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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
Commission File Number 001-13715
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BIG CITY RADIO, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3790661
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
11 SKYLINE DRIVE, HAWTHORNE, N.Y. 10532 07073-2137
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 592-1071
Securities registered pursuant to Section 12(b) of the Act:
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TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON
- ------------------------- WHICH REGISTERED:
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Class A Common Stock, par American Stock Exchange
value $.01 per share
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Securities registered pursuant to Section 12(g) of the Act: NONE
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
On March 24, 1998 the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the Registrant, using the closing price
of the Registrant's Class A Common Stock, as reported by the American Stock
Exchange on such date, was $99,228,043.75. For purposes of this calculation, the
value of each share of Class B Common Stock of the Registrant held by
non-affiliates was determined based on the value of one share of Class A Common
Stock as there is no established market for the Class B Common Stock and as each
share of Class B Common Stock is convertible into one share of Class A Common
Stock.
The number of shares of the Registrant's Class A Common Stock and Class B
Common Stock outstanding as of March 24, 1998 was 5,725,062 and 8,250,458,
respectively.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement to be used in connection with the
Registrant's Annual Meeting of Stockholders to be held on May 12, 1998 are
incorporated by reference into Part III of this report.
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BIG CITY RADIO, INC.
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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ITEM NO. DESCRIPTION PAGE
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PART I
Item 1. Business.................................................................................... 1
Item 2. Properties.................................................................................. 13
Item 3. Legal Proceedings........................................................................... 14
Item 4. Submission of Matters to a Vote of Security Holders......................................... 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....................... 17
Item 6. Selected Financial Data..................................................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation........ 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................................. 25
Item 8. Financial Statements and Supplementary Data................................................. 26
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........ 48
PART III
Item 10. Directors and Executive Officers of the Registrant.......................................... 48
Item 11. Executive Compensation...................................................................... 48
Item 12. Security Ownership of Certain Beneficial Owners and Management.............................. 48
Item 13. Certain Relationships and Related Transactions.............................................. 48
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................. 49
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PART I
ITEM 1. BUSINESS
GENERAL
Big City Radio, Inc. ("Big City Radio" or the "Company") was formed in 1994
to acquire radio broadcast properties in or adjacent to major metropolitan
markets and utilize innovative engineering techniques and low-cost,
ratings-driven operating strategies to develop these properties into successful
metropolitan radio stations. In order to accomplish this objective, the Company
applies a variety of innovative broadcast engineering techniques to the radio
broadcast properties it acquires, including Synchronized Total Market
Coverage-TM- ("STMC-TM-"). STMC-TM- consists of acquiring two or more stations
which broadcast on the same frequency and simulcasting their signals to achieve
broad coverage of a targeted metropolitan market. In addition to STMC-TM-, the
Company intends to employ other broadcast engineering techniques to enter major
metropolitan markets at attractive valuations. These engineering techniques
include acquiring suburban radio stations and moving the station's broadcast
antenna closer to the metropolitan market ("move-ins") and acquiring high-power
stations adjacent to major metropolitan markets and focusing such stations'
broadcast signal into the metropolitan area.
The Company's acquisition/engineering strategies enable it to provide near
seamless coverage of major metropolitan markets at a significantly lower
acquisition cost than is typically required to acquire a major market Class B
station. Class B radio stations are defined by the Federal Communications
Commission (the "FCC") as those facilities whose signal is predicted to cover a
regional urban area. The Company currently owns and operates STMC-TM- station
combinations in New York, Los Angeles and Chicago, the three largest radio
markets in the United States in terms of aggregate advertising revenues.
The Company's first targeted market was Los Angeles where the Company
operates a three-station combination, which broadcasts as Y-107 ("Y-107 LA"),
featuring a modern rock format on the 107.1-FM frequency. Y-107 LA covered
approximately 75% of the Arbitron diaries in the Los Angeles Arbitron Metro
Survey Area ("MSA") and as a result of an increase in its transmission power
pursuant to the FCC Power Increase (as defined herein) which the Company is
implementing in the first quarter of 1998, Y-107 will increase its coverage to
approximately 90%. The Company has demonstrated the success of its strategy in
Los Angeles where Y-107 LA has consistently ranked as one of the top five most
listened to modern rock radio stations in America over the past year and has
achieved a significant share of 1.0% in the 12+ category as of the Fall 1997
Arbitron book. The Company has successfully translated its strong listenership
into significant revenues as exemplified by the increase in its power ratio
(defined as a station's share of the aggregate radio market revenues divided by
its Arbitron listenership share) from 0.8 in the six-month period ended March
1997 to 1.4 in the six-month period ended September 1997. The Company's three
Los Angeles stations (the "Los Angeles Stations") were acquired in May 1996 for
a combined purchase price significantly lower than the reported purchase prices
of Class B stations in the Los Angeles MSA, as evidenced by reported
transactions consummated since the deregulation initiated by the passage of the
Telecom Act (as defined herein) in 1996. See "Business Strategy" below.
The Company's three stations in the New York collectively broadcast as Y-107
("Y-107 NY") on the 107.1-FM frequency. Y-107 NY commenced operations in
December 1996 as the only country music station covering the New York City
market. Y-107 NY earned a 0.9% share in the 12+category as of the Fall 1997
Arbitron book. Y-107 NY currently covers approximately 75% of the Arbitron
diaries in the New York MSA and will increase its coverage to approximately 90%
as a result of an increase in its transmission power pursuant to the FCC Power
Increase and implementation of other technical improvements, which the Company
plans to implement during the second quarter of 1998 pending receipt of final
approval from the FCC. The Company's three New York stations (the "New York
Stations") were acquired by the Company for a combined purchase price
significantly lower than the reported purchase prices of Class B stations in the
New York MSA, as evidenced by reported transactions consummated since the
passage of the Telecom Act. See "Business Strategy" below.
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The Company's two stations in the Chicago MSA collectively broadcast as
FM-103.1("FM-103.1") on the 103.1-FM frequency. FM-103.1 commenced operations in
February 1998, broadcasting an adult contemporary format. FM-103.1 currently
covers approximately 70% of the Arbitron diaries in the Chicago MSA and will
increase its coverage to approximately 90% as a result of the planned increase
in its transmission power pursuant to the FCC Power Increase and other technical
improvements, which the Company plans to implement in 1998 pending receipt of
FCC approval. The Company's two Chicago stations (the "Chicago Stations") were
acquired for a combined purchase price which is significantly less than the
reported purchase prices of Class B stations in the Chicago MSA, as evidenced by
transactions consummated since the passage of the Telecom Act. See "Business
Strategy" below.
The Company is controlled by Stuart Subotnick, a general partner of
Metromedia Company ("Metromedia") who owns approximately 59% of the Company's
common stock, representing 94% of the voting power of the Company's common stock
(without giving effect to the exercise of any options to acquire shares of the
Company's Class A Common Stock).
MANAGEMENT
The Company was formed by its chairman, Stuart Subotnick and its president
and chief executive officer, Michael Kakoyiannis. Mr. Subotnick contributes his
financial, strategic and operational expertise gained through the development
and operation of the numerous media and communications businesses that he and
longtime partner John W. Kluge have controlled through Metromedia and its
predecessor. Mr. Kakoyiannis, the Company's president and chief executive
officer, has been involved in the radio broadcasting industry for over 25 years
in various functions including sales, marketing and general management. In
addition to Mr. Subotnick and Mr. Kakoyiannis, the Company has numerous
experienced radio executives involved in all aspects of its operations,
including engineering, sales, marketing, programming and finance. The Company
believes that its quality management team will be instrumental in successfully
implementing its business strategy.
RECENT DEVELOPMENTS
INITIAL PUBLIC OFFERING
The Company successfully completed the initial public offering (the "Initial
Public Offering" or "IPO") of 4,600,000 shares of Class A Common Stock on
December 24, 1997 at an offering price of $7.00 per share, generating $28.5
million of net proceeds for the Company which were used by the Company to repay
outstanding indebtedness under the Old Credit Facility (as defined). In
connection with the consummation of the Initial Public Offering, the Company
changed its fiscal year-end from September 30 to December 31. In addition,
simultaneously with the consummation of the Initial Public Offering, Stuart and
Anita Subotnick (the "Principal Stockholders") contributed approximately $13.3
million of stockholder loans to the Company (the "Equity Contribution"), the
Company reclassified each share of its then-existing common stock (the "Old
Common Stock") into 7,610 shares of Class A Common Stock, and the Principal
Stockholders exchanged their shares of Class A Common Stock for shares of Class
B Common Stock, par value $.01 per share (the "Class B Common Stock")
(collectively, the "Reclassification"). The rights of holders of Class A Common
Stock and Class B Common Stock are identical, except that each share of Class A
Common Stock entitles its holder to one vote per share on all matters voted upon
by the Company's stockholders, whereas each share of Class B Common Stock
entitles its holder to ten votes per share on all matters voted upon by the
Company's stockholders. In addition, holders of Class B Common Stock vote as a
separate class to elect up to 75% of the members of the Company's Board of
Directors. Each share of Class B Common Stock is convertible at any time into
one share of Class A Common Stock. The Principal Stockholders own all of the
outstanding shares of Class B Common Stock.
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OFFERING OF SENIOR DISCOUNT NOTES
The Company completed a private placement of $174.0 million aggregate
principal amount 11 1/4% Senior Discount Notes due 2005 (the "Notes") on March
17, 1998 (the "Notes Offering"), generating approximately $125.4 million of
gross proceeds for the Company of which the Company used approximately $32.8
million to repay outstanding indebtedness under its Old Credit Facility. The
Company intends to use the remaining proceeds of the Notes Offering to finance
the acquisition costs of radio station properties and for general working
capital purposes.
The principal executive offices of the Company are located at 11 Skyline
Drive, Hawthorne, New York 10532. Its telephone number is (914) 592-1071.
STATIONS OPERATIONS
The Company currently owns station groups in Los Angeles, New York, and
Chicago, the three largest markets in the United States in terms of aggregate
radio revenues. Y-107 LA and Y-107 NY have each exhibited significant increases
in Arbitron ratings and net revenue since their respective launches. FM-103.1
began broadcasting an adult contemporary format in the Chicago MSA in February
1998.
LOS ANGELES
The Los Angeles market is the second largest Arbitron market in terms of
population and the largest in terms of aggregate radio market revenues in the
United States, with 1996 revenues of $540.0 million. From 1991 to 1996, radio
advertising revenue in the Los Angeles MSA grew from $440.0 million to $540.0
million, a compound annual growth rate of 4.2%. Los Angeles is the first market
in which the Company implemented STMC-TM-, with its acquisitions of three radio
stations for an aggregate purchase price of $26.8 million. Y-107 LA initially
covered approximately 75% of the Arbitron diaries in the Los Angeles MSA and, as
a result of an increase in its transmission power, which the Company is
implementing in the first quarter of 1998, Y-107 LA will increase its coverage
to approximately 90%. The Company believes that this coverage is substantially
similar to the Arbitron diary coverage of many of the highest-ranked Los Angeles
Class B stations. In addition to its coverage of the Los Angeles market, Y-107
LA covers parts of the Ventura, Orange, Riverside-San Bernardino and San Diego
markets.
The Company believes that identifying the appropriate format in a particular
market is crucial to the station's ability to achieve meaningful penetration of
the market's listening audience and aggregate advertising revenues. After
extensive research of the Los Angeles market, the Company launched a modern rock
format, as it believed that there was no comparable station that offered a
lively mix of modern rock music that primarily targets the important 25-54
demographic. The Company has demonstrated the success of its strategy in Los
Angeles where Y-107 LA has consistently ranked as one of the top 5 most
listened-to modern rock radio stations in America over the past year and has
achieved a significant share of 1.0% in the 12+ category as of the fall 1997
Arbitron book. The Company has successfully translated its strong listenership
into significant revenues as exemplified by the increase in its power ratio from
0.8 in the six-month period ended March 1997 to 1.4 in the six-month period
ended September 1997. Y-107 LA's cume (the estimated number of different persons
who listened to a station for a minimum of five minutes in a quarter-hour of a
reported daypart) grew from 50,000 to 574,500 in its first six months of
operation.
The Company believes that to achieve Class B station equivalent Arbitron
coverage and broadcast quality requires extensive engineering expertise. In Los
Angeles, the Company uses several advanced techniques to achieve what the
Company believes to be substantially full coverage. In addition to the three
stations, the Company uses a booster located in the San Fernando Valley to
enhance its coverage of the market. The Company believes these engineering
solutions have resulted in significantly broader coverage than traditional
simulcasting.
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NEW YORK
The New York MSA is the largest Arbitron market in terms of population and
the second largest in terms of aggregate radio market revenues in the United
States, with 1996 revenues of $507.2 million. From 1991 to 1996, radio
advertising revenue in the New York MSA grew from $349.0 million to $507.2
million, a compound annual growth rate of 7.8%. New York is the second market
which the Company entered with its acquisitions of three radio stations for an
aggregate purchase price of approximately $19.5 million. The Company has
implemented STMC-TM- in New York as well and believes that it has created the
equivalent of a New York Class B station. Subsequent to the implementation of
the planned power increase of the New York Stations and implementation of other
technical improvements, which the Company expects to complete by the end of the
second quarter of 1998, the Arbitron diary coverage of Y-107 NY will increase to
approximately 90%. The Company believes that this coverage is substantially
similar to the Arbitron diary coverage of many of the highest-ranked New York
Class B stations.
Y-107 NY has an exclusive format presence in New York, as the Company
believes there are no other country music stations covering substantially all of
the New York MSA. Country music is traditionally a very strong 25-54 demographic
format, which routinely generates high power ratios relative to other formats.
As the only country music station covering substantially all of the New York
market, Y-107 NY's recognition and popularity was significantly enhanced
recently when the station broadcasted live the Garth Brooks concert in Central
Park in New York City. Y-107 NY commenced operations on January 1, 1997 and has
already earned a share of 0.9% in the 12+category as of the Fall 1997 Arbitron
book.
CHICAGO
The Chicago market is the third largest Arbitron market in terms of
population and aggregate radio market revenues in the United States with 1996
revenues of $343.0 million. From 1991 to 1996, radio advertising revenue in the
Chicago MSA grew from $252.0 million to $343.0 million, a compound annual growth
rate of 6.4%. The Company has to date acquired two radio stations in the Chicago
MSA for an aggregate purchase price of $10.6 million and FM-103.1 began
broadcasting an adult contemporary format in February, 1998. FM-103.1 currently
cover approximately 70% of the Arbitron diaries in the Chicago MSA. Subsequent
to the implementation of the planned power increase of the Chicago Stations and
other technical improvements, which the Company expects to complete during 1998,
FM-103.1 will cover approximately 90% of the Arbitron diaries in the Chicago
MSA.
ADVERTISING SALES
The rates a station can charge are in large part dictated by the station's
ability to attract audiences in the demographic groups targeted by its
advertisers, as measured principally by Arbitron Radio Market Reports. The
Company believes that identifying the appropriate format in a particular market
is crucial to the station's ability to achieve meaningful penetration of the
listening audience of the market. In each market entered by the Company, an
extensive competitive analysis is performed to select the format with the
greatest audience and revenue potential.
Virtually all of the Company's revenues are generated from the sale of local
and national advertising for broadcast on its radio stations. The Company
believes that radio is one of the most efficient and cost-effective means for
advertisers to reach specific demographic groups. Advertising rates charged by
radio stations are based primarily on (i) a station's share of the audience in
the demographic groups targeted by advertisers, (ii) the number of stations in
the market competing for the same demographic groups, and (iii) the supply of
and demand for radio advertising time. Rates are generally highest during
morning and afternoon commuting hours.
The number of advertisements that can be broadcast without jeopardizing
listening levels (and the resulting ratings) is limited in part by the format of
a particular station. The Company's stations strive to maximize revenue by
constantly managing the number of commercials available for sale and adjusting
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prices based upon local market conditions. In the broadcasting industry, radio
stations often utilize trade (or barter) agreements to generate advertising time
sales in exchange for goods or services (such as travel and lodging) instead of
for cash. The Company minimizes its use of trade agreements. The Company
determines the number of advertisements broadcast hourly, which maximizes
available revenue dollars without jeopardizing listening levels. Although the
number of advertisements broadcast during a given time period varies, the total
number of advertisements broadcast on a particular station generally does not
vary significantly from year to year. As is typical of the radio broadcasting
industry, the Company's stations respond to changing demand for advertising
inventory by varying prices rather than by varying the target inventory level
for a particular station.
Most advertising contracts are short-term and run only for a few weeks.
Ninety percent of the Company's gross revenue is generated from local
advertising, which is sold primarily by a station's sales staff. To achieve
greater control over advertising dollars, the Company's sales force focuses on
establishing direct relationships with local advertisers. To generate national
advertising sales, the Company has recruited in-house staff to represent it in
the largest national sales markets of New York City, Boston, Philadelphia,
Chicago, Atlanta, Dallas, Detroit and San Francisco. This also helps to contain
commission costs as large national representative firms tend to have higher
commission rates than an in-house national sales representative.
COMPETITION
Radio broadcasting is a highly competitive business. Within their respective
markets, each of the Company's radio stations competes for audience share and
advertising revenue directly with other radio stations, as well as with other
media such as television, print media, billboards, compact discs and music
videos. There are a number of other better-capitalized companies competing in
the same geographic markets as the Company, many of which have greater financial
resources. In addition, recently the radio industry has experienced significant
consolidation which has resulted in several radio station groups that have a
large number of radio stations throughout the United States and vastly greater
financial resources and access to capital than the Company.
The financial success of each of the Company's radio stations is dependent
principally upon its share of the overall radio advertising revenue within its
geographic market, its promotion and other expenses incurred to obtain that
revenue and the economic health of the geographic market. Radio advertising
revenues are, in turn, highly dependent upon audience share. Radio station
operators are subject to the possibility of another station changing programming
formats to compete directly for listeners and advertisers or launching an
aggressive promotional campaign in support of an already existing competitive
format. If a competitor, particularly one with substantial financial resources,
were to attempt to compete in either of these fashions, the broadcast cash flow
of the Company's affected station could decrease due to increased promotional
and other expenses and/or lower advertising revenues resulting from lower
ratings. There can be no assurance that any one of the Company's radio stations
will be able to maintain or increase its current audience ratings and radio
advertising revenue market share.
The Company will also face competition from other radio stations that
attempt to replicate the engineering techniques of the Company to cover a
metropolitan area and from stations that simply simulcast on the same or first
adjacent frequencies. While simulcasting has been employed by other broadcast
radio operators in the past, the primary purpose has been to reduce programming
costs for the individual stations. The Company believes that most broadcast
radio operators that have employed simulcasting have done so on different
frequencies. The Company believes that few operators have successfully used
simulcasting to effectively cover an entire MSA.
Radio broadcasting is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems or the introduction of a new
technology known as DAB. DAB may deliver by satellite or terrestrial means
multi-
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channel, multi-format digital radio services with sound quality equivalent to
compact discs to nationwide and regional audiences. The Company cannot predict
the effect, if any, that any such new technologies may have on the radio
broadcasting industry.
ACQUISITIONS
Since its incorporation in August 1994, the Company has acquired the assets
of ten radio stations and has disposed of one station. The following is a
summary of the acquisitions and dispositions of radio stations which the Company
has consummated since its incorporation and other planned acquisitions. All of
these transactions were with non-affiliated persons.
NEW YORK
In December 1994, the Company acquired the assets of radio station WRGX-FM
(now WWXY-FM), Briarcliff Manor, New York, from West-Land Communicators, Inc.
("West-Land") for a purchase price of $2.5 million and the issuance of a
promissory note in the amount of $1.0 million to West-Land. In April 1997, the
Company acquired the assets of radio station WWHB-FM (now WWVY-FM), Hampton
Bays, New York, from South Fork Broadcasting Corporation ("South Fork") for a
purchase price of $4.0 million. In June 1997, the Company acquired the assets of
radio station WZVU-FM (now WWZY-FM), Long Branch, New Jersey, including a radio
tower, a radio antenna and a building, from K&K Radio Broadcasting L.L.C. and
K&K Tower, L.L.C. for an aggregate purchase price of $12.0 million and certain
payments under existing leases of the building facilities. K&K Radio
Broadcasting, L.L.C., K&K Tower, L.L.C. and each of their controlling members
and the general manager of WZVU-FM entered into a covenant not to compete with
the Company for a period of three years. Also, in December 1994, the Company
acquired the assets of radio station WRKL-AM, Pomona, New York, from Rockland
Communicators, Inc. for a purchase price of $1.0 million. The Company intends to
dispose of this station.
LOS ANGELES
In May 1996, the Company acquired four radio stations in the Los Angeles
area from Douglas Broadcasting, Inc. ("Douglas"). The Company acquired the
assets of radio station KMAX-FM (now KLYY-FM), Arcadia, California, KAXX-FM (now
KVYY-FM), Ventura, California, KBAX-FM (now KSYY-FM) Fallbrook, California, and
KWIZ-FM, Santa Ana, California, for an aggregate purchase price of $38.0
million. The Company also acquired FM Translator station K252BF, Temecula,
California, which rebroadcasts on 98.3 MHz the signal of KSYY-FM, and FM Booster
station KLYY-FM, Burbank, California, which boosts on 107.1 MHz the broadcast of
the signal of KLYY-FM. In December 1996, the Company sold radio station KWIZ-FM
to Liberman Broadcasting, Inc. for a price of $11.2 million.
CHICAGO
In August 1997, the Company acquired the assets of radio station WVVX-FM
(now WXXY-FM), Highland Park, Illinois, from WVVX License, Inc., for a purchase
price of $9.5 million. Douglas, WVVX, Inc. and WVVX License, Inc. agreed not to
compete for a period of eighteen months. In August 1997, the Company acquired
the assets of radio station WJDK-FM (now WYXX-FM), Morris, Illinois, from DMR
Media, Inc., for a purchase price of $1.1 million. In addition, the Company
agreed not to compete with DMR Media, Inc.'s operations of radio station
WCSJ-AM, Morris, Illinois, for a period of five years.
OTHER PLANNED ACQUISITIONS
The Company's principal business strategy is to add radio station properties
to its existing station groups in order to augment signal strength and Arbitron
diary coverage in these MSAs and to acquire additional station groups to which
the Company may deploy its STMC-TM- concept in existing markets (Los Angeles,
New York and Chicago) and in other top-20 markets throughout the U.S. The
Company is
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currently actively seeking out such acquisition opportunities and is in the
process of negotiating several transactions. Presently, the Company is a party
to two non-binding letters of intent for the acquisition of substantially all of
the assets of certain radio stations in top-20 markets for a purchase price of
$4.5 million and $5.0 million, respectively, subject to adjustments.
Consummation of the acquisition of the assets of these stations remains subject
to a number of significant conditions to closing, including negotiation and
execution of definitive documentation, the consent of the FCC to the assignment
of these stations' licenses to the Company and completion of a satisfactory due
diligence review. No assurance can be made that the Company will consummate such
acquisitions on the terms outlined above or at all. In addition to these
acquisitions, the Company is actively negotiating other radio station
acquisitions in its existing markets and in other markets.
PROPOSED RADIO STATION DISPOSITION
The Company intends to dispose of the assets of radio station WRKL-AM,
Pomona, New York during 1998. The Company and Polnet Communications, Ltd.
("Polnet") have executed a non-binding letter of intent for the sale by Big City
Radio of the assets of WRKL-AM to Polnet, for a sale price of $1.625 million,
subject to certain adjustments. Consummation of this proposed sale remains
subject to a number of conditions to closing including, but not limited to,
execution of definitive documentation, consent of the FCC to the assignment of
the WRKL-AM license to Polnet and certain other conditions to closing including,
but not limited to, conveyance of good title to the assets, free and clear of
all liens, claims, mortgages, security interests and encumbrances except those
assumed by Polnet.
EMPLOYEES
At December 31, 1997, the Company had approximately 109 full-time employees
and 83 part-time employees. Nine full-time employees of radio station WRKL-AM
are represented by a union. The Company believes that its relations with its
employees are good.
The Company employs several on-air personalities and generally enters into
employment agreements with certain of these personalities to protect its
interests in those relationships that it believes to be valuable. The loss of
certain of these personalities could result in a short term loss of audience
share but the Company does not believe that any such loss would have a material
adverse effect on the Company.
PATENTS AND TRADEMARKS
The Company owns registered trademark rights for STMC-TM- and domestic
trademark registrations related to the business of the Company and does not own
any patents or patent applications. The Company does not believe that any of its
trademarks are material to its business or operations.
FEDERAL REGULATION OF RADIO BROADCASTING
The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act of 1934, as amended (the "Communications Act"). Among other
things, the FCC assigns frequency bands for broadcasting; determines the
particular frequencies, locations and power of stations; issues, renews, revokes
and modifies station licenses; determines whether to approve changes in
ownership or control of station licenses; regulates equipment used by stations;
imposes regulations and takes other action to prevent harmful interference
between stations; adopts and implements regulations and policies that directly
or indirectly affect the ownership, management, programming, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules or the Communications Act. In February 1996, Congress
enacted the Telecommunications Act of 1996 (the "Telecom Act") to amend the
Communications Act. The Telecom Act, among other measures, directed the FCC,
which has since conformed its rules, to (a) eliminate the national radio
ownership limits; (b) liberalize the local radio ownership limits as specified
in the Telecom
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Act; (c) issue broadcast licenses for periods of up to eight years; and (d)
eliminate the opportunity for the filing of competing applications against
broadcast license renewal applications.
Congress, via the Balanced Budget Act of 1997, authorized the FCC for the
first time to conduct auctions for the awarding of initial broadcast licenses or
construction permits for commercial radio and television stations. To facilitate
the settlement without auctions of already pending mutually exclusive
applications, Congress directed the FCC to waive existing rules as necessary.
The FCC has initiated a rulemaking proceeding to implement these provisions.
While the Company is not a participant in any such proceeding, this recent
action should result in the awarding of construction permits for additional
radio stations, some of which might have the potential to compete with the
Company's radio stations.
LICENSE GRANTS AND RENEWALS
The Communications Act provides that a broadcast license may be granted to
an applicant if the grant would serve the public interest, convenience and
necessity, subject to certain limitations referred to below. In making licensing
determinations, the FCC considers the legal, technical, financial and other
qualifications of the applicant, including compliance with the Communications
Act's limitations on alien ownership, compliance with various rules limiting
common ownership of broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding "attributable" interests
in the licensee. Broadcast licenses are granted for specific periods of time
and, upon application, are renewable for additional terms. The Telecom Act
amended the Communications Act to provide that broadcast licenses be granted,
and thereafter renewed, for a term not to exceed eight years, if the FCC finds
that the public interest, convenience, and necessity would be served.
Generally, the FCC renews broadcast licenses without a hearing. The Telecom
Act amended the Communications Act to require the FCC to grant an application
for renewal of a broadcast license if: (1) the station has served the public
interest, convenience and necessity; (2) there have been no serious violations
by the licensee of the Communications Act or the rules and regulations of the
FCC; and (3) there have been no other violations by the licensee of the
Communications Act or the rules and regulations of the FCC which, taken
together, would constitute a pattern of abuse. Competing applications against
broadcast license renewal applications are therefore not entertained. The
Telecom Act provided that if the FCC, after notice and an opportunity for a
hearing, decides that the requirements for renewal have not been met and that no
mitigating factors warrant lesser sanctions, it may deny a renewal application.
Only thereafter may the FCC accept applications by third parties to operate on
the frequency of the former licensee. The Communications Act continues to
authorize the filing of petitions to deny against broadcast license renewal
applications during particular periods of time following the filing of renewal
applications. Petitions to deny can be used by interested parties, including
members of the public, to raise issues concerning the qualifications of the
renewal applicant.
The Company's Chicago Stations' broadcast licenses were renewed in 1996 and
will expire in 2003. The Los Angeles Stations' broadcast licenses were renewed
on November 25, 1997 and will expire on December 31, 2005. The New York
Stations' and WRKL-AM's broadcast licenses will expire on June 1, 1998. Renewal
applications were due on February 2 for the Company's New York Stations and
WRKL-AM, and were timely filed. The Company does not anticipate any material
difficulty in obtaining license renewals for full terms in the future.
The action of the FCC or its staff granting a renewal application may be
reconsidered during specified time periods by the FCC or its staff on their own
motion or by request of the petitioner, and the petitioner may also appeal
within a certain period actions by the FCC to the U.S. Court of Appeals. If the
FCC does not, on its own motion, or upon a request by an interested party for
reconsideration or review, review a staff grant or its own action within the
applicable time periods, and if no further reconsideration, review or appeals
are sought within the applicable time periods, an action by the FCC or its staff
becomes a "Final Order."
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<PAGE>
LICENSE ASSIGNMENTS AND TRANSFERS OF CONTROL
The Communications Act prohibits the assignment of an FCC license or the
transfer of control of a corporation holding such a license without the prior
approval of the FCC. Applications to the FCC for such assignments or transfers
are subject to petitions to deny by interested parties and must satisfy
requirements similar to those for renewal and new station applicants. Many
transactions involving radio stations provide, as a waivable pre-condition to
closing, that the FCC consent to the transaction has become a "Final Order."
In connection with the Company's acquisition of the broadcast licenses of
several radio stations, the Company has recently requested that the FCC issue to
the Company authorizations for auxiliary stations of use to the Company's radio
stations. The Company expects to receive such authorization in early 1998.
OWNERSHIP RULES
Rules of the FCC limit the number and location of broadcast stations in
which one licensee (or any party with a control position or attributable
ownership interest therein) may have an attributable interest. The FCC, pursuant
to the Telecom Act, eliminated the previously existing "national radio ownership
rule." Consequently, there now is no limit imposed by the FCC to the number of
radio stations one party may own nationally.
The "local radio ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a control position or
attributable ownership interest. Pursuant to the Telecom Act, the FCC revised
its rules to set the local radio ownership limits as follows: (a) in markets
with 45 or more commercial radio stations, a party may own up to eight
commercial radio stations, no more than five of which are in the same service
(AM or FM); (b) in markets with 30-44 commercial radio stations, a party may own
up to seven commercial radio stations, no more than four of which are in the
same service; (c) in markets with 15-29 commercial radio stations, a party may
own up to six commercial radio stations, no more than four of which are in the
same service; and (d) in markets with 14 or fewer commercial radio stations, a
party may own up to five commercial radio stations, no more than three of which
are in the same service, provided that no party may own more than 50% of the
commercial stations in the market. FCC cross-ownership rules also prohibit one
party from having attributable interests in a radio station as well as in a
local television station or daily newspaper, although such limits are waived by
the FCC under certain circumstances. In addition, the FCC has a "cross interest"
policy that may prohibit a party with an attributable interest in one station in
a market from also holding either a "meaningful" non-attributable equity
interest (e.g., non-voting stock, voting stock, limited partnership interests)
or key management position in another station in the same market, or which may
prohibit local stations from combining to build or acquire another local
station. The FCC is presently evaluating its radio/television, radio/newspaper
and cross-interest rules and policies as well as policies governing attributable
ownership interests. The Company cannot predict whether the FCC will adopt any
changes in these policies or, if so, what the new policies will be or how they
might affect the Company.
