in which the Company believes that it can cost-effectively
achieve a leading position in terms of audience and revenue share. The nature
and timing of further acquisitions, are uncertain and difficult to estimate.
Market Selection Considerations. Cox Radio's acquisition strategy has been
focused primarily on clustering stations in its existing markets; however, in
the future, Cox Radio will increasingly seek to make opportunistic acquisitions
in additional markets. Management believes that Cox Radio will have the
financial resources and management expertise to continue to pursue its
acquisition strategy. Certain future acquisitions may be limited by the multiple
and cross-ownership rules of the Federal Communications Commission ("FCC"). See
"Legislation and Regulation."
Station Considerations. Cox Radio expects to concentrate on acquiring
radio stations that offer, through application of Cox Radio's operating
philosophy, the potential for improvement in the station's performance,
particularly its Broadcast Cash Flow. Such stations may be in various stages of
development, presenting Cox Radio with an opportunity to apply its management
techniques and to enhance asset value. In evaluating potential acquisitions, the
Company considers the strength of a station's broadcast signal. A powerful
broadcast signal enhances delivery range and clarity, thereby influencing
listener preference and loyalty. Cox Radio also assesses the strategic fit of an
acquisition with its existing clusters of radio stations. When entering a new
market, Cox Radio expects to acquire a "platform" upon which to expand its
portfolio of stations and to build a leading cluster of stations.
STATION OPERATIONS
The Company's stations, including the stations to be acquired in the
Pending Transactions, are located in markets which, during the last five years,
have generated, on an aggregate basis, greater radio advertising revenue growth
than the average of 5.3% for the U.S. radio industry as a whole, in each case
calculated using revenue projections obtained from RAB. These markets include
six Sunbelt markets and four markets which management believes have a
disproportionately small number of radio stations relative to the size of the
potential market audience. In most of the Company's markets, radio captures a
small percentage of the total advertising dollars spent, with local advertisers
accounting for the majority of the spending. Clustering creates an opportunity
to increase radio's share of a market's advertising revenues.
The following table summarizes certain information relating to radio
stations owned or operated by the Company, assuming the consummation of the
Pending Transactions:
<TABLE>
<CAPTION>
AUDIENCE 1997
SHARE IN RANK IN AUDIENCE SHARE IN
TARGET TARGET ADULTS 25-54
MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC
CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP
- ------------------------------- ------------------ ------------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
LOS ANGELES
KFI-AM....................... Talk Adults 35-54 4.5 5 3.5
KOST-FM...................... Adult Contemporary Women 25-44 5.0 3 4.0
KACE-FM...................... R&B Oldies African American 11.4(2) 4(2) 1.6(2)
Adults 35-54
KRTO-FM...................... R&B Oldies African American -- -- --
Adults 35-54
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
AUDIENCE 1997
SHARE IN RANK IN AUDIENCE SHARE IN
TARGET TARGET ADULTS 25-54
MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC
CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP
- ------------------------------- ------------------ ------------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
ATLANTA
WSB-AM....................... News/Talk Adults 35-64 11.4 1 8.0
WSB-FM....................... Adult Contemporary Women 25-54 7.9 4 6.1
WJZF-FM...................... Jazz Men 25-54 3.6 13 3.4
WCNN-AM(3)................... News/Talk Adults 35-64 1.2 18 1.0
MIAMI
WFLC-FM...................... Hot Adult Adults 25-54 4.5 6 4.5
Contemporary
WHQT-FM...................... Urban Adult Adults 25-54 6.5 1 6.5
Contemporary
TAMPA
WWRM-FM...................... Soft Adult Women 35-54 10.9 1 6.8
Contemporary
WCOF-FM...................... 70's Oldies Adults 25-44 7.5(4) 5(4) 6.7(4)
WFNS-AM...................... 70's Oldies Adults 25-44 -- -- --
WSUN-AM...................... News Adults 25-54 .4 27 .4
ORLANDO
WDBO-AM...................... News/Talk Adults 35-64 6.3 5 4.1
WWKA-FM...................... Country Adults 25-54 8.4 1 8.4
WCFB-FM...................... Urban Adult Women 25-54 5.3(5) 7(5) 4.7(5)
Contemporary
WTLN-AM(6)................... Urban Adult Women 25-54 -- -- --
Contemporary
WHOO-AM...................... Standards Adults 55+ 14.0 2 .8
WHTQ-FM...................... Classic Rock Men 25-54 8.0 2 5.3
WMMO-FM...................... Rock Adult Adults 25-54 6.2 5 6.2
Contemporary
WTLN-FM(7)................... Religious Adults 25-54 1.1 18 1.1
SAN ANTONIO
KCYY-FM...................... Country Adults 25-54 6.2 6 6.2
KKYX-AM...................... Classic Country Adults 35-64 2.5 15 1.2
KCJZ-FM...................... Smooth Jazz Adults 25-54 3.6 11 3.6
Adult Oriented
KISS-FM...................... Rock Adults 18-49 7.1 4 4.7
KSMG-FM...................... Hot Adult Adults 25-54 7.2 3 7.2
Contemporary
KLUP-AM...................... Adult Standards Adults 35-64 2.2 16 .7
KONO-FM...................... Oldies Adults 25-54 6.9(8) 4(8) 6.9(8)
KONO-AM...................... Oldies Adults 25-54 -- -- --
LOUISVILLE
WRKA-FM...................... Oldies Adults 35-54 8.6 4 6.3
WRVI-FM...................... Rock Adult Adults 25-49 1.9 15 1.7
Contemporary
WLSY-FM...................... R&B Oldies Adults 35-54 .5 27 .5
BIRMINGHAM(9)
WZZK-FM...................... Country Adults 25-54 11.6 1 11.6
WEZN-AM(10).................. Stardust Adults 50+ 7.8 4 1.7
WODL-FM...................... Oldies Adults 25-54 6.7 6 6.7
WBHJ-FM(3)................... Contemporary Hit Adults 18-34 13.6 1 4.5
Urban
WBHK-FM(3)................... Urban Adult Adults 25-54 8.1 3 8.1
Contemporary
WAGG-AM...................... Gospel Adults 25-54 3.7 11 3.7
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
AUDIENCE 1997
SHARE IN RANK IN AUDIENCE SHARE IN
TARGET TARGET ADULTS 25-54
MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC
CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP
- ------------------------------- ------------------ ------------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
DAYTON
WHIO-AM...................... News/Talk Adults 35-64 5.4 4 3.9
WHKO-FM...................... Country Adults 25-54 14.2 1 14.2
WCLR-FM(3)(11)............... Oldies Adults 35-54 6.4(12) 4(12) 4.7(12)
WZLR-FM(3)(11)............... Oldies Adults 35-54 -- -- --
WPTW-AM(3)(11)............... Local Programming Adults 35+ .3 39 --
TULSA
KRMG-AM...................... News/Talk Adults 25-54 7.2 4 7.2
KWEN-FM...................... Country Adults 25-54 11.1 2 11.1
KJSR-FM...................... 70's Oldies Adults 25-54 8.1 3 8.1
KRAV-FM...................... Adult Contemporary Adults 25-54 5.7 7 5.7
KGTO-AM...................... Standards Adults 55+ 10.2 3 .7
BRIDGEPORT
WEZN-FM...................... Adult Contemporary Adults 25-54 14.6(13) 1(13) 14.6(13)
SYRACUSE
WSYR-AM...................... News/Talk Adults 35-64 8.6 4 5.4
WYYY-FM...................... Adult Contemporary Adults 25-54 9.8 2 9.8
WBBS-FM...................... Country Adults 25-54 12.1 1 12.1
WHEN-AM...................... Sports/Talk Men 25-54 3.6 9 2.1
WWHT-FM...................... Adult Hit Radio Women 18-34 10.1 4 2.7
LONG ISLAND
WBLI-FM...................... Hot Adult Adults 25-54 4.5 5 4.5
Contemporary
WBAB-FM...................... Adult Oriented Men 25-54 6.1(14) 3(14) 5.1(14)
Rock
WHFM-FM...................... Adult Oriented Men 25-54 -- -- --
Rock
WGBB-AM...................... To be determined Not Applicable -- -- --
Source: Arbitron 1997 Market Reports four-book average
</TABLE>
- ---------------
<TABLE>
<S> <C>
(1) Metropolitan market served; city of license may differ.
(2) Audience share and audience rank information for KACE-FM and
KRTO-FM are combined because the stations are simulcast.
(3) Station operated by Cox Radio pursuant to an LMA.
(4) Audience share and audience rank information for WCOF-FM and
WFNS-AM are combined because the stations are simulcast.
(5) Audience share and audience rank information for WCFB-FM and
WTLN-AM are combined because the stations are simulcast.
(6) Formerly known as WZKD-AM. Station to be sold by Cox Radio
pursuant to the Orlando Exchange.
(7) Station to be acquired by Cox Radio pursuant to the Orlando
Exchange.
(8) Audience share and audience rank information for KONO-FM and
KONO-AM are combined because the stations are simulcast.
(9) WEDA-FM is excluded from this listing because the station
has not yet commenced operations.
(10) Audience share and rank data is based only on Arbitron
Market Report for Fall 1997 because format was only
applicable for that period.
(11) Station to be acquired by Cox Radio pursuant to the Dayton
Acquisition.
(12) Audience share and audience rank information for WCLR-FM and
WZLR-FM are combined because the stations are simulcast.
(13) Audience share and rank data is based only on Arbitron
Market Reports for Fall 1997 and Spring 1997 because
Arbitron does not produce Summer and Winter Arbitron Market
Reports for the Bridgeport/Fairfield County market.
(14) Audience share and audience rank information for WBAB-FM and
WHFM-FM are combined because the stations are simulcast.
</TABLE>
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<PAGE> 36
The following table sets forth certain information relating to each of the
markets in which the Company's stations operate or will operate upon
consummation of the Pending Transactions:
<TABLE>
<CAPTION>
1997 MARKET RADIO'S
RADIO 1997 1997 MARKET PERCENTAGE OF ADVERTISING
ADVERTISING METRO TOTAL RADIO 1997 TOTAL REVENUE GROWTH
REVENUE MARKET ADVERTISING ADVERTISING ADVERTISING CAGR
MARKET RANK(A) RANK(B) REVENUE(C) REVENUE(D) REVENUE 1992-97
- ------ ----------- -------- ------------ ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles.......... 1 2 $3,293 $575 16.3% 6.3%
Atlanta.............. 10 12 886 222 21.7 14.8
Miami................ 12 11 918 198 19.0 12.7
Tampa................ 19 21 524 102 17.4 10.0
Orlando.............. 28 38 387 76 18.3 9.2
San Antonio.......... 32 33 384 68 19.8 8.7
Louisville........... 47 52 224 41 15.4 7.2
Long Island.......... 48 16 --(e) 41 --(e) 5.7
Birmingham........... 50 55 207 40 17.3 9.2
Tulsa................ 55 60 159 35 20.2 10.1
Dayton............... 58 54 197 34 15.1 7.2
Syracuse............. 71 71 123 24 18.7 4.8
Bridgeport........... 90 114 151 17 18.4 7.2
</TABLE>
- ---------------
(a)Ranking of the principal radio market served by the stations among all radio
markets in the United States by 1997 market revenue, according to BIA's
Investing in Radio, 1998.
(b)Ranks assigned by BIA based on population in the market.
(c)Includes television, radio, newspaper, outdoor and cable. Source, Duncan's
Radio Market Guide, 1997. Dollars in millions.
(d)Dollars in millions.
(e)Because the Long Island/Nassau-Suffolk market advertising dollars, exclusive
of radio advertising dollars, are commingled with the New York City market,
this information is not applicable for comparative purposes.
As a result of the Company's management, programming and sales efforts, the
Company's radio stations are characterized by strong ratings and above average
power ratios. A third of the Company's stations are ranked first or second in
terms of audience share in their target demographic groups. In five of the
Company's markets, the Company's station groups ranked number one with respect
to combined station revenue market share.
RECENT TRANSACTIONS
Orlando Acquisition
In March 1997, the Company exchanged WCKG-FM and WYSY-FM in Chicago for
WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition"). The Orlando
Acquisition resulted in a pre-tax gain of approximately $49 million. In addition
to receiving the three Orlando stations, Cox Radio also received cash proceeds
of approximately $20 million. Prior to the NewCity Acquisition, the Orlando
stations were operated by NewCity since July 1996 under an LMA.
Tampa Acquisition
In March 1997, the Company acquired WFNS-AM in Tampa for an aggregate
consideration of $1.5 million (the "Tampa Acquisition"). The Company had been
operating this station pursuant to an LMA or a JSA since June 1995.
Los Angeles Acquisition
In April 1997, Cox Radio completed its acquisition of the license and
certain assets of KRTO-FM in Los Angeles for $19 million in cash (the "Los
Angeles Acquisition").
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<PAGE> 37
NewCity Acquisition
In April 1997, the Company, through the merger of its wholly owned
subsidiary New Cox Radio II, Inc. with and into NewCity, with NewCity surviving
as a wholly owned subsidiary of Cox Radio, acquired all of the issued and
outstanding capital stock of NewCity in the NewCity Acquisition. Cox Radio
purchased the stock of NewCity for an aggregate consideration of approximately
$253 million, including approximately $87 million in assumption of NewCity
indebtedness and approximately $3 million in working capital adjustments. To
consummate the NewCity Acquisition, the Company utilized approximately $56
million of amounts due from CEI and borrowed approximately $110 million pursuant
to the Company's Credit Agreement. On April 2, 1997, NewCity was merged with and
into the Company, with the Company as the surviving corporation. NewCity's
subsidiaries were subsequently consolidated into Cox Radio. In October 1997, the
Company disposed of the assets of American Comedy Network, a former subsidiary
of NewCity, for aggregate proceeds of approximately $1.1 million including
certain non-compete agreements.
Birmingham Acquisition II and Birmingham Disposition
In May 1997, the Company agreed to acquire WENN-FM and WAGG-AM in
Birmingham, Alabama, for consideration of $15 million (the "Birmingham
Acquisition II"). In July 1997, the Company assigned its right to purchase
WENN-FM for consideration of $14.5 million to a third party (the "Birmingham
Disposition"). The Company consummated these transactions during November 1997.
San Antonio Transactions
In September 1997, the Company acquired KISS-FM, KSMG-FM and KLUP-AM in San
Antonio, Texas for an aggregate consideration of $30.4 million plus certain
non-compete agreements (the "San Antonio Acquisition I"). In March 1998, the
Company acquired KONO-FM and KONO-AM in San Antonio for $23 million (the "San
Antonio Acquisition II").
In December 1997, the Company acquired an option to purchase radio station
KRIO-FM, serving the San Antonio market, for a purchase price of $9 million. The
Company entered into an agreement to assign this option in January 1998 for an
aggregate consideration of $250,000 (the "San Antonio Disposition"). The closing
of the San Antonio Disposition occurred in May 1998.
The Orlando Acquisition, the Tampa Acquisition, the Los Angeles
Acquisition, the NewCity Acquisition, the Birmingham Acquisition II, the
Birmingham Disposition, the San Antonio Acquisition I, the San Antonio
Acquisition II and the San Antonio Disposition are collectively referred to
herein as the "Recent Transactions".
PENDING TRANSACTIONS
Birmingham Transactions
In May 1997, the Company agreed to acquire radio stations WBHJ-FM and
WBHK-FM in Birmingham, Alabama (the "Birmingham Acquisition I") for an aggregate
consideration of $17 million, consisting of $5 million paid for an option to
purchase the stations and a $12 million note transferred to the seller as a
station investment note receivable. On August 1, 1997, the Company began
operating WBHJ-FM and WBHK-FM under an LMA. Pending certain regulatory
approvals, the Company anticipates closing the Birmingham Acquisition I in the
second half of 1998.
In September 1997, the Company announced that it had entered into an
agreement in principle with a third party to construct, program and own WEDA-FM,
a new Class A FM radio station in Homewood, Alabama to serve the Birmingham
market (the "Birmingham Acquisition III"). The FCC has approved the third
party's application for the new construction permit and settlement of the
comparative hearing among the three applicants for the construction permit. As
part of the agreement in principle, the third party would construct the station,
the Company would enter into an LMA for the new station and the Company would
acquire an option to purchase the station for an aggregate consideration of $5.5
million and the assumption of
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<PAGE> 38
debt in an amount not to exceed $200,000. The Company expects to consummate the
Birmingham Acquisition III in the second half of 1998.
Dayton Acquisition
In February 1998, the Company entered into an agreement to acquire radio
stations WCLR-FM, WZLR-FM and WPTW-AM serving the Dayton, Ohio market for
approximately $6 million (the "Dayton Acquisition"). The Company has been
operating these stations pursuant to an LMA since December 1997. In addition,
the Company has entered into a station investment note receivable with the
stations' seller for $6 million. Pending certain regulatory approvals, the
Company anticipates closing the Dayton Acquisition in the second half of 1998.
Orlando Exchange
In February 1998, the Company entered into an agreement to acquire the
assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5
million. In a related transaction, the Company entered into an agreement to
dispose of the assets of WTLN-AM (formerly known as WZKD-AM), also serving the
Orlando, Florida market for $500,000 (the "Orlando Exchange"). Pending certain
regulatory approvals, the Company expects to complete the Orlando Exchange in
the second half of 1998 or the first half of 1999.
The Birmingham Acquisition I, the Birmingham Acquisition III, the Dayton
Acquisition and the Orlando Exchange are collectively referred to herein as the
"Pending Transactions".
LONG ISLAND ACQUISITION
In May 1998, the Company acquired the assets of WBLI-FM, WBAB-FM, WHFM-FM
and WGBB-AM, serving the Nassau-Suffolk, New York market for consideration of
$48 million (the "Long Island Acquisition").
COMPETITION; CHANGES IN THE BROADCASTING INDUSTRY
The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations depends largely upon its audience
ratings and its share of the overall advertising revenue within its market. The
Company's radio stations compete for listeners directly with other radio
stations in their respective markets primarily on the basis of program content
that appeals to a target demographic group. By building a strong listener base
consisting of a specific demographic in each of its markets, Cox Radio is able
to attract advertisers seeking to reach those listeners. The Company's stations
compete for advertising revenue directly with other radio stations and with
other electronic and print media within their respective markets.
Factors that are material to a station's competitive position include
management experience, the station's audience share rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance, and the number and characteristics of other stations in the market
area. Cox Radio attempts to improve its competitive position with promotional
campaigns aimed at the demographics targeted by its stations and by sales
efforts designed to attract advertisers. Recent changes in the law and in FCC
rules and policies have increased the number of radio stations a broadcaster may
own in a given market and permit, within limits, joint arrangements with other
stations in a market relating to programming, advertising sales, and station
operations. Management believes that radio stations that elect to take advantage
of these opportunities may, in certain circumstances, have lower operating costs
and may be able to offer advertisers more attractive rates and services.
Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC and the number of radio stations that a single entity may
own and operate in a given market is limited by the availability of FM and AM
radio frequencies allotted by the FCC to communities in that market, as well as
by the FCC's multiple ownership rules, which regulate the number of stations
that may be owned and controlled by a single entity. The FCC also recently
initiated a rulemaking proceeding to consider the use of competitive bidding
procedures
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<PAGE> 39
(auctions) to award licenses or construction permits for new broadcast stations
to the highest bidder, and may also subject to auction all pending and future
applications by licensees to improve or otherwise modify their existing
facilities, where such applications would be mutually exclusive with other
licensees' applications.
The Company's stations compete for advertising revenue with other radio
stations and with other electronic and print media. Potential advertisers can
substitute advertising through broadcast television, cable television systems
(which can offer concurrent exposure on a number of cable networks to enlarge
the potential audience), daily, weekly, and free-distribution newspapers, other
print media, direct mail, and on-line computer services for radio advertising.
Competing media commonly target the customers of their competitors, and
advertisers regularly shift dollars from radio to these competing media and vice
versa. Accordingly, there can be no assurance that any of the Company's stations
will be able to maintain or increase its current audience ratings and
advertising revenue share. In addition, the radio broadcasting industry is
subject to competition from new media technologies that are being developed or
introduced, such as the delivery of audio programming by cable television
systems, by satellite digital audio radio service ("satellite DARS" or "SDARS"),
and by digital audio broadcasting ("DAB"). DAB and SDARS provide for the
delivery by terrestrial or satellite means of multiple new audio programming
formats with compact disc quality sound to local and national audiences. The
delivery of information through the Internet also could create a new form of
competition. The radio broadcasting industry historically has grown despite the
introduction of new technologies for the delivery of entertainment and
information, such as broadcast television, cable television, audio tapes and
compact discs. A growing population and greater availability of radios,
particularly car and portable radios, have contributed to this growth. There can
be no assurance, however, that the development or introduction in the future of
any new media technology will not have an adverse effect on the radio
broadcasting industry.
Cox Radio cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any FCC proposals or changes might have on its business.
LEGISLATION AND REGULATION
The ownership, operation and sale of radio stations, including those
licensed to Cox Radio, are subject to the jurisdiction of the FCC, which acts
under authority granted by the Communications Act of 1934, as amended (the
"Communications Act"). Among other things, the FCC assigns frequency bands for
broadcasting, determines the particular frequencies, locations and operating
power of stations, issues, renews and modifies station licenses, determines
whether to approve changes in ownership or control of station licenses,
regulates equipment used by stations, adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation, program
content, employment practices, and business of stations, and has the power to
impose penalties, including license revocations, for violations of its rules or
the Communications Act.
The Telecommunications Act of 1996 (the "1996 Act"), which significantly
amended the Communications Act in numerous respects, dramatically changed the
ground rules for competition and regulation in virtually all sectors of the
telecommunications industry, including broadcasting, local and long-distance
telephone services, cable television services and telecommunications equipment
manufacturing. In addition, the 1996 Act imposed numerous requirements on the
FCC to launch new inquiries and rulemaking proceedings, perhaps 80 in all,
involving a multitude of telecommunications issues, including those described
herein that will directly affect the broadcast industry. The 1996 Act mandated
that such rulemaking proceedings be completed within certain time frames, in
some cases as short as six months. Some of these proceedings have been completed
while others remain pending.
Broadcast station licenses are subject to renewal upon application to the
FCC. Pursuant to Congress' mandate in the 1996 Act, the FCC adopted a rule
extending radio license terms from seven to eight years. All licenses renewed as
part of the current renewal cycle will have a term of eight years. The FCC will
renew a broadcast license if it determines that the "public convenience,
interest or necessity" will be served thereby. Each of the Company's radio
stations operates pursuant to one or more licenses issued by the FCC that
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<PAGE> 40
presently have a maximum term of seven years. The Company's licenses expire at
various times through the year 2006. Although Cox Radio has applied or will
apply to renew these licenses, third parties may challenge the Company's renewal
applications. Historically, Cox Radio's management has not experienced any
material difficulty in obtaining renewal from the FCC of any of the broadcast
licenses for stations under its control. See "Risk Factors-Government Regulation
of the Broadcasting Industry."
MANAGEMENT
The following table sets forth the name and age of the directors and
executive officers of Cox Radio as of August 1, 1998:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COX RADIO
---- --- -----------------------
<S> <C> <C>
Nicholas D. Trigony.................... 57 Chairman of the Board of Directors
Robert F. Neil......................... 39 President and Chief Executive Officer,
Director
Richard A. Ferguson.................... 52 Vice President and Chief Operating
Officer, Director
Maritza Pichon......................... 44 Chief Financial Officer
Marc W. Morgan......................... 48 Senior Group Vice President
Robert B. Green........................ 45 Group Vice President
James T. Morely........................ 49 Senior Group Vice President
Richard A. Reis........................ 44 Group Vice President
James C. Kennedy....................... 50 Director
David E. Easterly...................... 56 Director
Ernest D. Fears, Jr.................... 66 Director
Paul M. Hughes......................... 59 Director
</TABLE>
33
<PAGE> 41
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information as of March 18, 1998 with respect
to the shares of Class A Common Stock and Class B Common Stock beneficially
owned by each person known by the Company to own more than 5% of any class of
the outstanding voting securities of the Company.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF VOTE
CLASS A CLASS B CLASS OF OF ALL CLASSES OF
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
- ------------------------ ------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Cox Enterprises, Inc.(1)(2)(3).......... -- 19,577,672 100.00% 95.67%
J.&W. Seligman & Co. Incorporated(4).... 1,189,000 -- 13.41 0.58
Baron Capital Group, Inc.(5)............ 920,000 -- 10.37 0.45
Massachusetts Financial Services
Company(6)............................ 864,600 -- 9.75 0.42
College Retirement Equities Fund(7)..... 636,800 -- 7.18 0.31
Mellon Bank Corporation(8).............. 458,250 -- 5.17 0.22
</TABLE>
- ---------------
(1) The address for CEI is 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319.
(2) All the shares of Common Stock of the Company that are beneficially owned by
CEI are held of record by Cox Broadcasting. Cox Broadcasting holds
19,577,672 shares of Class B Common Stock that are convertible into the same
number of shares of Class A Common Stock. All the shares of outstanding
capital stock of Cox Broadcasting are beneficially owned by Cox Holdings,
Inc., and all of the shares of outstanding capital stock of Cox Holdings,
Inc. are beneficially owned by CEI. The beneficial ownership of the
outstanding capital stock of CEI is described in footnote (3) below.
(3) There are 202,448,312 shares of common stock of CEI outstanding, with
respect to which (i) Barbara Cox Anthony, as trustee of the Anne Cox
Chambers Atlanta Trust, exercises beneficial ownership over 58,316,422
shares (28.8%); (ii) Anne Cox Chambers, as trustee of the Barbara Cox
Anthony Atlanta Trust, exercises beneficial ownership over 58,316,422 shares
(28.8%); (iii) Barbara Cox Anthony, Anne Cox Chambers and Richard L.
Braunstein, as trustees of the Dayton Cox Trust A, exercise beneficial
ownership over 82,745,685 shares (40.9%); and (iv) 244 individuals and
trusts exercise beneficial ownership over the remaining 3,069,783 shares
(1.5%). Thus, Barbara Cox Anthony and Anne Cox Chambers, who are sisters,
together exercise sole or shared beneficial ownership over 199,378,529
shares (98.5%) of the common stock of CEI. In addition, Garner Anthony, the
husband of Barbara Cox Anthony, holds beneficially and of record 14,578
shares of common stock of CEI. Barbara Cox Anthony disclaims beneficial
ownership of such shares. Barbara Cox Anthony and Anne Cox Chambers are the
mother and aunt, respectively, of James C. Kennedy, the Chairman of the
Board of Directors and Chief Executive Officer of CEI and a director of the
Company.
(4) The information contained in this table with respect to J.&W. Seligman & Co.
Incorporated is based on a Schedule 13G reporting ownership as of January
31, 1998 by J.&W. Seligman & Co. Incorporated; William C. Morris; and
Seligman Communications & Information Fund, Inc. The address for the
reporting persons is 100 Park Avenue, New York, New York 10017.
(5) The information contained in this table with respect to Baron Capital Group,
Inc. is based on a joint filing on Schedule 13G reporting ownership as of
December 31, 1997 by Baron Capital Group, Inc., BAMCO, Inc., Baron Capital
Management, Inc., Baron Asset Fund, and Ronald Baron. The address for each
of the reporting parties is 767 Fifth Avenue, 24th Floor, New York, New York
10153.
(6) The information contained in this table with respect to Massachusetts
Financial Services Company is based on a filing on Schedule 13G reporting
ownership as of December 31, 1997. The address for the reporting person is
500 Boylston Street, Boston, Massachusetts 02116.
(7) The information contained in this table with respect to College Retirement
Equities Fund is based on a joint filing on Schedule 13G reporting ownership
as of December 31, 1997 by College Retirement Equities Fund and TIAA-CREF
Mutual Funds. The address for each reporting party is 730 Third Avenue, New
York, New York 10017.
(8) The information contained in this table with respect to Mellon Bank
Corporation is based on a joint filing on Schedule 13G reporting ownership
as of December 31, 1997 by the following direct or indirect subsidiaries of
Mellon Bank Corporation: Boston Safe Deposit and Trust Company; Mellon Bank,
N.A.; Mellon Capital Management Corporation; Mellon Equity Associates; The
Boston Company Asset Management, Inc.; The Dreyfus Corporation; Boston Group
Holdings, Inc.; The Boston Company, Inc.; and MBC Investment Corporation.
The address of Mellon Bank Corporation and for all reporting persons is One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
34
<PAGE> 42
DESCRIPTION OF CERTAIN INDEBTEDNESS
THE CREDIT AGREEMENT
On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior,
unsecured revolving credit facility (the "Credit Agreement") with certain
guarantors and banks, including Chase Bank of Texas, N.A. (formerly Texas
Commerce Bank National Association), as Administrative Agent, NationsBank of
Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent.
The loan proceeds were used to finance the payment of the consideration payable
in the NewCity Acquisition, repay certain secured debt of NewCity and finance
certain acquisitions. The remaining credit availability may be used to finance
additional acquisitions and for other corporate purposes. The Credit Agreement
has restrictions on the payment of dividends, certain mergers, consolidations or
dispositions of assets and establishes limitations on, among other things,
additional indebtedness and transactions with affiliates. The total principal
amount outstanding under the Credit Agreement was approximately $100.0 million
as of June 30, 1998 and the weighted average per annum interest rate applicable
to borrowings thereunder for the six months ended June 30, 1998 was 6.5%. Future
borrowings under the Credit Agreement will accrue interest at the London
Interbank Offered Rate plus a specified margin.
THE CEI CREDIT FACILITY
The Company has entered into a revolving credit facility with CEI (the "CEI
Credit Facility"). Borrowings by the Company under the CEI Credit Facility are
typically repaid by the Company within 30 days. Borrowings under the CEI Credit
Facility accrue interest at CEI's commercial paper rate plus .40%. As of June
30, 1998, no amounts were outstanding under the CEI Credit Facility.
ADDITIONAL FINANCING
The Company expects to enter into a new credit facility pursuant to which
the lenders thereunder would commit to lend $100 million to the Company on a
revolving basis for acquisitions and general corporate purposes. Loans pursuant
to such commitment are expected to bear interest on terms similar to the terms
of the Credit Agreement.
35
<PAGE> 43
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on May 26, 1998 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently placed the Old Notes with qualified institutional buyers pursuant
to Rule 144A under the Securities Act. As a condition of the Purchase Agreement,
the Company entered into the Registration Rights Agreement with the Initial
Purchasers pursuant to which the Company has agreed, for the benefit of the
holders of the Old Notes, at the Company's cost, to use its best efforts to (i)
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 180 days after the date of the original issuance of
the Old Notes and (ii) keep the Exchange Offer open for not less than 30
calendar days (or longer if required by applicable law) after the date on which
notice of the Exchange Offer is mailed to the holders of the Old Notes. For each
2003 Old Note validly tendered pursuant to the Exchange Offer and not validly
withdrawn by the holder thereof, the holder of such 2003 Old Note will receive a
2003 New Note having a principal amount equal to that of the surrendered 2003
Old Note and for each 2005 Old Note validly tendered pursuant to the Exchange
Offer and not validly withdrawn by the holder thereof, the holder of such 2005
Old Note will receive a 2005 New Note having a principal amount equal to that of
the surrendered 2005 Old Note.
Based upon interpretations by the staff of the Commission set forth in
certain no-action letters issued to third parties, the Company believes that the
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than a broker-dealer, as set forth below, or any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and that such holder has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. See "The Exchange Offer -- Resale of the New Notes." Holders
of Old Notes wishing to accept the Exchange Offer must represent to the Company,
as required by the Registration Rights Agreement, that such conditions have been
met and that such holder is not an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act. Each Participating Broker-Dealer must
represent that the Old Notes tendered in exchange therefor were acquired as a
result of market-making activities or other trading activities and must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by any broker-dealer (other than an affiliate of the Company) in connection with
resales of New Notes received in exchange for Old Notes where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of up to 90
days after the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." Any holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
New Notes or who is an affiliate of the Company may not rely on the position of
the staff of the Commission enunciated in Exxon Capital Holdings Corporation
(May 13, 1988) or similar no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Failure to comply with such requirements in such instance may
result in such holder incurring liability under the Securities Act for which the
holder is not indemnified by the Company. No affiliate of the Company may rely
on such no-action letters and any such affiliate must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer.
If, because of any change in law, regulation or in the applicable
interpretations of the staff of the Commission, the Company is not permitted to
effect the Exchange Offer or, for any reason, the Exchange
36
<PAGE> 44
Offer Registration Statement is not declared effective within 180 days after the
date of issuance of the Old Notes or in certain other circumstances, then the
Company shall use its best efforts to (a) as promptly as practicable, file a
shelf registration statement (the "Shelf Registration Statement") covering the
Old Notes, (b) cause the shelf registration statement to be declared effective
under the Securities Act and (c) keep the shelf registration statement effective
until the earlier of two years after the initial sale of the Old Notes to the
Initial Purchasers or such time as all of the applicable Old Notes have been
sold thereunder or otherwise cease to be registrable securities within the
meaning of the Registration Rights Agreement.
The Company will, in the event of the filing of the Shelf Registration
Statement, provide to each applicable holder of the Old Notes copies of the
prospectus which is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement has become effective and take
certain other actions as are required to permit unrestricted resales of the Old
Notes. A holder of the Old Notes that sells such Old Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations). In addition, each holder
of the Old Notes will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Old Notes included in the
Shelf Registration Statement and to benefit from the provisions set forth in the
following paragraph.
Each holder will be deemed to have agreed that, upon receipt of notice from
the Company of the occurrence of any event which makes any statement in the
prospectus which is part of the Shelf Registration Statement (or, in the case of
Participating Broker-Dealers, the prospectus which is part of the Exchange Offer
Registration Statement) untrue in any material respect or which requires the
making of any changes in such prospectus in order to make the statements therein
not misleading or of certain other events specified in the Registration Rights
Agreement, such holder (or Participating Broker-Dealer, as the case may be) will
suspend the sale of Old Notes pursuant to such prospectus until the Company has
amended or supplemented such prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented prospectus to such
holder (or Participating Broker-Dealer, as the case may be) or the Company has
given notice that the sale of the Notes may be resumed.
If the Company shall give such notice to suspend the sale of the Old Notes,
it shall extend the relevant period referred to above during which the Company
and the Note Guarantors, if any, are required to keep effective the Shelf
Registration Statement (or the period during which Participating Broker-Dealers
are entitled to use the prospectus included in the Exchange Offer Registration
Statement in connection with the resale of New Notes) by the number of days
during the period from and including the date of the giving of such notice to
and including the date when holders shall have received copies of the
supplemented or amended prospectus necessary to permit resales of the Notes or
to and including the date on which the Company has given notice that the sale of
Notes may be resumed.
If the Company or any Note Guarantor, if any, fails to comply with the
Registration Rights Agreement or if the Exchange Offer Registration Statement or
the Shelf Registration Statement fails to become effective, then liquidated
damages (the "Liquidated Damages") shall become payable in respect of the Notes
as follows:
(i) If neither the Exchange Offer Registration Statement nor the Shelf
Registration Statement is declared effective by the commission on or prior
to the 180th day after the Closing Date (in the case of an Exchange Offer
Registration Statement) or on or prior to the later of (A) the 40th day
after the date such Registration Statement was required to be filed and (B)
the 180th day after the Closing Date (in the case of a Shelf Registration
Statement), then Liquidated Damages shall accrue on the principal amount of
the Notes at a rate of 0.25% per annum; or
(ii) if (A) the Company has not exchanged the Exchange Notes for all
Notes validly tendered or any Note Guarantor has not executed a Note
Guarantee, if any, in respect of such Exchange Notes, in
37
<PAGE> 45
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date on which the Exchange Offer Registration Statement was
declared effective or (B) if applicable, the Shelf Registration Statement
has been declared effective and such Shelf Registration Statement ceases to
be effective or usable for resales at any time prior to the second
anniversary of the Closing Date (other than after such time as all Notes
have been disposed of thereunder or otherwise cease to be registrable
securities within the meaning of the Registration Rights Agreement), then
Liquidated Damages shall accrue on the principal amount of the Notes at a
rate of 0.25% per annum, commencing on (x) the 46th day after such
effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective or useable for resales, in
the case of (B) above;
provided, however, that the Liquidated Damages rate on the principal amount of
Notes may not exceed in the aggregate 0.25% per annum; provided, further,
however, that (1) upon the effectiveness of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the exchange of New Notes for all Old Notes validly tendered and
execution by each Note Guarantor of a Note Guarantee, if any, in respect thereof
(in the case of clause (ii) (A) above) or upon the effectiveness or availability
of the Shelf Registration Statement which had ceased to remain effective or
useable for resales (in the case of clause (iii) (B) above), then Liquidated
Damages on the principal amount of Old Notes as a result of such clause (or the
relevant subclause thereof) shall cease to accrue.
Any amounts of Liquidated Damages due pursuant to the foregoing paragraphs
will be payable in cash on May 15 and November 15 of each year to the holders of
record on the last day of the month preceding the month in which the relevant
payment date falls.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of 2003 New
Notes in exchange for each $1,000 principal amount of 2003 Old Notes and $1,000
principal amount of 2005 New Notes in exchange for each $1,000 principal amount
of 2005 Old Notes accepted in the Exchange Offer. Holders may tender some or all
of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000.
The form and terms of the New Notes are the same in all material respects
as the form and terms of the Old Notes, except that (i) the New Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (ii) the holders of the New Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for an increase in the interest rate on the Old Notes in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The New Notes will
evidence the same debts as the Old Notes (which they replace) and will be
entitled to the benefits of the Indenture.
As of the date of this Prospectus, $200,000,000 aggregate principal amount
of Old Notes are outstanding. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
38
<PAGE> 46
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal or transmit an Agent's
Message (as defined below) in connection with a book-entry transfer, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, or Agent's
Message, together with the Old Notes and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
To be tendered effectively, the Old Notes, Letter of Transmittal or Agent's
Message, and other required documents must be completed and received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent prior to
the Expiration Date along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes into the Exchange Agent's account at The Depository Trust Company ("DTC"
or the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the holder must comply with the guaranteed delivery
procedures described below. Delivery of the Old Notes may be made by book-entry
transfer in accordance with the procedures described below. Confirmation of such
book-entry transfer must be received by the Exchange Agent prior to the
Expiration Date. DELIVERY OF DOCUMENTS TO THE BOOK ENTRY
39
<PAGE> 47
TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURE DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
DTC has authorized DTC participants that hold Old Notes on behalf of
beneficial owners of Old Notes through DTC to tender their Old Notes as if they
were holders. To effect a tender of Old Notes, DTC participants should either
(i) complete and sign the Letter of Transmittal (or a manually signed facsimile
thereof), have the signature thereon guaranteed if required by the instructions
to the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or
such manually signed facsimile) to the Exchange Agent pursuant to the procedure
set forth in "Procedures for Tendering" or (ii) transmit their acceptance to DTC
through the DTC Automated Tender Offer Program ("ATOP") for which the
transaction will be eligible and follow the procedure for book-entry transfer
set forth in "-- Book-Entry Transfer."