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<PAGE>
ATTRIBUTION RULES
All holders of attributable interests must comply with, or obtain waivers
of, the FCC's multiple and cross-ownership rules. Under the current FCC rules,
an individual or other entity owning or having voting control of 5% or more of a
corporation's voting stock is considered to have an attributable interest in the
corporation and its stations, except that banks holding such stock in their
trust accounts, investment companies, and certain other passive interests are
not considered to have an attributable interest unless they own or have voting
control over 10% or more of such stock. The FCC is currently evaluating whether
to raise the foregoing benchmarks to 10% and 20%, respectively. An officer or
director of a corporation or any general partner of a partnership also is deemed
to hold an attributable interest in the media license. At present, when a single
shareholder holds a majority of the voting stock of a corporate licensee, the
FCC considers other shareholders, unless they are also officers or directors,
exempt from attribution. The FCC has asked for comments as to whether it should
continue the single majority shareholder exemption. Holders of non-voting stock
generally will not be attributed an interest in the issuing entity, and holders
of debt and instruments such as warrants, convertible debentures, options, or
other non-voting interests with rights of conversion to voting interests
generally will not be attributed such an interest unless and until such
conversion is effected. The FCC is currently considering whether it should
expand its attribution rules to reach certain of these interests in certain
circumstances. The Company cannot predict whether the FCC will adopt these or
any other proposals to change its attribution policies.
Under current FCC rules, any stockholder of the Company with 5% or more of
the outstanding votes (except for qualified institutional investors, for which
the 10% benchmark is applicable), will be considered to hold attributable
interests in the Company. Such holders of attributable interests must comply
with or obtain waivers of the FCC's multiple and cross-ownership rules. At
present, none of the attributable stockholders, officers and directors of the
Company have any other media interests besides those of the Company that
implicate the FCC's multiple ownership limits. In the event that the Company
learns of a new attributable stockholder and if such stockholder holds interests
that exceed the FCC limits on media ownership, under the Company's Amended and
Restated Certificate of Incorporation (as defined herein), the Board of
Directors of the Company has the corporate power to redeem stock of the
Company's stockholders to the extent necessary to be in compliance with FCC and
Communications Act requirements, including limits on media ownership by
attributable parties.
The FCC will consider a radio station providing programming and sales on
another local radio station pursuant to a LMA (as defined herein) to have an
attributable ownership interest in the other station for purposes of the FCC's
radio multiple ownership rules. In particular, a radio station is not permitted
to enter into a LMA giving it the right to program more than 15% of the
broadcast time, on a weekly basis, of another local radio station which it could
not own under the FCC's local radio ownership rules.
ALIEN OWNERSHIP LIMITS
Under the Communications Act, broadcast licenses may not be granted,
transferred or assigned to any corporation of which more than one-fifth of the
capital stock is owned of record or voted by non-U.S. citizens or foreign
governments or their representatives or by foreign corporations. Where the
corporation owning the license is controlled by another corporation, the parent
corporation cannot have more than one-fourth of the capital stock owned of
record or voted by Aliens, unless the FCC finds it in the public interest to
allow otherwise. The FCC has issued interpretations of existing law under which
the Alien ownership restrictions in slightly modified form apply to other forms
of business organizations, including general and limited partnerships. Recently,
the FCC decided that it is in the public interest to allow up to 100% indirect
Alien ownership by citizens of or corporations organized under the laws of WTO
member nations. The FCC also prohibits a licensee from continuing to control
broadcast licenses if the licensee otherwise falls under Alien influence or
control in a manner determined by the FCC to be in violation of the
Communications Act or contrary to the public interest. At present, one of the
Company's officers is known by the Company to be an Alien and no other officers,
directors or stockholders are known to be
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<PAGE>
Aliens. In the event that the Company learns that Aliens own, control or vote
stock in the Company in excess of the limits set in the Communications Act and
the FCC's rules, under the Amended and Restated Certificate of Incorporation,
the Board of Directors of the Company has the corporate power to redeem stock of
the Company's stockholders to the extent necessary to be in compliance with FCC
and Communications Act requirements on alien ownership.
PROGRAMMING REQUIREMENTS
While the FCC has relaxed or eliminated many of its regulatory requirements
related to programming and content, radio stations are still required to
broadcast programming responsive to the problems, needs and interests of the
stations' service areas and must comply with various rules promulgated under the
Communications Act that regulate political broadcasts and advertisements,
sponsorship identifications, indecent programming and other matters. Affirmative
action requirements also exist. Failure to observe these or other FCC rules can
result in the imposition of monetary forfeitures, in the grant of a "short"
(less than full term) license term or, where there have been serious or a
pattern of violations, license revocation.
TECHNICAL AND INTERFERENCE RULES
FCC rules specify technical and interference requirements and parameters
that govern the signal strength and coverage area of radio stations, and which,
unless waived, must be complied with in order to obtain FCC consent to modify a
station's service area or other technical operations. The FCC allots specific FM
radio frequencies and class designations to particular communities of license.
The FM class designations, which vary by geographic location, include (in order
of increasing potential coverage area) Class A, B1, C3, B, C2, C1 and C. (The C
Class designations are generally not allocated to communities in the more
densely-populated regions of the United States, such as the Northeast and
California.) Each FM class has minimum and maximum power specifications and must
not cause interference to the protected service areas of other radio stations,
domestic or international, operating on the same or adjacent frequencies. Under
FCC rules, a radio station must transmit a minimum predicted signal strength to
its allocated community of license, and therefore must locate its transmitting
antenna at a site providing such coverage while also being within a specified
power and height range for that station's class designation, and at specified
minimum distances from the transmitting sites of nearby radio stations operating
on the same or adjacent frequencies. The Company must also comply with certain
technical, reporting, and notification requirements imposed by the FAA with
respect to the installation, location, lighting, and painting of the transmitter
antennas used by the Company's radio stations. The combination of these
requirements sets limits on the ability of a particular radio station to
relocate in certain directions and to increase signal coverage. Stations may
petition the FCC to change a particular station's community of license and/or
class, which changes are granted by the FCC when its service priorities are met
and conflicting reallotment proposals, if any, are resolved. As to minimum
distance separation requirements designed to afford interference protection to
other FM stations, the FCC rarely waives such specifications. However, the FCC
permits radio stations in certain circumstances to relocate to a site not
meeting the minimum distance separation rule when the station demonstrates that
the service contours of neighboring radio stations will be protected from
interference. Because STMC-TM-uses radio stations that operate on the same or
adjacent frequencies, the STMC-TM- stations' transmitting sites must be
sufficiently distant from each other to comply with the FCC's interference
protection guidelines, unless such stations are exempt from compliance by their
grand fathered status.
FCC POWER INCREASE
In most instances, changes to the technical specifications of radio
stations, such as increases in the power (effective radiated power, or "ERP")
and subsequent increased coverage area, may be made only after application to
the FCC, and grant by the FCC of a construction permit for the modification of
the station. The Company has received approval for its application to the FCC
and the grant by the FCC of a
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<PAGE>
construction permit for the modifications of WRKL-AM, Pomona, New York. The FCC
has initially granted applications for modifications of WWXY-FM, Briarcliff
Manor, New York, WWVY-FM, Hampton Bays, New York, and WWZY-FM, Long Branch, New
Jersey. The WWXY-FM, the WWVY-FM and the WWZY-FM modification applications
requested increases in the authorized power of the stations from the current
equivalent three kilowatt to maximum six kilowatt level permitted for the
stations' FCC classification. The Company withheld filing these applications
while the FCC was considering changes to its policy relating to modifications of
"grandfathered short-spaced" FM stations, such as WWXY-FM, WWVY-FM and WWZY-FM.
Grandfathered short-spaced stations are those that do not meet the current FCC's
requirements for distance separation of FM radio stations operating on the same
or adjacent frequencies as the stations were authorized before the adoption of
the current rules. In the past, power increases or relocations of such
grandfathered stations often did not comply with the FCC's current technical
rules, and would be authorized by the FCC only in limited circumstances. In
August 1997, the FCC adopted a new policy, which the Company believes will
permit it to increase the power of its radio stations to the maximum six
kilowatt level (the "FCC Power Increase"). Until the grant of the subject
modification applications, the Company cannot be certain that the new policy
will serve to permit the increases in the Company's coverage areas. There can be
no assurance that the FCC will approve the Company's modification applications.
In January 1998, KLYY-FM, Arcadia, California implemented its increase in ERP
from three kilowatts to the maximum six kilowatts level permitted for the
station's FCC classification, and an application for issuance of a license
reflecting this change is pending before the FCC.
AGREEMENTS WITH OTHER BROADCASTERS
Over the past several years a significant number of broadcast licensees,
including the Company, have entered into cooperative agreements with other
stations in their markets. One typical example is a local marketing agreement
("LMA") between two separately or co-owned stations, whereby the licensee of one
station programs substantial portions or all of the broadcast day on the other
licensee's station, subject to ultimate editorial and other controls being
exercised by the latter licensee, and sells advertising time during such program
segments for its own account. The FCC has held that LMAs do not per se
constitute a transfer of control and are not contrary to the Communications Act
provided that the licensee of the station maintains ultimate responsibility for
and control over operations of its broadcast station. As is the case of the
Company, typically the LMA is entered into in anticipation of the sale of the
station, with the proposed acquiror providing programming for the station while
the parties are awaiting the necessary regulatory approvals to the transaction.
The FCC's rules also prohibit a radio licensee from simulcasting more than
25% of its programming on other radio stations in the same broadcast service
(i.e., AM-AM or FM-FM), whether it owns both stations or operates one or both
through a LMA, where such stations serve substantially the same geographic area
as defined by the stations' principal community contours. The Company's stations
are not subject to this limitation.
PROPOSED REGULATORY CHANGES
The FCC has not yet formally implemented certain of the changes to its rules
necessitated by the Telecom Act. Moreover, the Congress and the FCC have under
consideration, and may in the future consider and adopt, new laws, regulations
and policies regarding a wide variety of matters that could, directly or
indirectly, (i) affect the operation, programming, technical requirements,
ownership and profitability of the Company and its radio broadcast stations,
(ii) result in the loss of audience share and advertising revenues of the
Company's radio broadcast stations, (iii) affect the ability of the Company to
acquire additional radio broadcast stations or finance such acquisitions, (iv)
affect cooperative agreements and/or financing arrangements with other radio
broadcast licensees, (v) affect the Company's competitive position in
relationship to other advertising media in its markets, or (vi) affect the
Company's ability to exploit its unique technical capabilities and innovative
approach to acquiring and using radio broadcast
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stations. Such matters include, for example, changes to the license,
authorization, and renewal process; proposals to revise the FCC's equal
employment opportunity rules and other matters relating to minority and female
involvement in broadcasting; proposals to alter the benchmarks or thresholds for
attributing ownership interest in broadcast media; proposals to change rules or
policies relating to political broadcasting; changes to technical and frequency
allocation matters, including those relative to the implementation of digital
audio broadcasting on both a satellite and terrestrial basis; proposals to
restrict or prohibit the advertising of beer, wine and other alcoholic beverages
on radio; changes in the FCC's cross-interest, multiple ownership, Alien
ownership and cross-ownership policies; and proposals to limit the tax
deductibility of advertising expenses by advertisers.
Although the Company believes the foregoing discussion is sufficient to
provide the reader with a general understanding of all material aspects of FCC
regulations that affect the Company, it does not purport to be a complete
summary of all provisions of the Communications Act or FCC rules and policies.
Reference is made to the Communications Act, FCC rules, and the public notices
and rulings of the FCC for further information.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report, including those utilizing the phrases
"will," "expects," "intends," "estimates," "contemplates," and similar phrases,
are "forward-looking" statements (as such term is defined in Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including
statements regarding, among other items, (i) the Company's growth strategy, (ii)
the Company's intention to acquire additional radio stations and to enter
additional markets, including its ability to do so at attractive valuations,
(iii) the Company's expectation of improving the coverage areas of its radio
stations, and (iv) the Company's ability to successfully implement its business
strategy. Certain, but not necessarily all, of such forward-looking statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance and achievements of the Company and its
subsidiaries to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, the following: (i) changes in the
competitive market place, including the introduction of new technologies or
formatting changes by the Company's competitors, (ii) changes in the regulatory
framework, (iii) changes in audience tastes, and (iv) changes in the economic
conditions of local markets. Other factors which may materially affect actual
results include, among others, the following: general economic and business
conditions, industry capacity, demographic changes, changes in political, social
and economic conditions and various other factors beyond the Company's control.
The Company does not undertake and specifically declines any obligation to
publicly release the results of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
ITEM 2. PROPERTIES
The Company leases approximately 3,200 square feet in Hawthorne, New York,
where its corporate offices are located.
The type of properties required to support each of the Company's radio
stations includes offices, studios, transmitter sites, booster sites, translator
sites and antenna sites. The Company owns, leases or licenses the properties
required to operate its radio stations. The Company owns facilities for the New
York Stations in Long Branch (approximately 6,500 square feet) and for WRKL-AM
in Pomona (approximately 5,100 square feet). The Company leases or licenses
facilities for the Los Angeles Stations in
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Arcadia, Fallbrook (approximately 355 square feet), Los Angeles, Pasadena
(approximately 4,896 square feet), Ventura (approximately 758 square feet),
Temecula and Burbank. The Company leases facilities for the New York Stations in
Hampton Bays (approximately 1,260 square feet), Hawthorne, East Quoque and
Westchester. The Company leases facilities for the Chicago Stations in Highland
Park (approximately 2,120 square feet) and Morris. The Company considers its
facilities to be suitable and of adequate sizes for its current and intended
purposes and does not anticipate any difficulties in renewing those leases or
licenses or in leasing or licensing additional space, if required.
The Company owns substantially all of its other equipment, consisting
principally of transmitting antennae, transmitters, studio equipment and general
office equipment. The Company owns towers in Long Branch, NJ, Highland Park, IL,
and Morris, IL. The towers, antennae and other transmission equipment used in
the Company's stations are generally in good condition.
The following table sets forth the location of the Company's principal
properties:
<TABLE>
<CAPTION>
LOCATION FACILITY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Y-107 LOS ANGELES
Arcadia, CA............................................. FM tower(4)
Fallbrook, CA........................................... FM tower, studio, transmitter site(1)
Pasadena, CA............................................ Studio, business offices(1)
Ventura, CA............................................. FM tower(4), studio, transmitter site(1)
Temecula, CA............................................ Translator site(1)
Burbank, CA............................................. Booster site(1)
Los Angeles, CA......................................... Transmitter site(1)
Y-107 NEW YORK
Hampton Bays, NY........................................ Business offices(1)
Hawthorne, NY........................................... Studio, corporate offices(1)
Long Branch, NJ......................................... FM tower, studio(2)
Westchester, NY......................................... FM tower(1)
East Quoque, NY......................................... FM tower, transmitter site(1)
FM-103.1 CHICAGO
Highland Park, IL....................................... FM tower(4), studio(1)
Morris, IL.............................................. Studio(1), FM tower, transmitter site(2)
WRKL-AM
Pomona, NY.............................................. Tower, studio(3)
</TABLE>
- ------------------------
(1) Leased.
(2) Owned.
(3) Held for sale--See "Proposed Radio Station Disposition."
(4) Tower owned by the Company while the property is leased.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, the outcome of all pending
legal proceedings, individually and in the aggregate, will not have a material
adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 1, 1997, the shareholders of the Company unanimously consented
in writing pursuant to Section 228(a) of the General Corporation Law of the
State of Delaware (the "DGCL") to the adoption of the following resolutions:
(a) Approval of an amendment to the Company's Certificate of
Incorporation to change the name of the Company from Odyssey Communications,
Inc. to Big City Radio, Inc.;
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(b) Approval of the Big City Radio, Inc. 1997 Incentive Stock Plan (the
"Plan");
(c) Approval of the exchange of each share of Old Common Stock of the
Company that may be issued upon exercise of options granted under the Plan
for 7,610 shares of Class A Common Stock, effective upon the consummation of
the Company's IPO; and
(d) Approval of an amendment to the certificate of formation of the
Company's limited liability companies subsidiaries' to change their name,
following the change of name of the Company.
On December 18, 1997, the shareholders of the Company unanimously consented
in writing pursuant to Section 228(a) of the DCGL to the adoption of the
following resolutions, effective immediately prior to the consummation of the
Company's IPO:
(a) Appointment of Ms. Silvia Kessel, Mr. Arnold L. Wadler and Mr.
Leonard White as directors of the Company. The Principal Stockholders and
Mr. Michael Kakoyiannis continued as directors of the Company;
(b) Approval of the Company's Amended and Restated Certificate of
Incorporation and Bylaws;
(c) Approval of the exchange of each share of Old Common Stock for 7,610
shares of Class A Common Stock;
(d) Amendment to the employment agreements of Mr. Michael Kakoyiannis,
Mr. Paul R. Thomson, Mr. Steven G. Blatter and Mr. Alan D. Kirschner; and
(e) Revocation of the Company's election to be taxed as an S corporation
under the Internal Revenue Code of 1986, as amended.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers of the Company as of the date of this report.
<TABLE>
<CAPTION>
NAME AGE OFFICE OR POSITION HELD
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael Kakoyiannis................. 55 Chief Executive Officer and President
Steven G. Blatter................... 31 Vice President--Programming
Alan D. Kirschner................... 46 Vice President--Engineering
Bryan Subotnick..................... 34 Executive Vice President--Corporate Development
Paul R. Thomson..................... 41 Vice President, Chief Financial Officer and Treasurer
Silvia Kessel....................... 47 Executive Vice President
Arnold L. Wadler.................... 54 Executive Vice President, General Counsel, Secretary and Director
</TABLE>
Officers, subject to the terms of their respective employment agreements,
serve at the pleasure of the Board of Directors.
Set forth below is the background of each of the Company's executive
officers, certain of whom also act as directors, as indicated.
MICHAEL KAKOYIANNIS founded the Company in 1994 and has served as Chief
Executive Officer, President and a Director of the Company since its inception.
Mr. Kakoyiannis has over 25 years of experience in the radio broadcasting
business in major metropolitan markets. Prior to joining the Company, Mr.
Kakoyiannis was Executive Vice President of the Westwood One Stations Group
("Westwood One"), which operated three stations in Los Angeles and New York:
WNEW-AM and WYNY-FM in New York and KQLZ-FM, known as "Pirate Radio," in Los
Angeles. Additionally, Mr. Kakoyiannis was Vice President and General Manager of
all three stations. Prior to his tenure at Westwood One, Mr. Kakoyiannis was an
Executive Vice President from 1986 to 1989 at Metropolitan Broadcasting, a
15
<PAGE>
company that was owned by Metromedia and its predecessor, and controlled nine
stations that were generally located in major metropolitan markets.
STEVEN G. BLATTER has been serving as Vice President in charge of
Programming for the Company since 1995. Mr. Blatter served as Program Director
for the radio station WRGX-FM, which is owned by the Company, from 1993 to 1995
and as Director of Programming for MJI Broadcasting from 1991 to 1993. Mr.
Blatter served as Music Director for the radio station WYNY-FM owned by Westwood
One Stations Group, from 1988 to 1991.
ALAN D. KIRSCHNER has been a Vice President of the Company since September
1997 and a Director of Engineering since July 1995. Mr. Kirschner has been
serving as radio technical consultant for AM and FM radio stations since 1972.
Mr. Kirschner served as Chief Engineer responsible for technical operations of
radio station WYNY owned by Broadcasting Partners, Inc. and Evergreen Media, in
New York from 1993 to 1995 and a Director of Engineering for Westwood One
Stations Group in New York from 1988 to 1993.
BRYAN SUBOTNICK has served as Executive Vice President--Corporate
Development of the Company since September 1997. Mr. Subotnick served as Vice
President of the Company from January 1997, and Director of Operations from May
1995 to December 1996. Prior to joining the Company, Mr. Subotnick was Vice
President and General Counsel of Papamarkou & Company, an international finance
and investment company, in 1995, and as a General Partner in the law firm of
Shanker & Subotnick, which specialized in entertainment law, from 1992 to 1994.
Mr. Subotnick is the son of Stuart Subotnick, the Chairman of the Board of
Directors of the Company, and of Anita Subotnick, a director of the Company.
PAUL R. THOMSON has served as Vice President of the Company since September
1997 and as Chief Financial Officer of the Company since January 1996. Prior to
joining the Company, Mr. Thomson served as Corporate Controller of Herbalife
International, Inc. from 1993 to 1996, as Chief Financial Officer of Bernard
Salick Companies from 1992 to 1993 and as Controller--Radio Stations Group of
Westwood One, Inc. from 1989 to 1992. Prior to 1992, Mr. Thomson worked with
Price Waterhouse LLP for 12 years in London, Caracas and Los Angeles. He is a
certified public accountant and a member of the Institute of Chartered
Accountants in England and Wales.
SILVIA KESSEL has served as a Director of the Company since December 1997
and has served as Executive Vice President of the Company since September 1997.
Ms. Kessel has served as Executive Vice President of Metromedia Fiber Network,
Inc. ("Metromedia Fiber"), a provider of high bandwidth, fiber optic
transmission capacity, since October 1997, Chief Financial Officer and Treasurer
of Metromedia International Group, Inc. ("MMG"), an international media and
communications company that owns radio stations in Eastern Europe and Russia,
since 1995 and Executive Vice President of MMG since 1996. In addition, Ms.
Kessel served as Executive Vice President of Orion Pictures Corporation
("Orion") from January 1993 through July 1997, and has served as Senior Vice
President of Metromedia since 1994 and President of Kluge & Company since
January 1994. Prior to that time, Ms. Kessel served as Senior Vice President and
a Director of Orion from June 1991 to November 1992 and Managing Director of
Kluge & Company from April 1990 to January 1994. Ms. Kessel is a member of the
Board of Directors of MMG and Metromedia Fiber.
ARNOLD L. WADLER has served as a Director and General Counsel of the Company
since December 1997 and has served as Executive Vice President and Secretary of
the Company since September 1997. Mr. Wadler has served as Director of
Metromedia Fiber since July 1997, General Counsel of Metromedia Fiber since
August 1997, Secretary of Metromedia Fiber since October 1997, Executive Vice
President, General Counsel and Secretary of MMG since August 29, 1996 and, from
November 1, 1995 until that date, as Senior Vice President, General Counsel and
Secretary of MMG. In addition, Mr. Wadler serves as a director of MMG and has
served as a Director of Orion from 1991 until July 1997 and as Senior Vice
President, Secretary and General Counsel of Metromedia for over five years.
16
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock is listed and traded on the American
Stock Exchange (the "AMEX") under the symbol "YFM" since December 19, 1997.
There is no established public trading market for the Company's Class B Common
Stock. The following table sets forth the high and low sales prices per share of
the Class A Common Stock as reported by the AMEX since December 19, 1997:
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
First Quarter................................................................ N/A N/A
Second Quarter............................................................... N/A N/A
Third Quarter................................................................ N/A N/A
Fourth Quarter............................................................... 7 31/32 7 11/32
</TABLE>
On March 24, 1998, the last reported sales price for the Company's Class A
Common Stock by the AMEX was $10.625 per share. As of March 24, 1998, there were
approximately nine registered holders of record of Class A Common Stock, which
number includes nominees for an undeterminable number of beneficial owners, and
two holders of Class B Common Stock.
The Company has never declared or paid any cash dividends on its Common
Stock and does not expect to do so in the foreseeable future. The Company
anticipates that all future earnings, if any, generated from operations will be
retained to finance the expansion and continued development of its business. Any
future determination with respect to the payment of dividends will be within the
sole discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's earnings, capital requirements, the terms of then
existing indebtedness, applicable requirements of the DGCL, general economic
conditions and such other factors considered relevant by the Company's Board of
Directors. The Revolving Credit Facility and the Company's Notes also contain
certain restrictions on the payment of dividends. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
On December 24, 1997, the Company successfully completed an underwritten
Initial Public Offering lead managed by Donaldson, Lufkin & Jenrette Securities
Corporation and Furman Selz LLC of 4,600,000 shares of Class A Common Stock at
an offering price of $7.00 per share, generating $29.0 million of net proceeds.
In connection with its IPO, the Company filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (file no.
333-36449) for the registration of shares of Class A Common Stock for an
aggregate offering price of $46,000,000, which registration statement was
declared effective by the Commission on December 18, 1997. The Company paid
$1,960,000 ($0.49 per share) in underwriting discounts and commissions and
approximately $1,400,000 in registration fees, NASD filing fees, AMEX listing
fees, printing, engraving, legal, accounting, Blue Sky and other fees and
expenses for the offering. The net proceeds of $28.5 million after deducting
underwriting discounts and commissions and offering expenses were used to repay
outstanding indebtedness of the Company under its Old Credit Facility.
On December 19, 1997, the Company's Old Common Stock was reclassified into
Class A Common Stock and Class B Common Stock and the Principal Stockholders
exchanged all their shares of Class A Common Stock for a similar number of
shares of Class B Common Stock. These transactions were effected without
registration under the Securities Act in reliance on the exemption from
registration provided pursuant to Section 3(a)(9) or Section 4(2) and Regulation
D promulgated thereunder.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected financial data and should be read in
conjunction with the Company's financial statements and the related notes
thereto and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein. The selected balance sheet
data as of December 31, 1995 and 1994, and September 30, 1993 and 1994 and
statement of operations data for the year ended December 31, 1995, the three
months ended December 31, 1994 and the years ended September 30, 1993 and 1994
are derived from the Company's financial statements which have been audited by
Holtz Rubenstein & Co., LLP, Certified Public Accountants. The selected balance
sheet data as of December 31, 1996 and 1997 and statement of operations data for
the year ended December 31, 1996 and 1997 are derived from the Company's
financial statements which have been audited by KPMG Peat Marwick LLP,
Independent Certified Public Accountants. The historical financial results of
the Company are not comparable from period to period because of the acquisition
and sale of various broadcasting properties by the Company during the periods
covered.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
SEPTEMBER 30, DECEMBER 31, YEARS ENDED DECEMBER 31,
-------------------- --------------- ------------------------
1993 1994 1994(1) 1995(1)(2) 1996(3)(4)
--------- --------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Gross revenues............................................ $ 1,511 $ 2,267 $ 654 $ 5,655 $ 8,567
Net revenues.............................................. 1,383 2,074 604 5,225 7,944
Station operating expenses................................ 2,325 2,326 687 7,185 12,253
Corporate, general and administrative expenses............ -- -- -- 425 1,201
Employment incentives..................................... -- -- -- -- --
Depreciation and amortization............................. 622 524 113 798 1,388
Operating loss............................................ (1,563) (776) (196) (3,183) (6,898)
Gain on sale.............................................. -- -- -- -- (6,608)
Interest expense.......................................... 258 439 120 842 2,827
Income tax benefit........................................ -- -- -- -- --
Deferred income taxes resulting from conversion to C
corporation status...................................... -- -- -- -- --
Extraordinary loss on extinguishment of debt, net of
income taxes............................................ -- -- -- -- --
Net (loss)................................................ (1,807) (1,163) (298) (4,005) (3,098)
BASIC INCOME (LOSS) PER COMMON SHARE:..................... (0.30) (0.19) (0.05) (0.66) (0.39)
<CAPTION>
1997(5)
----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues............................................ $ 11,731
Net revenues.............................................. 10,460
Station operating expenses................................ 12,466
Corporate, general and administrative expenses............ 1,745
Employment incentives..................................... 3,863
Depreciation and amortization............................. 2,444
Operating loss............................................ (10,058)
Gain on sale.............................................. --
Interest expense.......................................... 4,348
Income tax benefit........................................ 1,050,000
Deferred income taxes resulting from conversion to C
corporation status...................................... (3,350,000)
Extraordinary loss on extinguishment of debt, net of
income taxes............................................ (313,000)
Net (loss)................................................ (16,918)
BASIC INCOME (LOSS) PER COMMON SHARE:..................... (1.77)
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
-------------------- ------------------------------------------
1993 1994 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash..................................................... $ 20 $ 56 $ -- $ 1,066 $ 234 $ 80
Intangibles, net......................................... 2,942 2,666 2,600 6,040 29,230 54,115
Total assets............................................. 4,037 4,044 3,863 9,433 38,963 60,108
Notes payable to stockholders............................ 4,923 6,028 6,219 13,477 12,544 --
Long-term debt, including current portion................ -- -- -- -- 28,200 30,100
Stockholder's equity (deficit)........................... (1,022) (2,185) (3,484) (5,821) (3,800) 25,032
</TABLE>
- ------------------------
(1) The financial statements for the 12 months ended December 31, 1995 include
three months (October, November and December 1994) of operations of Q
Broadcasting, Inc. that were included in the three months ended December 31,
1994 financial statements. Revenues and net income for the duplicate period
are $604,000 and $298,000, respectively.
(2) The Company acquired substantially all of the assets of WRGX-FM and WRKL-AM
effective December 31, 1994 and commenced operations on January 1, 1995. The
financial statements include the operations of these stations since January
1, 1995.
18
<PAGE>
(3) The Company acquired substantially all of the assets of the Los Angeles
Stations and KWIZ-FM on May 30, 1996 and commenced operations of these
stations under a LMA on March 26, 1996. The financial statements include the
operations of these stations from commencement of the LMA period. KWIZ-FM
was sold on December 20, 1996. No gain or loss was recognized on the sale of
KWIZ-FM.
(4) The Company acquired WSTC-AM and WKHL-FM during 1992. The financial
statements include the operations of these stations from their date of
acquisition to May 30, 1996, the date on which they were sold. For the year
ended December 31, 1996, the gain on sale of stations represents the gain on
sale of WSTC-AM and WKHL-FM.
(5) The Company acquired substantially all of the assets of WWHB-FM on April 1,
1997 and WZVU-FM on June 5, 1997 and commenced operations of these stations
under a LMA during December 1996. WWHB-FM and WZVU-FM together with WRGX-FM
form Y-107 NY. The financial statements include the operations of Y-107 NY
since December 1996.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following discussion should be read in conjunction with "Selected
Financial Data" and the other financial data appearing elsewhere in this report.
Certain information included herein contains statements that constitute
"forward-looking statements" containing certain risks and uncertainties. See
"Business-- Special Note Regarding Forward-Looking Statements."
GENERAL
The Company was incorporated in August 1994 and commenced operations on
January 1, 1995, having acquired WRGX-FM, Briarcliff Manor, New York, and
WRKL-AM, Pomona, New York (together, the "Original New York Stations"), on
December 31, 1994. On May 30, 1996 the Company merged with Q Broadcasting, Inc.
("Q") in a transaction accounted for as a combination of entities under common
control. As a result of this merger the two entities are deemed to be combined
since inception (see notes to the financial statements included elsewhere in
this report). Q owned and operated the Q stations in Stamford, Connecticut, from
July 1992 up to the date of the combination with the Company. The Company
reports on the basis of a December 31 year-end and Q reported on the basis of a
September 30 year-end. As a result, the December 31, 1996 and 1995 financial
statements reflect the operations of Q on the basis of the eight month period
ended May 30, 1996 (the date of sale of the Q stations) and the 12 months ended
September 30, 1995, respectively.
The Q stations were operated in one facility, with one sales and support
staff. Their financial performance is combined for purposes of the discussions
that follow. Y-107 LA, Y-107 NY, WRKL-AM, and the stand-alone operations of
WRGX-FM were operated with separate staffs and facilities, therefore their
performance is separately identified.