By executing the Letter of Transmittal or Agent's Message, each holder will
make to the Company the representations set forth above in the second paragraph
under the heading "-- Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute an agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of its authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old
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<PAGE> 48
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right in its sole discretion to waive any defects, irregularities
or conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Company shall determine. Although the
Company intends to notify holders of defects or irregularities with respect to
tenders of Old Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification. Tenders
of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral or written notice thereof to the Exchange Agent.
In all cases, the issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal or Agent's Message and all other required documents. If any tendered
Old Notes are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the Expiration Date.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish a new account or utilize an existing
account with respect to the Old Notes at DTC promptly after the date of this
Prospectus, and any financial institution that is a participant in DTC and whose
name appears on a security position listing as the owner of Old Notes may make a
book-entry tender of Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account in accordance with DTC's procedures for such
transfer. However, although tender of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
validly executed, with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be received by the Exchange Agent at its address set forth below under
the caption "Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedures described below must be complied with. The
confirmation of book-entry transfer of Old Notes into the Exchange Agent's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation." Delivery of documents to DTC in accordance with DTC's procedures
does not constitute delivery to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Old Notes stating (i) the aggregate principal
amount of Old Notes which have been tendered by such participant, (ii) that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and (iii) that the Company may enforce such agreement against the
participant.
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<PAGE> 49
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) (or in the case of a book-entry
transfer, an Agent's Message) together with the certificate(s) representing
the Old Notes (or a confirmation of book-entry transfer of such Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility), and any
other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) the certificate(s) representing all tendered Old Notes in proper
form for transfer (or a confirmation of book-entry transfer of such Old
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), together with a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent within five New York Stock Exchange trading days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the business day prior to the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number(s) and principal amount of such Old
Notes, or, in the case of Old Notes transferred by book-entry transfer, the name
and number of the account at the Book-Entry Transfer Facility to be credited),
(iii) be signed by the holder in the same manner as the original signature on
the Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes into the name of the person withdrawing the tender
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes
which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to Expiration Date.
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<PAGE> 50
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein before the
Expiration Date, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old Notes
and return all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such Old
Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: Overnight Courier:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
21st Floor 21st Floor
New York, New York 10286 New York, New York 10286
Attention: Corporate Trust Administration Attention: Corporate Trust Administration
By Hand: Facsimile Transmission:
The Bank of New York (212) 815-5915
101 Barclay Street
21st Floor
New York, New York 10286
Attention: Corporate Trust Administration
</TABLE>
Confirm by Telephone:
(212) 815-5092
DELIVERY TO AN ADDRESS OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
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<PAGE> 51
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act) in compliance with Rule 144A, (ii) to institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that, prior to such transfer, furnishes to the Trustee a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Notes (the form of which letter can be obtained
from the Trustee) and, if such transfer is in respect of an aggregate principal
amount of Notes at the time of transfer of less than $100,000, an opinion of
counsel acceptable to the Company that such transfer is in compliance with the
Securities Act, (iii) outside the United States in compliance with Rule 904
under the Securities Act, (iv) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available) or (v) pursuant to
an effective registration statement under the Securities Act.
RESALE OF THE NEW NOTES
Based upon interpretations by the staff of the Commission set forth in
certain no-action letters issued to third parties, the Company believes that the
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than a broker-dealer, as set forth below, or any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and that such holder has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. See "The Exchange Offer -- Resale of the New Notes." Holders
of Old Notes wishing to accept the Exchange Offer must represent to the Company,
as required by the Registration Rights Agreement, that such conditions have been
met and that such holder is not an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act. Each Participating Broker-Dealer must
represent that the Old Notes tendered in exchange therefor were acquired as a
result of market-making activities or other trading activities and must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by any broker-dealer (other than an affiliate of the Company) in connection with
resales of New Notes received in exchange for Old Notes where such Old Notes
were acquired by such broker-dealer as a
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<PAGE> 52
result of market-making activities or other trading activities. The Company has
agreed that, for a period of up to 180 days after the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution." Any holder who tenders in the
Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of the New Notes or who is an affiliate of the
Company may not rely on the position of the staff of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988) or similar
no-action letters and, in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Company.
No affiliate of the Company may rely on such no-action letters and any such
affiliate must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer. For a
description of the procedures for such resales by Participating Broker-Dealers,
see "Plan of Distribution."
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<PAGE> 53
DESCRIPTION OF THE NOTES
GENERAL
Each of the 2003 New Notes and the 2005 New Notes, like the Old Notes, will
be a separate series of securities issued under the Indenture, dated as of May
26, 1998 (the "Indenture"), among the Company, the Initial Note Guarantors (as
defined herein) and The Bank of New York, as trustee (the "Trustee"). Copies of
the Indenture are available upon request from the Company. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, including the definitions of certain terms therein and those
terms made a part thereof by the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Whenever particular defined terms of the Indenture not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference.
The form and terms of the New Notes are the same in all material respects
as the form and terms of the Old Notes (which they replace) except that (i) the
issuance of the New Notes have been registered under the Securities Act and,
therefore, the New Notes will not bear legends restricting the transfer thereof,
and (ii) the holders of New Notes will not be entitled to certain rights under
the Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. A copy of the Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Certain definitions of terms used in the following summary are set forth under
"-- Certain Definitions" below. The Old Notes and the New Notes are sometimes
referred to herein collectively as the "Notes."
The 2003 New Notes and the 2005 New Notes will be senior unsecured
obligations of the Company ranking pari passu in right of payment with all other
existing and future unsubordinated unsecured obligations of the Company,
initially limited to $100 million and $100 million aggregate principal amount,
respectively, and will mature on May 15, 2003 and May 15, 2005, respectively,
unless previously redeemed.
Interest on the New Notes will accrue at the rates shown on the front cover
of this Prospectus from the Closing Date or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable
semiannually (to Holders of record at the close of business on April 30 or
October 31 immediately preceding the Interest Payment Date) on May 15 and
November 15 of each year, commencing on November 15, 1998. Principal of, and
premium, if any, and interest on, the Notes will be payable at the office or
agency of the Company in the Borough of Manhattan, the City of New York (which
initially will be the principal corporate trust office of the Trustee at 101
Barclay Street, Floor 21W, New York, New York 10286); provided, that, at the
option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses as they appear in the Security Register. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 principal amount and any integral multiple
thereof. See "-- Book-Entry; Delivery and Form." No service charge will be made
for any registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
Subject to the covenants described below under "Covenants" and applicable
law, the Company may issue additional Notes under the Indenture. The New Notes
offered hereby, the Old Notes and any such additional Notes subsequently issued
would be treated as a single class for all purposes under the Indenture.
OPTIONAL REDEMPTION
The New Notes will be redeemable at the option of the Company, in whole at
any time or in part from time to time, on at least 30 days but not more than 60
days prior written notice mailed to the registered holders thereof, at a
redemption price equal to the greater of (i) 100% of the principal amount of the
Notes to be
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<PAGE> 54
redeemed, and (ii) the sum, as determined by the Quotation Agent (as defined
herein), of the present values of the principal amount and the remaining
scheduled payments of interest on the Notes to be redeemed from the redemption
date to May 15, 2003 in the case of the 2003 New Notes and May 15, 2005 in the
case of the 2005 New Notes (the "Remaining Life"), in each case, discounted on a
semiannual basis (assuming a 360-day year consisting of 30-day months) at the
Treasury Rate (as defined herein) plus 10 basis points in the case of the 2003
New Notes and 15 basis points in the case of the 2005 New Notes, plus in either
case, accrued interest thereon to the date of redemption.
If money sufficient to pay the redemption price of and accrued interest on
all of the Notes of a particular series (or portions thereof) to be redeemed on
the redemption date is deposited with the Trustee or a Paying Agent on or before
the redemption date and certain other conditions are satisfied, then on and
after such date, interest will cease to accrue on such Notes (or such portion
thereof) called for redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the Remaining Life of the Notes to be redeemed.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of five Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or, if the Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company. "Reference Treasury Dealer" means (i) NationsBanc Montgomery Securities
LLC, Chase Securities Inc. and J.P. Morgan Securities Inc. and their respective
successors; provided, however, that if the foregoing shall cease to be primary
U.S. Government securities dealers in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer,
and (ii) any other Primary Treasury Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual yield to maturity of the Comparable Treasury
Issue, calculated on the third business day preceding such redemption date using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.
NOTE GUARANTEES
The Indenture requires the Company to cause each of its Subsidiaries that
guarantee, on the date hereof or in the future, indebtedness under the Credit
Agreement and indebtedness under any future senior unsecured credit facility
between the Company and the third party lenders thereunder to fully and
unconditionally guarantee, as primary obligors and not merely as sureties,
pursuant to a Note Guarantee, on an unsubordinated, unsecured basis, the due and
punctual payment of the principal of, interest on and other amounts payable
under the Notes, when and if the same shall become due and payable, whether at
stated maturity, by declaration of acceleration, upon redemption or otherwise;
provided, however, that in the event that any such Subsidiary is released from
its guarantee of indebtedness under the Credit Agreement or such future credit
facility, then such Subsidiary will also be immediately released from its
obligations under its Note Guarantee without further action by any party. The
Old Notes were initially guaranteed by WSB, Inc., a Delaware corporation
("WSB"), and WHIO, Inc., a Delaware corporation ("WHIO" and, together with WSB,
the "Initial Note Guarantors").
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<PAGE> 55
Each Note Guarantee will be limited to an amount not to exceed the maximum
amount that can be guaranteed by the applicable Note Guarantor without rendering
such Note Guarantee, as it relates to such Note Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting creditors' rights generally.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur or assume any Lien (other than
Permitted Liens) on Restricted Property to secure the payment of
Indebtedness of the Company or any Restricted Subsidiary if, immediately
after the creation, incurrence or assumption of such Lien, the aggregate
outstanding principal amount of all Indebtedness of the Company and the
Restricted Subsidiaries that is secured by Liens (other than Permitted
Liens) on Restricted Property would exceed the greater of (i) $30 million
or (ii) 15% of the aggregate outstanding principal amount of all
Indebtedness of the Company and the Restricted Subsidiaries (whether or not
so secured), unless effective provision is made whereby the Notes (together
with, if the Company shall so determine, any other Indebtedness ranking
equally with the Notes, whether then existing or thereafter created) are
secured equally and ratably with (or prior to) such Indebtedness (but only
for so long as such Indebtedness is so secured). The foregoing limitation
does not apply to (i) Liens existing on the Closing Date; (ii) Liens
granted after the Closing Date on any assets or Capital Stock of the
Company or its Restricted Subsidiaries created in favor of the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary granted
by such Restricted Subsidiary to the Company or another Restricted
Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is incurred
to refinance secured Indebtedness which is permitted to be incurred under
the "Limitation on Indebtedness of Restricted Subsidiaries" covenant;
provided that such Liens do not extend to or cover any property or assets
of the Company or any Restricted Subsidiary other than the property or
assets securing the Indebtedness being refinanced; (v) Liens securing
Indebtedness permitted under the "Limitation on Indebtedness of Restricted
Subsidiaries" covenant; or (vii) Permitted Liens.
Limitation on Indebtedness of Restricted Subsidiaries. The Company
will not permit any Restricted Subsidiary to incur any Indebtedness if,
immediately after the incurrence or assumption of such Indebtedness, the
aggregate outstanding principal amount of all Indebtedness of the
Restricted Subsidiaries would exceed the greater of (i) $30 million or (ii)
15% of the aggregate outstanding principal amount of all Indebtedness of
the Company and the Restricted Subsidiaries; provided that, in any event, a
Restricted Subsidiary may incur Indebtedness to extend, renew or replace
Indebtedness of such Restricted Subsidiary to the extent that the principal
amount of the Indebtedness so incurred does not exceed the principal amount
of the Indebtedness extended, renewed or replaced thereby immediately prior
to such extension, renewal or replacement plus any premium, accrued and
unpaid interest or capitalized interest payable thereon.
Designation of Subsidiaries. The Company may designate a Restricted
Subsidiary as an Unrestricted Subsidiary or designate an Unrestricted
Subsidiary as a Restricted Subsidiary at any time, provided that (i)
immediately after giving effect to such designation, the Leverage Ratio of
the Restricted Group is not greater than 7:1 and the Company and the
Restricted Subsidiaries are in compliance with the "Limitation on Liens"
and "Limitation on Indebtedness of Restricted Subsidiaries" covenants, and
(ii) an Officers' Certificate with respect to such designation is delivered
to the Trustee within 75 days after the end of the fiscal quarter of the
Company in which such designation is made (or, in the case of a designation
made during the last fiscal quarter of the Company's fiscal year, within
120 days after the end of such fiscal year), which Officers' Certificate
shall state the effective date of such designation.
Mergers or Sales of Assets. The Indenture will provide that neither
the Company nor any Note Guarantor may merge into or consolidate with
another corporation or sell or lease all or substantially all
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<PAGE> 56
its assets to another corporation unless (i) either (A) the Company or such
Note Guarantor is the surviving corporation or (B) the resulting, surviving
or transferee corporation is organized under the laws of a state of the
United States or the District of Columbia and expressly assumes all
obligations under the Notes or the Note Guarantees, as applicable, and all
other applicable covenants and conditions of the Indenture, and (ii)
immediately after and giving effect to such transaction, no Event of
Default has occurred.
The Indenture will not contain any provisions affording holders of Notes
any additional protection in the event that the Company enters into a highly
leveraged transaction.
DEFINITIONS
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person where such Person shall become a
Restricted Subsidiary or shall be merged into or consolidated with the Company
or any of its Restricted Subsidiaries; or (ii) an acquisition by the Company or
any of its Restricted Subsidiaries of the property and assets of any Person
other than the Company or any of its Restricted Subsidiaries that constitute
substantially all of a division or line of business of such Person.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Closing Date" means the date on which the Old Notes were originally issued
under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"GAAP" means such accounting principles as are generally accepted in the
United States of America as of the date or time of any particular computation.
"Indebtedness" means, without duplication, with respect to any Person: (i)
any indebtedness of such Person (A) for borrowed money or (B) evidenced by a
note, debenture or similar instrument (including a purchase money obligation)
given in connection with the acquisition of any property or assets, including
securities; (ii) any guarantee by such Person of any indebtedness of others
described in the preceding clause (i); and (iii) any amendment, extension,
renewal or refunding of any such indebtedness or guarantee. The term
"Indebtedness" excludes (i) any indebtedness of the Company or any Restricted
Subsidiary to the Company or another Restricted Subsidiary, (ii) any guarantee
by the Company or any Restricted Subsidiary of indebtedness of the Company or
another Restricted Subsidiary, (iii) trade accounts payable, (iv) money borrowed
and set aside at the time of the incurrence of any Indebtedness in order to
prefund the payment of the interest on such Indebtedness so long as such money
is held to secure the payment of such interest, (v) liabilities for federal,
state, local or other taxes and (vi) letters of credit, performance bonds and
similar obligations issued in favor of governmental authorities as a term of any
governmental franchise, license, permit or authorization held by such Person or
any of its Subsidiaries. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation.
The amount of Indebtedness issued with original issue discount is the face
amount of
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such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Leverage Ratio" with respect to the Restricted Group means, as of the date
of and after giving effect to any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary or any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, in each case in accordance with the "Designation of
Subsidiaries" covenant, the ratio of (i) the aggregate outstanding principal
amount of all Indebtedness of the Restricted Group as of such date to (ii) the
product of four times the Restricted Group Cash Flow for the most recent full
fiscal quarter for which financial information is available on such date;
provided that, in making the foregoing calculation, (A) pro forma effect shall
be given to any Indebtedness to be incurred or repaid on the date of incurrence
of any Indebtedness (the "Transaction Date"); (B) pro forma effect shall be
given to Asset Dispositions and Asset Acquisitions (including giving pro forma
effect to the application of proceeds of any Asset Disposition) that occur from
the beginning of the fiscal quarter through the Transaction Date (the "Reference
Period"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period and, in the case of any Asset Acquisition,
giving pro forma effect to any cost reductions the Company anticipates if the
Company delivers to the Trustee an officer's certificate executed by the Chief
Financial Officer of the Company certifying to and describing and quantifying
with reasonable specificity the cost reductions expected to be attained within
the first year after such Asset Acquisition; and (C) pro forma effect shall be
given to asset dispositions and asset acquisitions (including giving pro forma
effect to the application of proceeds of any asset disposition) that have been
made by any Person that has become a Restricted Subsidiary or has been merged
with or into the Company or any Restricted Subsidiary during such Reference
Period and that would have constituted Asset Dispositions or Asset Acquisitions
had such transactions occurred when such Person was a Restricted Subsidiary as
if such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Reference Period;
provided that to the extent that clause (B) or (C) of this sentence requires
that pro forma effect be given to an Asset Acquisition or Asset Disposition,
such pro forma calculation shall be based upon the fiscal quarter immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Permitted Liens" means: (i) Liens for taxes, assessments, governmental
charges or claims that are not yet delinquent or are being contested in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made; (ii) statutory
and common law Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other similar Liens arising in the ordinary
course of business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate legal proceedings promptly instituted and
diligently conducted and for which a reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made; (iii)
Liens incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory or regulatory obligations (including
obligations under franchise agreements), bankers' acceptances, surety and appeal
bonds, government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Restricted Subsidiaries; (vi) Liens upon real or personal property acquired
after the Closing Date; provided that (a) such Lien is created solely for the
purpose of securing Indebtedness incurred, in accordance with the "Limitation on
Indebtedness of
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Restricted Subsidiaries" covenant to finance the cost (including the cost of
design, development, acquisition, installation, integration, improvement or
construction) of the item of property or assets subject thereto and such Lien is
created prior to, at the time of or within six months after the later of the
acquisition, the completion of construction or the commencement of full
operation of such property, (b) the principal amount of the Indebtedness secured
by such Lien does not exceed 100% of such cost and (c) any such Lien shall not
extend to or cover any property or assets other than such item of property or
assets and any improvements on such item; (vii) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (viii) Liens on
property of, or on shares of Capital Stock or Indebtedness of, any Person
existing at the time such Person becomes, or becomes a part of, any Restricted
Subsidiary; provided that such Liens do not extend to or cover any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets acquired; (ix) Liens in favor of the Company or any Restricted
Subsidiary; (x) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary that does not give rise to an
Event of Default; (xi) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof; (xii) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (xiii) Liens
encumbering customary initial deposits and margin deposits, and other Liens that
are within the general parameters customary in the industry and incurred in the
ordinary course of business, in each case, securing Indebtedness under Interest
Rate Agreements and Currency Agreements and forward contracts, options, future
contracts, futures options or similar agreements or arrangements designed solely
to protect the Company or any of its Restricted Subsidiaries from fluctuations
in interest rates, currencies or the price of commodities; (xiv) Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with industry
practice; (xv) Liens resulting from deposits made in connection with any
proposed Asset Acquisition; provided that such deposit does not exceed 10% of
the estimated purchase price for such Asset Acquisition; and (xvi) Liens on or
sales of receivables, including related intangible assets and proceeds thereof
where, in the good faith determination of the Company, the Company has received
the fair market value of such receivables.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Principal Property" means, as of any date of determination, any property
or assets owned by any Restricted Subsidiary other than (i) any such property
which, in the good faith opinion of the Board of Directors, is not of material
importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole and (ii) any shares of any class of stock or any
other security of any Unrestricted Subsidiary.
"Restricted Group" means, as of any date of determination, the Company and
the Restricted Subsidiaries as of such date.
"Restricted Property" means, as of any date of determination, any Principal
Property and any shares of stock of a Restricted Subsidiary owned by the Company
or a Restricted Subsidiary.
"Restricted Subsidiary" means each Subsidiary of the Company other than the
Unrestricted Subsidiaries.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of capital stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of
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directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that has
been designated as an Unrestricted Subsidiary as permitted by the covenant
described under "Designation of Subsidiaries" and not thereafter redesignated as
a Restricted Subsidiary as permitted thereby and (ii) each Subsidiary of any
Unrestricted Subsidiary.
DEFAULTS
An Event of Default with respect to the Notes of any series is defined in
the Indenture as (i) a default in the payment of interest on such Notes when
due, continued for 30 days, (ii) a default in the payment of principal of, or
premium, if any, on, any such Note when due at its Stated Maturity, upon
optional redemption, upon declaration or otherwise, (iii) the failure by the
Company or the Note Guarantors to comply with their respective obligations under
"-- Certain Covenants -- Mergers or Sales of Assets" above, (iv) the failure by
the Company to comply within 60 days after notice with any of its other
agreements contained in the Indenture, including its obligations under the
covenants described above in "-- Certain Covenants" under "-- Limitation on
Liens," "-- Limitation on Indebtedness of Restricted Subsidiaries" or
"-- Designation of Subsidiaries," (v) Indebtedness of the Company or any
Restricted Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds the greater of
$25 million or 30% of the aggregate outstanding principal amount of all
Indebtedness of the Company and the Restricted Subsidiaries, (vi) certain events
of bankruptcy, insolvency or reorganization of the Company or a Restricted
Subsidiary (the "bankruptcy provisions") or (vii) the Company or any Restricted
Subsidiary shall fail within 60 days to pay, bond or otherwise discharge any
uninsured judgment or court order for the payment of money in excess of $25
million, which is not stayed on appeal or is not otherwise being appropriately
contested in good faith. However, a default under clause (iv) with respect to
the 2003 New Notes or the 2005 New Notes will not constitute an Event of Default
until the Trustee or the holders of 25% in principal amount of the outstanding
Notes of such series notify the Company of the default and the Company does not
cure such default within the time specified after receipt of such notice.
If an Event of Default (other than one relating to the bankruptcy
provisions) occurs and is continuing with respect to the 2003 New Notes or the
2005 New Notes, the Trustee or the holders of at least 25% in principal amount
of the outstanding Notes of such series may declare the principal of and accrued
but unpaid interest on all such Notes to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
Under certain circumstances, the holders of a majority in principal amount of
the outstanding 2003 New Notes or 2005 New Notes, as the case may be, may
rescind any such acceleration with respect to such Notes and its consequences.
If an Event of Default relating to the bankruptcy provisions occurs and is
continuing, the principal of and interest on all such Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holders of such Notes.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing thereunder, the
Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of the holders of any Notes
unless such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless (i) such
holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in principal amount of the outstanding
2003 New Notes or 2005 New Notes, as applicable, have requested the Trustee to
pursue the remedy, (iii) such holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the receipt thereof and
the offer of security or indemnity and (v) the holders of a majority in
principal amount of such outstanding Notes have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject
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to certain restrictions, the holders of a majority in principal amount of the
2003 New Notes or 2005 New Notes, as the case may be, are given the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other holder of a Note or that would involve the Trustee in
personal liability.
The Indenture provides that if a Default occurs and is continuing and is
actually known to the Trustee, the Trustee must mail to each holder of the
applicable Notes notice of the Default within 90 days after it occurs. Except in
the case of a Default in the payment of principal of, premium (if any) or
interest on any Note, the Trustee may withhold notice if and so long as a
committee of its trust officers determines that withholding notice is not
opposed to the interest of the holders of such Notes. In addition, the Company
is required to deliver to the Trustee, within 120 days after the end of each
fiscal year, a certificate indicating whether the signers thereof know of any
Default that occurred during the previous year. The Company also is required to
deliver to the Trustee, within 30 days after the occurrence thereof, written
notice of any event which would constitute certain Defaults, their status and
what action the Company is taking or proposes to take in respect thereof.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in aggregate principal
amount of the Notes then outstanding of any series affected thereby (including
consents obtained in connection with a tender offer or exchange for the Notes)
and any past default or compliance with any provisions may also be waived with
such a consent of the holders of a majority in principal amount of such Notes
then outstanding; provided, however, that no such modification or amendment may,
without the consent of the holder of each Note affected thereby, (a) change the
Stated Maturity of the principal of, or any premium or installment of interest
on, or any Liquidated Damages payable in respect of, any Note, (b) reduce the
principal amount of, or the rate (or modify the calculation of such rate) of
interest on, or any Liquidated Damages with respect to, or any premium payable
upon redemption of, any Note, (c) change the obligation of the Company to pay
Liquidated Damages with respect to any Note or reduce the amount of any Note
provable in bankruptcy, (d) change the redemption provisions of any Note, (e)
change the place of payment or the coin or currency in which the principal of,
any premium or interest on or any Liquidated Damages with respect to any Note is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity of any Note (or, in the case of
redemption, on or after the Redemption Date), (g) reduce the percentage and
principal amount of the outstanding Notes, the consent of whose holders is
required in order to take certain actions, (h) reduce the requirements for
quorum or voting by holders of the Notes, (i) modify any of the provisions of
the Indenture regarding the waiver of past defaults or the waiver of certain
covenants by the holders of the Notes except to increase any percentage vote
required or to provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the holder or each Note affected
thereby, (j) make any changes that adversely affect the right to exchange any
Note for other securities in accordance with its terms, or (k) modify any of the
above provisions. The Indenture may be amended or supplemented without the
consent of any holder of a Note (i) to cure any ambiguity, defect or
inconsistency in the Indenture or in the Notes of any series; (ii) to provide
the assumption of all the obligations of the Company under the Notes or any Note
Guarantor under its Note Guarantee and, in each case, the Indenture by any
corporation in connection with a merger, consolidation, transfer or lease of
such entity's property and assets as an entirety or substantially as an
entirety, as provided for in the Indenture; (iii) to provide for uncertificated
Notes in addition to or in place of certificated Notes; (iv) to make any change
that does not adversely affect the rights of any holder of Notes; (v) to provide
for the issuance of and establish the form and terms and conditions of a series
of Notes or to establish the form of any certifications required to be furnished
pursuant to the terms of the Indenture or any series of Notes; (vi) to add to
rights of holders of Notes; or (vii) to secure any Notes as provided under
"-- Certain Covenants -- Limitation on Liens" above.
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The holders of a majority in aggregate principal amount of the Notes of any
series may, on behalf of the holders of all Notes of such series, waive
compliance by the Company with certain restrictive provisions of the Indenture.
The holders of a majority in aggregate principal amount of Notes of any series
may, on behalf of all holders of Notes of such series, waive any past default
and its consequences under the Indenture with respect to the Notes of such
series, except a default (a) in the payment of principal of (or premium, if any)
or any interest on or any Liquidated Damages with respect to Notes of such
series or (b) in respect of a covenant or provision of the Indenture that cannot
be modified or amended without the consent of the holder of each Note of any
series.
Under the Indenture, the Company and the Note Guarantors are required to
furnish the Trustee annually a statement as to the performance by the Company
and the Note Guarantors of their respective obligations under the Indenture and
as to any default in such performance. The Company is also required to deliver
to the Trustee, within five days after occurrence thereof, written notice of any
Event of Default or any event which after notice or lapse of time or both would
constitute an Event of Default.
The consent of the holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to holders of the related Notes a notice briefly describing
such amendment. However, the failure to give such notice to all holders of such
Notes, or any defect therein, will not impair or affect the validity of the
amendment.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Notes that have not already been delivered to the Trustee for cancellation and
that either have become due and payable or will become due and payable within
one year (or scheduled for redemption within one year) by depositing with the
Trustee, in trust, funds in U.S. dollars in an amount sufficient to pay the
entire indebtedness on such Notes with respect to principal (and premium, if
any) and interest to the date of such deposit (if such Notes have become due and
payable) or to the Maturity thereof as the case may be.
The Indenture provides that, unless the following provisions are made
inapplicable to the Notes of or within any series, the Company may elect either
(a) to defease and be discharged from any and all obligations with respect to
such Notes (except for, among other things, the obligation to pay Liquidated
Damages, if any, and other obligations to register the transfer or exchange of
such Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes,
to maintain an office or agency with respect to such Notes and to hold moneys
for payment in trust) ("defeasance"), or (b) to be released from its obligations
with respect to such Notes under the covenants described under "Certain
Covenants -- Limitation on Liens" and "-- Limitation on Indebtedness of
Restricted Subsidiaries" above and its obligations with respect to any other
specified covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default with respect to such Notes
("covenant defeasance"). Defeasance or covenant defeasance, as the case may be,
shall be conditioned upon the irrevocable deposit by the Company with the
Trustee, in trust of an amount in U.S. dollars or Government Obligations (as
defined below), or both, which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest on such
Notes on the scheduled due date therefor.
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no Event of Default or event which with notice or lapse of time or bother
would become an Event of Default with respect to the Notes to be defeased shall
have occurred and be continuing on the date of establishment of such a trust
and, with respect to defeasance only, at any time during the period ending on
the 123rd day after such date and (iii) the Company has delivered to the Trustee
an Opinion of Counsel (as specified in the Indenture) to the effect that the
holders of such Notes will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to U.S. federal income tax
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on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
Opinion of Counsel, in the case of defeasance, must refer to and be based upon a
letter ruling of the Internal Revenue Service received by the Company, a Revenue
Ruling published by the Internal Revenue Service or a change in applicable U.S.
federal income tax law occurring after the date of the Indenture.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America which, in the case of clauses (i)
and(ii), are not callable or redeemable at the option of the issuer or issuers
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of or any other amount with respect
to any such Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian with respect to the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depository receipt.
In the event the Company effects covenant defeasance with respect to any
Notes and such Notes are declared due and payable because of the occurrence of
any Event of Default other than an Event of Default relating to a breach of the
related covenant (which would no longer be applicable to such Notes after such
covenant defeasance) or with respect to any other covenant as to which there has
been covenant defeasance, the Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on such Notes at the time of the Stated
Maturity but may not be sufficient to pay amounts due on such Notes at the time
of the acceleration resulting from such Event of Default. However, the Company
would remain liable to make payment of such amounts due at the time of
acceleration.
FORM, DENOMINATION AND REGISTRATION
Old Notes will be exchanged for one or more permanent global New Notes in
definitive, fully registered form without interest coupons (each a "Global
Note"; and collectively, the "Global Notes") and will be deposited with the
Trustee as custodian for, and registered in the name of a nominee of, DTC. The
New Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof thereafter.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of these ownership interests will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants).
So long as DTC or its nominee is the registered owner or holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Notes represented by such Global Note for all purposes under
the Indenture and the Notes. In addition, no beneficial owner of an interest in
a Global Note will be able to transfer that interest except in accordance with
DTC's applicable procedures (in addition to those under the Indenture referred
to herein).
Payment on Global Notes will be made to DTC or its nominee, as the
registered owner thereof. None of the Company, the Trustee or any Paying Agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee will credit direct
participants' accounts on the payment date with payments in respect of a Global
Note in amounts proportionate to their respective beneficial interest in the
principal amount of such Global Note as shown on the records of DTC or its
nominee, unless DTC has
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reason to believe that it will not receive payment on the payment date. The
Company also expects that payments by participants to owners of beneficial
interest in such Global Note held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name." Such
payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. The laws of some states require that certain
persons take physical delivery of securities in definitive form. Consequently,
the ability to transfer beneficial interest in a Global Note to such persons may
be limited. Because DTC can only act on behalf of participants, who in turn act
on behalf of indirect participants and certain banks, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to persons
or entities that do not participate in the DTC system, or otherwise take actions
in respect of such interest, may be affected by the lack of a physical
certificate of such interest.
The Company believes that it is the policy of DTC that it will take any
action permitted to be taken by a holder of Notes only at the direction of one
or more participants to whose account interests in the Global Notes are credited
and only in respect of such portion of the aggregate principal amount of the
Notes as to which such participant or participants has or have given such
direction.
The Indenture provides that if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository or if the Depository ceases
to be eligible under the Indenture and a successor depository is not appointed
by the Company within 90 days, (ii) the Company determines that the Notes of any
series shall no longer be represented by Global Notes and executes and delivers
to the Trustee a Company Order to such effect or (iii) an Event of Default with
respect to the Notes of any series shall have occurred and be continuing, the
Global Notes will be exchanged for Notes in certificated form of like tenor and
of an equal aggregate principal amount, in authorized denominations. Such
certificated Notes shall be registered in such name or names as the Depository
shall instruct the Trustee. It is expected that such instructions may be based
upon directions received by the Depository from participants with respect to
ownership of beneficial interests in Global Notes.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC and facilitates the settlement among participants through
book-entry changes in participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a direct participant,
either directly or indirectly. The rules applicable to DTC and its participants
are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Note
Guarantors and the Trustee will have any responsibility for the performance by
DTC or its participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture (the "Trustee") and
has been appointed by the Company as Registrar and Paying Agent with regard to
the Notes.
The holders of a majority in principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that if an Event
of Default occurs (and is
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not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any holder of such
Notes, unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense and then
only to the extent required by the terms of the Indenture.
GOVERNING LAW
The Indenture and the Notes are governed by, and construed in accordance
with, the laws of the State of New York without giving effect to applicable
principles of conflicts of law to the extent that the application of the law of
another jurisdiction would be required thereby.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of the material United States federal income,
estate and gift tax consequences of the purchase, ownership and disposition of
the Notes, but is not purported to be a complete analysis of all potential tax
effects. This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed regulations promulgated thereunder,
published rulings and court decisions, all as in effect and existing on the date
hereof and all of which are subject to change at any time, which change may be
retroactive or prospective. Unless otherwise specifically noted, this summary
applies only to those persons that hold the Notes as capital assets within the
meaning of Section 1221 of the Code. This discussion assumes that the Notes will
be treated as indebtedness for United States federal income tax purposes.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS THE TAX
CONSEQUENCES TO TAXPAYERS WHO ARE SUBJECT TO SPECIAL RULES (SUCH AS FINANCIAL
INSTITUTIONS, TAX-EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, S CORPORATIONS,
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, BROKER-DEALERS,
TAXPAYERS SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND PERSONS THAT WILL HOLD THE
NOTES AS PART OF A POSITION IN A "STRADDLE" OR AS PART OF A "HEDGING" OR
"CONVERSION" TRANSACTION) OR ADDRESS ASPECTS OF FEDERAL TAXATION THAT MIGHT BE
RELEVANT TO A PROSPECTIVE INVESTOR BASED UPON SUCH INVESTOR'S PARTICULAR TAX
SITUATION. THIS SUMMARY DOES NOT ADDRESS ANY TAX CONSEQUENCES ARISING UNDER ANY
STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION. PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL TAX CONSEQUENCES OF OWNING AND DISPOSING OF THE NOTES (INCLUDING THE
INVESTOR'S STATUS AS A UNITED STATES HOLDER OR A NON-UNITED STATES HOLDER), AS
WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY STATE,
MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION.
EFFECT OF EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES
The Company believes that the exchange of Old Notes for New Notes pursuant
to the Exchange Offer will not be treated as an "exchange" for federal income
tax purposes because the New Notes will not be considered to differ materially
in kind or extent from the Old Notes. Rather, the New Notes received by a holder
will be treated as a continuation of the Old Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer.
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UNITED STATES HOLDERS
General
The following is a general discussion of certain United States federal
income tax consequences of the ownership and sale or other disposition of the
Notes by a beneficial owner that, for United States federal income tax purposes,
is a "United States person" (a "United States Holder"). For purposes of this
discussion, a "United States person" means a citizen or individual resident (as
defined in Section 7701(b) of the Code) of the United States; a corporation or
partnership (including any entity treated as a corporation or partnership for
United States federal income tax purposes) created or organized in or under the
laws of the United States, any state thereof or the District of Columbia unless,
in the case of a partnership, Treasury regulations provide otherwise; an estate
the income of which is subject to United States federal income tax without
regard to its source; or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, certain trusts
in existence on August 20, 1996, and treated as United States persons prior to
such date that elect to continue to be so treated also shall be considered
United States persons.
Payments of Interest
Payments of interest on a Note generally will be taxable to a United States
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the United States Holder's regular method of tax
accounting).
Amortizable Bond Premium
A United States Holder that purchases a Note for an amount in excess of its
principal amount will be considered to have purchased the Note at a premium and
may elect to amortize such premium, using a constant yield method, over the
remaining term of the Note (or, if a smaller amortization allowance would
result, by computing such allowance with reference to the amount payable on an
earlier call date and amortizing such allowance over the shorter period to such
call date). The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note. Bond premium on a Note
held by a United States Holder that does not make such an election will decrease
the gain or increase the loss otherwise recognized on disposition of the Note.
The election to amortize bond premium on a constant yield method, once made,
applies to all debt obligations held or subsequently acquired by the electing
United States Holder on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service (the "Service").
Market Discount
If a United States Holder purchases, subsequent to its original issuance, a
Note for an amount that is less than its stated redemption price at maturity,
the amount of the difference generally will be treated as "market discount,"
unless such difference is less than a specified de minimis amount. The United
States Holder will be required to treat any gain recognized on the sale,
exchange, redemption, retirement or other disposition of the Note as ordinary
income to the extent of the accrued market discount that has not previously been
included in income. In addition, the United States Holder may be required to
defer, until the maturity date of the Note or its earlier disposition in a
taxable transaction, the deduction of all or a portion of the interest expense
on any indebtedness incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue market discount on a constant interest method. A
United States Holder of a Note may elect to include market discount in income
currently as it accrues (under either the ratable or constant interest method).
This election to include currently, once made, applies to all market discount
obligations acquired in or after the first taxable year to which the election
applies and may not be revoked without the consent of the Service. If the United
States Holder of a Note makes such an election, the foregoing rules with respect
to the recognition of ordinary income on sales and
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other dispositions of such instruments, and with respect to the deferral of
interest deductions on debt incurred or maintained to purchase or carry such
debt instruments, would not apply.
Sale, Exchange or Redemption of the Notes
Generally, a sale, exchange or redemption of the Notes will result in
taxable gain or loss equal to the difference between the amount of cash or other
property received and the United States Holder's adjusted tax basis in the Note.