Between March 26, 1996 and May 30, 1996, when the stations were acquired,
the Company operated the Los Angeles Stations and KWIZ-FM under a LMA. On March
26, all of the existing operations of the Los Angeles Stations were terminated,
and the Company debuted Y-107 LA under a modern rock format with new staffing
and no existing advertiser base. Although commencing with no revenues, Y-107 LA
revenues had surpassed all other Company revenues combined by November 1996.
During the LMA period, station operating expenses include significant LMA fees
and other reimbursed expenses to the seller. KWIZ-FM was sold on December 20,
1996.
On December 5, 1996, the Company commenced operation of WWZY-FM (formerly,
WZVU-FM), Long Branch, New Jersey, under a LMA, changing its format to country
music. On that date, WWXY-FM (formerly, WRGX-FM), Briarcliff Manor, New York,
which the Company had operated as a stand-alone FM station since its acquisition
on January 1, 1995, changed format to broadcast Y-107 NY as a new country music
station with WWZY-FM. Furthermore, on December 30, 1996 the Company began
operating WWVY-FM (formerly, WWHB-FM), Hampton Bays, New York, under a LMA.
Since that date, the New York Stations have operated as Y-107 NY. Y-107 NY
retained certain advertisers and staff from all three of the previously
stand-alone stations. WWVY-FM and WWZY-FM were subsequently acquired on April 1,
1997 and June 5, 1997, respectively.
19
<PAGE>
On August 8, 1997 the Company acquired WVVX-FM, Highland Park, Illinois, and
WJDK-FM, Morris, Illinois. Since February 1998, the Chicago Stations have
operated as FM-103.1, broadcasting an adult contemporary format.
RESULTS OF OPERATIONS
The Company's financial results are dependent on a number of factors,
including the general strength of the local and national economies, local market
competition, the relative efficiency and effectiveness of radio broadcasting
compared to other advertising media, government regulation and policies and the
Company's ability to provide popular programming. The performance of a radio
station group is customarily measured by its ability to generate broadcast cash
flow, calculated as station operating income or loss excluding depreciation and
amortization and corporate overhead. This measure, although widely used in the
broadcast industry as a measure of operating performance, is not calculated in
accordance with generally accepted accounting principles. Broadcast cash flow
should not be considered in isolation or as a substitute for operating income,
net income, cash flows from operating activities, or any other measure for
determining the Company's operating performance or liquidity calculated in
accordance with generally accepted accounting principles.
The Company's primary source of revenue is the sale of advertising. Total
revenue is determined by the number of advertisements aired by the station and
the advertising rates that the stations are able to charge. See
"Business--Advertising Sales."
Given the fact that the Company's strategy involves developing a brand new
metropolitan area radio station, the initial revenue base is zero and subject to
factors other than ratings and radio broadcasting seasonality. After the
start-up period, as is typical in the radio broadcasting industry, the Company's
first calendar quarter generally will produce the lowest revenues for the year,
and the fourth quarter generally will produce the highest revenues for the year.
The Company's operating results in any period may be affected by the incurrence
of advertising and promotion expenses that do not produce commensurate revenues
in the period in which the expenses are incurred.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR END DECEMBER 31, 1996
NET REVENUES in the year ended December 31, 1997 were $10,460,000 as
compared to $7,944,000 for the year ended December 31, 1996, an increase of
$2,516,000, or 32%. This increase was due primarily to an increase of $4,647,000
in the net revenues of Y-107 LA compared to the prior year and an increase of
the Y-107 NY net revenues in the year ended December 31, 1997 of $1,120,000, or
67%, compared to the net revenues of the stand-alone WWXY-FM in 1996. These
increases in net revenues were partially offset by (a) the absence of net
revenues for the Q stations and KWIZ-FM in the year ended December 31, 1997
compared to $2,050,000 and $1,106,000 net revenues, respectively, for the year
ended December 31, 1996, and (b) the fact that WRKL-AM net revenues in the year
ended December 31, 1997 were down $249,000, or 16%, when compared to 1996. The
Y-107 LA increase was principally due to the fact that (a) the 1997 net revenues
include twelve months of Y-107 LA operations, whereas the 1996 net revenues
include only nine months of Y-107 LA operations, and (b) the 1996 period net
revenues were the first nine months of operation of the Los Angeles Stations
which was commenced with no existing business. The Y-107 NY increase reflects
growth resulting from the commencement of the initial broadcast of Y-107 NY in
January 1997.
STATION OPERATING expenses excluding depreciation and amortization in the
year ended December 31, 1997 were $12,466,000, as compared to $12,253,000 in the
year ended December 31, 1996, an increase of $213,000, or 2%. This increase was
due to the inclusion of the expenses of Y-107 LA and Y-107 NY offset by the
absence of operating expenses of the Q Stations. The increase in Y-107 LA
operating expenses reflects the fact that (a) the 1997 station operating
expenses represent twelve months of operations as compared to nine months
operations reported in 1996, and (b) the nine month operations in 1996 were the
20
<PAGE>
first nine months of operation of the station, reflecting incomplete staffing
and the absence of significant marketing initiatives, offset by the expense of
LMA fees and expenses of $593,000 incurred in 1996. The increase in the Y-107 NY
operating expenses when compared to the prior year operating expenses of the
stand-alone WWXY-FM were due to (a) $540,000 of non-recurring LMA fees and
expenses for WWZY-FM and WWVY-FM, (b) significantly increased advertising and
promotional expenditures incurred to launch Y-107 NY and (c) increased selling
and general and administrative expenses in developing the Y-107 NY
infrastructure.
DEPRECIATION AND AMORTIZATION EXPENSES for the year ended December 31, 1997
were $2,444,000, as compared to $1,388,000 for the prior year, an increase of
$1,056,000, or 76%. This increase was due primarily to the amortization of
intangibles and depreciation of capital assets related to the acquired stations.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES for the year ended December
31, 1997 were $1,745,000, as compared to $1,201,000 for the prior year, an
increase of $544,000, or 45%. This increase was primarily due to increases in
administrative staff to support the growth of the Company.
INTEREST EXPENSE for the year ended December 31, 1997 was $4,348,000 as
compared to $2,827,000 for the prior year, an increase of $1,521,000, or 54%.
This increase reflects borrowings under the Old Credit Facility made to fund the
Company's acquisitions, and (b) increased stockholders' loans throughout 1997
compared to 1996. In the years ended December 31, 1997 and 1996, the average
outstanding total debt for the Company was $56,898,000 and $37,026,000,
respectively. The average rate of interest on the outstanding debt was 7.6% and
7.6%, respectively.
NET LOSSES for the year ended December 31, 1997 were $16,918,000, as
compared to $3,098,000 for the prior year. The increase in the net loss of
$13,820,000 was primarily attributable to (a) 1996 period gain of $6,608,000 on
the sale of the Q stations, (b) higher interest expense and depreciation and
amortization expenses incurred as part of the radio station acquisitions of the
Company, (c) a charge of $3,863,000 in 1997 relating to awards under the
employment incentive arrangements, and (d) a one-time income tax charge of
$3,350,000 relating to the change in taxable status of the Company from an S
corporation to a C corporation, offset by the absence of the Q stations
operations in 1997 and improvement in the Y-107 LA performance.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET REVENUES in the year ended December 31, 1996 were $7,944,000 as compared
to $5,225,000 for the year ended December 31, 1995, an increase of $2,719,000,
or 52%. This increase was primarily due to (a) net revenues of $1,567,000 and
$1,106,000 from the Company's LMA operation and acquisition of the Los Angeles
Stations and KWIZ-FM, respectively, and (b) an increase in net revenues of
WRKL-AM of $320,000 for the year ended December 31, 1996 compared to the prior
year. This increase was partially offset by decreases in net revenues of the Q
stations of $237,000 due to their shorter period of operation and a small
decrease in net revenues of $36,000 at WRGX-FM.
STATION OPERATING EXPENSES excluding depreciation and amortization for the
year ended December 31, 1996 were $12,253,000, as compared to $7,185,000 in the
year ended December 31, 1995, an increase of $5,068,000, or 71%. This increase
was primarily due to (a) station operating expenses of $3,870,000 and $359,000
from the Company's LMA operation and acquisition of Y-107 LA and KWIZ-FM,
respectively, (b) an increase in WRKL-AM station operating expenses of $412,000
for the year ended December 31, 1996 compared to the prior year and (c) an
increase of $476,000 in the Q stations operating expenses. The 1996 Y-107 LA
operating costs of $3,870,000 include $593,000 of non-recurring LMA expenses
incurred during the two-month period ended May 30, 1996. The increased WRKL-AM
and Q stations operating costs in 1996 when compared to 1995 reflect significant
investments in sales, marketing, programming and administrative support to grow
the stations' ratings.
21
<PAGE>
DEPRECIATION AND AMORTIZATION EXPENSES for the year ended December 31, 1996
were $1,388,000, as compared to $798,000 for the year ended December 31, 1995,
an increase of $590,000, or 74%. This increase was due primarily to the
amortization of intangibles and the depreciation of capital assets acquired
related to the Y-107 LA and KWIZ-FM acquisitions.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES for the year ended December
31, 1996 were $1,201,000, as compared to $425,000 for the year ended December
31, 1995, an increase of $776,000, or 182%. This increase is due to the
establishment of a corporate staff during 1995 and early 1996 to support
implementation of the Company's business plan.
INTEREST EXPENSE for the year ended December 31, 1996 was $2,827,000, as
compared to $842,000 for the year ended December 31, 1995, an increase of
$1,985,000, or 236%. This increase reflects (a) the initial borrowings of $31
million under the Old Credit Facility made to fund, in part, the acquisition of
Y-107 LA and KWIZ-FM on May 30, 1996, and (b) increased stockholders' loans
throughout 1996 compared to 1995. In the year ended December 31, 1996 and 1995,
the average outstanding total debt for the Company was $37,026,000 and
$11,390,000, respectively. The average rate of interest on the outstanding debt
was 7.6% and 7.4%, respectively.
NET LOSSES for the year ended December 31, 1996 were $3,098,000, as compared
to $4,005,000 for the year ended December 31, 1995, a decrease of $907,000, or
23%. The net decrease is primarily attributable to the gain on the sale by the Q
stations of $6,608,000 and increased net revenue, offset by (a) higher interest
expense and depreciation and amortization expenses incurred as part of the radio
station acquisitions of the Company, and (b) an increase in station operating
expenses as the Company reconfigured and developed the Los Angeles Stations.
LIQUIDITY AND CAPITAL RESOURCES
The Company has reported net losses since inception primarily due to
broadcast cash flow deficits characteristic of the start up of Y-107 LA and
Y-107 NY, and depreciation and amortization charges relating to the Company's
acquisition of radio stations, as well as interest charges on its outstanding
debt. In addition, because its broadcast properties are in the early stages of
development, the Company expects to generate significant net losses as it
continues to expand its presence in major markets. Accordingly, the Company
expects to generate consolidated net losses for the foreseeable future. As a
result, working capital needs have been met by borrowings, including loans from
the Principal Stockholders (which borrowings were contributed to the capital of
the Company immediately prior to the consummation of the Initial Public
Offering) and borrowings under the Old Credit Facility. The Company has entered
into various employment contracts with thirteen individuals comprised of mainly
officers and senior management that provide for minimum salaries and incentives
based upon specified levels of performance. The minimum payments under these
contracts are $1,725,000 in 1998, $470,000 in 1999 and $300,000 in 2000.
The Company has never paid cash or stock dividends on shares of its common
stock. The Company will continue to report net losses throughout the start up
period for the Chicago Stations. Furthermore, it intends to retain future
earnings for use in its business and does not anticipate paying dividends on
shares of its Common Stock in the foreseeable future.
CASH FLOWS FROM OPERATING ACTIVITIES
In each of the years ended December 31, 1995, 1996 and 1997, the Company
reported cash used in operations. In the year ended December 31, 1996 these
negative cash flow were predominantly due to the funding of start-up operations
at Y-107 LA, together with an increase in interest expense in both periods, as
borrowings under the Old Credit Facility were used to fund the Y-107 LA radio
station acquisition. In the year ended December 31, 1997, the deficit was
predominantly due to the start-up operating losses of Y-107 NY and increased
interest expense for borrowings under the Old Credit Facility to finance the
Y-107 NY and Chicago radio station acquisitions.
22
<PAGE>
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (excluding acquisitions of radio stations) were
$333,000, $653,000 and $488,000 in the years ended December 31, 1995, 1996 and
1997, respectively. These expenditures primarily reflect costs associated with
the FCC Power Increases and other technical improvements at the Company's
stations, the upgrade and expansion of the studio and broadcast facilities,
computer support equipment, and the purchase of promotional vehicles for the
newly formed trimulcast stations. The Company has to date spent less than
$250,000 per station group for the upgrades and other technical improvements
associated with the implementation of its STMC-TM- concept for power increases
at such station groups.
CASH FLOWS FROM FINANCING ACTIVITIES
Under the terms of the Old Credit Facility, the Company had a $35.0 million
reducing revolving loan facility, of which amount Mr. Subotnick had guaranteed
the payment of up to $6.0 million. At December 31, 1997, the Company had $30.1
million outstanding under the Old Credit Facility. The amounts outstanding under
the Old Credit Facility were repaid with the proceeds of the Notes Offering on
March 17, 1998.
The Company completed a private placement of $174.0 million aggregate
principal amount of Notes on March 17, 1998, generating approximately $125.4
million of gross proceeds for the Company of which the Company used
approximately $32.8 million to repay outstanding indebtedness under its Old
Credit Facility. The Company intends to use the remaining proceeds of the Notes
Offering to finance the acquisition costs of radio station properties and for
general working capital purposes.
The Notes were issued at an original issue discount and will accrete in
value until March 15, 2001 at a rate of 11 1/4% per annum, compounded
semi-annually to an aggregate principal amount of $174.0 million. Cash interest
will not accrue on the Notes prior to March 15, 2001. Thereafter, interest on
the Notes will accrue at a rate of 11 1/4% per annum and will be payable in cash
semi-annually, commencing September 15, 2001. The Notes will mature on March 15,
2005 but may be redeemed after March 15, 2001 at the option of the Company, in
whole or in part at a redemption price of 105.625%, 102.813% or 100.000% if
redeemed during the 12-month period commencing on March 15 of 2002, 2003 and on
and after 2004, respectively. In addition, up to 33 1/3% of the original
principal amount of the Notes may be redeemed at the option of the Company prior
to March 15, 2001 at a redemption price equal to 111.25% of the accreted value
of the Notes with net cash proceeds of one or more equity offerings of the
Company so long as there is a public market for the Class A Common Stock at the
time of such redemption and provided that at least 66 2/3% of the original
principal amount of the Notes remains outstanding.
Holders of the Notes have the right to require the Company to repurchase
their Notes upon a "change of control" of the Company, at a price equal to 101%
of the accreted value of the Notes if such repurchase occurs prior to March 15,
2001 or of the principal amount of such Notes if such repurchase occurs
thereafter. A "change of control" for purposes of the Notes is deemed to occur
(i) when any person other than the Principal Stockholders, the management and
their affiliates (the "Permitted Holders"), becomes the owner of more than 35%
of the total voting power of the Company's stock and the Permitted Holders own
in the aggregate a lesser percentage of such voting power and do not have the
right or ability to elect a majority of the Board of Directors, (ii) when the
Board of Directors does not consist of a majority of continuing directors, (iii)
upon the occurrence of a sale or transfer of all or substantially all of the
assets of the Company taken as a whole, or (iv) upon the adoption by the
stockholders of a plan for the liquidation or dissolution of the Company.
Payments under the Notes are guaranteed on a senior unsecured basis by the
Company's restricted subsidiaries. The Notes contain certain financial and
operational covenants and other restrictions with which the Company and its
restricted subsidiaries must comply, including restrictions on the incurrence of
additional indebtedness, investments, payment of dividends on and redemption of
capital stock and the redemption of certain subordinated obligations, sales of
assets and the use of proceeds therefrom,
23
<PAGE>
transactions with affiliates, creation and existence of liens, the types of
businesses in which the Company may operate, asset swaps, distributions from
restricted subsidiaries, sales of capital stock of restricted subsidiaries and
consolidations, mergers and transfers of all or substantially all of the
Company's assets. The Company is currently in compliance with all covenants and
other restrictions under the Notes and anticipates that it will continue to meet
the requirements of the Notes.
The Notes contain customary events of default including payment defaults and
default in the performance of other covenants, certain bankruptcy defaults,
judgment and cross defaults, and failure of a subsidiary guarantee to be in full
force and effect.
In connection with the consummation of the Notes Offering, the Company
entered into the Revolving Credit Facility with The Chase Manhattan Bank
("Chase") providing for up to $15.0 million of availability, based upon a
multiple of the Company's Los Angeles Stations' cash flow. The Revolving Credit
Facility will mature on the fifth anniversary of the Issue Date and amounts
outstanding under the Revolving Credit Facility will bear interest at an
applicable margin plus, at the Company's option, Chase's prime rate (in which
case the applicable margin will initially be 2.00% subject to reduction upon
obtaining performance criteria based on the Company's leverage ratio) or the
London Interbank Borrowing Rate (in which case the applicable margin will
initially be 3.00% subject to reduction upon obtaining performance criteria
based on the Company's leverage ratio). The Company's obligations under the
Revolving Credit Facility are secured by a pledge of substantially all of the
Company's and its restricted subsidiaries' assets. The Company will pay fees of
0.5 percent per annum, on the aggregate unused portion of the facility.
The Revolving Credit Facility contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on capital expenditures, the incurrence of additional
indebtedness, restrictions on sales of assets, restrictions on the use of
borrowings, limitations on paying cash dividends and redeeming or repurchasing
capital stock of the Company or the Notes, and requirements to maintain certain
minimum interest coverage ratios. The Company is currently in material
compliance with all covenants and other restrictions under the Revolving Credit
Facility and anticipates that it will continue to meet the requirements of the
Revolving Credit Facility.
The Revolving Credit Facility contains customary events of default,
including material misrepresentations, payment defaults and default in the
performance of other covenants, certain bankruptcy and ERISA defaults, judgment
and cross defaults, revocation of any of the Company's broadcast licenses and
change in control. The Revolving Credit Facility also provides that an event of
default will occur upon the occurrence of a "change of control" as defined in
the Revolving Credit Facility. For purposes of the Revolving Credit Facility, a
change of control will occur when (i) any person or group other than the
Principal Stockholders and their affiliates obtains the power to elect a
majority of the Board of Directors, (ii) the Company fails to own 100% of the
capital stock of its subsidiaries owning any of the FCC broadcast licenses, or
when (iii) the Board of Directors does not consist of a majority of continuing
directors.
The Company is actively reviewing potential STMC-TM-, and other station
acquisition candidates. As of the date of this report, the Company has no
binding commitments for any such acquisitions. See "Business--Acquisitions."
After giving effect to the Notes Offering and application of the net proceeds
therefrom, the Company has available approximately $88.5 million of cash on hand
and up to $15.0 million of borrowing capacity under the Revolving Credit
Facility, which can be used for working capital purposes, including financing
these acquisitions. Cash on hand and amounts available under the Revolving
Credit Facility may not be sufficient to support the Company's growth strategy
and as a result the Company may require additional debt or equity financing in
order to acquire additional radio stations and accomplish its long-term business
strategies. There can be no assurance that any such financing will be available
or available on acceptable terms. In addition, because of the Company's
substantial indebtedness, a significant portion of the Company's broadcast cash
flow will be required for debt service.
24
<PAGE>
The Company anticipates that the net proceeds of the Notes Offering, its
available borrowing capacity and its broadcast cash flow from operations will be
sufficient to finance its capital expenditure programs, as well as existing
operational and debt service requirements, through December 31, 1998. Management
believes that its long term liquidity needs will be satisfied through a
combination of (i) the Company's successful implementation and execution of its
growth strategy to acquire and build a major market broadcast group; and (ii)
the Company's properties achieving positive operating results and cash flows
through revenue growth and control of operating expenses. If the Company is
unable successfully to implement its strategy, the Company may be required to
obtain additional financing through public or private sale of debt or equity
securities of the Company or otherwise restructure its capitalization.
YEAR 2000
Some of the Company's older computer programs were written using two digits
rather than four to define the application year. As a result, those computer
programs each have time-sensitive softwares that recognize a date using "00" as
the year 1900 rather than the year 2000. This could cause system failure or
miscalculations causing disruptions of operations, including, among other
things, temporary inability to process transactions, send invoices, or engage in
similar normal business activities.
The Company has completed the review of its systems and has initiated formal
communications with all of its significant suppliers and large customers to
determine the extent to which the Company's interface systems are vulnerable to
those third parties' failure to remedy their own year 2000 issues. All of the
systems tested and a majority of the third parties reviewed to date are year
2000 compliant. Year 2000 costs are not expected to have a material impact on
the Company's ongoing results of operations. There is no guarantee that the
systems of other companies on which the Company's systems rely will be timely
converted and would not have an adverse effect on the Company's systems.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BIG CITY RADIO, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
BIG CITY RADIO, INC.
Report of KPMG Peat Marwick LLP, Independent Auditors...................................................... 27
Report of Holtz Rubenstein & Co., LLP, Independent Auditors................................................ 28
Balance Sheets as of December 31, 1996 and 1997............................................................ 29
Statements of Operations for the years ended December 31, 1995, 1996 and 1997.............................. 30
Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997.............................. 31
Statement of Stockholders' Deficit......................................................................... 32
Notes to Financial Statements.............................................................................. 33
</TABLE>
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Big City Radio, Inc.:
We have audited the accompanying consolidated balance sheets of Big City
Radio, Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the years then ended. In connection with our audits of the consolidated
financial statements, we also have audited Schedule II, Combined Financial
Statement Schedules Valuation and Qualifying Accounts for the years ended
December 31, 1997 and 1996. These consolidated financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Big City
Radio, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Los Angeles, California
March 20, 1998
27
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Big City Radio, Inc.:
We have audited the accompanying statements of operations, stockholders'
deficit and cash flows for the year ended December 31, 1995 of Big City Radio,
Inc. (formerly Odyssey Communications, Inc.) These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Big City
Radio, Inc. for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
Melville, New York
September 19, 1997
- -------------------
Holtz Rubenstein & Co., LLP
Certified Public Accountants
28
<PAGE>
BIG CITY RADIO, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................. $ 234,000 80,000
Cash held in escrow (note 3)..................................................... 500,000 --
Accounts receivable, net of allowance of $212,000 and $213,000 in 1996 and 1997,
respectively................................................................... 1,537,000 2,325,000
Prepaid expenses and other current assets........................................ 42,000 252,000
------------- -------------
Total current assets....................................................... 2,313,000 2,657,000
Property and equipment, net (note 4)............................................... 1,477,000 2,679,000
Intangibles, net (note 5).......................................................... 29,230,000 54,115,000
Deferred financing fees............................................................ 473,000 612,000
Other assets....................................................................... 36,000 45,000
Advance to purchase stations (note3)............................................... 5,434,000 --
------------- -------------
Total assets............................................................... $ 38,963,000 60,108,000
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................................... $ 830,000 1,125,000
Accrued expenses............................................................... 454,000 1,383,000
Other current liabilities...................................................... 735,000 368,000
------------- -------------
Total current liabilities.................................................. 2,019,000 2,876,000
------------- -------------
Notes payable:
Long-term debt (note 6)........................................................ 28,200,000 30,100,000
Notes payable, stockholders (note 7)........................................... 12,544,000 --
Deferred income tax liabilities (notes 2 and 10)................................... -- 2,100,000
Stockholders' deficit:
Preferred stock, $.01 par value.Authorized 20,000,000 shares in 1997; zero
shares issued and outstanding................................................ -- --
Common stock, Class A, $.01 par value.Authorized 2,000 shares and 80,000,000
shares in 1996 and 1997, respectively; issued and outstanding 9,375,520
shares and 5,725,062 shares in 1996 and 1997, respectively................... 94,000 57,000
Common stock, Class B, $.01 par value.Authorized 20,000,000 shares in 1997;
issued and outstanding 8,250,458 shares...................................... -- 83,000
Additional paid-in capital..................................................... 6,395,000 27,024,000
Deficit........................................................................ (10,289,000) (2,132,000)
------------- -------------
(3,800,000) 25,032,000
------------- -------------
Total liabilities and stockholders' deficit................................ $ 38,963,000 60,108,000
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
BIG CITY RADIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------ -------------
<S> <C> <C> <C>
Gross revenues........................................................ $ 5,655,000 8,567,000 11,731,000
Less commissions and fees........................................... 430,000 623,000 1,271,000
------------- ------------ -------------
Net revenues.................................................... 5,225,000 7,944,000 10,460,000
------------- ------------ -------------
Operating expenses:
Station operating expenses, excluding depreciation and
amortization...................................................... 7,185,000 12,253,000 12,466,000
Corporate, general and administrative expenses...................... 425,000 1,201,000 1,745,000
Employment stock incentives......................................... -- -- 3,863,000
Depreciation and amortization....................................... 798,000 1,388,000 2,444,000
------------- ------------ -------------
Total operating expenses........................................ 8,408,000 14,842,000 20,518,000
------------- ------------ -------------
Operating loss.................................................. (3,183,000) (6,898,000) (10,058,000)
------------- ------------ -------------
Other income (expenses):
Gain on sale of stations............................................ -- 6,608,000 --
Interest expense, net............................................... (842,000) (2,827,000) (4,348,000)
Other, net.......................................................... 20,000 19,000 101,000
------------- ------------ -------------
Total other income (expenses)................................... (822,000) 3,800,000 (4,247,000)
------------- ------------ -------------
Loss before provision for income taxes, reinstatement of
deferred income taxes relating to conversion to C Corporation
status and extraordinary loss................................. (4,005,000) (3,098,000) (14,305,000)
Income tax benefit (notes 2 and 10)................................... -- -- 1,050,000
Deferred income taxes resulting from conversion to C Corporation
status (note 2)..................................................... -- -- (3,350,000)
------------- ------------ -------------
Loss before extraordinary loss.................................. (4,005,000) (3,098,000) (16,605,000)
Extraordinary loss on extinguishment of debt, net of income taxes
(note 6).............................................................. -- -- (313,000)
------------- ------------ -------------
Net loss........................................................ $ (4,005,000) (3,098,000) (16,918,000)
------------- ------------ -------------
------------- ------------ -------------
Basic and diluted loss per share:
Loss before extraordinary item...................................... $ (0.66) (0.39) (1.74)
Extraordinary item.................................................. -- -- (0.03)
------------- ------------ -------------
Net loss........................................................ $ (0.66) (0.39) (1.77)
------------- ------------ -------------
------------- ------------ -------------
Weighted average shares outstanding................................... 6,088,000 8,024,000 9,539,000
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
BIG CITY RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................................... $ (4,005,000) (3,098,000) (16,918,000)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization.................................... 798,000 1,388,000 2,444,000
Deferred income taxes............................................ -- -- 2,100,000
Loss on abandonment.............................................. 150,000 -- --
Contributed services............................................. 20,000 -- --
Gain on sale of stations......................................... -- (6,608,000) --
Employment stock incentives...................................... -- -- 3,863,000
Extraordinary loss on extinguishment of debt..................... -- -- 513,000
Changes in operating assets and liabilities, net of acquisitions:
(Increase) decrease in assets:
Accounts receivable.......................................... (429,000) (456,000) (788,000)
Prepaid expenses and other current assets.................... (18,000) 30,000 (210,000)
Other assets................................................. (33,000) 54,000 (9,000)
Increase (decrease) in liabilities:
Accounts payable............................................. 302,000 458,000 295,000
Accrued expenses............................................. 257,000 84,000 929,000
Other liabilities............................................ 16,000 700,000 (367,000)
------------- ------------- -------------
Net cash used in operating activities...................... (2,942,000) (7,448,000) (8,148,000)
------------- ------------- -------------
Cash flows from investing activities:
Purchase of property and equipment................................. (333,000) (653,000) (488,000)
Cash paid and advanced for assets of radio stations acquired....... (3,550,000) (38,173,000) (21,967,000)
Cash received for radio stations sold.............................. -- 20,025,000 --
Net advances to purchase stations.................................. -- (5,434,000) --
------------- ------------- -------------
Net cash used in investing activities...................... (3,883,000) (24,235,000) (22,455,000)
------------- ------------- -------------
Cash flows from financing activities:
Loans from stockholders............................................ 7,522,000 4,186,000 801,000
Drawdown on credit facility, net of fees paid of $535,000 and
$793,000 in 1996 and 1997, respectively.......................... -- 38,865,000 30,007,000
Repayment of existing credit facility.............................. -- (11,200,000) (28,900,000)
Repayment of note payable.......................................... -- (1,000,000) --
Proceeds from initial public offering.............................. -- -- 28,541,000
Capital contributions.............................................. 350,000 -- --
Other.............................................................. (93,000) -- --
------------- ------------- -------------
Net cash provided by financing activities.................. 7,779,000 30,851,000 30,449,000
------------- ------------- -------------
Change in cash and cash equivalents........................ 954,000 (832,000) (154,000)
Cash and cash equivalents at beginning of year....................... 56,000 1,066,000 234,000
Adjustment for duplicate three-month period.......................... 56,000 -- --
------------- ------------- -------------
Cash and cash equivalents at end of year............................. $ 1,066,000 234,000 80,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE>
BIG CITY RADIO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994........... -- $ -- 1,000,000 (3,484,000) (2,484,000)
Capital contribution................... 6,088,000 61,000 309,000 -- 370,000
Net loss............................... -- -- -- (4,005,000) (4,005,000)
Adjustment for change in fiscal
year-end (note 2).................... -- -- -- 298,000 298,000
------------ ------------- ------------- ------------- -------------
Balance at December 31, 1995........... 6,088,000 61,000 1,309,000 (7,191,000) (5,821,000)
Contribution of stockholders' loans to
equity (note 3)...................... 3,287,520 33,000 5,086,000 -- 5,119,000
Net loss............................... -- -- -- (3,098,000) (3,098,000)
------------ ------------- ------------- ------------- -------------
Balance at December 31, 1996........... 9,375,520 94,000 6,395,000 (10,289,000) (3,800,000)
Capital contribution related to
employment incentive................. -- -- 3,713,000 -- 3,713,000
Net loss in the period January 1, 1997
to the date of the change in tax
status, October 1, 1997.............. -- -- -- (11,435,000) (11,435,000)
Reinstatement of deferred income taxes
relating to conversion to C
Corporation status (note 2).......... -- -- -- (3,350,000) (3,350,000)
Reclassification of accumulated deficit
to paid-in capital in connection with
the termination of S Corporation
status............................... -- -- (25,074,000) 25,074,000 --
Stock option awards.................... -- -- 150,000 -- 150,000
Equity contribution and
reclassification (note 11)........... -- -- 13,345,000 -- 13,345,000
Initial public offering................ 4,600,000 46,000 28,495,000 -- 28,541,000
Net loss in the period following
conversion to C Corporation.......... -- -- -- (2,132,000) (2,132,000)
------------ ------------- ------------- ------------- -------------
Balance at December 31, 1997........... 13,975,520 $ 140,000 27,024,000 (2,132,000) 25,032,000
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
32
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
(1) ORGANIZATION AND BUSINESS
Big City Radio, Inc. (formerly Odyssey Communications, Inc.) ("Big City
Radio") was incorporated in Delaware on August 2, 1994 and commenced operations
on January 1, 1995. On May 30, 1996, Big City Radio merged with Q Broadcasting,
Inc. ("Q", and together with Big City Radio, the "Company") with Big City Radio
being the surviving company. Big City Radio and Q were owned 94% and 100% by
Stuart and Anita Subotnick (the "Principal Stockholders"). Accordingly, the
merger has been accounted for as a combination of entities under common control.
As a result, the combination of Big City Radio and Q was effected utilizing
historical costs. At the date of conversion from S Corporation to C Corporation
(see note 2), the Company formed five wholly owned subsidiaries, Big City Radio
- -- LA, LLC; Big City Radio -- NYC, LLC; Big City Radio -- CHI, LLC; WRKL
Rockland Radio, LLC; and Odyssey Traveling Billboards, Inc.
The Company owns and operates radio broadcasting stations. As of December
31, 1997, the Company owned three FM stations in Southern California, KLYY-FM
Arcadia, KVYY-FM Ventura and KSYY-FM Fallbrook (programmed as "Y-107 LA"). In
the New York area, the Company owns four radio properties, WWXY-FM Westchester
County, New York and WRKL-AM Rockland, New York (the "Original New York
Stations") and WWZY-FM Monmouth, New Jersey and WWVY-FM Hampton Bays, New York.
WWXY-FM, WWZY-FM and WWVY-FM are programmed as "New Country Y-107." In the
Chicago area, the Company owns two radio properties, WXXY-FM Highland Park,
Illinois and WYXX-FM Morris, Illinois (programmed as "FM 103.1").
Since inception, the Company has not generated significant revenue, has
incurred substantial losses and has never generated positive cash flows from
operations. The Company's recent purchases and reformatting of radio stations in
its markets are currently contributing to the Company's losses. The Company
believes that losses will continue while the Company pursues its strategy of
acquiring and developing radio stations. In March 1998, the Company successfully
completed the offering of 11.25% Senior Discount Notes (the "Note Offering" see
note 12). The net proceeds of approximately $125,400,000 from this offering were
used to repay approximately $32,800,000 of the Credit Facility (see note 6).
Simultaneously with the completion of the Note Offering, the Company obtained a
revolving credit facility in the amount of $15 million (see note 12). The
Company believes the proceeds from the Note Offering, together with the
available revolving credit facility, will be sufficient to permit it to acquire,
develop and operate new and existing properties through at least December 31,
1998.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
In connection with the merger discussed in note 1, Big City Radio and Q are
deemed to be combined since inception for financial reporting purposes. Big City
Radio reports on the basis of a December 31 year-end and Q reported on the basis
of a September 30 year-end. As a result, the December 31, 1995 and 1996
financial statements include the operations of Q on the basis of an eight-month
period ended May 30, 1996 (the date of sale of the Q Stations) and twelve-month
period ended September 30, 1995, respectively. Reported periods prior to January
1, 1995, the commencement of Big City Radio operations, reflected the operations
of Q on the basis of a September 30 year-end. The Company previously reported
Q's operations for the period October 1, 1994 to December 31, 1994 to transition
from a September 30 to a December 31 year-end. As a result, the financial
statements for the twelve months ended December 31, 1995 include the three
months of Q (October, November and December 1994) that were included in the
three-month transition period ended December 31, 1994. The net revenues and net
loss for the three-month duplicate
33
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
period are $604,000 and $298,000, respectively. The December 31, 1995
accumulated deficit has been adjusted to eliminate the duplication of the
October, November and December 1994 net losses.
The accompanying consolidated financial statements include the accounts of
Big City Radio, Inc. and all its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is calculated on the
straight-line method over the estimated useful lives of the assets ranging from
5 to 7 years for transmission equipment, vehicles and furniture and office
equipment to 39 years for buildings.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value, less costs to
sell.
INTANGIBLE ASSETS
Intangible assets include the portion of the purchase price allocable to FCC
broadcast licenses, which are amortized over 40 years. Covenants not to compete,
signed as part of station acquisition agreements, are amortized over the period
of the agreements, generally 3 years. Organization costs are amortized over 5
years.
It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair market value. As part of an ongoing review of the
valuation and amortization of intangible assets, management assesses the
carrying value of the Company's intangible assets if facts and circumstances
suggest that they are impaired. If this review indicates that the intangibles
will not be recoverable as determined by a nondiscounted cash flow analysis over
the remaining amortization period, the carrying value of the Company's
intangibles will be reduced to their estimated realizable value. The Company has
determined that intangibles are fairly stated at December 31, 1997.
DEFERRED FINANCING FEES
Deferred finance costs and loan origination fees incurred in connection with
the long-term debt and Senior Discount Notes (see notes 6 and 12) are and will
be amortized over the period of the relevant facility.
REVENUE RECOGNITION
Broadcasting revenue is recognized when commercials are aired. Net revenues
represent gross revenues, less direct fees and commissions paid to independent
advertising agencies.
INCOME TAXES
The Company previously elected to be treated as an S Corporation for federal
and certain state income tax purposes. As an S Corporation, the earnings and
losses of the Company were reported by the individual stockholders and the
Company was not responsible for federal or certain state income taxes.
34
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company terminated its S Corporation election effective October 1, 1997.
Accordingly, no provision for income taxes is included in the accompanying
consolidated financial statements for the years ended December 31, 1995 and
1996. The year ended December 31, 1997 reflects a provision for income taxes
comprised of a charge of $3,350,000 relating to the reinstatement of deferred
income taxes resulting from the conversion to C Corporation status and a
deferred tax benefit of $1,050,000 for the period from October 1, 1997 to
December 31, 1997.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating the fair value
disclosures for financial instruments:
The carrying amounts reported in the balance sheets for cash, current
receivables, accounts payable and accrued expenses approximate fair value.
The carrying value of the long-term debt approximates fair value because it
is a floating rate instrument.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentration
of credit risk consist primarily of accounts receivable. The Company believes
that concentration of credit risk with respect to accounts receivable, which are
unsecured, are limited due to the Company's ongoing relationship with its
clients. The Company provides for its estimate of uncollectible accounts on a
periodic basis. The Company has not experienced significant losses relating to
accounts receivable. For periods ended December 31, 1995, 1996 and 1997, no
customer accounted for more than 10% of revenues.
BARTER TRANSACTIONS
The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An asset and a
liability are recorded at the fair market value of the goods or services
received. Barter revenue is recorded and the liability is relieved when the
commercials are broadcast, and barter expense is recorded and the assets are
relieved when the goods or services are received or used.
ADVERTISING
The Company charges advertising costs, as incurred, to expense. Advertising
costs amounted to $320,000, $550,000 and $1,275,000 for the years ended December
31, 1995, 1996 and 1997, respectively.
EARNINGS PER SHARE
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," is effective for financial statements issued for periods ending after
December 15, 1997. SFAS No. 128 replaces Accounting
35
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles Board Opinion (APB) No. 15 and simplifies the computation of earnings
per share (EPS) by replacing the presentation of primary EPS with a presentation
of basic EPS. Basic EPS includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from
securities that could share in the earnings of the Company, similar to fully
diluted EPS under APB No. 15. The statement requires dual presentation of basic
and diluted EPS by entities with complex capital structures. The Company adopted
SFAS No. 128 for the financial statements ended December 31, 1997. Stock options
issued under the Company's 1997 Incentive Stock Plan amounting to 572,500 at
December 31, 1997 were not included in the computation of diluted EPS because to
do so would have been antidilutive.
ACCOUNTING FOR STOCK OPTIONS
Prior to January 1, 1996, the Company accounted for its stock option grants
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 allows
entities to continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and disclosure for employee stock option grants made in
1995, 1996 and future years as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions
of SFAS No. 123. Accordingly, the adoption of SFAS No. 123 did not have a
material effect on the consolidated financial statements of the Company.
REPORTING COMPREHENSIVE INCOME
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, which establishes standards for reporting and
disclosure of comprehensive income, is effective for interim and annual periods
beginning after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 130. As this statement only
requires additional disclosures in that Company's consolidated financial
statements, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 130 effective January 1, 1998.
(3) ACQUISITIONS AND DISPOSITIONS
On August 8, 1997, the Company acquired substantially all of the assets of
WXXY-FM Chicago for a purchase price of $9,500,000 and WYXX-FM Chicago for a
purchase price of $1,100,000. The fair value of the WXXY-FM and WYXX-FM assets
acquired is as follows:
<TABLE>
<CAPTION>
WXXY-FM WYXX-FM
------------ -----------
<S> <C> <C>
Fixed assets, including land........................................ $ 119,000 154,000
FCC broadcast license............................................... 9,381,000 946,000
</TABLE>
The fair value of the fixed assets and land acquired is determined by
reference to replacement value on an individual-asset basis and comparable
property, respectively. The remaining purchase price is assigned to the FCC
license.
36
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
On June 5, 1997, the Company acquired substantially all of the assets of
WWZY-FM Monmouth, New Jersey, for a purchase price of $12,000,000. At that date,
the seller's loan payable to the Company in the amount of $5,434,000 plus
accrued interest of $103,000 was paid in full. This loan payable originated on
the date the Company entered into an agreement to acquire WWZY-FM, November 7,
1996. The loan bore interest at prime rate plus 2% and was collateralized by
substantially all the assets of the seller. The Company managed the operations
of WWZY-FM for a fee from December 5, 1996 up to the effective acquisition date
under a local marketing agreement ("LMA"). Revenue, programming expenses and
other reimbursable expenses pursuant to the LMA have been included in the
accompanying consolidated financial statements as have LMA fees of approximately
$100,000 and $375,000 for the years ended December 31, 1996 and 1997,
respectively. The fair value of WWZY-FM assets acquired, exclusive of
acquisition costs, is as follows:
<TABLE>
<S> <C>
Fixed assets................................................... $ 833,000
FCC broadcast license.......................................... 11,157,000
Covenant not to compete........................................ 10,000
</TABLE>
The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of the covenant
not to compete is determined by reference to the covenant agreement, and the
remaining purchase price is assigned to the FCC license.
LMA fees are reflected in the accompanying consolidated financial statements
as station operating expenses.
On April 1, 1997, the Company acquired substantially all the assets of
WWVY-FM Hampton Bays, New York, for a purchase price of $4,000,000. The Company
managed the operations of WWVY-FM for a fee from December 31, 1996 up to the
effective acquisition date under an LMA. Revenue, programming expenses and other
reimbursable expenses pursuant to the LMA have been included in the accompanying
consolidated financial statements as have LMA fees of $165,000 for the year
ended December 31, 1997. Management's estimate of the fair value of WWVY-FM
assets acquired, exclusive of acquisition costs, subject to further review and
appraisal, is as follows:
<TABLE>
<S> <C>
Fixed assets.................................................... $ 55,000
FCC broadcast license........................................... 3,795,000
Consulting agreement............................................ 150,000
</TABLE>
The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of the consulting
agreement is determined by reference to the agreement, and the remaining
purchase price is assigned to the FCC license.
LMA fees are reflected in the accompanying consolidated financial statements
as station operating expenses.
On May 30, 1996, the Company acquired substantially all of the assets of
KLYY-FM, Arcadia, KVYY-FM, Ventura, KSYY-FM, Fallbrook (the "Los Angeles
Stations") and KWIZ-FM, Santa Ana, in a simultaneous purchase and multiparty,
tax-free exchange through the use of a third party serving as a "qualified
intermediary." The aggregate purchase price of the four stations was
approximately $38,000,000. The acquisitions were recorded using the purchase
method of accounting. In connection with the acquisition of the Los Angeles
Stations and KWIZ-FM, the Company borrowed $31,000,000 under the Existing Credit
Facility (see note 6). On December 20, 1996, the Company completed the sale of
KWIZ-
37
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
FM, Santa Ana, California, for a sale price of $11,200,000 and simultaneously
paid down the Existing Credit Facility in the same amount. No gain or loss was
recorded in connection with the sale of KWIZ-FM.
Immediately before the simultaneous purchase and multiparty tax-free
exchange, Q was merged into Big City Radio (see note 1). Two Connecticut radio
stations (WSTC-AM and WKHL-FM), which comprised the sole operating assets of Q
(the "Q stations") were transferred to the acquirer of the Q stations for
$9,500,000, of which $500,000 was held in escrow until May 31, 1997.
Substantially all of the cash received from such acquirer plus cash provided by
Big City Radio was transferred by the "qualified intermediary" to the third
party disposing of the Los Angeles Stations in connection with the tax-free
exchange of the Q stations for the Los Angeles Stations and the purchase of the
assets of KWIZ-FM. For financial reporting purposes, the Company accounted for
the transfer of the Q stations as a sale and recorded a gain of $6,608,000. In
connection with the merger of Q and Big City Radio, the stockholders contributed
$5,119,000 of loans payable by the Company to equity and received 3,287,520
additional shares of Common Stock.
The Company managed the operations of the Los Angeles Stations and KWIZ-FM
for a fee from March 26, 1996 up to the effective acquisition date under the
LMA. Revenue, programming expenses and other reimbursable expenses pursuant to
the LMA, including rent and utilities, have been included in the accompanying
consolidated financial statements from March 26, 1996 as have LMA fees of
approximately $593,000. The acquisitions were recorded using the purchase method
of accounting. The fair value of the Los Angeles Stations' assets acquired,
exclusive of acquisition costs, is as follows:
<TABLE>
<S> <C>
Fixed assets................................................... $ 437,000
FCC broadcast licenses......................................... 26,085,000
Covenant not to compete........................................ 68,000
</TABLE>
The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of covenants not
to compete is determined by reference to the covenant agreement, and the
remaining purchase price is assigned to the FCC licenses.
LMA fees are reflected in the accompanying consolidated statements of
operations as station operating expenses.
Effective December 31, 1994, the Company acquired substantially all the
assets of WWXY-FM and WRKL-AM. The aggregate purchase price totaled $4,550,000,
consisting of cash of $3,550,000 and a note payable to the seller of $1,000,000
(which was repaid in 1996). The acquisitions were recorded using the purchase
method of accounting. The accompanying consolidated financial statements include
the results of operations from January 1, 1995. The allocation of purchase price
to the assets acquired is as follows:
<TABLE>
<S> <C>
Fixed assets.................................................... $ 250,000
Land and building............................................... 250,000
FCC broadcast licenses.......................................... 3,300,000
Leasehold and tower............................................. 150,000
Covenant not to compete......................................... 600,000
</TABLE>
The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of covenants not
to compete is determined by reference to the covenant agreement, and the
remaining purchase price is assigned to the FCC licenses.
38
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
The acquisitions were recorded using the purchase method of accounting. The
results of operations of the acquired businesses are included in the Company's
consolidated financial statements since the respective dates of acquisition.
The following unaudited pro forma results of operations illustrate the
effect of the acquisition of WWZY-FM and WXXY-FM and assumes that the
acquisitions occurred at the beginning of each of the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
<S> <C> <C>
1996 1997
------------- -------------
Net revenues.................................................... $ 12,007,000 11,495,000
Income (loss) from continuing operations........................ (4,778,000) (18,700,000)
Pro forma loss per share........................................ (.51) (1.96)
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ----------
<S> <C> <C>
Land............................................................... $ 50,000 377,000
Building and improvements.......................................... 236,000 561,000
Transmitter equipment.............................................. 1,152,000 1,925,000
Furniture and office equipment..................................... 260,000 422,000
Vehicles........................................................... 163,000 219,000
------------ ----------
1,861,000 3,504,000
Less accumulated depreciation...................................... 384,000 825,000
------------ ----------
$ 1,477,000 2,679,000
------------ ----------
------------ ----------
</TABLE>
Subsequent to December 31, 1995, the Company relocated its WWXY-FM tower,
resulting in a write-off of its initial acquisition cost allocated to the tower
of $150,000. This amount is included in other expenses, net, in the 1995
consolidated statement of operations.
(5) INTANGIBLES
Intangibles at December 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
------------- ------------
<S> <C> <C>
FCC broadcast licenses........................................... $ 29,528,000 55,788,000
Covenants not to compete......................................... 668,000 678,000
------------- ------------
30,196,000 56,466,000
Less accumulated amortization.................................... 966,000 2,351,000
------------- ------------
$ 29,230,000 54,115,000
------------- ------------
------------- ------------
</TABLE>
39
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(6) LONG-TERM DEBT
On May 30, 1996, the Company entered into a credit agreement (the Old Credit
Facility) with The Chase Manhattan Bank. The Old Credit Facility provided
revolving credit commitments in the form of loans and/or letters of credit in an
aggregate principal amount of $40 million. A significant portion of the debt was
guaranteed by a Principal Stockholder. This facility was subsequently amended in
November 1996, May 1997 and August 1997 to primarily change the available
borrowings.
On December 24, 1997, following the initial public offering of the Company's
stock, the Old Credit Facility was substantially amended to comprise a new $35
million reducing revolving facility (Credit Facility). Outstanding amounts under
the Credit Facility bear interest at a rate based, at the option of the Company,
on the participating bank's prime rate, plus 1.5% to 2.0% or the London
Inter-Bank Borrowing Rate, plus 2.5% to 3.0%, except for guaranteed amounts
which bear interest at 1% less. A Principal Stockholder of the Company has
guaranteed $6 million of the outstanding amounts. As consideration for agreeing
to the Credit Agreement, the Company paid financing fees of $612,000. These fees
will be amortized over the period of the Credit Agreement. In addition, the
Company agreed to pay a commitment fee quarterly equal to 0.5% per annum on the
average unused available credit. Upon entering into the Credit Facility, the
Company recorded a loss on extinguishment of the Old Credit Facility which
consisted of the existing unamortized deferred financing fees of $513,000. This
expense is reported, net of its tax effect of $200,000, as an extraordinary loss
in the consolidated statement of operations for the year ended December 31,
1997.
The interest rates for the guaranteed and nonguaranteed portions as of
December 31, 1997 were 8.9% and 9.9%, respectively. Interest expense on the
above facilities for the years ended December 31, 1996 and 1997 was $1,794,000
and $3,547,000, respectively.
The Credit Facility contains certain financial and operational covenants and
other restrictions with which the Company had to comply, including, among
others, limitations on capital expenditures, the incurrence of additional
indebtedness, restrictions on the use of borrowings, limitations on paying cash
dividends and redeeming or repurchasing capital stock of the Company, and
requirements to maintain certain financial ratios. The Company was also
prohibited from making acquisitions without the prior consent of the Bank. All
of the Company's obligations under the Credit Facility are secured by a first
priority security interest in all of the Company's tangible and intangible
property and assets.
In March 1998, the Company repaid all amounts outstanding under the Credit
Facility (see note 12).
(7) NOTES PAYABLE TO STOCKHOLDERS
At December 31, 1996 and 1997, the Company had $12,544,000 and $0
outstanding in notes payable to stockholders at interest rates which fluctuated
and ranged during the periods from 5.5% to 8% per annum for the years ended
December 31, 1996 and 1997, respectively. The notes payable to the stockholders
were contributed as equity to the Company at the date of the Company's initial
public offering (see note 11). The notes were subordinated to the Old Credit
Facility. Interest expense related to notes payable to stockholders was
$781,000, $1,033,000 and $801,000 for the years ended December 31, 1995, 1996
and 1997, respectively.
40
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(8) COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases studio and office space, transmitter tower sites and
office equipment under operating leases. Future minimum rental commitments for
the remainder of the operating leases are as follows:
<TABLE>
<S> <C>
1998............................................................ $ 325,000
1999............................................................ 298,000
2000............................................................ 246,000
2001............................................................ 199,000
2002............................................................ 114,000
Thereafter...................................................... 86,000
---------
$1,268,000
---------
---------
</TABLE>
Rent expense for the years ended December 31, 1995, 1996 and 1997 was
approximately $301,000, $325,000 and $383,000, respectively.
EMPLOYMENT CONTRACTS
The Company has entered into various employment contracts with 13
individuals comprised of mainly officers and senior management that provide for
minimum salaries and incentives based upon specified levels of performance. The
minimum payments under these contracts are as follows:
<TABLE>
<S> <C>
1998............................................................ $1,725,000
1999............................................................ 470,000
2000............................................................ 300,000
---------
$2,495,000
---------
---------
</TABLE>
CONTINGENT LIABILITIES
The Company has certain contingent liabilities resulting from litigation and
claims incident to the ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially affect the
financial position, results of operations, or liquidity of the Company.
(9) SUPPLEMENTARY INFORMATION -- STATEMENT OF CASH FLOWS
The Company acquired vehicles during the years ended December 31, 1996 and
1997 through issuances of notes payable amounting to $51,000 and $33,000,
respectively.
Barter transactions resulted in sales of $941,000, $875,000 and $850,000 and
related expenses of $951,000, $962,000 and $797,000 for the years ended December
31, 1995, 1996 and 1997, respectively.
Cash paid for interest during the years ended December 31, 1995, 1996 and
1997 amounted to $781,000, $2,454,000 and $4,395,000, respectively.
41
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(9) SUPPLEMENTARY INFORMATION -- STATEMENT OF CASH FLOWS (CONTINUED)
The capitalization of the Company on January 1, 1995 was effected by the
contribution of $350,000 in cash equity funds and the payment on behalf of the
Company of legal and other start-up expenses of $20,000.
During the years ended December 31, 1996 and 1997, the Principal
Stockholders contributed notes payable of $5,119,000 and $13,345,000,
respectively, to the Company's capital.
42
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(10) INCOME TAXES
The Company did not incur income taxes during the years ended December 31,
1995 and 1996 and the period ended September 30, 1997 due to its election to be
treated as an S corporation. Income tax expense for the year ended December 31,
1997 is comprised of the following:
<TABLE>
<S> <C>
Deferred tax expense resulting from conversion to C
Corporation................................................ $3,350,000
Deferred tax benefit......................................... (1,050,000)
Tax benefit resulting from extraordinary loss................ (200,000)
---------
$2,100,000
---------
---------
</TABLE>
The provision for income taxes differs from the amount computed by applying
the statutory Federal income tax rate in 1995 and 1996 due to the Company's S
Corporation status and in 1997 due to the following:
<TABLE>
<S> <C>
Federal income taxes at the statutory rate.................. $(4,864,000)
State income taxes, net of any amount of Federal income tax
benefit................................................... (84,000)
Extraordinary loss.......................................... (200,000)
Losses during status as S Corporation....................... 3,888,000
Conversion to C Corporation................................. 3,350,000
Other....................................................... 10,000
----------
$2,100,000
----------
----------
</TABLE>
The tax effects of the significant temporary differences which comprise the
deferred tax liability at December 31, 1997 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss......................................... $1,603,000
Other...................................................... 287,000
---------
1,890,000
---------
Deferred tax liabilities:
Deferred gain.............................................. 2,946,000
Depreciation and amortization.............................. 1,044,000
---------
3,990,000
---------
Net deferred tax liability............................... $2,100,000
---------
---------
</TABLE>
The Company has approximately $1,603,000 of net operating loss carryforwards
for Federal income tax purposes which expire in 2017.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income and tax planning strategies in making this
assessment. At December 31, 1997, based on projections for
43
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(10) INCOME TAXES (CONTINUED)
future taxable income over the periods in which the level of deferred tax assets
are deductible, management believes that it is more likely than not that the
Company will realize the benefits of these deductible differences. Accordingly,
no valuation allowance has been provided for the deferred tax assets for the
year ended December 31, 1997.
(11) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS
On December 24, 1997, the Company completed an initial public offering ("the
Offering") of 4,600,000 shares of its Class A Common Stock, at an offering price
of $7.00 per share. Simultaneously with the Offering, certain related
transactions occurred.
EQUITY CONTRIBUTION AND RECLASSIFICATION -- Immediately prior to the
consummation of the Offering, the Principal Stockholders contributed the entire
amount of certain outstanding stockholders' loans in the amount of $13,345,000
made to the Company to the Company's capital (the "Equity Contribution").
Simultaneously with the Equity Contribution, each share of the Company's Common
Stock, par value $.01 per share (the "Old Common Stock"), was reclassified into
7,610 shares of Class A Common Stock and the Principal Stockholders exchanged
each share of Class A Common Stock held by them for one share of Class B Common
Stock (the foregoing reclassification and exchange is hereinafter referred to as
the "Reclassification"). In addition, the Company converted from an S
Corporation to a C Corporation.
DESCRIPTION OF CAPITAL STOCK -- The authorized capital stock of the Company
upon consummation of the Equity Contribution and the Reclassification consists
of 120,000,000 shares of capital stock, par value $.01 per share, of which
80,000,000 shares have been designated as Class A Common Stock and 20,000,000
shares have been designated as Class B Common Stock. After completion of the
Offering, 5,725,062 shares of Class A Common Stock are issued and outstanding
and 8,250,458 shares of Class B Common Stock are issued and outstanding. In
addition, 8,250,458 shares of Class A Common Stock are reserved for issuance
upon conversion of the Class B Common Stock. Immediately prior to the
consummation of the Offering, there was one holder of Class A Common Stock and
two holders of Class B Common Stock.
The shares of Class A Common Stock and Class B Common Stock are identical in
all respects, except for voting rights and certain conversion rights and
transfer restrictions in respect to the shares of the Class B Common Stock.
The holders of Class A Common Stock are entitled to one vote per share.
Holders of Class B Common Stock are entitled to ten votes per share. Holders of
all classes of Common Stock vote together as a single class on all matters
presented to the stockholders for their vote or approval except for the election
and removal of directors as described below and as otherwise required by
applicable law. In addition, with respect to the election of directors, the
Company's Amended and Restated Certificate of Incorporation provides that
holders of Class B Common Stock vote as a separate class to elect up to 75% of
the members of the Company's Board of Directors. Stockholders have no cumulative
voting rights.
EMPLOYMENT INCENTIVE -- On July 1, 1997, the Principal Stockholders
transferred 68 shares of Old Common Stock to the Chief Executive Officer as an
employment incentive. The consolidated statement of operations for the year
ended December 31, 1997 reflects a charge of $3,713,000 relating to the award.
The charge represents the fair market value of the stock transferred and it has
been reflected as a capital contribution in the accompanying consolidated
financial statements.
STOCK OPTION PLAN -- On December 1, 1997, the Company adopted the Big City
Radio, Inc. 1997 Incentive Stock Plan (the "1997 Incentive Stock Plan"). The
following is a summary of the material features of the 1997 Incentive Stock
Plan.
44
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(11) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
The types of awards that may be granted pursuant to the 1997 Incentive Stock
Plan include (i) incentive stock options ("ISOs") and (ii) nonqualified stock
options ("NQSOs" and together with ISOs, "Stock Options" and "Awards").
Stock Option grants will consist of the maximum number of ISOs that may be
granted to a particular grantee under applicable law with the balance of the
Stock Options being NQSOs.
Subject to certain exceptions set forth in the 1997 Incentive Stock Plan,
the aggregate number of shares of the Class A Common Stock that may be the
subject of Awards under the 1997 Incentive Stock Plan is 700,000. The maximum
number of shares of Class A Common Stock available with respect to Awards
granted to any one grantee shall not exceed, in the aggregate, 100,000 shares.
Shares of Class A Common Stock granted under the 1997 Incentive Stock Plan may
either be authorized by unissued shares of Class A Common Stock not reserved for
any other purpose or shares of Class A Common Stock held in or acquired for the
treasury of the Company.
On December 1, 1997, options to purchase an aggregate of 150,000 shares of
Class A Common Stock were granted to certain officers and directors of the
Company, at an exercise price of $6.00 per share. These options vested
immediately resulting in a charge of $150,000. On the date of the Offering,
options to purchase an aggregate of 422,500 shares of Class A Common Stock were
granted to certain officers, directors and advisors of the Company, at an
exercise price per share equal to the initial public offering price per share in
the Offering.
Summary information pertaining to the plan for the year ended December 31,
1997 is as follows:
<TABLE>
<CAPTION>
EXERCISE WEIGHTED
NUMBER OF PRICE AVERAGE
SHARES PER SHARE EXERCISE PRICE
----------- ------------- ---------------
<S> <C> <C> <C>
Outstanding at beginning of year............... -- $ -- $ --
Granted........................................ 572,500 6.00 - 7.00 6.74
Exercised...................................... -- -- --
Outstanding at end of year..................... 572,500 6.00 - 7.00 6.74
Exercisable at end of year..................... 150,000 6.00 6.00
Available for grant at end of year............. 127,500 --
</TABLE>
At December 31, 1997, the weighted average remaining contractual life of all
outstanding options was 10 years.
Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board (APB) Option No.
25, "Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 in accounting for its Plan, and accordingly, no compensation cost
has been recognized for its stock options granted at fair market value in the
consolidated financial statements. Compensation cost will be recorded for
options granted below fair market value.
45
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(11) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
In 1995 and 1996, the Company did not grant any stock options nor did it
have any previously granted options outstanding. Accordingly, for these years,
there is no pro forma impact on earnings had SFAS No. 123 fair value methods
been used. In 1997, had the Company determined compensation cost based on the
fair value at the grant date for its stock options under SFAS No. 123, the
Company's net income would have been reduced to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1997
--------------
<S> <C>
Net income (loss):
As reported............................................................... $ (16,918,000)
Pro forma................................................................. (17,515,000)
Earnings (loss) per share:
As reported............................................................... (1.77)
Pro forma................................................................. (1.84)
--------------
--------------
</TABLE>
At December 31, 1997, the per share weighted average fair value of stock
options granted was $4.83 on the date of grant using the modified Black-Scholes
option-pricing model with the following weighted average assumptions: expected
dividend yield 0%, risk-free interest rate of 5.57%, expected volatility of 50%
and an expected life of 10 years.
(12) SUBSEQUENT EVENTS
On March 17, 1998 ("the issue date"), the Company completed the offering of
$174,000,000 11.25% Senior Discount Notes ("the Notes"). The Senior Discount
Notes are due 2005 and were issued at a discount to their aggregate principal
amount at maturity generating gross proceeds to the Company of approximately
$125.4 million. They mature on March 15, 2005. The Notes will accrete in value
until March 15, 2001 at a rate of 11.25% per annum, compounded semiannually, to
an aggregate principal amount of $174.0 million. Cash interest will not accrue
on the Notes prior to March 15, 2001. Thereafter, interest on the Notes will
accrue at a rate of 11.25% per annum and will be payable semiannually in cash on
March 15 and September 15 of each year, commencing on September 15, 2001.
Except as described below, the Company may not redeem the Notes prior to
March 15, 2002. On or after such date, the Company may redeem the Notes, in
whole or in part, at certain redemption prices together with accrued and unpaid
interest, if any, to the date of redemption. In addition, at any time on or
prior to March 15, 2001, the Company may, at its option, redeem in the aggregate
up to 33 1/3% of the original principal amount of the Notes with net cash
proceeds of one or more Equity Offerings received by the Company so long as
there is a public market for the Company's Class A Common Stock at the time of
such redemption, at a redemption price equal to 111.25% of the accreted value
thereof to be redeemed, to the date of redemption; provided that at least
66 2/3% of the original principal amount of the Notes remains outstanding
immediately after each such redemption. The Notes are not subject to any sinking
fund requirement. Upon a Change of Control, each holder of Notes has the right
to require the Company to make an offer to purchase the Notes at a price equal
to 101% of the accreted value of such Notes prior to March 15, 2001, or 101% of
the principal amount of such Notes thereafter, together with accrued and unpaid
interest, if any, to the date of the purchase.