A United States Holder's adjusted tax basis for determining gain or loss on the
sale or other disposition of a Note will initially equal the cost of the Note to
such Holder and will be increased by any market discount previously included in
income by such United States Holder, and decreased by any amortized premium
previously deducted from income by the United States Holder. Except as described
above with respect to market discount, such gain or loss will be capital gain or
loss. Capital gain or loss with be long-term gain or loss if the Note was held
by the holder for more than one year and otherwise will be short-term. Any
capital losses realized generally may be used by a corporate taxpayer only to
offset capital gains, and by an individual taxpayer only to the extent of
capital gains plus $3,000 of other income.
Individuals will generally be taxed on net capital gain at a maximum rate
of (i) 39.6% for property held 12 months or less, and (ii) 20% for property held
more than 12 months. Special rules (and generally lower maximum rates) apply for
individuals in lower tax brackets. The deductibility of capital losses is
subject to limitations.
Neither an exchange of the Notes for Exchange Securities of the Company
with terms identical to those of the Notes nor the filing of a registration
statement with respect to the resale of the Notes should be a taxable event to
the United States Holders of the Notes, and such Holders should not recognize
any taxable gain or loss or any interest income as a result of such an exchange
or such a filing.
FOREIGN HOLDERS
The following is a general discussion of certain United States federal
income and estate and gift tax consequences of the ownership and sale or other
disposition of the Notes by any beneficial owner of a Note that is not a United
States Holder (a "Non-United States Holder"). Resident alien individuals will be
subject to United States federal income tax with respect to the Notes as if they
were United States Holders.
Interest
Under current United States federal income tax law, and subject to the
discussion of backup withholding below, interest paid on the Notes to a
Non-United States Holder will not be subject to the normal 30% United States
federal withholding tax; provided that (i) the interest is "effectively
connected with the conduct of a trade or business in the United States" by the
Non-United States Holder and the Non-United States Holder timely furnishes the
Company with two duly executed copies of Internal Revenue Service Form 4224 (or
any successor form), or (ii) all of the following conditions of the portfolio
interest exception (the "Portfolio Interest Exception") are met: (A) the
Non-United States Holder does not, actually or constructively, own 10% or more
of the total combined voting power of all classes of stock of the Company
entitled to vote, (B) the Non-United States Holder is not a controlled foreign
corporation that is related, directly or indirectly, to the Company through
stock ownership, (C) the Non-United States Holder is not a bank receiving
interest pursuant to a loan agreement entered into in the ordinary course of its
trade or business, and (D) either (1) the Non-United States Holder certifies to
the Company or its agent, under penalties of perjury, that it is a Non-United
States Holder and provides its name and address, or (2) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Notes in such capacity, certifies to the Company or
its agent, under penalties of perjury, that such statement has been received
from the beneficial owner of the Notes by it or by a Financial Institution
between it and the beneficial owner and furnishes the Company or its agent with
a copy thereof. The foregoing certification may be provided by the Non-United
States Holder on Internal Revenue Service Form W-8 (or any successor form). Such
certificate is effective with respect to payments of interest
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made after the issuance of the certificate in the calendar year of its issuance
and the two immediately succeeding calendar years.
On October 14, 1997, the final regulations were published in the Federal
Register (the "1997 Final Regulations") that affect the United States federal
income taxation of Non-United States Holders. The 1997 Final Regulations are
effective for payments after December 31, 1999, regardless of the issue date of
the instrument with respect to which such payments are made, subject to certain
transition rules discussed below. The discussion under this heading and under
"Backup Withholding Tax and Information Reporting," below, is not intended to be
a complete discussion of the provisions of the 1997 Final Regulations.
Prospective Holders of the Notes are urged to consult their tax advisors
concerning the tax consequences of their investment in light of the 1997 Final
Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. Qualified intermediaries include: (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization), or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the Service.
In addition to certain other requirements, qualified intermediaries must obtain
withholding certificates, such as revised Internal Revenue Service Form W-8
(discussed below), from each beneficial owner. Under another option, an
authorized foreign agent of a United States withholding agent will be permitted
to act on behalf of the United States withholding agent (including the receipt
of withholding certificates, the payment of amounts of income subject to
withholding and the deposit of tax withheld) provided that certain conditions
are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat as the beneficial owners of payments on a Note those persons
that, under United States federal income tax principles, are the taxpayers with
respect to such payments, rather than persons such as nominees or agents legally
entitled to such payments. In the case of payments to an entity classified as a
foreign partnership under United States tax principles, the partners, rather
than the partnership, generally must provide the required certifications to
qualify for the withholding tax exemption described above (unless the
partnership has entered into a special agreement with the Service). A payment to
a United States partnership, however, is treated for these purposes as payment
to a United States payee, even if the partnership has one or more foreign
partners. The 1997 Final Regulations provide certain presumptions with respect
to withholding for Holders not furnishing the required certifications to qualify
for the withholding tax exemption described above. In addition, the 1997 Final
Regulations will replace a number of current tax certification forms (including
Internal Revenue Service Form W-8) with a single, revised Internal Revenue
Service Form W-8 (which, in certain circumstances, requires information in
addition to that previously required). Under the 1997 Final Regulations, this
revised Form W-8 will remain valid until the last day of the third calendar year
following the year in which the certificate is signed.
The 1997 Final Regulations provide transition rules concerning existing
certificates, such as Internal Revenue Service Form W-8. Valid withholding
certificates that are held on December 31, 1999 will generally remain valid
until the earlier of December 31, 2000 or the date of their expiration. Existing
certificates that expire in 1999 will not be effective after their expiration.
Certificates dated prior to January 1, 1998 will generally remain valid until
the end of 1998, irrespective of the fact that their validity expires during
1998.
In the event that the interest paid on the Notes is effectively connected
with the conduct of a trade or business within the United States of the
Non-United States Holder, the Non-United States Holder will generally be taxed
on a net income basis (that is, after allowance for applicable deductions) at
the graduated rates that are applicable to United States persons in essentially
the same manner as if the Notes were held by a United States person, as
discussed above. In the case of a Non-United States Holder that is a
corporation,
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such income may also be subject to the United States federal branch profits tax
(which is generally imposed on a foreign corporation upon the deemed
repatriation from the United States of effectively connected earnings and
profits) at a 30% rate, unless the rate is reduced or eliminated by an
applicable income tax treaty and the Non-United States Holder is a qualified
resident of the treaty country.
If the interest on the Notes is not "effectively connected" and does not
qualify for the Portfolio Interest Exception, then the interest will be subject
to United States federal withholding tax at a flat rate of 30% (or a lower
applicable income tax treaty rate upon delivery of the appropriate certification
of eligibility for treaty benefits).
Gain on Sale or Other Disposition
Subject to special rules applicable to individuals as described below, a
Non-United States Holder will generally not be subject to regular United States
federal income or withholding tax on gain recognized on a sale or other
disposition of the Notes, unless the gain is effectively connected with the
conduct of a trade or business within the United States of the Non-United States
Holder or of a partnership, trust or estate in which such Non-United States
Holder is a partner or beneficiary.
Gains realized by a Non-United States Holder that are effectively connected
with the conduct of a trade or business within the United States of the
Non-United States Holder will generally be taxed on a net income basis (that is,
after allowance for applicable deductions) at the graduated rates that are
applicable to United States persons, as described above, unless exempt by an
applicable income tax treaty. In the case of a Non-United States Holder that is
a corporation, such income may also be subject to the United States federal
branch profits tax (which is generally imposed on a foreign corporation upon the
deemed repatriation from the United States of effectively connected earnings and
profits) at a 30% rate, unless the rate is reduced or eliminated by an
applicable income tax treaty and the Non-United States Holder is a qualified
resident of the treaty country.
In addition to being subject to the rules described above, an individual
Non-United States Holder who holds the Notes as a capital asset will generally
be subject to tax at a 30% rate on any gain recognized on the sale or other
disposition of such Notes if (i) such gain is not effectively connected with the
conduct of a trade or business within the United States of the Non-United States
Holder, and (ii) such individual is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and either (A) has a
"tax home" in the United States (as specially defined for purposes of the United
States federal income tax), or (B) maintains an office or other fixed place of
business in the United States and the gain from the sale or other disposition of
the Notes is attributable to such office or other fixed place of business.
Individual Non-United States Holders may also be subject to tax pursuant to
provisions of United States federal income tax law applicable to certain United
States expatriates (including certain former long-term residents of the United
States).
Under the 1997 Final Regulations, withholding of United States federal
income tax may apply to payments on a taxable sale or other disposition of the
Notes by a Non-United States Holder who does not provide appropriate
certification to the withholding agent with respect to such transaction.
Federal Estate and Gift Taxes
A Note beneficially owned by an individual who is neither a United States
citizen nor a domiciliary of the United States at the time of death will not be
subject to United States federal estate tax as a result of such individual's
death; provided that any interest thereon would have been eligible for the
portfolio interest exemption within the meaning of Section 871(h)(1) of the
Code, described above in "Interest," if such interest had been received by the
individual at the time of death.
An individual who is not a United States citizen will not be subject to
United States federal gift tax on a transfer of Notes, unless such person is a
domiciliary of the United States or such person is subject to provisions of
United States federal gift tax law applicable to certain United States
expatriates (including certain former long-term residents of the United States).
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BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to interest paid to, and to the proceeds of sales or other
dispositions before maturity by, certain non-corporate persons. In addition, a
31% backup withholding tax applies if a non-corporate person (i) fails to
furnish such person's Taxpayer Identification Number ("TIN") (which, for an
individual, is his or her Social Security Number) to the payor in the manner
required, (ii) furnishes an incorrect TIN and the payor is so notified by the
Service, (iii) is notified by the Service that such person has failed properly
to report payments of interest and dividends, or (iv) in certain circumstances,
fails to certify, under penalties of perjury, that such person has not been
notified by the Service that such person is subject to backup withholding for
failure properly to report interest and dividend payments. Backup withholding
does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations.
In the case of a Non-United States Holder, under current United States
federal income tax law, backup withholding and information reporting do not
apply to payments of interest with respect to a Note, or to payments on the sale
or other disposition of a Note, if such Holder has provided to the Company or
its paying agent the certification described in clause (ii)(D) of "Foreign
Holders -- Interest" or has otherwise established an exemption.
Under current United States federal income tax law, (i) interest payments
with respect to a Note collected outside the United States by a foreign office
of a custodian, nominee or broker acting on behalf of a beneficial owner of a
Note, and (ii) payments on the sale or other disposition of a Note to or through
a foreign office of a broker are not generally subject to backup withholding or
information reporting. However, if such custodian, nominee or broker is a United
States person, a controlled foreign corporation for United States tax purposes
or a foreign person 50% of more of whose gross income is effectively connected
with the conduct of a United States trade or business for a specified three-year
period, such custodian, nominee or broker may be subject to certain information
reporting (but not backup withholding) requirements with respect to such
payments, unless such custodian, nominee or broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain conditions are met or the beneficial owner otherwise establishes an
exemption. Backup withholding may apply to any payment that such custodian,
nominee or broker is required to report if such person has actual knowledge that
the payee is a United States person. Payments to or through the United States
office of a broker will be subject to backup withholding and information
reporting unless the Holder certifies, under penalties of perjury, that it is
not a United States person or otherwise establishes an exemption.
The 1997 Final Regulations modify certain of the certification requirements
for backup withholding. These modifications generally will become effective for
interest payments made beginning January 1, 2000. It is possible that the Issuer
or its paying agent may request new withholding exemption forms from Holders in
order to qualify for continued exemption from backup withholding when the 1997
Final Regulations become effective.
Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a person under the backup withholding rules are
allowed as a refund or a credit against such person's United States federal
income tax; provided that the required information is furnished to the Service.
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PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer (other than an affiliate of the Company) in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any Participating Broker-Dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sales of the New Notes
by Participating Broker-Dealers. New Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such New Notes. Any Participating Broker-Dealer that resells the New Notes
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such New Notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer.
The Company has agreed to pay all expenses incident to the Exchange Offer
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Old Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
The Initial Purchasers have indicated to the Company that they intend to
effect offers and sales of the New Notes in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale, but
are not obligated to do so, and such market-making activities may be
discontinued at any time. The Initial Purchasers may act as principal or agent
in such transactions. There can be no assurance that an active market for the
New Notes will develop.
The Company has not entered into any arrangements or understandings with
any person to distribute the New Notes to be received in the Exchange Offer.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Dow, Lohnes & Albertson, PLLC, Washington, D.C.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, stated in their report thereon, which is incorporated in this
Prospectus by reference, and have been so incorporated by reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
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The consolidated financial statements of NewCity Communications, Inc.
incorporated in this Prospectus by reference to the Company's Current Report on
Form 8-K dated April 14, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference therein and incorporated herein by reference. Such financial
statements are incorporated by reference herein in reliance upon the report of
Ernst & Young LLP pertaining to such financial statements given upon the
authority of such firm as experts in accounting and auditing.
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(Cox Radio, Inc. Logo)
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for unlawful payment of
dividend) or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Amended and Restated Certificate of
Incorporation contains a provision which eliminates the liability of directors
to the extent permitted by Section 102(b)(7) of the DGCL.
Reference is made to Section 145 of the DGCL, which provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation (a "derivative action")),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise. The
Amended and Restated Certificate of Incorporation of the Company provides that
the Company shall indemnify its directors and officers to the fullest extent
permitted by Delaware law.
ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES
<TABLE>
<S> <C> <C>
4.1 -- Indenture dated as of May 26, 1998 (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 (Commission file No.
1-12187) and incorporated herein by this reference)
4.2 -- Registration Rights Agreement dated May 26, 1998
5.1 -- Opinion of Dow, Lohnes & Albertson, PLLC regarding the
validity of the New Notes
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of Dow, Lohnes & Albertson, PLLC (included in
Exhibit 5.1)
25.1 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, of The Bank of New York, as
Trustee for the 2003 Notes
25.2 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, of The Bank of New York, as
Trustee for the 2005 Notes
99.1 -- Letter of Transmittal*
99.2 -- Tender Instructions*
99.3 -- Notice of Guaranteed Delivery*
</TABLE>
- ---------------
* To be filed by amendment
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
II-1
<PAGE> 74
the foregoing provisions or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; and
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Cox
Radio, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, on August 11, 1998.
COX RADIO, INC.
By: /s/ ROBERT F. NEIL
------------------------------------
Robert F. Neil
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the persons whose signatures
appear below hereby constitutes and appoints Nicholas D. Trigony, Robert F.
Neil, Maritza C. Pichon, James C. Kennedy and David E. Easterly, or any of them,
his or her attorneys-in-fact and agents, with full power of substitution and
resubstitution for him or her in any and all capacities, to sign a Registration
Statement under the Securities Act of 1933, as amended (the "Registration
Statement"), for the registration of $100,000,000 aggregate principal amount of
6.250% Notes due 2003 and $100,000,000 aggregate principal amount of 6.375%
Notes due 2005 of Cox Radio, Inc. (the "Company"), any or all pre-effective
amendments or post-effective amendments to the Registration Statement (which
amendments may make such changes in and additions to the Registration Statement
as such attorneys-in-fact may deem necessary or appropriate), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto each of such
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary in connection with such matters and
hereby ratifying and confirming all that each of such attorneys-in-fact and
agents or his substitute or substitutes may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Signatures appear on page II-4
A majority of the members of the Board of Directors of Cox Radio, Inc. has
signed this Registration Statement in accordance with the requirements of the
Securities Act of 1933, as amended.
II-3
<PAGE> 76
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NICHOLAS D. TRIGONY Chairman of the Board of August 11, 1998
- --------------------------------------------------- Directors
Nicholas D. Trigony
/s/ ROBERT F. NEIL President and Chief Executive August 11, 1998
- --------------------------------------------------- Officer, Director
Robert F. Neil
/s/ MARITZA C. PICHON Chief Financial Officer August 11, 1998
- --------------------------------------------------- (Principal Financial Officer
Maritza C. Pichon and Principal Accounting
Officer)
/s/ DAVID E. EASTERLY Director August 11, 1998
- ---------------------------------------------------
David E. Easterly
/s/ PAUL M. HUGHES Director August 11, 1998
- ---------------------------------------------------
Paul M. Hughes
/s/ RICHARD A. FERGUSON Director August 11, 1998
- ---------------------------------------------------
Richard A. Ferguson
</TABLE>
II-4
<PAGE> 1
EXHIBIT 4.2
===============================================================================
===============================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of May 26, 1998
among
COX RADIO, INC.
WSB, INC.
WHIO, INC.
and
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
J.P. MORGAN SECURITIES INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of May 26, 1998 among COX RADIO, INC., a Delaware
corporation (the "Company"), WSB, INC., a Delaware corporation ("WSB"), WHIO,
INC., a Delaware corporation ("WHIO", and together with WSB, the "Initial
Guarantors"), the subsidiaries of the Company made a party hereto (together
with the Initial Guarantors, the "Guarantors") and NATIONSBANC MONTGOMERY
SECURITIES LLC, CHASE SECURITIES INC. and J.P. MORGAN SECURITIES INC.
(collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated May 26, 1998 (the "Purchase Agreement"), among the Company, as issuer of
the 6.250% Notes due 2003 (the "2003" Notes) and the 6.375% Notes due 2005 (the
"2005" Notes) (collectively, the "Senior Notes"), and the Initial Guarantors,
as issuers of the Note Guarantees in respect of the Notes (the "Senior
Guarantees") and the Initial Purchasers). The Senior Notes and the Senior
Guarantees are collectively referred to as the "Securities". In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company and
the Initial Guarantors have agreed, and the company has agreed to cause all
Guarantors who are not Initial Guarantors, to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in Section 3(u)
hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
<PAGE> 3
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the offer by the Company and the
Guarantors to the Holders to exchange all of the Registrable Securities (other
than Private Exchange Securities) for a like amount of Exchange Securities
pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean (i) with respect to the 2003 Notes,
the 6.250% Notes due 2003 and the 2005 Notes, the 6.375% Notes due 2005
(collectively, the "Exchange Notes") containing terms substantially identical
to the 2003 Notes and 2005 Notes, as the case may be (except that they will not
contain terms with respect to the transfer restrictions under the Securities
Act and will not provide for any Liquidated Damages thereon) and (ii) with
respect to the Senior Guarantees, each Notes Guarantee of the Guarantors
guarantee in respect of the Exchange Notes (the "Exchange Guarantee")
containing terms substantially identical to the Senior Guarantees.
"Guarantors" shall have the meaning set forth in the preamble to this
Agreement and also includes a Guarantor's successors and permitted assigns;
provided, however, that the foregoing defined term shall not apply to any party
who is no longer required to be a guarantor of Notes under the Indenture.
"Holder" shall mean each of the Initial Purchasers, for so long as it
owns any Registrable Securities, and each of their respective successors,
assigns and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Senior Notes and
the Exchange Notes, dated as of the Closing Time, between the Company, the
Guarantors and The Bank of New York, as trustee, as the same may be amended
from time to time in accordance with the terms thereof.
<PAGE> 4
"Initial Guarantors" shall have the meaning set forth in the preamble
to this Agreement and also includes an Initial Guarantor's successors and
permitted assigns; provided, however, that the foregoing defined term shall not
apply to any party who is no longer required to a guarantor of Notes under the
Indenture .