46
<PAGE>
BIG CITY RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1997
(12) SUBSEQUENT EVENTS (CONTINUED)
The Notes are unsecured, senior obligations of the Company and rank pari
passu in right of payment to all existing and future senior indebtedness of the
Company and senior to all existing and future subordinated indebtedness of the
Company. The Notes are guaranteed on a senior unsecured basis by each of the
Company's subsidiaries. The indenture does not restrict the ability of the
Company or its subsidiaries to create, acquire or capitalize subsidiaries in the
future. The Notes will be effectively subordinated to all existing and future
indebtedness of the Company's subsidiaries.
Simultaneously with the consummation of the Notes, the Company entered into
the Revolving Credit Facility providing for up to $15 million of availability.
The Revolving Credit Facility matures on the fifth anniversary of the Issue Date
and amounts outstanding under the Revolving Credit Facility bear interest at an
applicable margin plus, at the Company's option, Chase's prime rate (in which
case the applicable margin is 2.00% subject to reduction upon obtaining
performance criteria based on the Company's leverage ratio) or the London
Inter-Bank Borrowing Rate (in which case the applicable margin is 3.00% subject
to reduction upon obtaining performance criteria based on the Company's leverage
ratio). The Company's obligations under the Revolving Credit Facility are
secured by a pledge of substantially all of the Company and its subsidiaries'
assets. The Company will pay fees of .5% per annum, on the aggregate unused
portion of the facility.
The Revolving Credit Facility contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on capital expenditures, the incurrence of additional
indebtedness, restrictions on sale of assets, restrictions on the use of
borrowings, limitations on paying cash dividends and redeeming or repurchasing
capital stock of the Company or the Notes, and requirements to maintain certain
financial ratios, maximum total leverage, minimum interest coverage and minimum
fixed charge coverage.
The Revolving Credit Facility contains customary events of default,
including material misrepresentations, payment defaults and default in the
performance of other covenants, certain bankruptcy and ERISA defaults, judgment
and cross defaults, revocation of any of the Company's broadcast licenses and
change in control. The Revolving Credit Facility also provides that an event of
default will occur upon the occurrence of a "change of control." For purposes of
the Revolving Credit Facility, a change of control will occur when (i) any
person or group other than the Principal Stockholders and their affiliates
obtains the power to elect a majority of the Board of Directors, (ii) the
Company fails to own 100% of the capital stock of its subsidiaries owning any of
the FCC broadcast licenses or (iii) the Board of Directors does not consist of a
majority of continuing directors.
47
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
For information, see the Company's Registration Statement on Form S-1 (File
No. 333-36449).
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 12, 1998.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 12, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 12, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 12, 1998.
48
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statement, Financial Statement Schedules and Exhibits
1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of KPMG Peat Marwick LLP, Independent Auditors...................................................... 27
Report of Holtz Rubenstein & Co., LLP, Independent Auditors................................................ 28
Balance Sheets as of December 31, 1996 and 1997............................................................ 29
Statements of Operations for the years ended December 31, 1995, 1996 and 1997.............................. 30
Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997.............................. 31
Statement of Stockholders' Deficit......................................................................... 32
Notes to Financial Statements.............................................................................. 33
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
Schedule II--Combined Financial Statement Schedules Valuation and Qualifying
Accounts
3. EXHIBITS
All Exhibits listed below are filed with this Annual Report on Form 10-K
unless specifically stated to be incorporated by reference to other documents
previously filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
3.1 Form of Amended and Restated Certificate of Incorporation of Big City Radio, Inc. (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
3.2 Form of Amended and Restated Bylaws of Big City Radio, Inc. (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
4.1 Specimen Class A Common Stock Certificate of Big City Radio, Inc. (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
4.2 Indenture, dated as of March 17, 1998, among the Company, the Subsidiary Guarantors named therein and
First Trust National Association as Trustee.
4.3 Form of 11 1/4% Senior Discount Note due 2005.
10.1 Big City Radio, Inc. 1997 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.2 Employment Agreement, between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference
to Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.3 Form of Employment Agreement, between Big City Radio, Inc. and Paul R. Thomson (incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.4 Form of Employment Agreement, between Big City Radio, Inc. and Steven G. Blatter (incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.5 Form of Employment Agreement, between Big City Radio, Inc. and Alan D. Kirschner (incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.6 Agreement and Plan of Merger, dated May 20, 1996, between Q Broadcasting, Inc. and Odyssey
Communications, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Registration
Statement on Form S-1 (File No. 333-36449)).
10.7 Amended and Restated Credit Agreement between Big City Radio, Inc. and The Chase Manhattan Bank
(incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File
No. 333-36449)).
10.8 Form of Registration Rights Agreement between Big City Radio, Inc. and Michael Kakoyiannis
(incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File
No. 333-36449)).
10.9 Form of Registration Rights Agreement between Big City Radio, Inc., Stuart Subotnick and Anita
Subotnick (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form
S-1 (File No. 333-36449)).
10.10 Second Amended and Restated Credit Agreement, dated as of March 17, 1998, among the Company, the
Subsidiary Guarantors named therein, the lenders named therein and The Chase Manhattan Bank.
10.11 Purchase Agreement, dated March 12, 1998, among the Company, the Subsidiary Guarantors named therein
and Chase Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex Brown
Incorporated and ING Barings (U.S.) Securities, Inc. as initial purchasers.
10.12 Exchange and Registration Rights Agreement, dated as of March 17, 1998, among the Company, the
Subsidiary Guarantors named therein and Chase Securities Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, BT Alex Brown Incorporated and ING Barings (U.S.) Securities, Inc. as initial
purchasers.
11.1 Statement re computation of per share earnings.
21.1 List of Subsidiaries of Big City Radio, Inc.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Holtz Rubenstein & Co., LLP.
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule (restated).
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the Registrant during the last
quarter of the fiscal year ended December 31, 1997.
As of the date of the filing of this Annual Report on Form 10-K no proxy
materials have been furnished to security holders. Copies of all proxy materials
will be sent to the Commission in compliance with its rules.
50
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in East Rutherford,
New Jersey, on this 31st day of March, 1998.
BIG CITY RADIO, INC.
BY: /S/ MICHAEL KAKOYIANNIS
-----------------------------------------
Name: Michael Kakoyiannis
Title: President and Chief Executive
Officer
We, the undersigned officers and directors of Big City Radio, Inc., hereby
severally constitute Arnold L. Wadler, Silvia Kessel, Paul R. Thomson and
Michael Kakoyiannis, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, any and all reports (including any amendments
thereto), with all exhibits thereto and any and all documents in connection
therewith, and generally do all such things in our name and on our behalf in
such capacities to enable Big City Radio, Inc. to comply with the applicable
provisions of the Securities Exchange Act of 1934, as amended, and all
requirements of the Securities Exchange Commission, and we hereby ratify and
confirm our signatures as they may be signed by our said attorneys, or either of
them, to any and all such reports (including any amendments thereto) and other
documents in connection therewith.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ STUART SUBOTNICK
- ------------------------------ Chairman of the Board of March 31, 1998
Stuart Subotnick Directors
/s/ MICHAEL KAKOYIANNIS
- ------------------------------ President, Chief Executive March 31, 1998
Michael Kakoyiannis Officer and Director
Vice President, Chief March 31, 1998
/s/ PAUL R. THOMSON Financial Officer and
- ------------------------------ Treasurer (Principal
Paul R. Thomson Financial and Accounting
Officer)
/s/ ANITA SUBOTNICK
- ------------------------------ Director March 31, 1998
Anita Subotnick
/s/ SILVIA KESSEL
- ------------------------------ Executive Vice President March 31, 1998
Silvia Kessel and Director
51
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ARNOLD L. WADLER Executive Vice President, March 31, 1998
- ------------------------------ General Counsel,
Arnold L. Wadler Secretary and Director
/s/ LEONARD L. WHITE
- ------------------------------ Director March 31, 1998
Leonard L. White
/s/ MICHAEL H. BOYER
- ------------------------------ Director March 31, 1998
Michael H. Boyer
</TABLE>
52
<PAGE>
SCHEDULE II
BIG CITY RADIO, INC.
COMBINED FINANCIAL STATEMENT SCHEDULES VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED BALANCE AT
BEGINNING TO COSTS AND OTHER DEDUCTIONS/ END
OF PERIOD PURCHASES CHARGES WRITE-OFFS OF PERIOD
---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Allowances for doubtful accounts, etc. (deducted
from current receivables):
Year ended December 31, 1995...................... $ 54,000 $ 30,000 $ $ (26,000) $ 58,000
---------- ------------ ---------- ----------- ----------
---------- ------------ ---------- ----------- ----------
Year ended December 31, 1996...................... $ 58,000 $ 190,000 $ $ (36,000) $ 212,000
---------- ------------ ---------- ----------- ----------
---------- ------------ ---------- ----------- ----------
Year ended December 31, 1997...................... $ 212,000 $ 304,000 $ $ (303,000) $ 213,000
---------- ------------ ---------- ----------- ----------
---------- ------------ ---------- ----------- ----------
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Form of Amended and Restated Certificate of Incorporation of Big City Radio, Inc. (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
3.2 Form of Amended and Restated Bylaws of Big City Radio, Inc. (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-1 (File No. 333-36449)).
4.1 Specimen Class A Common Stock Certificate of Big City Radio, Inc. (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
4.2 Indenture, dated as of March 17, 1998, among the Company, the Subsidiary Guarantors named therein and
First Trust National Association as Trustee.
4.3 Form of 11 1/4% Senior Discount Note due 2005.
10.1 Big City Radio, Inc. 1997 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.2 Employment Agreement, between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.3 Form of Employment Agreement, between Big City Radio, Inc. and Paul R. Thomson (incorporated by reference
to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.4 Form of Employment Agreement, between Big City Radio, Inc. and Steven G. Blatter (incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.5 Form of Employment Agreement, between Big City Radio, Inc. and Alan D. Kirschner (incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.6 Agreement and Plan of Merger, dated May 20, 1996, between Q Broadcasting, Inc. and Odyssey
Communications, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement
on Form S-1 (File No. 333-36449)).
10.7 Amended and Restated Credit Agreement between Big City Radio, Inc. and The Chase Manhattan Bank
(incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No.
333-36449)).
10.8 Form of Registration Rights Agreement between Big City Radio, Inc. and Michael Kakoyiannis (incorporated
by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
10.9 Form of Registration Rights Agreement between Big City Radio, Inc., Stuart Subotnick and Anita Subotnick
(incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (File No.
333-36449)).
10.10 Second Amended and Restated Credit Agreement, dated as of March 17, 1998, among the Company, the
Subsidiary Guarantors named therein, the lenders named therein and The Chase Manhattan Bank.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.11 Purchase Agreement, dated March 12, 1998, among the Company, the Subsidiary Guarantors named therein and
Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex Brown Incorporated
and ING Barings (U.S.) Securities, Inc. as initial purchasers.
10.12 Exchange and Registration Rights Agreement, dated as of March 17, 1998, among the Company, the Subsidiary
Guarantors named therein and Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
BT Alex Brown Incorporated and ING Barings (U.S.) Securities, Inc. as initial purchasers.
11.1 Statement re computation of per share earnings.
21.1 List of Subsidiaries of Big City Radio, Inc.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Holtz Rubenstein & Co., LLP.
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule (restated).
</TABLE>
<PAGE>
Exhibit 4.2
--------------------------------------
BIG CITY RADIO, INC.
11 1/4% Senior Discount Notes due 2005
GUARANTEED BY THE SUBSIDIARY GUARANTORS NAMED HEREIN
------------
INDENTURE
Dated as of March 17, 1998
------------
FIRST TRUST NATIONAL ASSOCIATION, a national association
as Trustee
--------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
<S> <C>
310(a)(1) ......................... 7.10
(a)(2) ......................... 7.10
(a)(3) ......................... N.A.
(a)(4) ......................... N.A.
(b) ......................... 7.10
(c) ......................... N.A.
311(a) ......................... 7.11
(b) ......................... 7.11
(c) ......................... N.A.
312(a) ......................... 2.5
(b) ......................... 11.3
(c) ......................... 11.3
313(a) ......................... 7.6
(b)(1) ......................... N.A.
(b)(2) ......................... 7.6
(c) ......................... 11.2
(d) ......................... 7.6
314(a) ......................... 3.2; 3.10; 11.2
(b) ......................... N.A.
(c)(1) ......................... 10.4
(c)(2) ......................... 10.4
(c)(3) ......................... N.A.
(d) ......................... N.A.
(e) ......................... 10.5
(f) ......................... 3.17
315(a) ......................... 7.1
(b) ......................... 7.5
(c) ......................... 7.1
(d) ......................... 7.1
(e) ......................... 6.11
316(a)(last sentence) ......................... 10.6
(a)(1)(A) ......................... 6.5
(a)(1)(B) ......................... 6.4
(a)(2) ......................... N.A.
(b) ......................... 6.7
317(a)(1) ......................... 6.8
(a)(2) ......................... 6.9
(b) ......................... 2.4
318(a) ......................... 10.1
</TABLE>
N.A. means Not Applicable.
- -----------------------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Definitions and Incorporation by Reference. . . . . . . . . . . . . . . .1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2 Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.3 Incorporation by Reference of Trust Indenture Act. . . . . . . . 23
SECTION 1.4 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE II The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.1 Form, Dating and Terms . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . 34
SECTION 2.3 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . 35
SECTION 2.4 Paying Agent To Hold Money in Trust. . . . . . . . . . . . . . . 36
SECTION 2.5 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.6 Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.7 Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors. . . . . . . . 40
SECTION 2.8 Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S. . . . . . . . . . . . . . 42
SECTION 2.9 Mutilated, Destroyed, Lost or Stolen Securities. . . . . . . . . 44
SECTION 2.10 Outstanding Securities. . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.11 Temporary Securities. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.12 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.13 Payment of Interest; Defaulted Interest . . . . . . . . . . . . 46
SECTION 2.14 Computation of Interest . . . . . . . . . . . . . . . . . . . . 48
SECTION 2.15 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE III Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.1 Payment of Securities. . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.2 SEC Reports and Available Information. . . . . . . . . . . . . . 49
SECTION 3.3 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . 49
SECTION 3.4 Limitation on Asset Swaps. . . . . . . . . . . . . . . . . . . . 51
SECTION 3.5 Limitation on Restricted Payments. . . . . . . . . . . . . . . . 51
SECTION 3.6 Limitation on Restrictions on Distributions from Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.7 Limitation on Sales of Assets. . . . . . . . . . . . . . . . . . 56
SECTION 3.8 Limitation on Affiliate Transactions . . . . . . . . . . . . . . 59
SECTION 3.9 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 3.10 Limitation on Restricted Subsidiary Capital Stock . . . . . . . 62
SECTION 3.11 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 3.12 Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . 62
SECTION 3.13 Limitation on Lines of Business . . . . . . . . . . . . . . . . 63
SECTION 3.14 Maintenance of Office or Agency . . . . . . . . . . . . . . . . 63
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 3.15 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 3.16 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . 64
SECTION 3.17 Compliance Certificate. . . . . . . . . . . . . . . . . . . . . 65
SECTION 3.18 Further Instruments and Acts. . . . . . . . . . . . . . . . . . 65
ARTICLE IV Successor Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 4.1 Merger and Consolidation . . . . . . . . . . . . . . . . . . . . 65
ARTICLE V Redemption of Securities . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 5.1 Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 5.2 Applicability of Article . . . . . . . . . . . . . . . . . . . . 67
SECTION 5.3 Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . 67
SECTION 5.4 Selection by Trustee of Securities to Be Redeemed. . . . . . . . 67
SECTION 5.5 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 5.6 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . 69
SECTION 5.7 Securities Payable on Redemption Date. . . . . . . . . . . . . . 69
SECTION 5.8 Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . 70
ARTICLE VI Defaults and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 6.7 Rights of Holders to Receive Payment . . . . . . . . . . . . . . 75
SECTION 6.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . 76
SECTION 6.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . 76
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE VII Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . 80
SECTION 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . . . . . . 80
SECTION 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . 81
SECTION 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . 82
SECTION 7.9 Successor Trustee by Merger. . . . . . . . . . . . . . . . . . . 83
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . 84
SECTION 7.11 Preferential Collection of Claims Against Company . . . . . . . 84
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VIII Discharge of Indenture; Defeasance. . . . . . . . . . . . . . . . . 84
SECTION 8.1 Discharge of Liability on Securities; Defeasance . . . . . . . . 84
SECTION 8.2 Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . 85
SECTION 8.3 Application of Trust Money . . . . . . . . . . . . . . . . . . . 87
SECTION 8.4 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 8.5 Indemnity for U.S. Government Obligations. . . . . . . . . . . . 88
SECTION 8.6 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE IX Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 9.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . 88
SECTION 9.2 With Consent of Holders. . . . . . . . . . . . . . . . . . . . . 89
SECTION 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . . . . . 90
SECTION 9.4 Revocation and Effect of Consents and Waivers. . . . . . . . . . 91
SECTION 9.5 Notation on or Exchange of Securities. . . . . . . . . . . . . . 91
SECTION 9.6 Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . 91
ARTICLE X Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.2 Limitation on Liability; Termination, Release and Discharge . . 95
SECTION 10.3 Right of Contribution . . . . . . . . . . . . . . . . . . . . . 95
SECTION 10.4 No Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE XI Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.1 Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . 96
SECTION 11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.3 Communication by Holders with other Holders . . . . . . . . . . 97
SECTION 11.4 Certificate and Opinion as to Conditions Precedent. . . . . . . 98
SECTION 11.5 Statements Required in Certificate or Opinion . . . . . . . . . 98
SECTION 11.6 When Securities Disregarded . . . . . . . . . . . . . . . . . . 98
SECTION 11.7 Rules by Trustee, Paying Agent and Registrar. . . . . . . . . . 99
SECTION 11.8 Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . 99
SECTION 11.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.12 Multiple Originals . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.13 Variable Provisions. . . . . . . . . . . . . . . . . . . . . .100
SECTION 11.14 Qualification of Indenture . . . . . . . . . . . . . . . . . .100
SECTION 11.15 Table of Contents; Headings. . . . . . . . . . . . . . . . . .100
</TABLE>
EXHIBIT A
EXHIBIT B
EXHIBIT C
<PAGE>
INDENTURE dated as of March 17, 1998, by and among BIG CITY RADIO, INC., a
Delaware corporation (the "Company"), the SUBSIDIARY GUARANTORS referred to
herein and FIRST TRUST NATIONAL ASSOCIATION, a national association (the
"Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 111/4% Senior
Discount Notes due 2005 (the "Initial Securities") and, if and when issued in
exchange for Initial Securities as provided in the Registration Rights Agreement
(as hereinafter defined), the Company's 111/4% Senior Discount Notes due 2005
which have been registered under the Securities Act (as hereinafter defined)
(the "Exchange Securities" and, together with the Initial Securities, the
"Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.1 Definitions.
"Accreted Value" means as of the date of determination prior to March
15, 2001, with respect to any Security, the sum of (a) the initial offering
price of such Security and (b) the portion of the excess of the principal amount
of such Security over such initial offering price which shall have been accreted
thereon through such date, such amount to be so accreted on a daily basis at the
rate of 111/4% per annum, compounded semi-annually on each March 15 and
September 15 from the Issue Date through the date of determination, computed on
the basis of a 360-day year of twelve 30-day months. The Accreted Value of any
Security on or after March 15, 2001 shall be 100% of the principal amount
thereof.
"Affiliate" of any specified person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
<PAGE>
"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated into or merged
with the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division or line of business of such Person.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary or the Company to the
Company or a Restricted Subsidiary, (ii) the disposition of Cash Equivalents in
the ordinary course of business, (iii) a disposition of inventory or other
property in the ordinary course of business, (iv) a disposition of obsolete,
damaged or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Restricted Subsidiaries and that
is disposed of in each case in the ordinary course of business, (v) transactions
permitted under Section 4.1 of this Indenture, (vi) for purposes of Section 3.7
of this Indenture only, a disposition subject to Section 3.5 of this Indenture,
(vii) transactions permitted by paragraph (b) of Section 3.8 of this Indenture,
(viii) the surrender or waiver of contract rights or the settlement, release or
surrender of contract, tort or other claims of any kind, (ix) pursuant to
foreclosure or other exercise of remedies and (x) an Asset Swap made in
compliance with Section 3.4 of this Indenture.
"Asset Swap" means the execution of a definitive agreement, subject
only to approval by the Federal Communications Commission ("FCC") and other
customary closing conditions, that the Company in good faith believes will be
satisfied, for a substantially concurrent purchase and sale, or exchange, of
Broadcast Assets between the Company or any of its Restricted Subsidiaries and
another Person or group of Affiliated Persons; provided, that any amendment to
or waiver of any closing condition which individually or in the aggregate, is
material to the Asset Swap shall be deemed to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest (or accretion) rate borne by the Securities, compounded semi-annually)
of the
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<PAGE>
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Broadcast Asset" means assets used or useful in the radio broadcast
or any business reasonably related thereto.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Contribution" means any contribution to the equity of the
Company from a direct or indirect parent of the Company for which no
consideration, other than the issuance of shares of common stock with no
redemption rights or special preferences, privileges or voting rights is given.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into or exchangeable for
such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease to the first date such lease may be terminated without penalty.
3
<PAGE>
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
Eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's
Rating Group, or "A" or the equivalent thereof by Moody's Investors Service,
Inc., and having capital and surplus in excess of $500,000,000; (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (i), (ii) and (iii) entered into with any bank
meeting the qualifications specified in clause (iii) above; (v) commercial paper
rated at the time of acquisition thereof at least "A-2" or the equivalent
thereof by Standard & Poor's Rating Group or "P-2" or the equivalent thereof by
Moody's Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and in either case maturing within 270
days after the date of acquisition thereof; and (vi) interests in any investment
company which invests solely in instruments of the type specified in clauses (i)
through (v) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Big City Radio, Inc., a Delaware corporation, or any
successor thereto which assumes the obligations under the Securities pursuant to
this Indenture.
"Consolidated EBITDA" for any period means, with respect to any
person, the Consolidated Net Income of such person for such period, plus the
following to the extent deducted in calculating such Consolidated Net Income of
such person: (i) income tax expense, (ii) Consolidated Interest Expense of such
person, (iii) depreciation expense, (iv) amortization of intangibles and (v)
other non-cash charges reducing Consolidated Net Income of such person
(excluding any such non-cash charge to the extent it represents an accrual of or
reserve for cash charges in any future period of amortization of a prepaid cash
expense that was paid
4
<PAGE>
in a prior period not included in the calculation). Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
interest, depreciation and amortization of, a Restricted Subsidiary of such
person shall be added to Consolidated Net Income of such person to compute
Consolidated EBITDA of such person only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating the Consolidated Net Income of such person.
"Consolidated Interest Expense" means, with respect to any person, for
any period, the total interest expense of such person and its Consolidated
Subsidiaries, plus, to the extent not included in such interest expense, (i)
interest expense attributable to Capitalized Lease Obligations of such person
and its Consolidated Subsidiaries and the interest portion of rent expense
associated with Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a capitalized lease in
accordance with GAAP, (ii) amortization of debt discount and debt issuance cost,
(iii) capitalized interest and accrued interest, (iv) non-cash interest expense,
(v) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (vi) interest actually paid
by such person or any such Consolidated Subsidiary under any Guarantee of
Indebtedness or other obligation of any other Person, (vii) net costs associated
with Interest Rate Agreements of such person and its Consolidated Subsidiaries
(including amortization of fees), (viii) dividends in respect of all
Disqualified Stock of such person and all Preferred Stock of its Subsidiaries
(other than pay in kind dividends or accretions to liquidation value of
Preferred Stock that is not Disqualified Stock), in each case, held by Persons
other than such person or a Restricted Subsidiary and (ix) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than such person) in connection with Indebtedness Incurred
by such plan or trust; provided, however, that there shall be excluded therefrom
any such interest expense of any Unrestricted Subsidiary to the extent the
related Indebtedness is not Guaranteed or paid by such person or any Restricted
Subsidiary. For purposes of the foregoing, total interest expense shall be
determined after giving effect to any net payments made or received by such
person and its Consolidated Subsidiaries with respect to Interest Rate
Agreements. Notwithstanding the foregoing, the Consolidated Interest Expense
with respect to any Restricted Subsidiary of such person that was not a Wholly
Owned Subsidiary shall be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.
5
<PAGE>
"Consolidated Leverage Ratio" means, with respect to any person, the
ratio of (i) the aggregate outstanding amount of Indebtedness of such person and
its Consolidated Subsidiaries as of the date of calculation on a consolidated
basis in accordance with GAAP plus the aggregate liquidation preference of all
Disqualified Stock of such person and of all outstanding Preferred Stock of
Consolidated Subsidiaries of such person to (ii) the Consolidated EBITDA of such
person for the four full fiscal quarters (the "Four Quarter Period") ending on
or immediately prior to the date of determination.
For purposes of this definition, the aggregate outstanding amount of
Indebtedness of such person and its Consolidated Subsidiaries for which such
calculation is made shall be determined on a pro forma basis as if the
Indebtedness giving rise to the need to perform such calculation had been
incurred and the proceeds therefrom had been applied, and all other transactions
in respect of which such Indebtedness is being incurred had occurred, on the
last day of the Four Quarter Period. In addition to the foregoing, for purposes
of this definition, "Consolidated EBITDA" of any person shall be calculated on a
pro forma basis after giving effect to (i) the incurrence of the Indebtedness of
such person and its Consolidated Subsidiaries (and the application of the
proceeds therefrom) giving rise to the need to make such calculation and any
incurrence (and the application of the proceeds therefrom) or repayment of other
Indebtedness, other than the incurrence or repayment of Indebtedness pursuant to
working capital facilities, at any time on or subsequent to the beginning of the
Four Quarter Period and on or prior to the date of determination, as if such
incurrence (and the application of the proceeds thereof), or the repayment as
the case may be, occurred on the first day of the Four Quarter Period (except
that, in making such computation, the amount of Indebtedness under any revolving
credit facility outstanding on the date of such calculation shall be computed
based on the average daily balance of such Indebtedness (and any Indebtedness
under a revolving credit facility replaced by such Indebtedness) during such
Four Quarter Period or such shorter period when such facility and any replaced
facility was outstanding), and (ii) any Asset Dispositions or Asset Acquisitions
of such person and its Consolidated Subsidiaries (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation as a
result of such person or one of its Consolidated Subsidiaries (including any
Person that becomes a Consolidated Subsidiary as a result of such Asset
Acquisition) incurring, assuming or otherwise becoming liable for Indebtedness)
at any time on or subsequent to the first day of the Four Quarter Period and on
or prior to the date of determination, as if such Asset Disposition or Asset
Acquisition (including the incurrence, assumption or liability for any such
Indebtedness and also including any pro forma effects on Consolidated EBITDA
6
<PAGE>
associated with such Asset Acquisition) occurred on the first day of the Four
Quarter Period. Furthermore, in calculating "Consolidated Interest Expense" of
any person for purposes of the calculation of "Consolidated EBITDA," of such
Person (i) interest on Indebtedness determined on a fluctuating basis as of the
date of determination (including Indebtedness actually incurred on the date of
the transaction giving rise to the need to calculate the Consolidated Leverage
Ratio) and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness as in effect on the date of determination and (ii) notwithstanding
(i) above, interest determined on a fluctuating basis, to the extent such
interest is covered by Interest Rate Agreements, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Net Income" means, with respect to any person, for any
period, the net income (loss) of such person and its Consolidated Subsidiaries
determined in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any net income (loss) of any
Person if such Person is not a Restricted Subsidiary, except that (A) subject to
the limitations contained in (iv) below, such person's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to such person or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii) below) and
(B) such person's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income to the extent such loss has been funded with cash from
such person or a Restricted Subsidiary; (ii) any net income (loss) of any Person
acquired by such person or a Subsidiary of such person in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income of any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to such
person, except that (A) subject to the limitations contained in (iv) below such
person's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to such person or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend or other distribution to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) such person's
equity in a net loss of any such Restricted Subsidiary
7
<PAGE>
for such period shall be included in determining such Consolidated Net Income;
(iv) any gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of such person or its Consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) any extraordinary gain or loss and (vi) the cumulative effect of a change in
accounting principles.
"Consolidated Senior Leverage Ratio" means, with respect to any
person, the ratio of (i) the aggregate outstanding amount of secured
Indebtedness of such person and its Consolidated Subsidiaries as of the date of
calculation on a consolidated basis in accordance with GAAP to (ii) the
Consolidated EBITDA of such person for the four full fiscal quarters (the "Four
Quarter Period") ending on or immediately prior to the date of determination.
For purposes of this definition, the aggregate outstanding amount of
secured Indebtedness of such person and its Consolidated Subsidiaries for which
such calculation is made shall be determined on a pro forma basis as if the
Indebtedness giving rise to the need to perform such calculation had been
Incurred and the proceeds therefrom had been applied, and all other transactions
in respect of which such secured Indebtedness is being Incurred had occurred, on
the last day of the Four Quarter Period. In addition to the foregoing, for
purposes of this definition, Consolidated EBITDA of any person shall be
calculated on a pro forma basis after giving effect to (i) the Incurrence of the
Indebtedness of such person and its Consolidated Subsidiaries (and the
application of the proceeds therefrom) giving rise to the need to make such
calculation and any Incurrence (and the application of the proceeds therefrom)
or repayment of other Indebtedness, other than the Incurrence or repayment of
Indebtedness pursuant to working capital facilities, at any time on or
subsequent to the beginning of the Four Quarter Period and on or prior to the
date of determination, as if such Incurrence (and the application of the
proceeds thereof), or the repayment, as the case may be, occurred on the first
day of the Four Quarter Period, and (ii) any Asset Dispositions or Asset
Acquisitions of such person and its Consolidated Subsidiaries (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Consolidated Subsidiaries
(including any Person that becomes a Consolidated Subsidiary as a result of such
Asset Acquisition) Incurring, assuming or otherwise becoming liable for
Indebtedness) at any time on or subsequent to the first day of the Four Quarter
Period and on or prior to the date of determination, as if such Asset
Disposition or Asset Acquisition (including the Incurrence, assumption or
liability
8
<PAGE>
for any such secured Indebtedness and also including any Consolidated EBITDA
associated with such Asset Acquisition) occurred on the first day of the Four
Quarter Period. Furthermore, in calculating "Consolidated Interest Expense" for
purposes of the calculation of "Consolidated EBITDA," (i) interest on secured
Indebtedness determined on a fluctuating basis as of the date of determination
(including Indebtedness actually Incurred on the date of the transaction giving
rise to the need to calculate the Consolidated Senior Leverage Ratio) and which
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness as in
effect on the date of determination and (ii) notwithstanding (i) above, interest
determined on a fluctuating basis, to the extent such interest is covered by
Interest Rate Agreements, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Subsidiaries" means, with respect to any Person, the
Restricted Subsidiaries of such Person that are consolidated with such Person in
accordance with GAAP.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.13.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) (i) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii)
is convertible into or exchangeable for Indebtedness or Disqualified Stock of
such Person (excluding Capital Stock which is convertible or exchangeable solely
at the option of the Company or a Restricted Subsidiary) or (iii) is redeemable
at the option of the holder thereof, in whole or in part, in each case on or
prior to the Stated Maturity of the Securities, provided, that only the portion
of Capital Stock which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such Stated Maturity shall be deemed to be Disqualified Stock
and; provided, further, that any Capital Stock that would not
9
<PAGE>
constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of any "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of
such Capital Stock than the provisions described under Section 3.7 or Section
3.9 of this Indenture and if such provisions do not permit payment to the
holders of such Capital Stock prior to the Holders of the Securities.
"Equity Offering" means an offering or issuance for cash by the
Company of its shares of Capital Stock (other than Disqualified Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. All determinations in the covenants
of Fair Market Value shall be made by the Board of Directors of the Company and
shall be evidenced by a resolution of such Board of Directors set forth in an
Officers' Certificate delivered to the Trustee, upon which the Trustee may
conclusively rely.
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect as of the date of this Indenture, including
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii)
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entered into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" or "Securityholder" means the Person or Persons in whose name
a Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for (including as a result of an Asset Acquisition); provided, however,
that any Indebtedness or Capital Stock of a Person existing at the time such
Person becomes a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary. "Incurrence" shall
have a correlative meaning.
"Indebtedness" means, with respect to any person on any date of
determination (without duplication), (i) the principal and premium (if any) in
respect of Indebtedness of such person for borrowed money; (ii) the principal
and premium (if any) in respect of obligations of such person evidenced by
bonds, the Securities, notes or other similar instruments; (iii) all obligations
of such person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) other than
obligations with respect to letters of credit securing obligations entered into
in the ordinary course of business of such person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed not later than the 30th day following payment on the letter of
credit; (iv) all obligations of such person to pay the deferred and unpaid
purchase price of property or services (except trade payables), which purchase
price is due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of such services;
(v) all Capitalized Lease Obligations and all Attributable Indebtedness of such
person; (vi) the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of (A) any Disqualified Stock of such
person or, (B) with respect to any Subsidiary, any Preferred Stock (but
excluding, in each case, any accrued dividends); (vii) all Indebtedness of other
Persons secured by a Lien on any asset of such person, whether or not such
Indebtedness is assumed by such person; provided, however, that the amount of
such Indebtedness shall be the lesser of (A) the fair market value of such asset
at such date of determination and (B) the amount of such Indebtedness of such
other Persons; (viii) all Indebtedness of other Persons to the extent Guaranteed
11
<PAGE>
by such person; and (ix) to the extent not otherwise included in this
definition, net obligations of such person under Interest Rate Agreements (the
amount of any such obligations to be equal at any time to the termination value
of such agreement or arrangement giving rise to such obligation that would be
payable by such person at such time). The amount of Indebtedness of any such
person at any date shall be the outstanding balance without duplication at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date, provided that the amount outstanding
at any time of any Indebtedness issued with original issue discount is the full
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
accordance with GAAP.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Interest Rate Agreement" means, with respect to any Person, 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 or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or by payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by, such person. For purposes
of Section 3.5 of this Indenture, (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of a Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market
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<PAGE>
value of the net assets of such Subsidiary at the time that such Subsidiary is
so redesignated a Restricted Subsidiary; and (ii) any property transferred to or
from an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by the Board of
Directors of the Company.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Legal Holiday" has the meaning ascribed to it in Section 11.8.
"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).
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash or Cash
Equivalent payments received (including any cash or Cash Equivalent payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to the properties
or assets that are the subject of such Asset Disposition or received in any
other noncash form) therefrom, in each case net of (i) all legal, accounting,
investment banking, title and recording tax expenses, commissions and other fees
and expenses incurred, and all Federal, state, provincial, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the assets
disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition and (v) employee severance
and termination costs.
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"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Note Register" means the register of Securities, maintained by the
Trustee, pursuant to Section 2.3.
"Officer" means the Chairman of the Board of Directors, the President,
any Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means (i) the Class B Permitted Holders (as such
term is defined in the Company's Amended and Restated Certificate of
Incorporation in effect on the Issue Date); (ii) any officer or other member of
management employed by the Company or any Subsidiary as of the Issue Date; (iii)
without duplication of (i), family members or relatives of the persons described
in clauses (i) and (ii); (iv) any trusts created for the sole benefit of the
persons described in clause (i), (ii) or (iii); or (v) in the event of the
incompetence or death of any of the persons described in clauses (i) or (ii),
such person's estate, executor, administrator, committee or other personal
representatives or beneficiaries.
"Permitted Investment" means an investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all of its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) cash and Cash Equivalents; (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such conces-
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<PAGE>
sionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; or (viii)
Investments made in connection with any Asset Disposition permitted under
Section 3.7 of this Indenture.
"Permitted Liens" means, with respect to any person, (a) pledges or
deposits by such person under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases
to which such person is a party, or deposits to secure public or statutory
obligations of such person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
including landlords' and carriers', warehousemen's, suppliers', materialmen's,
repairmen's and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings; or other Liens arising out
of judgments or awards against such person with respect to which such person
shall there be proceeding with an appeal or other proceedings for review; (c)
Liens for taxes, assessments or other governmental charges not yet subject to
penalties for non-payment or which are being contested in good faith by
appropriate proceedings provided appropriate reserves have been taken on the
books of such person in accordance with GAAP; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the request of and for the
account of such person in the ordinary course of its business; provided,
however, that such letters of credit do not constitute Indebtedness; (e)
encumbrances, easements, rights-of-way, minor defects or irregularities in title
or reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties or liens
incidental to the conduct of the business of such person or to the ownership of
its properties which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such person; (f) Liens securing an Interest Rate Agreement of such
person so long as the related Indebtedness is, and is permitted to be under this
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<PAGE>
Indenture, secured by a Lien on the same property securing such Interest Rate
Agreement; (g) leases and subleases of real property which do not materially
interfere with the ordinary conduct of the business of such person or any of its
Restricted Subsidiaries; (h) judgment Liens not giving rise to an Event of
Default so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired; (i) Liens for the purpose
of securing the payment (or the refinancing of the payment) of all or a part of
Purchase Money Indebtedness relating to assets or property acquired or
constructed in the ordinary course of business of such person provided that (x)
the aggregate principal amount of Indebtedness secured by such Liens shall not
exceed the cost of the assets or property so acquired or constructed and (y)
such Liens shall not encumber any other assets or property of such person or any
of its Restricted Subsidiaries other than such assets or property and assets
affixed or appurtenant thereto and (z) such Purchase Money Indebtedness was
incurred pursuant to Section 3.3 of this Indenture; (j) Liens arising solely by
virtue of any statutory or common law provision relating to banker's Liens,
rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution; provided that (x) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by such person in excess of those set forth by
regulations promulgated by the Federal Reserve Board, and (y) such deposit
account is not intended by such person or any of its Restricted Subsidiaries to
provide collateral to the depository institution; (k) Liens arising from Uniform
Commercial Code financing statement filings regarding operating leases entered
into by such person and its Restricted Subsidiaries in the ordinary course of
business; (l) Liens existing on the Issue Date and any additional Liens created
under the terms of the agreements relating to such Liens existing on the Issue
Date; (m) Liens under any Senior Credit Facility and under the Revolving Credit
Facility; (n) Liens on property or shares of stock of a Person at the time such
Person becomes a Subsidiary; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such other
Person becoming a Subsidiary, provided, further, however, that any such Lien may
not extend to any other property owned by such person or any of its Restricted
Subsidiaries; (o) Liens on property at the time such person or a subsidiary of
such person acquired the property, including any acquisition by means of a
merger or consolidation with or into such person or any of its Restricted
Subsidiaries; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such acquisition; provided,
further, however, that such Liens may not extend to any other property owned by
such person or any of its Restricted
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<PAGE>
Subsidiary; (p) Liens securing Indebtedness or other obligations of a Subsidiary
owing to the Company or a Subsidiary; (q) Liens securing Refinancing
Indebtedness incurred to Refinance Indebtedness that was previously so secured,
provided that any such Lien is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under which
the original Lien arose, could secure) the obligations to which such Liens
relate; and (r) Liens securing Indebtedness incurred pursuant to paragraph (b)
of Section 3.3 of this Indenture, so long as such Indebtedness is permitted to
be incurred thereunder.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision hereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall have the meaning set forth in the
Registration Rights Agreement.
A "Public Market" exists at any time with respect to the common stock
of the Company if (i) the common stock of the Company is then registered with
the SEC pursuant to Section 12(b) or 12(g) of the Exchange Act and traded either
on a national securities exchange or in the Nasdaq National Market and (ii) at
least 15% of the total issued and outstanding shares of common stock of the
Company has been distributed prior to such time by means of an effective
registration statement under the Securities Act.
"Purchase Money Indebtedness" of any person means any Indebtedness of
such person to any seller or other person incurred to finance the acquisition or
construction (including in the case of a Capitalized Lease Obligation, the
lease) of any business or real or personal tangible property (or, in each case,
any interest therein) acquired or constructed after the Issue Date which, in the
reasonable good faith judgment of the Board of Directors of the Company is
related to a Related Business of the Company and which is incurred concurrently
with, or within 180
17
<PAGE>
days of, such acquisition or the completion of such construction and, if
secured, is secured only by the assets so financed.
"QIB" means any "qualified institutional buyer" (as defined in Rule
144A under the Securities Act ("Rule 144A")).
"Refinancing Indebtedness" means Indebtedness that is Incurred in
exchange for or to refund, refinance, replace, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) (collectively, "refinance",
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on the date of this Indenture or Incurred in compliance
with this Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted Subsidiary)
including Indebtedness that refinances Refinancing Indebtedness; provided,
however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being refinanced, (ii) the
Refinancing Indebtedness has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being refinanced, and
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding
(plus fees and expenses, including any premium and defeasance costs) of the
Indebtedness being refinanced.
"Registered Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement, dated as of March 17, 1998, between the Company, the
Subsidiary Guarantors named on the signature pages thereto, Chase Securities
Inc., Donaldson, Lufkin & Jenrette Securities Corporation , BT Alex Brown
Incorporated and ING Baring (U.S.) Securities, Inc.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries on the Issue Date.
18
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"Restricted Period" means the 40 consecutive days beginning on and
including the later of (A) the day on which the Initial Securities are offered
to persons other than distributors (as defined in Regulation S under the
Securities Act) and (B) the Issue Date.
"Restricted Securities Legend" means the Private Placement Legend set
forth in clause (A) of Section 2.1(c) or the Regulation S Legend set forth in
clause (B) of Section 2.1(c), as applicable.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Second Amended and Restated
Credit Agreement, dated as of the Issue Date, by and among the Company, the
Subsidiary Guarantors and the lenders named therein, as in effect on the Issue
Date, as the same may be amended, modified, renewed, refunded, replaced or
refinanced from time to time with the same or different lenders, including (i)
any related notes, letters of credit, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time
and (ii) any notes, guarantees, collateral documents, instruments and agreements
executed in connection with any such amendment, modification, renewal,
refunding, replacement or refinancing.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE>
"Securities Custodian" means the custodian with respect to the Global
Securities (as appointed by the Depositary), or any successor Person thereto and
shall initially be the Trustee.
"Senior Credit Facilities" means secured Indebtedness for borrowed
money Incurred under agreements with financial institutions.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the 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).
"Subordinated Obligation" means any Indebtedness of the Company or any
Restricted Subsidiary (whether outstanding on the Issue Date or thereafter
Incurred) which expressly is subordinate or junior in right of payment to the
Securities or the Subsidiary Guarantee of such Restricted Subsidiary pursuant to
a written agreement.
"Subsidiary" of any Person means 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 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. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment
of the Securities by a Subsidiary Guarantor pursuant to the terms of this
Indenture, and, collectively, all such Guarantees. Each such Subsidiary
Guarantee will be in the form set forth in Exhibit C of this Indenture.
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"Subsidiary Guarantor" means any Restricted Subsidiary created or
acquired by the Company which Guarantees Indebtedness of the Company under the
Securities.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture
except as provided in Section 9.3.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors of the Company in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total consolidated assets of $10,000 or less
or (B) if such Subsidiary has consolidated assets greater than $10,000, then the
Restricted Payments to or with respect to such Subsidiary would be permitted
under Section 3.5 of this Indenture. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness pursuant to paragraph (a)
under Section 3.3 of this Indenture and (y) no Default shall have occurred and
be continuing. Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of
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America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged
and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a person means all classes of Capital Stock of
such person then outstanding and normally entitled to vote in the election of
directors.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
scheduled payment of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by (ii) the then outstanding aggregate principal amount of such
Indebtedness.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company, all of the Capital Stock of which (other than directors qualifying
shares and shares that, under applicable law, are required to be held by
third persons) is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.2 Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
------ -----------
<S> <C>
"Affiliate Transaction"........................................ 3.8
"Agent Member"................................................. 2.1(d)
"Bankruptcy Law"............................................... 6.1
"Blockage Notice".............................................. 11.3
"Change of Control"............................................ 3.9
"covenant defeasance option"................................... 8.1(b)
"Custodian".................................................... 6.1
"Definitive Securities"........................................ 2.1(e)
"Event of Default"............................................. 6.1
"Global Securities"............................................ 2.1(a)
"legal defeasance option"...................................... 8.1(b)
"Offer"........................................................ 3.7
"Offer Proceeds"............................................... 3.7
"pay the Securities"........................................... 11.3
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"Paying Agent"................................................. 2.3
"Payment Blockage Period"...................................... 11.3
"Record Date".................................................. 5.3
"Redemption Date".............................................. 5.3
"Registrar".................................................... 2.3
"Regulation S"................................................. 2.1(a)
"Restricted Payment"........................................... 3.5
"Rule 144A".................................................... 2.1(b)
</TABLE>
SECTION 1.3 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
required in order for this Indenture to qualify under the TIA and which are
incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
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(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular;
(vi) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(vii) the principal amount of any non-interest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in accordance
with GAAP; and
(viii) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1 Form, Dating and Terms. The Initial Securities are
being offered and sold by the Company pursuant to a Purchase Agreement, dated
March 12, 1998, by and among the Company, the Subsidiary Guarantors named on
the signature pages thereto, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, BT Alex Brown Incorporated and ING Baring
(U.S.) Securities, Inc. (the "Purchase Agreement").
Initial Securities offered and sold to QIBs in the United States of
America (the "Rule 144A Note") will be issued on the Issue Date in the form
of a permanent global Security substantially in the form of Exhibit A, which
is hereby incorporated by reference and made a part of this Indenture,
together with appropriate legends as set forth in Section 2.1(c) (the "Rule
144A Global Note"), deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and
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authenticated by the Trustee as hereinafter provided. The Rule 144A Global
Note may be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be represented
by a single certificate. The aggregate principal amount of the Rule 144A
Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depositary or its
nominee, as hereinafter provided.
Initial Securities offered and sold outside the United States of
America ("Regulation S Note") in reliance on Regulation S will be issued on
the Issue Date in the form of a temporary global Security, without interest
coupons, substantially in the form set forth in Exhibit A, which is hereby
incorporated by reference and made a part of this Indenture, together with
appropriate legends as set forth in Section 2.1(c) (a "Regulation S Temporary
Global Note"), deposited with the Trustee as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. Beneficial interests in a Regulation S Temporary Global Note will
be exchangeable for beneficial interests in a single permanent global
security (the "Regulation S Permanent Global Note", together with the
Regulation S Temporary Global Note, the "Regulation S Global Note") on or
after the expiration of the Restricted Period (the "Release Date") upon the
receipt by the Trustee or its agent of a certificate certifying that the
Holder of the beneficial interest in the Regulation S Temporary Global Note
is a non-United States Person within the meaning of Regulation S (a
"Regulation S Certificate"), substantially in the form set forth in Section
2.8. Upon receipt by the Trustee or Paying Agent of a Regulation S
Certificate, (i) with respect to the first such Regulation S Certificate, the
Company shall execute and upon receipt of a Company Order for authentication,
the Authenticating Agent (each, as defined in Section 2.2) shall authenticate
and deliver to the custodian, the applicable Regulation S Permanent Global
Note and (ii) with respect to the first and all subsequent Regulation S
Certificates, the custodian shall exchange on behalf of the applicable
beneficial owners the portion of the applicable Regulation S Temporary Global
Note covered by such Regulation S Certificates for a comparable portion of
the applicable Regulation S Permanent Global Note. Upon any exchange of a
portion of a Regulation S Temporary Global Note for a comparable portion of a
Regulation S Permanent Global Note, the custodian shall endorse on the
schedules affixed to each of such Regulation S Global Note (or on
continuations of such schedules affixed to each of such Regulation S Global
Note and made parts thereof) appropriate notations evidencing the date of
transfer and (x) with respect to the applicable Regulation S Temporary Global
Note, a decrease in the principal amount thereof equal to the amount covered
by the applicable certification and (y) with respect to the applicable
Regulation S Permanent Global Note, an increase in
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the principal amount thereof equal to the principal amount of the decrease in
the applicable Regulation S Temporary Global Note pursuant to clause (x)
above. The Regulation S Global Note will be deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The Regulation S Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Regulation S Global Note
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Securities resold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) in
the United States of America (the "Institutional Accredited Investor Note")
will be issued in the form of a permanent global Security substantially in
the form set forth in Exhibit A hereto, which is hereby incorporated by
reference and made a part of this Indenture, together with appropriate
legends as set forth in Section 2.1(c) (the "Institutional Accredited
Investor Global Note"), deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Institutional Accredited Investor Global Note may
be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be represented
by a single certificate. The aggregate principal amount of the Institutional
Accredited Investor Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Exchange Securities exchanged for interests in the Rule 144A Note,
the Regulation S Note and the Institutional Accredited Investor Note will be
issued in the form of a permanent global Security substantially in the form
set forth in Exhibit B hereto, which is hereby incorporated by reference and
made a part of this Indenture, deposited with the Trustee as custodian for
the Depositary, duly executed by the Company and authenticated by the Trustee
as hereinafter provided, with the appropriate legend set forth in Section
2.1(c) hereof (the "Exchange Global Note"). The Exchange Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate.
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The Rule 144A Global Note, the Regulation S Global Note, the
Exchange Global Note and the Institutional Accredited Investor Global Note
are sometimes collectively herein referred to as the "Global Securities."
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency
of the Company as may be maintained for such purpose pursuant to Section 2.3;
provided, however, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Note Register or (ii) wire
transfer to an account located in the United States maintained by the payee.
The Private Exchange Securities shall be in the form of Exhibit A
hereto. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage, in addition to those set forth on
Exhibits A and B and Section 2.1(c). The Company and the Trustee shall
approve the forms of the Securities and any notation, endorsement or legend
on them. Each Security shall be dated the date of its authentication. The
terms of the Securities set forth in Exhibit A and Exhibit B are part of the
terms of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree
to be bound by such terms.
(b) Denominations. The Securities shall be issuable only in fully
registered form, without coupons, and only in denominations of $1,000 and any
integral multiple thereof.
(c) Restrictive Legends. Unless and until (i) an Initial Security
is sold under an effective registration statement under the Securities Act or
(ii) an Initial Security is exchanged for an Exchange Security in connection
with an effective registration statement under the Securities Act, in each
case pursuant to the Registration Rights Agreement or otherwise, (A) such
Rule 144A Global Note and the Institutional Accredited Investor Global Note
shall bear the following legend (the "Private Placement Legend") on the face
thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
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INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION
INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF SECURITIES, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
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SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM AND IN THE CASE OF THE FOREGOING CLAUSES (D) OR (E) A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE."; and
(B) the Regulation S Global Note shall bear the following legend
(the "Regulation S Legend") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A
U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY
(A) TO THE
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COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND IN THE CASE OF THE
FOREGOING CLAUSES (D) OR (E), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER
OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN
DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B)
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THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
The Global Securities, whether or not an Initial Security, to the
extent required by the Depository Trust Company, a New York corporation (as such
requirements may be modified in the future) shall bear the following legend on
the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF."
The Regulation S Temporary Global Note shall also bear the following
legend on the face thereof:
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THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. NEITHER
THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD
OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO
RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED
CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE
INDENTURE.
(d) Book-Entry Provisions. (1) This Section 2.1(d) shall apply
only to Global Securities deposited with the Trustee, as custodian for the
Depositary.
(2) Each Global Security initially shall (x) be registered in the name
of the Depositary for such Global Security or the nominee of such Depositary,
(y) be delivered to the Trustee as custodian for such Depositary and (z) bear
legends as set forth in Section 2.1(c).
(3) Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any
Global Security held on their behalf by the Depositary or by the Trustee as
the custodian of the Depositary or under such Global Security, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Agent Members, the operation of customary practices of the Depositary
governing the exercise of the rights of a holder of a beneficial interest in
any Global Security.
(4) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (e) of this Section to
beneficial owners who are required to hold Definitive Securities, the
Security Trustee shall reflect on its books and records the date and a
decrease in the principal amount of such Global Security in an amount equal
to the principal amount of the beneficial
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interest in the Global Security to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Definitive Securities of like tenor and amount.
(5) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to subsection (e) of this Section, such Global
Security shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations.
(e) Definitive Securities. Except as provided below, owners of
beneficial interests in Global Securities will not be entitled to receive
certificated Securities ("Definitive Securities"). If required to do so
pursuant to any applicable law or regulation, beneficial owners may obtain
Definitive Securities in exchange for their beneficial interests in a Global
Security upon written request in accordance with the Depositary's and the
Registrar's procedures. In addition, Definitive Securities shall be
transferred to all beneficial owners in exchange for their beneficial
interests in a Global Security if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or the Depositary ceases to be a clearing agency registered under
the Exchange Act, at a time when the Depositary is required to be so
registered in order to act as Depositary, and in each case a successor
depositary is not appointed by the Company within 90 days of such notice or,
(ii) the Company executes and delivers to the Trustee and Registrar an
Officers' Certificate stating that such Global Security shall be so
exchangeable or (iii) an Event of Default has occurred and is continuing and
the Registrar has received a request from the Depositary to issue Definitive
Securities.
(f) Any Definitive Security delivered in exchange for an interest
in a Global Security pursuant to Section 2.1(d)(4) and (5) shall, except as
otherwise provided by paragraph (c) of Section 2.6, bear the applicable
legend regarding transfer restrictions applicable to the Definitive Security
set forth in Section 2.1(c).
(g) The registered holder of a Global Security may grant proxies
and otherwise authorize any person, including Agent Members and persons that
may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
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SECTION 2.2 Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the
time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually authenticates the Security. The signature of the Trustee on
a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
At any time and from time to time after the execution and delivery
of this Indenture, the Trustee shall authenticate and make available for
delivery: (1) Initial Securities for original issue in an aggregate principal
amount of $174,000,000 and (2) Exchange Securities for issue only in a
Registered Exchange Offer pursuant to the Registration Rights Agreement, and
only in exchange for Initial Securities of an equal principal amount, in each
case upon a written order of the Company signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company (the "Company Order"). Such Company Order shall specify the amount
of the Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated and whether the Securities are to
be Initial Securities or Exchange Securities. The aggregate principal amount
of Securities outstanding at any time may not exceed $174,000,000 except as
provided in Section 2.9.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Any
such appointment shall be evidenced by an instrument signed by an authorized
officer of the Trustee, a copy of which shall be furnished to the Company.
Unless limited by the terms of such appointment, any such Authenticating
Agent may authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent.
In case the Company or any Subsidiary Guarantor (if any), pursuant
to Article IV, shall be consolidated or merged with or into any other Person
or shall convey, transfer, lease or otherwise dispose of its properties and
assets substantially as an entirety to any Person, and the successor Person
resulting from such consolidation, or surviving such merger, or into which
the Company or any Subsidiary Guarantor (if any) shall have been merged, or
the Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an
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indenture supplemental hereto with the Trustee pursuant to Article IV, any of
the Securities authenticated or delivered prior to such consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to
time, at the request of the successor Person, be exchanged for other
Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Order of the successor
Person, shall authenticate and deliver Securities as specified in such order
for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon registration of
transfer of any Securities, such successor Person, at the option of the
Holders but without expense to them, shall provide for the exchange of all
Securities at the time outstanding for Securities authenticated and delivered
in such new name.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Company
shall cause each of the Registrar and the Paying Agent to maintain an office
or agency in the Borough of Manhattan, The City of New York. The Registrar
shall keep a register of the Securities and of their transfer and exchange
(the "Note Register"). The Company may have one or more co-registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company
shall notify the Trustee of the name and address of each such agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.7. The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or
transfer agent.
The Company initially appoints the Trustee as Registrar, Paying
Agent, and transfer agent for the Securities.
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SECTION 2.4 Paying Agent To Hold Money in Trust. By at least 10:00
a.m (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying Agent
a sum sufficient to pay such principal or interest when due. The principal and
interest on Global Securities shall be payable to the Depositary or its nominee,
as the case may be, as the sole registered Holder of the Global Securities
represented thereby. The principal and interest on Definitive Securities shall
be payable at the office of the Paying Agent. The Company shall require each
Paying Agent to agree in writing that such Paying Agent shall hold in trust for
the benefit of Securityholders or the Trustee all money held by such Paying
Agent for the payment of principal of or interest on the Securities and shall
notify the Trustee of any default by the Company in making any such payment. If
the Company or a Subsidiary acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate trust fund. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed by such Paying Agent. Upon complying
with this Section, the Paying Agent shall have no further liability for the
money delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
SECTION 2.5 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6 Transfer and Exchange.
(a) The following provisions shall apply with respect to any proposed
transfer of a Rule 144A Note or an Institutional Accredited Investor Note prior
to the date which is two years after the later of the date of original issue and
the last date on which the Company or any affiliate of the Company was the owner
of such Securities (or any predecessor thereto) (the "Resale Restriction
Termination Date"):
(1) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a QIB
shall be made upon the representation of the transferee that it is
purchasing the
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Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account
is a "qualified institutional buyer" within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A;
(2) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to an
institutional accredited investor shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set
forth in Section 2.7 hereof from the proposed transferee and, if
requested by the Company or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them; and
(3) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a Non-U.S.
Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.8 hereof
from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or
other information satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:
(1) a transfer of a Regulation S Note or a beneficial
interest therein to a QIB shall be made upon the representation of the
transferee that it is purchasing the Security for its own account or an
account with respect to which it exercises sole investment discretion
and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
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(2) a transfer of a Regulation S Note or a beneficial
interest therein to an institutional accredited investor shall be made
upon receipt by the Trustee or its agent of a certificate substantially
in the form set forth in Section 2.7 hereof from the proposed transferee
and, if requested by the Company or the Trustee, the delivery of an
opinion of counsel, certification and/or other information satisfactory
to each of them; and
(3) a transfer of a Regulation S Note or a beneficial
interest therein to a Non-U.S. Person shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set
forth in Section 2.8 hereof from the proposed transferee and, if
requested by the Company or the Trustee, receipt by the Trustee or its
agent of an opinion of counsel, certification and/or other information
satisfactory to each of them.
After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred without requiring certification set forth
in Section 2.8 or any additional certification.
(c) Restricted Securities Legend. Upon the transfer, exchange or
replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless there is delivered to the Registrar
an Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.1 or this Section 2.6.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
(d) Obligations with Respect to Transfers and Exchanges of Securities.
(1) To permit registrations of transfers and exchanges,
the Company shall, subject to the other terms and conditions of this
Article II, execute
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and the Trustee shall authenticate Definitive Securities and Global
Securities at the Registrar's or co-registrar's request.
(2) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments or similar governmental charges
payable upon exchange or transfer pursuant to Sections 3.7, 3.9 or 9.5).
(3) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on
the day of such mailing or (2) 15 days before an interest payment date
and ending on such interest payment date.
(4) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and interest on such
Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(5) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(d) shall, except
as otherwise provided by Section 2.6(c), bear the applicable legend
regarding transfer restrictions applicable to the Definitive Security
set forth in Section 2.1(c).
(6) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee. (1) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof,
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with respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person (other
than the Depositary) of any notice (including any notice of redemption) or the
payment of any amount or delivery of any Securities (or other security or
property) under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders
in respect of the Securities shall be given or made only to or upon the order of
the registered Holders (which shall be the Depositary or its nominee in the case
of a Global Security). The rights of beneficial owners in any Global Security
shall be exercised only through the Depositary subject to the applicable rules
and procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(2) The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7 Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors.
[Date]
First Trust National Association, a national association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Dear Sirs:
This certificate is delivered to request a transfer of $_____
principal amount of the 111/4% Senior Discount Notes due 2005 (the "Securities")
of Big City Radio, Inc. (the "Company").
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Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
--------------------------------------------------
Address:
-----------------------------------------------
Taxpayer ID Number:
-------------------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal amount
of the Securities, and we are acquiring the Securities for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risk of our investment in the Securities and we invest in or purchase
securities similar to the Securities in the normal course of our business. We
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
2. We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is
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purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Securities
of $250,000 or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Securities
is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer prior to the Resale Termination
Date of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
TRANSFEREE:
--------------------------------------
BY:
----------------------------------------------
SECTION 2.8 Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S.
[Date]
First Trust National Association, a national association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Big City Radio, Inc.
111/4% Senior Discount Notes due 2005 (the "Securities")
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Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(a) the offer of the Securities was not made to a person in
the United States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States or (ii) the transaction was executed
in, on or through the facilities of a designated off-shore
securities market and neither we nor any person acting on our
behalf knows that the transaction has been pre-arranged with a
buyer in the United States;
(c) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party
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in any administrative or legal proceedings or official inquiry with respect to
the matters covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------------
-------------------------------------
Authorized Signature Signature Medallion Guaranteed
SECTION 2.9 Mutilated, Destroyed, Lost or Stolen Securities. If a
mutilated Security is surrendered to the Registrar or the Trustee or if the
Holder of a Security presents evidence to the satisfaction of the Trustee and
the Company that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the Uniform Commercial Code are met and the
Holder satisfies any other reasonable requirements of the Trustee. If required
by the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar, the transfer agent and
any co-registrar from any loss which any of them may suffer if a Security is
replaced, then, in the absence of notice to the Company, any Subsidiary
Guarantor or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses
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(including the fees and expenses of the Trustee and reasonable attorneys' fees
and expenses) in connection therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10 Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security ceases to be outstanding in the event
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.9, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or any of its Affiliates)
segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is
not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.11 Temporary Securities. Until Definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall
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prepare and the Trustee shall authenticate Definitive Securities. After the
preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more Definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
holder of Definitive Securities.
SECTION 2.12 Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such destruction to the
Company. The Company may not issue new Securities to replace Securities it has
paid or delivered to the Trustee for cancellation.
SECTION 2.13 Payment of Interest; Defaulted Interest. Interest on any
Security which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Security
(or one or more predecessor Securities) is registered at the close of business
on the regular record date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 2.3. The interest on
Global Securities shall be payable to the Depositary or its nominee, as the case
may be, as the sole registered owner and the sole Holder of the Global
Securities represented thereby.
Any interest on any Security which is payable, but is not paid when
the same becomes due and payable and such nonpayment continues for a period of
30 days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") shall be paid by the Company, at its election in
each case, as provided in clause (a) or (b) below:
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(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date (as defined below) for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date (not less
than 30 days after such notice) of the proposed payment (the "Special
Interest Payment Date"), and at the same time the Company shall
deposit with the Trustee or the Paying Agent an amount of money equal
to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause
provided. The Defaulted Interest shall be considered paid upon such
deposit with the Trustee or the Paying Agent, and interest on such
Defaulted Interest shall thereafter cease to accrue from such date.