"Initial Purchasers" shall have the meaning set forth in the preamble
to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(o) hereof.
"Issue Date" shall mean May 26, 1998, the date of original issuance of
the Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Notes.
"Notes" shall collectively mean the Senior Notes and the Exchange
Notes.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(u) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability corporation, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
"Private Exchange Notes" shall have the meaning set forth in Section
2(a) hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all documents incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Records" shall have the meaning set forth in Section 3(o) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such
<PAGE> 5
Securities or Private Exchange Securities for the exchange or resale thereof,
as the case may be, shall have been declared effective under the Securities Act
and such Securities or Private Exchange Securities, as the case may be, shall
have been disposed of pursuant to such Registration Statement, (ii) such
Securities or Private Exchange Securities, as the case may be, shall have been
sold to the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act or are eligible to be sold
without restriction as contemplated by Rule 144(k), (iii) such Securities or
Private Exchange Securities, as the case may be, shall have ceased to be
outstanding or (iv) with respect to the Securities, such Securities shall have
been exchanged for Exchange Securities upon consummation of the Exchange Offer
and are thereafter freely tradeable by the holder thereof (other than an
Affiliate of the Company or any Guarantor).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all SEC or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees, including,
if applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of one counsel
for all underwriters or Holders as a group in connection with blue sky
qualification of any of the Exchange Securities or Registrable Securities) and
compliance with the rules of the NASD, (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing
any Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and distributing
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the Company
and the Guarantors and of the independent certified public accountants of the
Company, including the expenses of any "cold comfort" letters required by or
incident to the performance of and compliance with this Agreement, (vi) the
reasonable fees and expenses of the Trustees and their counsel and any
custodian, and (vii) the fees and expenses of any special experts retained by
the Company in connection with any Registration Statement; provided, however,
that notwithstanding the foregoing, the Company and the Guarantors shall not be
responsible for underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
Company and the Guarantors which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
posteffective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
"Rule 144(k) Period" shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
<PAGE> 6
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Guarantors pursuant to the provisions of
Section 2(b) hereof which covers all of the Registrable Securities or all of
the Private Exchange Securities, as the case may be, on an appropriate form
under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all documents
incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustee" shall mean any and all trustees under the Indenture.
2. Registration Under the Securities Act.
a. Exchange Offer. Except as set forth in Section 2(b) below,
the Company and the Initial Guarantors shall, and the Company
shall cause each Guarantor other than the Initial Guarantors
to, for the benefit of the Holders, at the cost of the
Company and the Guarantors, use their best efforts to (i)
cause an Exchange Offer Registration Statement to be declared
effective under the Securities Act by the SEC not later than
the date which is 180 days after the Issue Date, and (ii)
keep such Exchange Offer Registration Statement effective for
not less than 30 calendar days (or longer if required by
applicable law) after the date notice of the Exchange Offer
is mailed to the Holders. Promptly after the effectiveness of
the Exchange Offer Registration Statement, the Company and
the Guarantors shall commence the Exchange Offer, it being
the objective of such Exchange Offer to enable each Holder
eligible and electing to exchange Registrable Securities for
a like principal amount of Exchange Notes, together with the
Exchange Guarantee, as applicable (provided that such Holder
(i) is not an Affiliate of the Company or any Guarantor, (ii)
is not a broker-dealer tendering Registrable Securities
acquired directly from the Company or any Guarantor, (iii)
acquires the Exchange Securities in the ordinary course of
such Holder's business and (iv) has no
<PAGE> 7
arrangements or understandings with any Person to participate
in the Exchange Offer for the purpose of distributing the
Exchange Securities), to transfer such Exchange Securities
from and after their receipt without any limitations or
restrictions under the Securities Act and under state
securities or blue sky laws.
In connection with the Exchange Offer, the Company and the
Initial Guarantors shall, and the Company shall cause each Guarantor other than
the Initial Guarantors to,
i. mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal
and related documents;
ii. keep the Exchange Offer open for acceptance for a
period of not less than 30 days after the date
notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred
to herein as the "Exchange Period");
iii. utilize the services of the Depositary for the
Exchange Offer with respect to the Senior Notes
represented by global certificates;
iv. permit Holders to withdraw tendered Senior Notes at
any time prior to the close of business, New York
City time, on the last Business Day of the Exchange
Period, by sending to the institution specified in
the notice to Holders, a telegram, telex, facsimile
transmission or letter setting forth the name of
such Holder, the principal amount of Senior Notes
delivered for exchange, and a statement that such
Holder is withdrawing his election to have such
Senior Notes exchanged;
v. notify each Holder that any Senior Note not tendered
by such Holder in the Exchange Offer will remain
outstanding and continue to accrue interest, but
will not retain any rights under this Agreement
(except in the case of the Initial Purchasers and
Participating BrokerDealers as provided herein); and
vi. otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
If any Initial Purchaser determines upon advice of its
outside counsel that it is not eligible to participate in the Exchange Offer
with respect to the exchange of Senior Notes constituting any portion of an
unsold allotment in the initial placement, as soon as practicable upon receipt
by the Company of a written request from such Initial Purchaser, the Company
shall issue and deliver to such Initial Purchaser in exchange (the "Private
Exchange") for the Senior Notes held by such Initial Purchaser a like principal
amount of Exchange Notes (the "Private Exchange Notes"), and the Initial
Guarantors shall, and the Company shall cause each Guarantor other than the
Initial Guarantors to, execute an Exchange Guarantee in respect of the Exchange
Notes, in each case with terms that are identical (except that such securities
may bear a customary legend with respect to restrictions on transfer pursuant
to the Securities Act) to the Exchange Securities (the "Private Exchange
Securities"), it being understood that the Exchange Notes, the Private Exchange
Notes and the Senior Notes will vote and consent together on all
<PAGE> 8
matters as one class and that none of the Exchange Securities, the Private
Exchange Securities or the Securities will have the right to vote or consent as
a separate class on any matter. The Private Exchange Notes shall be of the same
series as the Exchange Notes and the Company will seek to cause the CUSIP
Service Bureau to issue the same CUSIP numbers for the Private Exchange Notes
as for the Exchange Notes issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Company and the Guarantors, as
applicable, shall:
vii. accept for exchange all Senior Notes or portions
thereof tendered and not validly withdrawn pursuant
to the Exchange Offer or the Private Exchange;
viii. deliver, or cause to be delivered, to the Trustee
for cancellation all Senior Notes or portions
thereof so accepted for exchange by the Company; and
ix. (A) issue, and cause the Trustee to promptly
authenticate and deliver to each Holder, new
Exchange Notes or Private Exchange Notes, as
applicable, equal in principal amount to the
principal amount of Senior Notes surrendered by such
Holder, or (B) will execute an Exchange Guarantee in
respect of the Exchange Notes.
Interest on each Exchange Note and Private Exchange Note
issued pursuant to the Exchange Offer and in the Private Exchange will accrue
from the last date on which interest was paid on the Senior Note surrendered in
exchange therefor or, if no interest has been paid on such Senior Note, from
the Issue Date. To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company and the Initial Guarantors
shall, and the Company shall cause each Guarantor other than the Initial
Guarantors to, use their best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions
other than the conditions referred to in Section 2(b)(i) and (ii) below and
those conditions that are customary in similar exchange offers. Each Holder of
Registrable Securities who wishes to exchange such Registrable Securities for
Exchange Securities in the Exchange Offer will be required to make certain
customary representations in connection therewith, including, in the case of
any Holder of Senior Notes, representations that (i) it is not an Affiliate of
the Company or any Guarantor, (ii) it is not a broker-dealer tendering
Registrable Securities acquired directly from the Company or any Guarantor,
(iii) the Exchange Securities to be received by it were acquired in the
ordinary course of its business and (iv) at the time of the Exchange Offer, it
has no arrangements or understandings with any Person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes.
The Company shall inform the Initial Purchasers, after consultation with the
Trustee, of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such
Holders in order to facilitate the tender of Registrable Securities in the
Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this Section 2(a),
the provisions of this Agreement shall continue to apply, mutatis mutandis,
solely with respect to Registrable Securities that are Private Exchange Notes
and Exchange Notes held by Participating
<PAGE> 9
BrokerDealers, and the Company and the Guarantors shall have no further
obligation to register the Registrable Securities (other than Private Exchange
Notes) held by any Holder pursuant to Section 2(b) of this Agreement.
b. Shelf Registration. In the event that (i) the Company
reasonably determines, after conferring with counsel, that
the Exchange Offer Registration provided in Section 2(a)
above is not available under applicable law and regulations
and currently prevailing interpretations of the staff of the
SEC, (ii) the Exchange Offer Registration Statement is not
declared effective within 180 days of the Issue Date or (iii)
upon the request of an Initial Purchaser with respect to any
Registrable Securities held by it, if such Initial Purchaser
is not permitted, in the reasonable opinion of Brown & Wood
LLP, pursuant to applicable law or applicable interpretations
of the staff of the SEC, to participate in the Exchange Offer
and thereby receive securities that are freely tradeable
without restriction under the Securities Act and applicable
blue sky or state securities laws (any of the events
specified in (i), (ii) or (iii) being a "Shelf Registration
Event", and the date of occurrence thereof, the "Shelf
Registration Event Date"), then in addition to or in lieu of
conducting the Exchange Offer contemplated by Section 2(a),
as the case may be, the Company and the Initial Guarantors
shall, and the Company shall cause each Guarantor other than
the Initial Guarantors to, at the cost of the Company and the
Guarantors, use their best efforts to cause to be filed as
promptly as practicable after such Shelf Registration Event
Date, as the case may be, and, in any event, within 45 days
after such Shelf Registration Event Date (provided that in no
event shall such filing date be required to be earlier than
90 days after the Issue Date), a Shelf Registration Statement
providing for the sale by the Holders of all of the
Registrable Securities, and shall use their best efforts to
have such Shelf Registration Statement declared effective by
the SEC as soon as practicable. No Holder of Registrable
Securities shall be entitled to include any of its
Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such Holder agrees in writing
to be bound by all of the provisions of this Agreement
applicable to such Holder and furnishes to the Company in
writing, within 15 days after receipt of a request therefor,
such information as the Company may, after conferring with
counsel with regard to information relating to Holders that
would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein,
reasonably request for inclusion in any Shelf Registration
Statement or Prospectus included therein. Each Holder as to
which any Shelf Registration is being effected agrees to
furnish to the Company all information with respect to such
Holder necessary to make the information previously furnished
to the Company by such Holder not materially misleading.
The Company and the Initial Guarantors agree, and the Company
shall cause each Guarantor other than the Initial Guarantors to agree, to use
their best efforts to keep the Shelf Registration Statement continuously
effective and the Prospectus included therein usable for resales for (a) the
Rule 144(k) Period in the case of a Shelf Registration Statement filed pursuant
to Section 2(b)(i) or (ii) or (b) one year in the case of a Shelf Registration
Statement filed pursuant to Section 2(b)(iii) (subject in each case to
extension pursuant to the last paragraph of
<PAGE> 10
Section 3 hereof), or for such shorter period which will terminate when all of
the Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be Registrable
Securities (the "Effectiveness Period"). The Company and the Guarantors shall
not permit any securities other than Registrable Securities to be included in
the Shelf Registration. The Company will, in the event a Shelf Registration
Statement is declared effective, provide to each Holder a reasonable number of
copies of the Prospectus which is a part of the Shelf Registration Statement,
notify each such Holder when the Shelf Registration has become effective and
take certain other actions as are required to permit certain unrestricted
resales of the Registrable Securities. The Company and the Guarantors further
agree, if necessary, to supplement or amend the Shelf Registration Statement
and the Prospectus, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.
c. Expenses. The Company, as issuer of the Senior Notes, shall
pay all Registration Expenses in connection with any
Registration Statement filed pursuant to Section 2(a) and/or
2(b) hereof. Each Holder shall pay all expenses of its
counsel, underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to the Shelf
Registration Statement.
d. Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a
Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has
been declared effective by the SEC; provided, however, that
if, after it has been declared effective, the offering of
Registrable Securities pursuant to such Exchange Offer
Registration Statement or Shelf Registration Statement is
interfered with by any stop order, injunction or other order
or requirement of the SEC or any other governmental agency or
court, such Exchange Offer Registration Statement or Shelf
Registration Statement will be deemed not to have been
effective during the period of such interference, until the
offering of Registrable Securities pursuant to such
Registration Statement may legally resume. The Company and
the Guarantors will be deemed not to have used their best
efforts to cause the Exchange Offer Registration Statement or
the Shelf Registration Statement, as the case may be, to
become, or to remain, effective during the requisite period
if either of them voluntarily takes any action that would
result in any such Registration Statement not being declared
effective or that would result in the Holders of Registrable
Securities covered thereby not being able to exchange or
offer and sell such Registrable Securities during that
period, unless such action is required by applicable law.
e. Liquidated Damages. In the event that:
(1) a Shelf Registration Statement is not filed
with the SEC on or prior to the 45th day
after the Shelf Registration Event Date in
respect of a Shelf Registration Event
(provided that in no event
<PAGE> 11
shall such filing date be required to be
earlier than 90 days after the Issue Date),
then commencing on the day after the
applicable required filing date, liquidated
damages ("Liquidated Damages") shall accrue
on the principal amount of the Senior Notes
at a rate of 0.25% per annum; or
(2) neither the Exchange Offer Registration
Statement is declared effective by the SEC
on or prior to the 180th day after the
Issue Date nor a Shelf Registration
Statement is declared effective by the SEC
on or prior to the later of (A) the 40th
day after the date such Shelf Registration
Statement was required to be filed and (B)
the 180th day after the Issue Date, in
respect of a Shelf Registration Event,
then, commencing on the day after the
applicable required effectiveness date,
Liquidated Damages shall accrue on the
principal amount of the Senior Notes at a
rate of 0.25% per annum;
(3) (A) the Company has not exchanged Exchange
Notes for all Senior Notes, validly
tendered, or any Guarantor has failed to
execute an Exchange Guarantee in respect of
the Exchange Notes, in accordance with the
terms of the Exchange Offer on or prior to
the 45th day after the date on which the
Exchange Offer Registration Statement was
declared effective or (B) if applicable,
the Shelf Registration Statement in respect
of Shelf Registration Event has been
declared effective and such Shelf
Registration Statement ceases to be
effective or the Prospectus included
therein usable for resales (whether as a
result of an event contemplated by Section
3(e) or otherwise) at any time prior to the
expiration of the Rule 144(k) Period (other
than after such time as all Securities have
been disposed of thereunder or otherwise
cease to be Registered Securities), then
Liquidated Damages shall accrue on the
principal amount of Senior Notes at a rate
of 0.25% per annum commencing on (x) the
46th day after such effective date, in the
case of (A) above, or (y) the day such
Shelf Registration Statement ceases to be
effective or the Prospectus included
therein usable for resales, in the case of
(B) above;
provided, however, that the Liquidated Damages rate on the Senior Notes may not
exceed in the aggregate 0.25% per annum; provided, further, however, that (1)
upon the filing of the Shelf Registration Statement (in the case of clause (i)
above), (2) upon the effectiveness of the Exchange Offer Registration Statement
or a Shelf Registration Statement (in the case of clause (ii) above), or (3)
upon the exchange of Exchange Notes for all Senior Notes validly tendered and
execution of the Exchange Guarantees (in the case of clause (iii)(A) above), or
at such time as the Shelf Registration Statement which had ceased to remain
effective or usable for resales again becomes effective and usable for resales
(in the case of clause (iii)(B) above), Liquidated Damages on the principal
amount of the Senior Notes as a result of such clause (or the relevant
subclause thereof) shall cease to accrue.
Any amounts of Liquidated Damages due pursuant to Section
2(e)(i), (ii) or (iii)
<PAGE> 12
above will be payable in cash on the next succeeding May 15 or November 15 as
the case may be, to Holders on the relevant record dates for the payment of
interest pursuant to the Indenture.