Thereupon the Trustee shall fix a record date (the "Special Record
Date") for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the Special
Interest Payment Date and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date, and in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record
Date and Special Interest Payment Date therefor to be given in the
manner provided for in Section 11.2, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor having been so given, such Defaulted Interest
shall be paid on the Special Interest Payment Date to the Persons in
whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by
the Trustee.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.14 Computation of Interest. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.15 CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such CUSIP numbers.
ARTICLE III
Covenants
SECTION 3.1 Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent (if other than the Company or any of its Affiliates) holds in accordance
with this Indenture money sufficient to pay all principal and interest then due
and the Trustee or the Paying Agent, as the case may be, is not prohibited from
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
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SECTION 3.2 SEC Reports and Available Information. Notwithstanding
that the Company may not be subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act,
the Company shall file with the SEC, and provide, within 15 days after the
Company is (or would be) required to file the same with the SEC, the Trustee and
the Holders of Securities with the annual reports and the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may, by rules and regulations prescribe), that are specified in Sections 13(a)
and 15(d) of the Exchange Act. In the event that the Company is not permitted
to file such reports, documents and information with the SEC pursuant to the
Exchange Act, the Company will nevertheless deliver such Exchange Act
information to the Trustee and the Holders of the Securities as if the Company
were subject to the reporting requirements of Section 13(a) or 15(d) of the
Exchange Act. In addition, for so long as any of the Securities remain
outstanding the Company shall make available to any prospective purchaser of the
Securities or beneficial owner of the Securities in connection with any sale
thereof the information required by Rule 144A(d)(4) under the Securities Act.
The Company shall also comply with the other provisions of TIA Section 314(a).
SECTION 3.3 Limitation on Indebtedness. (a) The Company and each
Subsidiary Guarantor shall not, and shall not permit any Restricted Subsidiary
to, Incur any Indebtedness; provided, however, that the Company may incur
Indebtedness if, on the date of such Incurrence, the Consolidated Leverage Ratio
of the Company for the most recent four consecutive fiscal quarters ending prior
to the date of such Incurrence, after giving effect, on a pro forma basis, to
such Incurrence of Indebtedness and, to the extent set forth in the definition
of Consolidated Leverage Ratio, the use of proceeds thereof, would be no more
than 7 to 1.
(b) Notwithstanding paragraph (a) of this Section 3.3, the Company and
its Restricted Subsidiaries may incur Indebtedness under any Senior Credit
Facility; provided, that (i) such Indebtedness would be permitted to be incurred
under paragraph (a) of this Section 3.3 if it were being incurred solely by the
Company and (ii) the Consolidated Senior Leverage Ratio of the Company for the
most recent four consecutive fiscal quarters ending prior to the date of such
Incurrence, after giving effect, on a pro forma basis, to such Incurrence of
Indebtedness under such Senior Credit Facilities and, to the extent set forth in
the definition of Consolidated Senior Leverage Ratio, the use of proceeds
thereof, would be no more than 4 to 1.
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(c) Notwithstanding paragraphs (a) and (b) of this Section 3.3, the
Company and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness of the Company owing to and held by any Restricted Subsidiary
or Indebtedness of a Restricted Subsidiary owing to and held by the Company or
any Restricted Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof; (ii) Indebtedness represented by (w)
Indebtedness of the Company and its Restricted Subsidiaries under the Revolving
Credit Facility not to exceed (including any Refinancing Indebtedness Incurred
with respect to any such Indebtedness) $15,000,000 in the aggregate outstanding
at any time pursuant to this clause (c)(ii)(w); (x) the Securities, this
Indenture and the Subsidiary Guarantees in amounts set forth therein on the
Issue Date; (y) any Indebtedness outstanding on the Issue Date (after giving
effect to the use of proceeds from the Securities to retire Indebtedness); or
(z) any Refinancing Indebtedness Incurred in respect of any Indebtedness
described in clauses (ii) or (iii) of this paragraph (c) or Incurred pursuant to
paragraph (a) or (b) of this Section 3.3; (iii) Indebtedness of a Restricted
Subsidiary Incurred and outstanding on the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred to
provide all or any portion of the funds utilized to consummate, or otherwise in
connection with, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Subsidiary or was otherwise acquired
by the Company); provided, however, that at the time such Restricted Subsidiary
is acquired by the Company, the Company would have been able to Incur $1.00 of
additional Indebtedness pursuant to paragraph (a) or (c) of this Section 3.3, on
a pro forma basis as set forth in such paragraphs; (iv) Indebtedness under
Interest Rate Agreements entered into for bona fide hedging purposes of the
Company or its Restricted Subsidiaries (as determined in good faith by the Board
of Directors or senior management of the Company) and that correspond in terms
of notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Restricted Subsidiaries Incurred without
violation of this Indenture; (v) Indebtedness of the Company or any Restricted
Subsidiary consisting solely of indemnification, adjustment of purchase price or
similar obligations, in each case Incurred in connection with the disposition of
any assets of the Company (other than the Capital Stock of any Unrestricted
Subsidiary) or any Restricted Subsidiary; and (vi) Indebtedness (other than
Indebtedness described in clauses (i) through (v) of this paragraph (c) in an
amount which, when taken together with the amount of all other Indebtedness
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Incurred pursuant to this clause (vi) and then outstanding (including any
Refinancing Indebtedness Incurred with respect to any such Indebtedness), would
not exceed $15,000,000 in the aggregate.
(d) In the event that Indebtedness meets the criteria of more than one
of the types of Indebtedness described in the foregoing paragraphs (a), (b) or
(c) of this Section 3.3, the Company, in its sole discretion, shall classify
such item of Indebtedness as having been Incurred under one of such provisions
and, except as specifically provided otherwise, shall only be required to
include the amount and type of such Indebtedness as having been Incurred
pursuant to such clause.
SECTION 3.4 Limitation on Asset Swaps. The Company and each
Subsidiary Guarantor shall not, and shall not permit any Restricted Subsidiary
to, engage in any Asset Swaps, unless: (i) at the time of entering into such
Asset Swap and immediately after giving effect to such Asset Swap, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; (ii) in the event such Asset Swap involves an aggregate
amount in excess of $1,000,000, the terms of such Asset Swap have been approved
by a majority of the members of the Board of Directors of the Company and (iii)
in the event such Asset Swap involves an aggregate amount in excess of
$5,000,000, the Company has received a written opinion from an independent
investment banking firm or other valuation firm of nationally recognized
standing that such Asset Swap is fair to the Company or such Restricted
Subsidiary, as the case may be, from a financial point of view.
SECTION 3.5 Limitation on Restricted Payments. (a) The Company and
each Subsidiary Guarantor shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make
any distribution on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except (A) dividends or accretions of liquidation value
or distributions payable in the Company's Capital Stock (other than Disqualified
Stock) and (B) dividends or distributions payable to the Company or a Restricted
Subsidiary (and if such Restricted Subsidiary is not a Wholly Owned Subsidiary,
to its other holders of Capital Stock on a pro rata basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
held by Persons other than a Restricted Subsidiary or any Capital Stock of a
Restricted Subsidiary of the Company held by any Affiliate of the Company, other
than another Restricted Subsidiary (in either case, other than in exchange for
its Capital Stock (other than Disqualified Stock)),
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(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Obligations (other than the purchase, repurchase
or other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition) or (iv) make any Investment (other than a Permitted Investment) in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein referred to
in clauses (i) through (iv) as a "Restricted Payment"), if at the time the
Company or such Subsidiary Guarantor or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); or (2) the Company or such Subsidiary Guarantor shall
not be able to Incur an additional $1.00 of Indebtedness pursuant to paragraph
(a) under Section 3.3; or (3) the aggregate amount of Restricted Payments made
on or subsequent to the Issue Date (the amount expended for such purposes, if
other than in cash, being the fair market value of such property as determined
by the Board of Directors of the Company in good faith) exceeds, without
duplication, the sum of (a) (x) 100% of the aggregate Consolidated EBITDA of the
Company (or, in the event such Consolidated EBITDA shall be a deficit, minus
100% of such deficit) accrued subsequent to the Issue Date to the most recent
date for which financial information is available to the Company, taken as one
accounting period, less (y) 1.4 times Consolidated Interest Expense of the
Company for the same period, plus (b) the aggregate Net Cash Proceeds received
by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other Capital Contributions subsequent to the Issue Date
(other than Net Cash Proceeds received from an issuance or sale of such Capital
Stock to a Subsidiary of the Company or an employee stock ownership plan or
similar trust to the extent such sale to an employee stock ownership plan or
similar trust is financed by loans from or guaranteed by the Company or any
Restricted Subsidiary unless such loans have been repaid with cash on or prior
to the date of determination); plus (c) the amount by which Indebtedness of the
Company is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Subsidiary of the Company) subsequent to the Issue
Date of any Indebtedness of the Company converted or exchanged for Capital Stock
(other than Disqualified Stock) of the Company (less the amount of any cash, or
other property, distributed by the Company upon such conversion or exchange;
plus (d) the amount equal to the net reduction in Investments made by the
Company or any of its Restricted Subsidiaries subsequent to the Issue Date in
any Person resulting from (i) Net Cash Proceeds to the Company or a Restricted
Subsidiary from (A) repurchases or redemptions of such Investments by
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such Person, (B) proceeds realized upon the sale of such Investment to a
purchaser other than a Subsidiary, (C) repayments of loans or advances or
other transfers of assets (including by way of dividend or distribution) by
such Person to the Company or any Restricted Subsidiary of the Company or
(ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investment") not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; provided, however, that no
amount shall be included under this clause (d) to the extent it is already
included in Consolidated EBITDA. For purposes of this Section 3.5, the
amount of any Restricted Payments, if other than in cash, shall be determined
in good faith by the Board of Directors of the Company as evidenced by a
certificate filed with the Trustee, except that in the event the value of any
non-cash consideration shall be $5,000,000 or more, the value shall be as
determined in writing by an independent investment banking or valuation firm.
(b) The provisions of paragraph (a) of this Section 3.5 shall not
prohibit: (i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or similar trust to the extent
such sale to an employee stock ownership plan or similar trust is financed by
loans from or guaranteed by the Company or any Restricted Subsidiary unless
such loans have been repaid with cash on or prior to the date of
determination); provided, however, that (A) such purchase or redemption shall
be excluded in subsequent calculations of the amount of Restricted Payments
and (B) the Net Cash Proceeds from such sale and the reduction in the amount
of Indebtedness as applicable, shall be excluded from clause (3) of paragraph
(a) of this Section 3.5; (ii) any purchase or redemption of Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Subordinated Obligations of the
Company; provided, however, that such purchase or redemption shall be
excluded in subsequent calculations of the amount of Restricted Payments;
(iii) dividends paid within 60 days after the date of declaration if at such
date of declaration such dividend would have complied with this provision;
provided, however, that such dividends shall be included in subsequent
calculations of the amount of Restricted Payments; (iv) payments for the
purpose of, and in amounts equal to, amounts required to permit the Company
to redeem or repurchase its Capital Stock from existing or former
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employees, management or directors of the Company or any Subsidiary or their
assigns, estates or heirs, in each case in connection with the repurchase
provisions under plans (or amendments thereto) or agreements (including
employment agreements) under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of Capital Stock; provided,
that such redemption or repurchases pursuant to this clause shall not exceed
$1,000,000 in the aggregate; provided, further, that such dividends shall be
included in the calculation of the amount of Restricted Payments; (v)
repurchases of Capital Stock deemed to occur upon the exercise of stock
options if such Capital Stock represents a portion of the exercise price
thereof; provided, however, that (A) such repurchases shall be excluded from
the calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from clause (3) of paragraph (a) of
this Section 3.5; (vi) Investments in any other Person which were received as
consideration for an Asset Disposition in accordance with Section 3.7 (after
giving effect to any such Investments that are returned to the Company or the
Restricted Subsidiary that made such Investment, without restriction, in cash
on or prior to the date of such calculation); provided, that such Investments
shall be included in the calculation of Restricted Payments; (vii)
Investments made in Related Businesses, subsequent to the Issue Date, in an
aggregate amount not to exceed $2,000,000 at any one time outstanding (after
giving effect to any such Investments that are returned to the Company or the
Restricted Subsidiary that made such Investment, without restriction, in cash
on or prior to the date of such calculation; provided, that such amounts
shall be included in the calculation of Restricted Payments); (viii)
Investments in an amount not to exceed $10,000,000 in another Person for the
purpose of conducting a Related Business in North America (other than the
United States); provided, that such amounts shall not be included in the
calculation of such Restricted Payments; provided, that the Company shall use
its best efforts, subject to applicable legal restrictions, to cause
substantially all of the earnings of such Restricted Subsidiary or Person to
be paid promptly to the Company; and (ix) management fees paid to Metromedia
Company or its successors for certain legal, accounting, tax and other
services in an amount not to exceed (A) $200,000 in fiscal 1998, (B) $300,000
in fiscal 1999, (C) $400,000 in fiscal 2000 and (D) $500,000 in each fiscal
year thereafter and such amounts shall not be included in the calculation of
Restricted Payments.
SECTION 3.6 Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company and each Subsidiary Guarantor shall not,
and shall not permit any Restricted Subsidiary to, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or consensual
restriction on
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the ability of any Restricted Subsidiary to (i) pay dividends or make any
other distributions on its Capital Stock or pay any Indebtedness or other
obligations owed to the Company, (ii) make any loans or advances to the
Company or (iii) transfer any of its property or assets to the Company,
except (a) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Issue Date (including, the Revolving Credit
Facility but after giving effect to the use of proceeds from the issuance of
the Securities to retire Indebtedness on such date); (b) any encumbrance or
restriction imposed by the Securities or any pari passu Indebtedness incurred
in accordance with this Indenture and whose restrictions are no more
restrictive than those in this Indenture; (c) any encumbrance or restriction
with respect to a Restricted Subsidiary pursuant to an agreement relating to
any Indebtedness Incurred by a Restricted Subsidiary on or prior to the date
on which such Restricted Subsidiary became a Restricted Subsidiary (other
than Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds utilized to consummate or otherwise Incurred in
connection with, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary) and
outstanding on such date; (d) any encumbrance or restriction imposed by any
Senior Credit Facility that is no more restrictive than those contained in
the Revolving Credit Facility; (e) any encumbrance or restriction with
respect to any agreement effecting a refinancing, refunding, replacement,
renewal, repayment or extension (including pursuant to defeasance or
discharger mechanisms) of Indebtedness Incurred pursuant to an agreement
referred to in clause (a), (b), (c) or (d) of this Section 3.6 or this clause
(e) or contained in any amendment to an agreement referred to in clause (a),
(b), (c) or (d) of this Section 3.6 or this clause (e); provided, however,
that the encumbrances and restrictions with respect to any such agreement or
amendment are not materially more restrictive than encumbrances or
restrictions contained in such agreements; (f) in the case of clause (iii)
above, any encumbrance or restriction that restricts in a customary manner
the subletting, assignment or transfer of any property or asset that is
subject to a lease, license or similar contract, or the assignment or
transfer of any such lease, license or other contract; (g) any restriction
with respect to a Restricted Subsidiary (or any of its property or assets
imposed pursuant to an agreement entered into for the, direct or indirect,
sale or disposition of all or substantially all the Capital Stock or assets
of such Restricted Subsidiary (or the property or assets, that are subject to
such restriction) pending the closing of such sale or disposition; (h)
encumbrances or restrictions arising or existing by reason of applicable law;
(i) restrictions on transfer contained in Purchase Money Indebtedness
incurred pursuant to Section 3.3 of this Indenture; provided such
restrictions relate only to the transfer of the property acquired with the
proceeds
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of such Purchase Money Indebtedness; (j) any restriction pursuant to this
Indenture, the Securities or the Subsidiary Guarantees.
SECTION 3.7 Limitation on Sales of Assets. (a) The Company and
each Subsidiary Guarantor shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good
faith by the Board of Directors of the Company (including as to the value of
all non-cash consideration), of the assets subject to such Asset Disposition,
(ii) at least 80% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or Cash Equivalents and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) first, to the extent the Company or any Restricted
Subsidiary, as the case may be, elects (or is required by the terms of the
Senior Credit Facilities), to prepay, repay or purchase Indebtedness under
any of the Senior Credit Facilities within 180 days from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's election, to the
investment in Broadcast Assets within one year from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third,
to the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B) to make an offer to purchase (an "Offer")
the Securities at a price in cash equal to, prior to March 15, 2001, 100% of
the Accreted Value thereof on the purchase date and, thereafter 100% of the
principal amount thereof plus accrued and unpaid interest to the purchase
date, and other pari passu debt obligation subject to a similar covenant
(collectively, the "pari passu debt obligations") at par plus accrued and
unpaid interest (or Accreted Value, as applicable) to the purchase date; and
(D) fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B) and (C), for other general
corporate purposes not prohibited by this Indenture; provided, however, that,
in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to clause (A) above, the Company or such Restricted Subsidiary shall
permanently retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions, the Company and its Restricted Subsidiaries shall not
be required to apply any Net Available Cash in accordance herewith except to
the extent that the aggregate Net Available Cash from any Asset Dispositions
or series of related Asset Dispositions exceeds
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$500,000. The Company shall not be required to make an Offer for the
Securities and for the pari passu debt obligations pursuant to this Section
3.7 if the Net Available Cash available therefore (after application of the
proceeds as provided in clauses (A) and (B)) are less than $5,000,000 (which
lesser amounts shall be carried forward for purposes of determining whether
an Offer is required with respect to the Net Available Cash from any
subsequent Asset Disposition).
(b) If the aggregate principal amount (or Accreted Value, as
applicable) of Securities and pari passu obligations validly tendered and not
withdrawn in connection with an Offer pursuant to clause (C) above exceed the
funds available therefor ("Offer Proceeds"), the Trustee will select the
Securities and such pari passu obligations to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the Trustee so
that only Securities in denominations of $1,000 or integral multiples
thereof, will be purchased). Holders whose Securities are purchased only in
part will be issued new Securities equal in principal amount at maturity to
the unpurchased portion of the Securities surrendered.
(c) For the purposes of this Section 3.7, the following will be
deemed to be cash or Cash Equivalents: (x) the assumption by the transferee
of Indebtedness of the Company or Indebtedness of any Restricted Subsidiary
of the Company (in each case, other than Subordinated Obligations) and the
release of the Company and such Restricted Subsidiary from all liability on
such Indebtedness (in which case the Company shall, without further action,
be deemed to have applied such assumed Indebtedness in accordance with clause
(A) of the preceding paragraph) and (y) notes or other obligations or
securities received by the Company or any Restricted Subsidiary of the
Company from the transferee that are within 30 Business Days converted by the
Company or such Restricted Subsidiary into cash or Cash Equivalents and used
in accordance with this Section 3.7.
(d) If the aggregate purchase price of the Securities and any pari
passu debt obligations tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase of the Securities and any pari passu
debt obligations, the Company shall apply the remaining Net Available Cash in
accordance with clause (a) (iii) (D) of this Section 3.7.
(e) (i) Promptly, and in any event within 20 days after the Company
is required to make an Offer, the Company shall deliver to the Trustee, and
the Company or, at the Company's request, the Trustee, in the Company's name
and at the Company's sole expense, shall send, by first-class mail to each
Holder, a written
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notice stating that the Holder may elect to have his Securities purchased by
the Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice
shall specify a purchase date not less than 30 days nor more than 60 days
after the date of mailing of such notice to the Holders (the "Purchase Date").
(ii) Not later than the date upon which such written notice of an
Offer is delivered to the Trustee and the Holders, the Company shall deliver
to the Trustee an Officers' Certificate setting forth (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash
from the Asset Disposition as a result of which such Offer is being made and
(iii) the compliance of such allocation with the provisions of Section
3.7(a). Upon the expiration of the period (the "Offer Period") for which the
Offer remains open, the Company shall deliver to the Trustee for cancellation
the Securities or portions thereof which have been properly tendered to and
are to be accepted by the Company. The Trustee shall, on the Purchase Date,
mail or deliver payment to each tendering Holder in the amount of the
purchase price of the Securities tendered by such Holder to the extent such
funds are available to the Trustee.
(iii) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed,
to the Company or, at the Company's option, a depositary, if appointed by the
Company, or the Paying Agent, at the address specified in the notice prior to
the expiration of the Offer Period. Each Holder will be entitled to withdraw
its election if the Trustee or the Company receives, not later than one
Business Day prior to the expiration of the Offer Period, a facsimile
transmission or overnight mail from such Holder setting forth the name of
such Holder, the principal amount of the Security or Securities which were
delivered for purchase by such Holder and a statement that such Holder is
withdrawing his election to have such Security or Securities purchased. If
at the expiration of the Offer Period the aggregate principal amount of
Securities surrendered by Holders exceeds the Offer Amount, the Company shall
select the Securities to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall
be purchased). Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
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(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to
this Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.7, the Company shall
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue
thereof.
SECTION 3.8 Limitation on Affiliate Transactions. The Company
and each Subsidiary Guarantor shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless: (i) the terms of such Affiliate Transaction are no
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate; (ii) in the
event such Affiliate Transaction or series of related Affiliate Transactions
involves an aggregate amount in excess of $1,000,000 in any given fiscal
year, the terms of such transaction have been approved by a majority of the
members of the Board of Directors of the Company and by a majority of the
members of such Board of Directors having no personal stake in such
transaction, if any (and such majority or majorities, as the case may be,
determines that such Affiliate Transaction satisfies the criteria in (i)
above); and (iii) in the event such Affiliate Transaction or series of
related Affiliate Transactions involves an aggregate amount in excess of
$5,000,000 in any given fiscal year, the Company has received a written
opinion from an independent investment banking firm or valuation firm of
nationally recognized standing that such Affiliate Transaction or series of
related Affiliate Transactions is not materially less favorable than those
that might reasonably have been obtained in a comparable transaction at such
time on an arm's-length basis from a Person that is not an Affiliate.
(b) The foregoing paragraph (a) shall not apply to (i) payment of
customary fees to members of the Board of Directors of the Company, (ii) any
issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors of the Company, (iii) loans or advances to employees in the
ordinary course of business of the Company or any of its Restricted
Subsidiaries, (iv) any transaction between the Company and a Wholly Owned
Subsidiary Guarantor or between Subsidiaries, (v) the grant of stock
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options or similar rights to employees and directors of the Company pursuant
to plans approved by the Board of Directors, (vi) indemnification agreements
with, and the payment of fees and indemnities to, directors, officers and
employees of the Company and its Restricted Subsidiaries, in each case, in
the ordinary course of business, (vii) any employment, noncompetition or
confidentiality agreement entered into by the Company and its Restricted
Subsidiaries with its employees in the ordinary course of business, (viii)
the pledge of any Capital Stock of any Unrestricted Subsidiary to support any
Indebtedness thereof or (ix) management fees paid to Metromedia Company or
its successors for certain legal, accounting, tax or other services in an
amount not to exceed (A) $200,000 in fiscal 1998, (B) $300,000 in fiscal
1999, (C) $400,000 in fiscal 2000 and (D) $500,000 in each fiscal year
thereafter.
SECTION 3.9 Change of Control. Upon the occurrence of any of the
following events (each a "Change of Control"), each Holder will have the
right to require the Company to purchase all or any part of such Holder's
Securities at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) or, in the case
of purchases of Securities prior to March 15, 2001, at a purchase price equal
to 101% of the Accreted Value thereof as of the date of purchase:
(i) (A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% of the total voting power
of the Voting Stock of the Company; and (B) the Permitted Holders
"beneficially own" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or
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designate for election a majority of the Board of Directors of the
Company or such successor; or
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved or is a designee of the then remaining members of the Board of
Directors of the Company or was nominated or elected by such then remaining
members of the Board of Directors of the Company) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office; or
(iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Section 13(d) and 14(d) of the Exchange Act) other
than a Permitted Holder; or
(iv) the adoption by the stockholders of a plan for the liquidation
or dissolution of the Company.
Within 30 days following any Change of Control the Company shall
mail a notice to each Holder, with a copy to the Trustee, stating: (i) that
a Change of Control has occurred and that such Holder has the right to
require the Company to purchase such Holder's Securities at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on a record date to receive interest on the relevant interest payment
date) or, in the case of purchases of Securities prior to March 15, 2001, at
a purchase price equal to 101% of the Accreted Value thereof as of the date
of purchase; (ii) the date of purchase (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (iii)
the procedures determined by agreement between the Company and the Trustee
consistent with this Indenture, that a Holder must follow in order to have
its Securities purchased.
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The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to
this Section 3.9 To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in this Indenture by virtue
thereof.
SECTION 3.10 Limitation on Restricted Subsidiary Capital Stock.
The Company and each Subsidiary Guarantor shall not permit any Restricted
Subsidiary to issue or suffer to exist any of its Capital Stock, except (i)
Capital Stock issued to and held by the Company or a Wholly Owned Subsidiary,
(ii) Capital Stock issued by a Person prior to the time (A) such Person
becomes a Restricted Subsidiary, (B) such Person merges with or into a
Restricted Subsidiary or (C) a Restricted Subsidiary merges with or into such
Person; provided, that such Capital Stock was not issued or incurred by such
Person in anticipation of the type of transaction contemplated by subclause
(A), (B) or (C), (iii) if, immediately after giving effect to such issuance,
neither the Company nor any of its Restricted Subsidiaries owns any Capital
Stock of such Person who was a Restricted Subsidiary, or (iv) if, immediately
after giving effect to such issuance, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect thereto would have been permitted to be made
under Section 3.5 of this Indenture, if made on the date of such issuance.
SECTION 3.11 Limitation on Liens. The Company and each Subsidiary
Guarantor shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur or suffer to exist any Lien (other than
Permitted Liens) upon any of its property or assets (including Capital
Stock), whether owned on the date of this Indenture or thereafter acquired,
securing any Indebtedness, unless contemporaneously therewith effective
provision is made to secure the Indebtedness due under this Indenture and the
Securities or, in respect of Liens on any Restricted Subsidiary's property or
assets, the Subsidiary Guarantee by such Restricted Subsidiary of the
Securities equally and ratably with (or prior to in the case of Liens with
respect to Subordinated Obligations) the Indebtedness secured by such Lien
with a Lien on the same properties and assets securing such Indebtedness for
so long as such Indebtedness is so secured.
SECTION 3.12 Subsidiary Guarantors. On and after the Issue Date,
immediately upon any Person becoming a Restricted Subsidiary, the Company
shall
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cause each such Restricted Subsidiary to execute and deliver to the Trustee a
Subsidiary Guarantee pursuant to which such Subsidiary Guarantor will
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any, and interest on the Securities
on a senior basis, which Subsidiary Guarantees will rank pari passu in right
of payment to all existing and future guarantees of such Restricted
Subsidiaries under the Revolving Credit Facility.
Each Subsidiary Guarantor will be permitted to consolidate with or merge
into or sell all or part of its assets or properties to the Company or
another Subsidiary Guarantor without limitation and such merger, sale or
other transfer will not be subject to Section 3.7 of this Indenture. Subject
to the other provisions of this Indenture, each Subsidiary Guarantor will be
permitted to consolidate with or merge into or sell all or substantially all
of its assets or properties to any Person other than the Company or another
Subsidiary Guarantor (whether or not affiliated with the Subsidiary
Guarantor). Upon the sale or disposition of a Subsidiary Guarantor (by
merger, consolidation, the sale of all or substantially all of its assets) to
a Person (whether or not an Affiliate of the Subsidiary Guarantor) which is
not a Subsidiary Guarantor of the Company, which sale or disposition is
otherwise in compliance with this Indenture (including Section 3.7 of this
Indenture), such Subsidiary Guarantor shall be deemed released from all its
obligations under this Indenture and its Subsidiary Guarantee and such
Subsidiary Guarantee shall terminate; provided, however, that any such
termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, any other
Indebtedness of the Company shall also terminate upon such release, sale or
transfer.
SECTION 3.13 Limitation on Lines of Business. The Company and each
Subsidiary Guarantor shall not, and shall not permit any Restricted
Subsidiary to, engage, to more than a de minimus extent, in any business
other than a Related Business.
SECTION 3.14 Maintenance of Office or Agency.
The Company shall maintain in The City of New York, an office or
agency where the Securities may be presented or surrendered for payment,
where, if applicable, the Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The corporate
trust office of the Trustee shall be
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such office or agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such purposes. The
Company shall give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the
Securities may be presented or surrendered for any or all such purposes and
may from time to time rescind any such designation; provided, however, that
no such designation or rescission shall in any manner relieve the Company of
its obligation to maintain an office or agency in The City of New York for
such purposes. The Company shall give prompt written notice to the Trustee
of any such designation or rescission and any change in the location of any
such other office or agency.
SECTION 3.15 Corporate Existence.
Subject to Article IV, the Company shall use all reasonable efforts
to do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and that of each Restricted
Subsidiary and the corporate rights (charter and statutory) licenses and
franchises of the Company and each Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve any such existence (except
the Company), right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and each of its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not, and will
not be, disadvantageous in any material respect to the Holders.
SECTION 3.16 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed upon the Company or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary and (ii) all lawful claims for labor, materials and supplies,
which, if unpaid, might by law
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become a material liability or lien upon the property of the Company or any
Restricted Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which appropriate
reserves, if necessary (in the good faith judgment of management of the
Company), are being maintained in accordance with GAAP or where the failure
to effect such payment will not be disadvantageous to the Holders.
SECTION 3.17 Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers
know of any Default or Event of Default that occurred during such period. If
they do, the certificate shall describe the Default or Event of Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 3.18 Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
Successor Company
SECTION 4.1 Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation, partnership, trust or limited liability
company organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor
Company (if not the Company) shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form reasonably
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satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as
having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), the Successor
Company would be able to Incur at least an additional $1.00 of Indebtedness
pursuant to paragraph (a) of Section 3.3 of this Indenture; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but,
in the case of a lease of all or substantially all its assets, the Company
shall not be released from the obligation to pay the principal of and
interest on the Securities.
Notwithstanding clauses (ii) and (iii) of this Section 4.1: (i)
any Restricted Subsidiary of the Company may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or any other
Wholly Owned Subsidiary; provided such transaction involves no other parties
either directly or indirectly and (ii) the Company may merge with an
Affiliate with no Indebtedness incorporated solely for the purpose of
reincorporating the Company in another jurisdiction to realize tax or other
benefits.
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ARTICLE V
Redemption of Securities
SECTION 5.1 Optional Redemption. The Securities may or shall, as the
case may be, be redeemed, as a whole or from time to time in part, subject to
the conditions and at the Redemption Prices specified in the form of
Securities set forth in Exhibits A and B hereto, which are hereby
incorporated by reference and made a part of this Indenture, together with
accrued and unpaid interest to the redemption date.
SECTION 5.2 Applicability of Article. Redemption of Securities at the
election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision
and this Article.
SECTION 5.3 Election to Redeem; Notice to Trustee. The election of the
Company to redeem any Securities pursuant to Section 5.1 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the
Company, the Company shall, upon not less than 30 and not more than 60 days
prior to the date fixed by the Company for such redemption (the "Redemption
Date") (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date, the record date for such redemption
(which record date shall be not more than 90 days prior to the Redemption
Date (the "Record Date")) and of the principal amount of Securities to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Securities to be redeemed pursuant to
Section 5.4.