f. Specific Enforcement. Without limiting the remedies available
to the Holders, the Company and the Guarantors acknowledge
that any failure by the Company or the Guarantors to comply
with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the
Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, any
Holder may obtain such relief as may be required to
specifically enforce the obligations of the Company and the
Guarantors under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of the
Company and the Guarantors with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Company and the Initial
Guarantors shall, and the Company shall cause each Guarantor other
than Initial Guarantors to, use their best efforts (unless otherwise
stated below) to:
(a) prepare and file with the SEC a
Registration Statement or Registration
Statements as prescribed by Sections 2(a)
and 2(b) hereof within the relevant time
period specified in Section 2 hereof on the
appropriate form under the Securities Act,
which form (i) shall be selected by the
Company, (ii) shall, in the case of a Shelf
Registration, be available for the sale of
the Registrable Securities by the selling
Holders thereof and, in the case of an
Exchange Offer, be available for the
exchange of Registrable Securities, and
(iii) shall comply as to form in all
material respects with the requirements of
the applicable form and include all
financial statements required by the SEC to
be filed therewith; and use their best
efforts to cause such Registration
Statement to become effective and remain
effective (and, in the case of the
Prospectus included in a Shelf Registration
Statement, usable for resales) in
accordance with Section 2 hereof; provided,
however, that if (1) such filing is
pursuant to Section 2(b), or (2) a
Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to
Section 2(a) is required to be delivered
under the Securities Act by any
Participating BrokerDealer who seeks to
sell Exchange Securities, before filing any
Registration Statement or Prospectus or any
amendments or supplements thereto, the
Company and the Initial Guarantors shall,
and the Company shall cause each Guarantor
other than the Initial Guarantors to,
furnish to and afford the Holders of the
Registrable Securities and each such
Participating BrokerDealer, as the case may
be,
<PAGE> 13
covered by such Registration Statement,
their counsel and the managing
underwriters, if any, a reasonable
opportunity to review copies of all such
documents (including copies of any
documents to be incorporated by reference
therein and all exhibits thereto) proposed
to be filed. Neither, the Company nor any
Guarantor shall file any Registration
Statement or Prospectus or any amendments
or supplements thereto ("Filing") in
respect of which the Holders must be
afforded an opportunity to review prior to
the filing of such document if the Majority
Holders or such Participating BrokerDealer,
as the case may be, their counsel or the
managing underwriters, if any, shall
reasonably object in a timely manner,
unless such filing, in the opinion of the
Company's or Guarantors' counsel, is
required under the Securities Act or
Exchange Act or the SEC's interpretation
thereto;
(b) prepare and file with the SEC such
amendments and post-effective amendments to
each Registration Statement as may be
necessary to keep such Registration
Statement effective for the Effectiveness
Period or the Applicable Period, as the
case may be; and cause each Prospectus to
be supplemented, if so determined by the
Company or requested by the SEC, by any
required prospectus supplement and as so
supplemented to be filed pursuant to Rule
424 (or any similar provision then in
force) under the Securities Act, and comply
with the provisions of the Securities Act,
the Exchange Act and the rules and
regulations promulgated thereunder
applicable to it with respect to the
disposition of all securities covered by
each Registration Statement during the
Effectiveness Period or the Applicable
Period, as the case may be, in accordance
with the intended method or methods of
distribution by the selling Holders thereof
described in this Agreement (including
sales by any Participating BrokerDealer);
(c) in the case of a Shelf Registration, (i)
notify each Holder of Registrable
Securities included in the Shelf
Registration Statement, at least three
Business Days prior to filing, that a Shelf
Registration Statement with respect to the
Registrable Securities is being filed and
advising such Holder that the distribution
of Registrable Securities will be made in
accordance with the method selected by the
Majority Holders; and (ii) furnish to each
Holder of Registrable Securities included
in the Shelf Registration Statement and to
each underwriter of an underwritten
offering of Registrable Securities, if any,
without charge, as many
<PAGE> 14
copies of each Prospectus, including each
preliminary Prospectus, and any amendment
or supplement thereto, and such other
documents as such Holder or underwriter may
reasonably request, in order to facilitate
the public sale or other disposition of the
Registrable Securities; and (iii) consent
to the use of the Prospectus or any
amendment or supplement thereto by each of
the selling Holders of Registrable
Securities included in the Shelf
Registration Statement in connection with
the offering and sale of the Registrable
Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Shelf Registration,
register or qualify the Registrable
Securities under all applicable state
securities or "blue sky" laws of such
jurisdictions by the time the applicable
Registration Statement is declared
effective by the SEC as any Holder of
Registrable Securities covered by a
Registration Statement and each underwriter
of an underwritten offering of Registrable
Securities shall reasonably request in
writing in advance of such date of
effectiveness, and do any and all other
acts and things which may be reasonably
necessary or advisable to enable such
Holder and underwriter to consummate the
disposition in each such jurisdiction of
such Registrable Securities owned by such
Holder; provided, however, that the Company
shall not be required to (i) qualify as a
foreign corporation or as a dealer in
securities in any jurisdiction where it
would not otherwise be required to qualify
but for this Section 3(d), (ii) file any
general consent to service of process in
any jurisdiction where it would not
otherwise be subject to such service of
process or (iii) subject itself to taxation
in any such jurisdiction if it is not then
so subject;
(e) (1) in the case of a Shelf Registration or
(2) if Participating BrokerDealers from
whom the Company has received prior written
notice that they will be utilizing the
Prospectus contained in the Exchange Offer
Registration Statement as provided in
Section 3(u) hereof, are seeking to sell
Exchange Securities and are required to
deliver Prospectuses, promptly notify each
Holder of Registrable Securities, or such
Participating BrokerDealers, as the case
may be, their counsel and the managing
underwriters, if any, and promptly confirm
such notice in writing (i) when a
Registration Statement has become effective
and when any post-effective amendments
thereto become effective, (ii) of any
request by the SEC or any state securities
authority for amendments and supplements to
a Registration Statement
<PAGE> 15
or Prospectus or for additional information
after the Registration Statement has become
effective, (iii) of the issuance by the SEC
or any state securities authority of any
stop order suspending the effectiveness of
a Registration Statement or the
qualification of the Registrable Securities
or the Exchange Securities to be offered or
sold by any Participating Broker-Dealer in
any jurisdiction described in paragraph
3(d) hereof or the initiation of any
proceedings for that purpose, (iv) in the
case of a Shelf Registration, if, between
the effective date of a Registration
Statement and the closing of any sale of
Registrable Securities covered thereby, the
representations and warranties of the
Company and the Guarantors contained in any
purchase agreement, securities sales
agreement or other similar agreement cease
to be true and correct in all material
respects, (v) of the happening of any event
or the failure of any event to occur or the
discovery of any facts, during the
Effectiveness Period, which makes any
statement made in such Registration
Statement or the related Prospectus untrue
in any material respect or which causes
such Registration Statement or Prospectus
to omit to state a material fact necessary
in order to make the statements therein, in
the light of the circumstances under which
they were made, not misleading, and (vi) of
the reasonable determination of the Company
that a posteffective amendment to the
Registration Statement would be
appropriate;
(f) commercially reasonable efforts to obtain
the withdrawal of any order suspending the
effectiveness of a Registration Statement
at the earliest possible moment;
(g) in the case of a Shelf Registration,
furnish to each Holder of Registrable
Securities included within the coverage of
such Shelf Registration Statement, without
charge, at least one conformed copy of each
Registration Statement relating to such
Shelf Registration and any posteffective
amendment thereto (without documents
incorporated therein by reference or
exhibits thereto, unless requested);
(h) in the case of a Shelf Registration,
cooperate with the selling Holders of
Registrable Securities to facilitate the
timely preparation and delivery of
certificates representing Registrable
Securities to be sold and not bearing any
restrictive legends and in such
denominations (consistent with the
provisions of the Indenture) and registered
in such names as the selling Holders or the
underwriters may reasonably request at
least two Business Days prior to the
closing of any sale of Registrable
Securities pursuant to
<PAGE> 16
such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an
Exchange Offer Registration, promptly after
the occurrence of any event specified in
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, prepare a supplement or
post-effective amendment to such
Registration Statement or the related
Prospectus or any document incorporated
therein by reference or file any other
required document so that, as thereafter
delivered to the purchasers of the
Registrable Securities, such Prospectus
will not include any untrue statement of a
material fact or omit to state a material
fact necessary to make the statements
therein, in the light of the circumstances
under which they were made, not misleading;
and to notify each Holder to suspend use of
the Prospectus as promptly as practicable
after the occurrence of such an event, and
each Holder hereby agrees to suspend use of
the Prospectus until the Company has
amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) in the case of a Shelf Registration, a
reasonable time prior to the filing of any
document which is to be incorporated by
reference into a Registration Statement or
a Prospectus after the initial filing of a
Registration Statement, provide a
reasonable number of copies of such
document to the Holders; and make such of
the representatives of the Company and the
Guarantors as shall be reasonably requested
by the Holders of Registrable Securities or
the Initial Purchaser on behalf of such
Holders available for discussion of such
document;
(k) obtain a CUSIP number for all Exchange
Notes and the Senior Notes not later than
the effective date of a Registration
Statement, and provide the Trustee with
certificates for the Exchange Notes or the
Registrable Securities, as the case may be,
in a form eligible for deposit with the
Depositary;
(l) cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended
(the "TIA"), in connection with the
registration of the Exchange Securities or
Registrable Securities, as the case may be,
and effect such changes to such documents
as may be required for them to be so
qualified in accordance with the terms of
the TIA and execute, and cause the Trustee
to execute, all documents as may be
required to effect such changes, and all
other forms and documents required to be
filed with the SEC to enable such documents
to be so qualified in a
<PAGE> 17
timely manner;
(m) in the case of a Shelf Registration, enter
into such agreements (including
underwriting agreements) as are customary
in underwritten offerings and take all such
other appropriate actions in connection
therewith as are reasonably requested by
the Holders of at least 25% in aggregate
principal amount of the Registrable
Securities in order to expedite or
facilitate the registration or the
disposition or the Registrable Securities;
(n) in the case of a Shelf Registration,
whether or not an underwriting agreement is
entered into and whether or not the
registration is an underwritten
registration, if requested by (x) an
Initial Purchaser, in the case where such
Initial Purchaser holds Securities acquired
by it as part of its initial placement and
(y) Holders of at least 25% in aggregate
principal amount of the Registrable
Securities covered thereby: (i) make such
representations and warranties to Holders
of such Registrable Securities and the
underwriters (if any), with respect to the
business of the Company and the
subsidiaries of the Company as then
conducted and the Registration Statement,
Prospectus and documents, if any,
incorporated or deemed to be incorporated
by reference therein, in each case, as are
customarily made by issuers to underwriters
in underwritten offerings, and confirm the
same if and when requested; (ii) obtain
opinions of counsel to the Company and the
Guarantors and updates thereof (which may
be in the form of a reliance letter) in
form and substance reasonably satisfactory
to the managing underwriters (if any) and
the Holders of a majority in amount of the
Registrable Securities being sold,
addressed to each selling Holder and the
underwriters (if any) covering the matters
customarily covered in opinions requested
in underwritten offerings and such other
matters as may be reasonably requested by
such underwriters (it being agreed that the
matters to be covered by such opinion may
be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort"
letters and updates thereof in form and
substance reasonably satisfactory to the
managing underwriters from the independent
certified public accountants of the Company
and the Guarantors (and, if necessary, any
other independent certified public
accountants of any business acquired by the
Company and the Guarantors for which
financial statements and financial data
are, or are required to be, included in the
Registration Statement), addressed to
<PAGE> 18
each of the underwriters, such letters to
be in customary form and covering matters
of the type customarily covered in "cold
comfort" letters in connection with
underwritten offerings and such other
matters as reasonably requested by such
underwriters in accordance with Statement
on Auditing Standards No. 72; and (iv) if
an underwriting agreement is entered into,
the same shall contain indemnification
provisions and procedures no less favorable
than those set forth in Section 4 hereof
(or such other provisions and procedures
acceptable to Holders of a majority in
aggregate principal amount of Registrable
Securities covered by such Registration
Statement and the managing underwriters)
customary for such agreements with respect
to all parties to be indemnified pursuant
to said Section (including, without
limitation, such underwriters and selling
Holders); and in the case of an
underwritten registration, the above
requirements shall be satisfied at each
closing under the related underwriting
agreement or as and to the extent required
thereunder;
(o) if (1) a Shelf Registration is filed
pursuant to Section 2(b) or (2) a
Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to
Section 2(a) is required to be delivered
under the Securities Act by any
Participating BrokerDealer who seeks to
sell Exchange Notes during the Applicable
Period, make reasonably available for
inspection by any selling Holder or
Registrable Securities or Participating
BrokerDealer, as applicable, who certifies
to the Company that it has a current
intention to sell Registrable Securities
pursuant to the Shelf Registration, any
underwriter participating in any such
disposition of Registrable Securities, if
any, and any attorney, accountant or other
agent retained by any such selling Holder,
Participating BrokerDealer, as the case may
be, or underwriter (collectively, the
"Inspectors"), at the offices where
normally kept, during the Company's normal
business hours, all financial and other
records, pertinent corporate documents and
properties of the Company and its
subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable
them to exercise any applicable due
diligence responsibilities, and cause the
officers, directors and employees of the
Company and its subsidiaries to supply all
relevant information in each case
reasonably requested by any such Inspector
in connection with such Registration
Statement; records and information which
the Company determines, in good faith, to
be
<PAGE> 19
confidential and any Records and
information which it notifies the
Inspectors are confidential shall not be
disclosed to any Inspector except where
(i) the disclosure of such Records or
information is necessary to avoid or
correct a material misstatement or omission
in such Registration Statement, (ii) the
release of such Records or information is
ordered pursuant to a subpoena or other
order from a court of competent
jurisdiction or is necessary in connection
with any action, suit or proceeding or
(iii) such Records or information
previously has been made generally
available to the public; each selling
Holder of such Registrable Securities and
each such Participating BrokerDealer will
be required to agree in writing that
Records and information obtained by it as a
result of such inspections shall be deemed
confidential and shall not be used by it as
the basis for any market transactions in
the securities of the Company or the
Guarantors unless and until such is made
generally available to the public through
no fault of an Inspector or a selling
Holder; and each selling Holder of such
Registrable Securities and each such
Participating BrokerDealer will be required
to further agree in writing that it will,
upon learning that disclosure of such
Records or information is sought in a court
of competent jurisdiction, or in connection
with any action, suit or proceeding, give
notice to the Company and allow the Company
at its expense to undertake appropriate
action to prevent disclosure of the Records
and information deemed confidential;
(p) comply with all applicable rules and
regulations of the SEC so long as any
provision of this Agreement shall be
applicable and make generally available to
its securityholders earning statements
satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158
thereunder (or any similar rule promulgated
under the Securities Act) no later than 45
days after the end of any 12-month period
(or 90 days after the end of any 12-month
period if such period is a fiscal year)
(i) commencing at the end of any fiscal
quarter in which Registrable Securities are
sold to underwriters in a firm commitment
or best efforts underwritten offering and
(ii) if not sold to underwriters in such an
offering, commencing on the first day of
the first fiscal quarter of the Company
after the effective date of a Registration
Statement, which statements shall cover
said 12-month periods, provided that the
obligations under this paragraph (p) shall
be satisfied by the timely filing of
<PAGE> 20
quarterly and annual reports on Forms 10-Q
and 10-K under the Exchange Act;
(q) upon consummation of an Exchange Offer or a
Private Exchange, if requested by the
Trustee, obtain an opinion of counsel to
the Company addressed to the Trustee for
the benefit of all Holders of Registrable
Securities participating in the Exchange
Offer or the Private Exchange, as the case
may be, substantially to the effect that
(i) each of the Company and each Guarantor,
as applicable, has duly authorized,
executed and delivered the Exchange
Securities and Private Exchange Securities,
and (ii) each of the Exchange Securities or
the Private Exchange Securities, as the
case may be, constitutes a legal, valid and
binding obligation of the Company or a
Guarantor, as the case may be, enforceable
against such party, in accordance with its
respective terms;
(r) if an Exchange Offer or a Private Exchange
is to be consummated, upon delivery of the
Registrable Securities by Holders to the
Company (or to such other Person as
directed by the Company), in exchange for
the Exchange Securities or the Private
Exchange Securities, as the case may be,
the Company or the Guarantors, as
applicable, shall mark, or cause to be
marked, on such Registrable Securities
delivered by such Holders that such
Registrable Securities are being cancelled
in exchange for the Exchange Securities or
the Private Exchange Securities, as the
case may be; it being understood that in no
event shall such Registrable Securities be
marked as paid or otherwise satisfied;
(s) cooperate with each seller of Registrable
Securities covered by any Registration
Statement and each underwriter, if any,
participating in the disposition of such
Registrable Securities and their respective
counsel in connection with any filings
required to be made with the NASD;
(t) take all other steps necessary to effect
the registration of the Registrable
Securities covered by a Registration
Statement contemplated hereby;
(u) (A) the case of the Exchange Offer
Registration Statement (i) include in the
Exchange Offer Registration Statement a
section entitled "Plan of Distribution,"
which section shall be reasonably
acceptable to the Initial Purchaser or
another representative of the Participating
BrokerDealers, and which shall contain a
summary statement of the positions taken or
policies made by the staff of the SEC with
respect to the potential "underwriter"
status of any brokerdealer
<PAGE> 21
that holds Registrable Securities acquired
for its own account as a result of
market-making activities or other trading
activities (a "Participating BrokerDealer")
and that will be the beneficial owner (as
defined in Rule 13d-3 under the Exchange
Act) of Exchange Securities to be received
by such broker-dealer in the Exchange
Offer, whether such positions or policies
have been publicly disseminated by the
staff of the SEC or such positions or
policies, in the reasonable judgment of the
Initial Purchasers or such other
representative, represent the prevailing
views of the staff of the SEC, including a
statement that any such broker-dealer who
receives Exchange Securities for
Registrable Securities pursuant to the
Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus
meeting the requirements of the Securities
Act in connection with any resale of such
Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has
delivered to the Company the notice
referred to in Section 3(e), without
charge, as many copies of each Prospectus
included in the Exchange Offer Registration
Statement, including any preliminary
Prospectus, and any amendment or supplement
thereto, as such Participating
Broker-Dealer may reasonably request (each
of the Company and the Initial Guarantors
hereby consents, and each Guarantor other
than the Initial Guarantors shall be deemed
to consent, to the use of the Prospectus
forming part of the Exchange Offer
Registration Statement or any amendment or
supplement thereto by any Person subject to
the prospectus delivery requirements of the
Securities Act, including all Participating
BrokerDealers, in connection with the sale
or transfer of the Exchange Securities
covered by the Prospectus or any amendment
or supplement thereto), (iii) use
their best efforts to keep the Exchange
Offer Registration Statement effective and
to amend and supplement the Prospectus
contained therein in order to permit such
Prospectus to be lawfully delivered by all
Persons subject to the prospectus delivery
requirements of the Securities Act for such
period of time as such Persons must comply
with such requirements under the Securities
Act and applicable rules and regulations in
order to resell the Exchange Securities;
provided, however, that such period shall
not be required to exceed 90 days (or such
longer period if extended pursuant to the
last sentence of Section 3 hereof) (the
"Applicable Period"), and (iv) include in
the transmittal letter or similar
<PAGE> 22
documentation to be executed by an exchange
offeree in order to participate in the
Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer will
not be deemed to admit that it is an underwriter within the meaning of the
Securities Act; and
(i) in the case of any Exchange Offer
Registration Statement, the
Company and the Initial Guarantors
agree to, and the Company shall
cause each Guarantor other than
the Initial Guarantors to, deliver
to the Initial Purchasers or to
another representative of the
Participating BrokerDealers, if
requested by an Initial Purchaser
or such other representative of
Participating Broker-Dealers, on
behalf of the Participating
BrokerDealers upon consummation of
the Exchange Offer (i) an opinion
of counsel in form and substance
reasonably satisfactory to the
Initial Purchasers or such other
representative of the
Participating Broker-Dealers,
covering the matters customarily
covered in opinions requested in
connection with Exchange Offer
Registration Statements and such
other matters as may be reasonably
requested, (ii) an officers'
certificate containing
certifications substantially
similar to those set forth in
Section 5(c) of the Purchase
Agreement and such additional
certifications as are customarily
delivered in a public offering of
debt securities and (iii) as well
as upon the effectiveness of the
Exchange Offer Registration
Statement, a comfort letter, in
each case, in customary form if
permitted by Statement on Auditing
Standards No. 72.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding such seller as may be required by the staff of the SEC to
be included in a Registration Statement. The
<PAGE> 23
Company may exclude from such registration the Registrable Securities of any
seller who unreasonably fails to furnish such information within a reasonable
time after receiving such request. The Company shall have no obligation to
register under the Securities Act the Registrable Securities of a seller who so
fails to furnish such information.
In the case of a Shelf Registration Statement, or if
Participating BrokerDealers who have notified the Company that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in this Section 3(u) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, each Holder agrees that,
upon receipt of any notice from the Company of the occurrence of any event
specified in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, if so directed by the Company,
such Holder will deliver to the Company (at the Company's expense) all copies
in such Holder's possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities or
Exchange Securities, as the case may be, current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Registrable Securities or Exchange Securities, as the case may be, pursuant to
a Registration Statement, the Company and the Initial Guarantors shall, and the
Company shall cause each Guarantor other than the Initial Guarantors to, use
their best efforts to file and have declared effective (if an amendment) as
soon as practicable after the resolution of the related matters an amendment or
supplement to the Registration Statement and shall extend the period during
which such Registration Statement is required to be maintained effective and
the Prospectus included therein usable for resales pursuant to this Agreement
by the number of days in the period from and including the date of the giving
of such notice to and including the date when the Company shall have made
available to the Holders (x) copies of the supplemented or amended Prospectus
necessary to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company and the Initial Guarantors shall,
and the Company shall cause each Guarantor other than the Initial
Guarantors to, jointly and severally, indemnify and hold harmless the
Initial Purchasers, each Holder, each underwriter who participates in
an offering of the Registrable Securities, each Participating
BrokerDealer, each Person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
1) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred,
arising out of any untrue statement or
alleged untrue statement of a material fact
contained in any Registration Statement (or
any amendment thereto) or any Prospectus
(or any amendment or supplement thereto),
<PAGE> 24
covering Registrable Securities or Exchange
Securities, as applicable, or the omission
or alleged omission therefrom of a material
fact required to be stated therein, in the
light of the circumstances under which they
were made, not misleading;
2) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid
in settlement of any litigation, or any
investigation or proceeding by any
governmental agency or body, commenced or
threatened, or of any claim whatsoever
based upon any such untrue statement or
omission, or any such alleged untrue
statement or omission; provided that
(subject to Section 4(d) hereof) any such
settlement is effected with the prior
written consent of the Company and the
Guarantors; and
3) against any and all expenses whatsoever, as
incurred (including the reasonable fees and
disbursements of counsel chosen by such
Holder, such Participating BrokerDealer, or
any underwriter), reasonably incurred in
investigating, preparing or defending
against any litigation, or any
investigation or proceeding by any
governmental agency or body, commenced or
threatened, or any claim whatsoever based
upon any such untrue statement or omission,
or any such alleged untrue statement or
omission, to the extent that any such
expense is not paid under subparagraph (i)
or (ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished in writing to the Company or any
Guarantor by an Initial Purchaser or such Holder, underwriter or Participating
BrokerDealer for use in a Registration Statement (or any amendment thereto) or
any Prospectus (or any amendment or supplement thereto) and, provided, further,
that this indemnity shall not inure to the benefit of any Initial Purchaser or
Holder to the extent that any such losses, liabilities, claims, damages or
expenses result from the fact that such Initial Purchaser or Holder (or other
person so indemnified) sold Senior Notes to a person to whom there was not sent
or given by or on behalf of the Initial Purchasers a copy of any amended or
<PAGE> 25
supplemented Prospectus at or prior to the written confirmation of the sale of
Senior Notes to such person if the Company shall have furnished such amendment
or supplement to the Prospectus to the Initial Purchasers a reasonable amount
of time in advance of the required delivery thereof and if the losses,
liabilities, claims, damages or expenses result from an untrue statement or
alleged untrue statement or an omission contained in the Prospectus that was
corrected in such amendment or supplement to the Prospectus.
a. The Initial Purchasers and each Holder, underwriter or
Participating Broken-Dealer agrees, severally and not
jointly, to indemnify and hold harmless the Company, the
Guarantors, their respective directors and officers
(including each officer of the Company and the Guarantors who
signed the Registration Statement) and each Person, if any,
who controls the Company or any Guarantor within the meaning
of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in a Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Holder
expressly for use in such Registration Statement (or any
amendment thereto) or any such Prospectus (or any amendment
or supplement thereto); provided, however, that in the case
of a Shelf Registration Statement, no such Holder shall be
liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration
Statement.
b. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any
liability which it may have under this Section 4 to the
extent that it is not materially prejudiced by such failure
as a result thereof, and in any event shall not relieve it
from liability which it may have otherwise on account of this
indemnity agreement. In the case of parties indemnified
pursuant to Section 4(a) or (b) above, counsel to the
indemnified parties shall be selected by such parties and, in
the case of parties indemnified pursuant to Section 4(c),
counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own
expense in the defense of such action; provided, however,
that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties
be liable for the fees and expenses of more than one counsel
(in addition to local counsel), separate from their own
counsel, for all indemnified parties in connection with any
one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations
or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with
respect
<PAGE> 26
to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each
indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any
indemnified party.
c. If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees
that it shall be liable for any settlement of the nature
contemplated by Section 4(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to
the date of such settlement.
d. If any of the indemnity provisions set forth in this
Section 4 is for any reason unavailable or insufficient to
hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein,
the Company and the Guarantors, on the one hand, and the
Holders, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity agreement incurred by
such indemnified party, as incurred, in such proportion as
shall be appropriate to reflect the relative fault of the
Company and Guarantors, on the one hand, and the Holders, on
the other hand, with respect to the statements or omissions
which resulted in any such loss, liability, claim, damage or
expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the
Company and the Guarantors, on the one hand, and of the
Holders, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the Company or the Guarantors, on the one hand,
or by or on behalf of the Holders, on the other, and the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The Company, the Guarantors and the Holders of the
Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 4 were to
be determined by pro rata allocation or by any other method
of allocation that does not take into account the relevant
equitable considerations. For purposes of this Section 4,
each Affiliate of a Holder, and each director, officer and
employee and Person, if any, who controls a Holder or such
Affiliate within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Holder, and each director of
the Company or any Guarantor and each Person, if any, who
controls the Company or any Guarantor within the
<PAGE> 27
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution
as each of the Company or the Guarantors.
5. Participation in an Underwritten Registration. No Holder may
participate in an underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities
on the basis provided in the underwriting arrangement approved by the
Persons entitled hereunder to approve such arrangements and
(b) completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such
underwriting arrangements.
6. Selection of Underwriters. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may
sell the Securities covered by such Shelf Registration in an
underwritten offering, subject to the provisions of Section 3(m)
hereof. In any such underwritten offering, the underwriter or
underwriters and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in such offering;
provided, however, that such underwriters and managers must be
reasonably satisfactory to the Company and the Guarantors.
7. Miscellaneous.
a. Rule 144 and Rule 144A. For so long as the Company is subject
to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain
outstanding, the Company will file the reports required to be
filed by it under the Securities Act and Section 13(a) or
15(d) of the Exchange Act and the rules and regulations
adopted by the SEC thereunder; provided, however, that if the
Company ceases to be so required to file such reports, it
will, upon the request of any Holder of Registrable
Securities (a) make publicly available such information as is
necessary to permit sales of its securities pursuant to Rule
144 under the Securities Act, (b) deliver such information to
a prospective purchaser as is necessary to permit sales of
its securities pursuant to Rule 144A under the Securities
Act, and (c) take such further action that is reasonable in
the circumstances, in each case, to the extent required from
time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended
from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
b. No Inconsistent Agreements. Neither the Company nor any
Guarantor has entered into, nor will the Company or any
Guarantor on or after the date of this Agreement enter into,
any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the
holders of the other issued and outstanding securities of the
Company or any
<PAGE> 28
Guarantor under any such agreements.
c. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given,
unless the Company and the Guarantors have obtained the
written consent of Holders of a majority in aggregate
principal amount of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver
or departure; provided that no amendment, modification or
supplement or waiver or consent to the departure with respect
to the provisions of Section 4 hereof shall be effective as
against any Holder of Registrable Securities unless consented
to in writing by such Holder of Registrable Securities.
Notwithstanding the foregoing sentence, (i) this Agreement
may be amended, without the consent of any Holder of
Registrable Securities, by written agreement signed by the
Company, the Guarantors and the Initial Purchasers, to cure
any ambiguity, correct or supplement any provision of this
Agreement that may be inconsistent with any other provision
of this Agreement or to make any other provisions with
respect to matters or questions arising under this Agreement
which shall not be inconsistent with other provisions of this
Agreement, (ii) this Agreement may be amended, modified or
supplemented, and waivers and consents to departures from the
provisions hereof may be given, by written agreement signed
by the Company, the Guarantors and the Initial Purchasers to
the extent that any such amendment, modification, supplement,
waiver or consent is, in their reasonable judgment, necessary
or appropriate to comply with applicable law (including any
interpretation of the Staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement
relates to an Initial Purchaser, such provision may be
amended, modified or supplemented, and waivers or consents to
departures from such provisions may be given, by written
agreement signed by such Initial Purchaser, the Company and
the Guarantors.
d. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by
hand-delivery, registered firstclass mail, telex, telecopier,
or any courier guaranteeing overnight delivery (i) if to a
Holder, at the most current address given by such Holder to
the Company or the Guarantors by means of a notice given in
accordance with the provisions of this Section 7(d), which
address initially is, with respect to an Initial Purchaser,
the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Guarantors, initially at the Company's
address set forth in the Purchase Agreement and thereafter at
such other address, notice of which is given in accordance
with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be
<PAGE> 29
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
e. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and
transferees of the Initial Purchasers, including, without
limitation and without the need for an express assignment,
subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the
terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be
conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement and
such Person shall be entitled to receive the benefits hereof.
f. Third Party Beneficiaries. Each Holder and any Participating
Broker-Dealer shall be third party beneficiaries of the
agreements made hereunder among the Initial Purchasers, the
Company and the Guarantors, and the Initial Purchasers shall
have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to
protect its rights or the rights of Holders hereunder.
g. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall
constitute one and the same agreement.
h. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
i. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND
CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO
CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK
OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF SUCH
SUIT, ACTION
<PAGE> 30
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
j. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such
provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired
thereby.
k. Securities Held by the Company, the Guarantors or its
Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company, the
Guarantors or any Affiliates shall not be counted in
determining whether such consent or approval was given by the
Holders of such required percentage.
l. This Agreement shall terminate with respect to any Guarantor
(including the Initial Guarantors) immediately upon
termination of such Guarantor's Guarantee in accordance with
the terms and conditions of the Indenture.
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COX RADIO, INC.
By: /s/ Richard J. Jacobson
------------------------------
Name: Richard J. Jacobson
Title: Treasurer
WSB, INC.
By: /s/ Andrew A. Merdek
------------------------------
Name: Andrew A. Merdek
Title: Secretary
WHIO, INC.
By: /s/ Andrew A. Merdek
------------------------------
Name: Andrew A. Merdek
Title: Secretary
Confirmed and accepted as of
the date first above
written:
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
J.P. MORGAN SECURITIES INC.
By: NATIONSBANC MONTGOMERY SECURITIES LLC
By: /s/ Charles P. Drakos
-------------------------------------
Authorized Signatory
For itself and the other
Initial Purchasers
<PAGE> 1
EXHIBIT 5.1
August 11, 1998
Cox Radio, Inc.
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Cox Radio, Inc.
Registration Statement on Form S-4 for
$100,000,000 Aggregate Principal Amount of 6.250% Notes due
2003 and $100,000,000 Aggregate Principal Amount of 6.375%
Notes due 2005
Ladies and Gentlemen:
We have acted as special counsel for Cox Radio, Inc., a Delaware
corporation ("Cox" or the "Company"), in connection with the preparation of the
above-referenced registration statement (the "Registration Statement"), filed
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Act"), to register the $100,000,000
aggregate principal amount of 6.250% Notes due 2003 (the "2003 Notes") and
$100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005
Notes" and, collectively with the 2003 Notes, the "Notes").
In preparing this opinion, we have examined and reviewed such documents and
made such investigation of law as we have considered necessary or appropriate to
render the opinions expressed below. We have reviewed (a) the Registration
Statement; (b) Cox's Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws; (c) the Indenture entered into on May 26, 1998 by
Cox and The Bank of New York, as Trustee, providing for the issuance of the
Notes (the "Indenture"); and (d) such other documents, corporate records,
certificates of public officials, certificates of officers of the Company and
other instruments relating to the authorization and issuance of the Notes as we
deemed relevant or necessary for the opinion herein expressed. As to matters of
fact relevant to our opinion, we have relied upon certificates of officers of
Cox without further investigation.
With respect to the foregoing documents, we have assumed (i) the
authenticity of all documents submitted to us as originals, the conformity with
authentic original documents of all documents submitted to us as copies or
forms, the genuineness of all signatures and the legal capacity of natural
persons, and (ii) that the foregoing documents, in the forms thereof submitted
for our review, have not been altered, amended or repealed in any respect
material to our opinion as stated herein. We have not reviewed any documents
other than the documents listed above for
<PAGE> 2
Cox Radio, Inc.
August 11, 1998
Page 2
our purposed of rendering our opinion as expressed herein, and we assume that
the documents submitted to us for our review have not been altered, amended or
repealed in any respect material to our opinion as stated herein. We have not
reviewed any documents other than the documents listed above for purposes of
rendering our opinion as expressed herein, and we assume that there exists no
provision of any such other document that bears upon or is inconsistent with our
opinion as expressed herein. We have conducted no independent factual
investigation of our own, but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we assume to be true, complete
and accurate in all material respects.
Our opinion is limited to matters of law of the District of Columbia, the
General Corporation Law of the State of Delaware, and the United States of
America, insofar as such laws apply, and we express no opinion as to conflicts
of law rules, or the laws of any states or jurisdictions, including federal laws
regulating securities or other federal laws, or the rules and regulations of
stock exchanges or any other regulatory body, other than as specified above.
Based upon and subject to the forgoing and any other qualifications stated
herein, we are of the opinion that the Notes, when duly executed, authenticated
and delivered in accordance with the provisions of the Indenture against payment
therefor and under the terms and conditions described in the Registration
Statement and the Indenture, will constitute valid and binding obligations of
Cox, subject, as to enforcement, (i) to any applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar law relating to or
affecting creditor's rights general and (ii) to general principles of equity and
judicial discretion.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to all references to our firm in the Registration
Statement; provided, however, that in giving such consent we do not admit that
we come within the category of persons whose consent is required under Section 7
of the Act or the Rules and Regulations of the Commission thereunder. Except as
provided for hereinabove, without our prior written consent, this opinion may
not be furnished or quoted to, or relied upon by, any other person or entity for
any purpose.
DOW, LOHNES & ALBERTSON, PLLC
By: /s/ Stuart A. Sheldon
___________________________________
Stuart A. Sheldon
Member
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cox Radio, Inc. on Form S-4 of our report dated February 6, 1998 (March 17, 1998
as to the KONO-FM/AM Acquisition described in Note 4) appearing in the Annual
Report on Form 10-K of Cox Radio, Inc. for the year ended December 31, 1997 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/ Deloitte & Touche LLP
- --------------------------
Atlanta, Georgia
August 7, 1998
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) dated August 11, 1998 for the registration of
6.25% and 6.375% Senior Notes due 2003 and 2005, respectively and to the
incorporation by reference therein of our report dated March 7, 1997, with
respect to the financial statements of NewCity Communications, Inc. for the
three years in the period ended December 31, 1996 included in the Current
Report on Form 8-K dated April 14, 1997 also incorporated herein by reference.
/s/ Ernst & Young LLP
Ernst & Young LLP
Stamford, Connecticut
August 11, 1998
<PAGE> 1
EXHIBIT 25.1
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------
COX RADIO, INC.
(Exact name of obligor as specified in its charter)
Delaware 58-1620022
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1400 Lake Hearn Drive, N.E.
Atlanta, Georgia 30319
(Address of principal executive offices) (Zip code)
----------------------
6.250% Senior Notes due 2003
(Title of the indenture securities)
===============================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street,
New York New York, N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C.
20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 5th day of August, 1998 .
THE BANK OF NEW YORK
By: /s/ Michael Culhane
------------------------------
Name: Michael Culane
Title: Vice President
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin... $ 6,397,993
Interest-bearing balances ........................... 1,138,362
Securities:
Held-to-maturity securities ......................... 1,062,074
Available-for-sale securities ....................... 4,167,240
Federal funds sold and Securities purchased under
agreements to resell................................. 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned income...36,538,242
LESS: Allowance for loan and lease losses.....631,725
LESS: Allocated transfer risk reserve...............0
Loans and leases, net of unearned income,
allowance, and reserve............................. 35,906,517
Assets held in trading accounts ....................... 2,145,149
Premises and fixed assets (including capitalized
leases) ............................................. 663,928
Other real estate owned ............................... 10,895
Investments in unconsolidated subsidiaries
and associated companies ............................ 237,991
Customers' liability to this bank on acceptances
outstanding ......................................... 992,747
Intangible assets ..................................... 1,072,517
Other assets .......................................... 1,643,173
-----------
Total assets .......................................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices ................................. $24,849,054
Noninterest-bearing .......................10,011,422
Interest-bearing ..........................14,837,632
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .................. 15,319,002
Noninterest-bearing ..........................707,820
Interest-bearing ..........................14,611,182
Federal funds purchased and Securities sold under
agreements to repurchase............................. 1,906,066
Demand notes issued to the U.S. Treasury............... 215,985
Trading liabilities ................................... 1,591,288
Other borrowed money:
With remaining maturity of one year or less.......... 1,991,119
With remaining maturity of more than one year
through three years................................ 0
With remaining maturity of more than three years..... 25,574
Bank's liability on acceptances executed and
outstanding ......................................... 998,145
Subordinated notes and debentures ..................... 1,314,000
Other liabilities ..................................... 2,421,281
-----------
Total liabilities ..................................... 50,631,514
-----------
EQUITY CAPITAL
Common stock .......................................... 1,135,284
Surplus ............................................... 731,319
Undivided profits and capital reserves................. 3,328,050
Net unrealized holding gains (losses) on
available-for-sale securities........................ 40,198
Cumulative foreign currency translation
adjustments.......................................... (36,129)
-----------
Total equity capital .................................. 5,198,722
-----------
Total liabilities and equity capital................... $55,830,236
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi [ ]
Alan R. Griffith Directors [ ]
J. Carter Bacot [ ]
<PAGE> 1
EXHIBIT 25.2
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
-------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-------------
COX RADIO, INC.
(Exact name of obligor as specified in its charter)
Delaware 58-1620022
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1400 Lake Hearn Drive, N.E.
Atlanta, Georgia 30319
(Address of principal executive offices) (Zip code)
----------------------
6.375% Senior Notes due 2005
(Title of the indenture securities)
===============================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street,
New York, New York N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 5th day of August, 1998 .
THE BANK OF NEW YORK
By: /s/ Michael Culhane
--------------------------
Name: Michael Culane
Title: Vice President
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin... $ 6,397,993
Interest-bearing balances ........................... 1,138,362
Securities:
Held-to-maturity securities ......................... 1,062,074
Available-for-sale securities ....................... 4,167,240
Federal funds sold and Securities purchased under
agreements to resell................................. 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned income...36,538,242
LESS: Allowance for loan and lease losses.....631,725
LESS: Allocated transfer risk reserve...............0
Loans and leases, net of unearned income,
allowance, and reserve............................. 35,906,517
Assets held in trading accounts ....................... 2,145,149
Premises and fixed assets (including capitalized
leases) ............................................. 663,928
Other real estate owned ............................... 10,895
Investments in unconsolidated subsidiaries
and associated companies ............................ 237,991
Customers' liability to this bank on acceptances
outstanding ......................................... 992,747
Intangible assets ..................................... 1,072,517
Other assets .......................................... 1,643,173
-----------
Total assets .......................................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices ................................. $24,849,054
Noninterest-bearing .......................10,011,422
Interest-bearing ..........................14,837,632
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .................. 15,319,002
Noninterest-bearing ..........................707,820
Interest-bearing ..........................14,611,182
Federal funds purchased and Securities sold under
agreements to repurchase............................. 1,906,066
Demand notes issued to the U.S. Treasury............... 215,985
Trading liabilities ................................... 1,591,288
Other borrowed money:
With remaining maturity of one year or less.......... 1,991,119
With remaining maturity of more than one year
through three years................................ 0
With remaining maturity of more than three years..... 25,574
Bank's liability on acceptances executed and
outstanding ......................................... 998,145
Subordinated notes and debentures ..................... 1,314,000
Other liabilities ..................................... 2,421,281
-----------
Total liabilities ..................................... 50,631,514
-----------
EQUITY CAPITAL
Common stock .......................................... 1,135,284
Surplus ............................................... 731,319
Undivided profits and capital reserves................. 3,328,050
Net unrealized holding gains (losses) on
available-for-sale securities........................ 40,198
Cumulative foreign currency translation
adjustments.......................................... (36,129)
-----------
Total equity capital .................................. 5,198,722
-----------
Total liabilities and equity capital................... $55,830,236
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi [ ]
Alan R. Griffith [ ] Directors
J. Carter Bacot [ ]