SECTION 5.4 Selection by Trustee of Securities to Be Redeemed. If less
than all the Securities are to be redeemed at any time pursuant to an
optional redemption, the particular Securities to be redeemed shall be
selected not more than 90 days prior to the Redemption Date by the Trustee,
from the outstanding Securities not previously called for redemption, in
compliance with the requirements of the principal securities exchange, if
any, on which such Securities are listed, or, if such Securities are not so
listed, on a pro rata basis, by lot or by such other method as the Trustee
shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements) and which may provide for the selection for
redemption of portions of the principal of the Securities; provided, however,
that no such partial redemption shall reduce the portion of the principal
amount of a Security not re deemed to less than $1,000.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 5.5 Notice of Redemption. Notice of redemption shall be given in
the manner provided for in Section 11.2 not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of record on the Record
Date of Securities to be redeemed. The Trustee shall give notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall deliver to the Trustee, at least 45 days
prior to the Redemption Date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in
such notice as provided in the following items.
All notices of redemption shall state:
(i) the Redemption Date and the Record Date,
(ii) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 5.7, if any,
(iii) if less than all outstanding Securities are to be redeemed,
the identification of the particular Securities (or portion thereof) to
be redeemed, as well as the aggregate principal amount of Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption,
(iv) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
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(v) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
5.7) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Securities called for redemption
(or the portion thereof) will cease to accrue on and after said date,
(vi) that Securities called for redemption must be surrendered to
the Paying Agent for payment of the Redemption Price and accrued
interest, if any,
(vii) the name and address of the Paying Agent,
(viii) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such
notice or printed on the Securities called for redemption, and
(ix) the section of this Indenture pursuant to which the Securities
are to be redeemed.
SECTION 5.6 Deposit of Redemption Price. On or before any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 2.4) an amount of money sufficient to pay the
Redemption Price of, and accrued interest on, all the Securities which are to
be redeemed on that date. On or after the Redemption Date, if an amount of
money sufficient to pay the Redemption Price of, and accrued interest on, all
the Securities which are to be redeemed on that date shall have been
deposited with the Trustee or a Paying Agent (other than the Company or one
of its affiliates), the Securities called for redemption will cease to accrue
interest and the only right of the Holders of such Securities will be to
receive payment of the Redemption Price of, and accrued interest on, such
Securities to the Redemption Date.
SECTION 5.7 Securities Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified (together with accrued interest, if any, to the Redemption Date),
and from and after such date (unless the Company shall default in the payment
of the Redemption Price and accrued interest) such Securities shall cease to
bear interest. Upon
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surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, to the Redemption Date; provided, however,
that installments of interest whose regular or special record date is on or
prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more predecessor Securities, registered as such at the
close of business on the relevant regular record date or special record date,
as the case may be, according to their terms and the provisions of Section
2.13.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the unpaid principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne
by the Securities.
SECTION 5.8 Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of
the Paying Agent referred to in the notice of redemption provided for under
Section 5.5 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company
and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security at the
expense of the Company, a new Security or Securities, of any authorized
denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered, provided, that each such new Security will be in a
principal amount of $1,000 or integral multiple thereof.
ARTICLE VI
Defaults and Remedies
SECTION 6.1 Events of Default. An "Event of Default" occurs if:
(i) the Company defaults in any payment of interest on any Security
when the same becomes due and payable and such default continues for a
period of 30 days;
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(ii) the Company defaults in the payment of the principal or
premium, if any, of any Security when the same becomes due and payable
at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise;
(iii) the Company fails to comply with Article IV of this Indenture;
(iv) the Company or any Subsidiary Guarantor fails to comply with
Section 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 3.15 and 3.16, and (in each case other than a failure to purchase
Securities when required pursuant to Sections 3.7 or 3.9 of this
Indenture, which failure would constitute an Event of Default under
clause (ii) of this Section 6.1 of this Indenture) and such failure
continues for 30 days after notice specified below;
(v) the Company or any Subsidiary Guarantor defaults in the
performance of or a breach by the Company of any other covenant or
agreement in this Indenture or under the Securities (other than those
referred to in (i), (ii), (iii) or (iv) above) and such default continues
for 60 days after the notice specified below;
(vi) Indebtedness of the Company or any Restricted Subsidiary is
not paid, waived or cured within any applicable grace period after final
maturity or is accelerated by the holders thereof and the total amount
of such unpaid or accelerated Indebtedness exceeds $5,000,000 or its
foreign currency equivalent at the time;
(vii) the Company or a Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian (as defined
below) of it or for any substantial part of its property; or
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(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(ix) any final judgment or decree for the payment of money in
excess of $5,000,000 or its foreign currency equivalent (net of
applicable insurance coverage provided that the insurance carriers have
acknowledged coverage) is rendered against the Company or a Significant
Subsidiary if such judgment or decree remains unvacated, undischarged or
unstayed for a period of 60 days after such judgment or decree becomes
final and non-appealable; or
(x) the failure of any Subsidiary Guarantee by a Subsidiary
Guarantor (if any) to be in full force and effect (except as
contemplated by the terms of this Indenture or such Subsidiary
Guarantee) or the denial or disaffirmation by any such Subsidiary
Guarantor of its obligations under any Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
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The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (iv) or (v) of
this Section 6.1 will not constitute an Event of Default until the Trustee or
the Holders of more than 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure
such Default within the time specified in said clause (iv) or (v) after
receipt of such notice. Such notice must specify the Default, demand that it
be remedied and state that such notice is a "Notice of Default" and is
subject to Section 7.5 of this Indenture.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default under clauses (iii), (iv), (v), (vi), (ix) or
(x) of this Section 6.1.
SECTION 6.2 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.1(vii) or (viii) with respect to the Company
or a Significant Subsidiary) occurs and is continuing, the Trustee by notice
to the Company, or the Holders of at least 25% in outstanding principal
amount of the Securities by notice to the Company and the Trustee, may, and
the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued but unpaid interest on all the Securities to be
due and payable. Upon such a declaration, such principal amount, premium and
interest or, if prior to March 15, 2001, Accreted Value shall be immediately
due and payable. In the event of a declaration of acceleration because an
Event of Default set forth in Section 6.1(vi) above has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default or payment default triggering such Event
of Default pursuant to Section 6.1(vi) shall be remedied or cured by the
Company and/or the relevant Significant Subsidiaries or waived by the holders
of the relevant Indebtedness within 90 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in
Section 6.1(vii) or (viii) with respect to the Company occurs, the principal
of, premium and accrued and unpaid interest on (or if prior to March 15,
2001, the Accreted Value of) all the Securities will become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or any Holders. The Holders of a majority in principal amount
of the outstanding Securities by notice to the Trustee may waive all past
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defaults (except with respect to nonpayment of principal, premium or
interest) and rescind an acceleration with respect to the Securities and its
consequences if (i) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (ii) all existing Events of
Default, other than the nonpayment of principal or interest that has become
due solely because of such acceleration, have been cured or waived. No such
rescission shall affect any subsequent Default or Event of Default or impair
any right consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative to
the extent permitted by law.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may
waive or rescind an existing Default or Event of Default and its consequences
except (i) a Default or Event of Default in the payment of the principal of
or interest on a Security or (ii) a Default or Event of Default in respect of
a provision that under Section 9.2 cannot be amended without the consent of
each Securityholder affected. When a Default or Event of Default is waived,
it is deemed cured and ceases to exist, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any consequent
right.
SECTION 6.5 Control by Majority. The Holders of a majority in principal
amount of the outstanding Securities may 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. However, the Trustee
may refuse to follow any direction that conflicts with any laws or this
Indenture or, subject to Sections 7.1 and 7.2, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve
the Trustee in personal liability; provided, however, that the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the
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Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking
such action.
SECTION 6.6 Limitation on Suits. Except to enforce the right to receive
payment of principal or Accreted Value, premium, if any, or interest when
due, a Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(ii) the Holders of at least 25% in outstanding principal amount of
the Securities make a request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(v) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a direction that, in the
opinion of the Trustee, is inconsistent with the request during such
60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Securities 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 this Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under this Indenture, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment
of principal or Accreted Value, premium (if any) or interest on the
Securities held by such Holder, on or after the respective due dates
expressed in the Securities, or to
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bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default specified
in Section 6.1(i) or (ii) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9 Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries
or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of
a trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each
Holder to make payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and
any other amounts due the Trustee under Section 7.7.
SECTION 6.10 Priorities. If the Trustee collects any money or property
pursuant to this Article VI, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively, upon presentation
of the Securities and the notation thereon of the payment, if only
partially paid, and upon surrender thereof, if fully paid; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date,
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the Company shall mail to each Securityholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to
a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in aggregate outstanding
principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.1 Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
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(j) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.2 Rights of Trustee. Subject to Section 7.1, (a) In the
absence of bad faith on its part, the Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting with respect to any
matters contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on an Officers'
Certificate or Opinion of Counsel.
(c) In the absence of bad faith on its part, the Trustee may act through
its attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within
its rights or powers under this Indenture; provided, however, that the
Trustee's conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) Except with respect to Section 3.1, the Trustee shall have no duty
to inquire as to the performance of the Company with respect to the covenants
contained in Article III. In addition, the Trustee shall not be deemed to
have knowledge of an Event of Default except (i) any Default or Event of
Default occurring pursuant to Sections 3.1, 6.1(i) or 6.1(ii) or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
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(g) Delivery of reports, information and documents to the Trustee under
Section 3.2 is for informational purposes only and the Trustee's receipt of
the foregoing shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Company's compliance with any of their covenants hereunder (as
to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 7.3 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than
the Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults. If a Default or Event of Default occurs
and is continuing and if a Trust Officer has actual knowledge thereof, the
Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of, premium (if any), or interest on
(or if prior to March 15, 2001, the Accreted Value of) any Security
(including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.6 Reports by Trustee to Holders. As promptly as practicable
after each May 15 beginning with the May 15 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
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A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
costs of preparing and reviewing reports, certificates and other documents,
costs of preparation and mailing of notices to Securityholders and reasonable
costs of one counsel retained by the Trustee in connection with the delivery
of an Opinion of Counsel or otherwise, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any
and all loss, liability or reasonable expense (including reasonable
attorneys' fees and expenses) incurred by it without negligence or bad faith
on its part in connection with the administration of this trust and the
performance of its duties hereunder, including the reasonable costs and
expenses of enforcing this Indenture (including this Section 7.7) and of
defending itself against any claims (whether asserted by any Securityholder,
the Company or otherwise). The Trustee shall notify the Company promptly in
writing of any claim for which it may seek indemnity. Failure by the Trustee
to so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have one
separate counsel reasonably satisfactory to the Company and the Company shall
pay the fees and expenses of such counsel provided that the Company shall not
be required to pay such fees and expenses if it assumes the Trustee's
defense, and, in the reasonable judgement of outside counsel to the Trustee,
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal
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of and interest on particular Securities. The Trustee's right to receive
payment of any amounts due under this Section 7.7 shall not be subordinate to
any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.1(vii) or (viii) with respect
to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign at any time
by so notifying the Company. The Holders of a majority in outstanding
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property or affairs; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of the Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject
to the lien provided for in Section 7.7.
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No resignation or removal of the Trustee shall become effective until
the acceptance of appointment by the successor Trustee. If a successor
Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of
10% in principal amount of the outstanding Securities may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have.
Immediately following a successor Trustee's acceptance of its appointment,
the resignation or removal of the retiring Trustee shall become
effective and the retiring Trustee shall, subject to its rights under Section
7.7 hereof, transfer all property held by it as Trustee to the successor
Trustee and shall have all the rights , powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its successor
to each Securityholder.
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SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA section 310(a). The Trustee shall have a
combined capital and surplus of at least $100,000,000 or be a member of a bank
holding company with a combined capital and surplus of at least $100,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA section 310(b); provided, however, that there shall be
excluded from the operation of TIA section 310(b)(1) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA section 310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee
shall comply with TIA section 311(a), excluding any creditor relationship listed
in TIA section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1 Discharge of Liability on Securities; Defeasance. (a) When (i)
the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.9) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities (other than Securities
replaced pursuant to Section 2.9), including interest thereon to maturity or
such redemption date, and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
(accompanied by an Officers' Certificate and an Opinion of Counsel stating that
all conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with) and at the cost and expense
of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 3.2, 3.3,
3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.16 and 4.1(iii)
and the operation of Sections
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6.1(vi), 6.1 (vii) and 6.1(viii) with respect to Significant Subsidiaries,
6.1(ix) and 6.1 (x) and the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.1(iii) and 6.1(iv) ("covenant defeasance option"), but, except as specified
above, the remainder of this Indenture and the Securities shall be unaffected
thereby. The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If the Company exercises
its covenant defeasance option, the Company may, by written notice to the
Trustee prior to the delivery of the Opinion of Counsel referred to in Section
8.2(viii), elect to have any Subsidiary Guarantees in effect at such time
terminate.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default and the
Subsidiary Guarantees in effect at such time shall terminate. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.1(iv),
6.1(v), 6.1(vi), 6.1(vii) (but only with respect to a Significant Subsidiary) or
(viii) or because of the failure of the Company to comply with Sections
4.1(iii).
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b), the
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 7.7, 7.8, 8.4,
8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2 Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the Trustee for the
benefit of the Holders money in U.S. dollars or U.S. Government Obligations
or a combination thereof for the payment of principal of, premium, if any,
and interest on the Securities to maturity or redemption, as the case may
be;
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(ii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity;
(iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default with respect to this Indenture resulting from the incurrence of
Indebtedness, all or a portion of which will be used to defease the
Securities concurrently with such incurrence);
(iv) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(v) the Company shall have delivered to the Trustee an Opinion of
Counsel, subject to such qualifications and exceptions as the Trustee deems
appropriate, to the effect that (A) the Securities and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the
91st day following the deposit and that no Holder of the Securities is an
insider of the Company, after 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' right
generally;
(vi) the deposit does not constitute a default under any other
agreement binding on the Company;
(vii) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company required to register under the
Investment Company Act of 1940;
(viii) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
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Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Securityholders will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance had
not occurred;
(ix) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States to
the effect that the Securityholders will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and
(x) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to the defeasance and discharge of
the Securities and this Indenture as contemplated by this Article VIII have
been complied with and an Opinion of Counsel stating that the Trustee on
behalf of the Holders will have a valid and perfected exclusive security
interest in the trust funds and that the conditions precedent provided for
in clauses (viii) and (ix), as applicable, of this Section 8.2 have been
complied with.
SECTION 8.3 Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
VIII. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.4 Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them upon payment of all the obligations under this Indenture.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal of or interest on the Securities that remains unclaimed
for
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two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.
SECTION 8.5 Indemnity for U.S. Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.6 Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article
VIII by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the obligations of the Company under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1 Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to comply with Article IV in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
(iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in
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a manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Code;
(iv) to add guarantees with respect to the Securities or to secure the
Securities;
(v) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(vi) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(vii) to make any change that does not adversely affect the rights of
any Securityholder;
(viii) to provide for the issuance of the Exchange Securities, which
will have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Securities, as
a single issue of securities; or
(ix) to effect any change to the transfer restrictions and Security
delivery procedures contained in Article II in order to conform with any
change in applicable law or policies of the Depositary.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.2 With Consent of Holders. The Company and the Trustee may amend
this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in principal amount of
the Securities. However, without the consent of each Securityholder affected, an
amendment may not:
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(i) reduce the amount of Securities whose Holders must consent to an
amendment to this Indenture;
(ii) reduce the rate of or extend the time for payment of interest on
any Security;
(iii) reduce the principal of or extend the Stated Maturity of any
Security;
(iv) make any Security payable in money other than that stated in the
Security;
(v) impair the right of any Holder to receive payment of principal of
and interest on such Holder's Securities on or after the due dates therefor
or to institute suit for the enforcement of any payment on or with respect
to such Holder's Securities;
(vi) make any change to the amendment provisions which require each
Holder's consent or to the waiver provisions; or
(vii) cause the Securities or the Subsidiary Guarantees to be
subordinated to any other Indebtedness; or
(viii) make any change to the redemption price or the Redemption Dates
as set forth in paragraph 5 of the Securities.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.3 Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
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SECTION 9.4 Revocation and Effect of Consents and Waivers. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder. An amendment or
waiver shall become effective upon receipt by the Trustee of the requisite
number of written consents under Section 9.1 or 9.2 as applicable.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
SECTION 9.5 Notation on or Exchange of Securities. If an amendment changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security regarding the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment.
SECTION 9.6 Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
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ARTICLE X
Guarantee
SECTION 10.1 Guarantee. The Subsidiary Guarantor hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder of the Securities the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the principal of,
premium, if any, and interest on the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). The Guarantor further agrees
(to the extent permitted by law) that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from it, and that
it will remain bound under this Article X notwithstanding any extension or
renewal of any Obligation.
The Subsidiary Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The Subsidiary Guarantor waives notice of any default
under the Securities or the Obligations. The obligations of the Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder to
assert any claim or demand or to enforce any right or remedy against the Company
or any other person under this Indenture, the Securities or any other agreement
or otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder to exercise any right or remedy against any other
Subsidiary Guarantor; or (f) any change in the ownership of the Company.
The Subsidiary Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment when due (and not a guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Obligations.
The obligations of the Subsidiary Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason (other
than payment of the Obligations in full), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff,
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counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
the Subsidiary Guarantor herein shall not be discharged or impaired or otherwise
affected by the failure of any Holder to assert any claim or demand or to
enforce any remedy under this Indenture, the Securities or any other agreement,
by any waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent vary the risk of the Subsidiary Guarantor
or would otherwise operate as a discharge of the Subsidiary Guarantor as a
matter of law or equity.
The Subsidiary Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any of the
Obligations is rescinded or must otherwise be restored by any Holder upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder has at law or in equity against the Subsidiary Guarantor by
virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, the Subsidiary Guarantor hereby promises to and will,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid
amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).
The Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity
of the Obligations guaranteed hereby may be accelerated as provided in this
Indenture for the purposes of the Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby and (y) in the event of any such declaration of
acceleration of such Obligations, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantor for
the purposes of this Guarantee.
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The Subsidiary Guarantor also agrees to pay any and all reasonable costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
the Holders in enforcing any rights under this Section.
SECTION 10.2 Limitation on Liability; Termination, Release and Discharge.
The obligations of the Subsidiary Guarantor hereunder will be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of the Subsidiary Guarantor (including, without limitation, any
guarantees under the Revolving Credit Facility) and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under this
Indenture or as set forth below, result in the obligations of the Subsidiary
Guarantor under this Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Each Subsidiary Guarantor shall be permitted to consolidate with or merge
into or sell all or part of its assets or properties to the Company or another
Subsidiary Guarantor without limitation and such merger, sale or other transfer
shall not be subject to Section 3.7 of this Indenture. Subject to the other
provisions of this Indenture, each Subsidiary Guarantor shall be permitted to
consolidate with or merge into or sell all or substantially all of its assets or
properties to any Person other than the Company or another Subsidiary Guarantor
(whether or not affiliated with the Subsidiary Guarantor). Upon the sale or
disposition of a Subsidiary Guarantor (by merger, consolidation, the sale of all
or substantially all of its assets) to a Person (whether or not an Affiliate of
the Subsidiary Guarantor) which is not a Subsidiary Guarantor of the Company,
which sale or disposition is otherwise in compliance with this Indenture
(including Section 3.7 of this Indenture), such Subsidiary Guarantor shall be
deemed released from all its obligations under this Indenture and its Subsidiary
Guarantee and such Subsidiary Guarantee shall terminate; provided, however, that
any such termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, any other
Indebtedness of the Company shall also terminate upon such release, sale or
transfer.
SECTION 10.3 Right of Contribution. The Subsidiary Guarantor hereby agrees
that to the extent that any Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made on the obligations under the Subsidiary
Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive
contribution from and against the Company or any other Subsidiary
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Guarantor (including the Subsidiary Guarantor) who has not paid its
proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 3.6. The
provisions of this Section 10.3 shall in no respect limit the obligations and
liabilities of the Subsidiary Guarantor to the Trustee and the Holders and the
Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the
full amount guaranteed by the Subsidiary Guarantor hereunder.
SECTION 10.4 No Subrogation. Notwithstanding any payment or payments made
by the Subsidiary Guarantor hereunder, the Subsidiary Guarantor shall not be
entitled to be subrogated to any of the rights of the Trustee or any Holder
against the Company or any other Subsidiary Guarantor or any collateral security
or guarantee or right of offset held by the Trustee or any Holder for the
payment of the Obligations, nor shall the Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by the Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
the Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by the Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of the Subsidiary Guarantor, and shall, forthwith
upon receipt by the Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by the Subsidiary Guarantor (duly indorsed by the Subsidiary
Guarantor to the Trustee, if required), to be applied against the Obligations.
ARTICLE XI
Miscellaneous
SECTION 11.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 11.2 Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
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if to the Company:
Big City Radio, Inc.
11 Skyline Drive
Hawthorne, NY 10532
Attention: President
With a copy to:
Paul Weiss Rifkind Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: James M. Dubin, Esq.
if to the Trustee:
First Trust National Association, a national association
180 East Fifth Street
Saint Paul, MN 55101
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.3 Communication by Holders with other Holders. Securityholders
may communicate pursuant to TIA section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA section
312(c).
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SECTION 11.4 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(i) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(iv) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual matters
on an Officer's Certificate or on certificates of public officials.
SECTION 11.6 When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred
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in any direction, waiver or consent, Securities owned by the Company or by any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company shall be disregarded and deemed not to
be outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 11.7 Rules by Trustee, Paying Agent and Registrar. The Trustee may
make reasonable rules for action by, or a meeting of, Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.8 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
other day on which commercial banking institutions are authorized or required to
be closed in New York City. If a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 11.9 Governing Law. This Indenture and the Securities shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 11.10 No Recourse Against Others. An incorporator, director,
officer, employee, stockholder or controlling person, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 11.11 Successors. All agreements of the Company in this Indenture
and the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.12 Multiple Originals. The parties may sign any number of copies
of this Indenture. Each signed copy shall be an original, but all of
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them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 11.13 Variable Provisions. The Company initially appoints the
Trustee as Paying Agent and Registrar and custodian with respect to any Global
Securities.
SECTION 11.14 Qualification of Indenture. The Company shall qualify this
Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys' fees and expenses for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive from
the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 11.15 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
BIG CITY RADIO, INC.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
SUBSIDIARY GUARANTORS:
BIG CITY RADIO--NYC, L.L.C.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
BIG CITY RADIO--CHI, L.L.C.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
BIG CITY RADIO--LA, L.L.C.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
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ODYSSEY TRAVELING BILLBOARDS,
INC.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
WRKL ROCKLAND RADIO, L.L.C.
By: /s/ Michael Kakoyiannis
----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
FIRST TRUST NATIONAL ASSOCIATION,
a national association
By: /s/ Richard H. Prokosch
----------------------------
Name: Richard H. Prokosch
Title: Assistant Vice President
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EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
No. [___] Principal Amount $[______________]
CUSIP NO. ____________
11 1/4% Senior Discount Notes due 2005
Big City Radio, Inc., a Delaware corporation, promises to pay to
[___________], or registered assigns, the principal sum of [__________________]
Dollars on March 15, 2005.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: March 17, 1998 BIG CITY RADIO, INC.
By: --------------------------------
Name: Michael Kakoyiannis
Title: President and
Chief Executive Officer
By: --------------------------------
Name: Arnold L. Walder
Title: Secretary
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TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Trust National Association, a national association,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By: -------------------------------
Authorized Signatory Date: March 17, 1998
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<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11 1/4% Senior Discount Note due 2005
1. Interest
Big City Radio, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.
The Company will pay interest semiannually on March 15 and September 15 of
each year commencing September 15, 2001. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from March 15, 2001. The Company will pay interest
on overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
The initial Accreted Value will increase at the rate of 11 1/4% per annum,
compounded semi-annually, until March 15, 2001, to an aggregate principal amount
on March 15, 2001 of $174,000,000.
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company will
irrevocably deposit with the Trustee or the Paying Agent money sufficient to
pay such principal, premium, if any, and/or interest. The Company will pay
interest (except Defaulted Interest) to the Persons who are registered Holders
of Securities at the close of business on March 1 or September 1 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
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3. Paying Agent and Registrar
Initially, First Trust National Association, a national association, a
banking corporation duly organized and existing under the laws of the State of
[_________] (the "Trustee"), will act as Trustee, Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of March 17,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors named therein and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. section 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior obligations of the Company
that will rank pari passu in right of payment to all existing and future senior
indebtedness of the Company (including the Revolving Credit Facility) and senior
to all existing and future subordinated indebtedness of the Company, limited to
$174,000,000 aggregate principal amount (subject to Section 2.9 of the
Indenture). This Security is one of the Initial Securities referred to in the
Indenture. The Securities include the Initial Securities and any Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture and the Registration Rights Agreement. The Initial Securities and the
Exchange Securities are treated, for all purposes, as a single class of
securities under the Indenture. The Indenture imposes certain limitations on:
the Incurrence of Indebtedness by the Company and its Restricted Subsidiaries,
the payment of dividends and other distributions on the Capital Stock of the
Company and its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of the Company and Capital Stock of such Restricted Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the Incurrence of Liens by
the Company or its Restricted Subsidiaries, the sale or
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transfer of assets and Capital Stock of Restricted Subsidiaries, the issuance of
Capital Stock of Restricted Subsidiaries, the business activities and
investments of the Company and its Restricted Subsidiaries and, transactions
with Affiliates. In addition, the Indenture limits the ability of the Company
and its Restricted Subsidiaries to restrict distributions and dividends from
Restricted Subsidiaries.
5. Redemption
Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to March 15, 2002. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (ex pressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on March 15 of the years
set forth below:
<TABLE>
<CAPTION>
Period Redemption Price
<C> <C>
2002 105.625%
2003 102.813%
2004 and thereafter 100.00%
</TABLE>
In addition, at any time and from time to time on or prior to March 15,
2001, the Company may redeem in the aggregate up to 331/3% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings received by the Company so long as there is a Public Market for
the Class A Common Stock at the time of such redemption, at a redemption price
(expressed as a percentage of Accreted Value thereof) of 1/4%, to the date of
redemption; provided, however, that at least 662/3% of the original principal
amount of the Securities must remain outstanding after each such redemption.
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<PAGE>
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in principal amount or less will
be redeemed in part. If any Security is to be redeemed in part only, the notice
of redemption relating to such Security shall state the portion of the principal
amount thereof to be redeemed. A new Security in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security.
6. Repurchase Provisions
(a) Upon a Change of Control, each Holder of Securities will have the right
to require the Company to purchase all or any part of the Securities of such
Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) or, in the case of
purchases of Securities prior to March 15, 2001, at a purchase price equal to
101% of the Accreted Value thereof as of the date of purchase as provided in,
and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Disposition permitted by the Indenture, when the aggregate amount of Net
Available Cash available after application of the proceeds of such Asset
Disposition pursuant to the Indenture, equals or exceeds $5,000,000, the Company
shall make an Offer to purchase all outstanding Securities pro rata up to a
maximum principal amount (expressed as a multiple of $1,000) of Securities equal
to such Offer Proceeds, at a purchase price in cash equal to, prior to March
15, 2001, 100% of the Accreted Value of such Securities on the purchase date and
thereafter 100% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of purchase and other pari passu debt
obligations subject to a similar covenant at par plus accrued and unpaid
interest, in accordance with the procedures set forth in Section 3.7 of the
Indenture.
7. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer
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documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange (i) any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before a selection of Securities to be redeemed and ending on
the date of such selection or (ii) any Securities for a period beginning 15 days
before an interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered holder of this Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Securities and
(ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount of the then
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsis-
5
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tency, or to comply with Article IV of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any change that does not adversely
affect the rights of any Securityholder, or to provide for the issuance of
Exchange Securities.
12. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
redemption pursuant to paragraphs 5 and 6 of the Securities, upon declaration or
otherwise; (iii) the failure by the Company to comply with its obligations under
Article IV of the Indenture, (iv) failure by the Company to comply for 30 days
after notice with any of its obligations under the covenants described under
Section 3.9 of the Indenture or under other covenants specified in the Indenture
(in each case, other than a failure to purchase Securities which shall
constitute an Event of Default under clause (ii) above), (v) the failure by the
Company to comply for 60 days after notice with its other agreements contained
in the Indenture, (vi) Indebtedness of the Company or any Restricted Subsidiary
not paid, waived or cured 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 $5,000,000 (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any final judgment or decree for the payment of money in
excess of $5,000,000 (net of applicable insurance coverage, provided, that the
insurance carriers have acknowledged coverage) is rendered against the Company
or a Significant Subsidiary and such judgment or decree shall remain unvacated,
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judgment default provision") or (ix) any
Subsidiary Guarantee ceases to be in full force and effect (except as
contemplated by the terms of the Indenture or such Subsidiary Guarantee) or any
Subsidiary Guarantor denies or disaffirms its obligations under the Indenture or
its Subsidiary Guarantee. However, a default under clause (iv) or (v) will not
constitute an Event of Default until the Trustee or the holders of more than 25%
in principal amount of the outstanding Securities notify the Company of the
default and the Company does not
6
<PAGE>
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Securities by notice to
the Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
7
<PAGE>
15. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
16. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Security shall be governed by, and construed in accordance with, the
laws of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
8
<PAGE>
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger type.
Requests may be made to:
Big City Radio, Inc.
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention of: General Counsel
9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
-------------------- -------------------
Signature Guarantee:
----------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without transfer;
or
2[ ] transferred to the Company; or
1
<PAGE>
3[ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended (the "Securities
Act"); or
4[ ] transferred pursuant to an effective registration statement
under the Securities Act; or
5[ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6[ ] transferred to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that
has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter
appears as Section 2.7 of the Indenture); or
-----------
7[ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
- ------------------------------
Signature
Signature Guarantee:
- -------------------------
- ------------------------------
(Signature must be guaranteed) Signature
2
<PAGE>
- ------------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
- ------------------
Dated:
3
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
[TO BE ATTACHED TO GLOBAL SECURITIES]
The following increases or decreases in this Global Security have been
made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this
in Principal Amount in Principal Amount Global Security Signature of authorized
Date of of this of this following such signatory of Trustee
Exchange Global Security Global Security decrease or increase or Securities Custodian
- ------- -------------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
</TABLE>
4
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check the box:
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
5
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
11 1/4% Senior Discount Notes due 2005
Big City Radio, Inc., a Delaware corporation, promises to pay to
[______________], or registered assigns, the principal sum of [_______________]
Dollars on March 15, 2005.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Additional provisions of this Security are set forth on the other side of
this Security.
BIG CITY RADIO, INC.
By:
-----------------------------------------------
By:
-----------------------------------------------
6
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Trust National Association, a national association,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
------------------------------
Authorized Signatory Date:
7
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
___% Senior Discount Note due 2005
1. Interest
Big City Radio, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.
The Company will pay interest semiannually on March 15 and Septem ber 15 of
each year commencing September 15, 2001. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from March 15, 2001. The Company will pay interest
on overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
The initial Accreted Value will increase at the rate of 11 1/4% per annum,
compounded semi-annually, until March 15, 2001, to an aggregate principal amount
on March 15, 2001 of $174,000,000.
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company will
irrevoca bly deposit with the Trustee or the Paying Agent money sufficient to
pay such principal, premium, if any, and/or interest. The Company will pay
interest (except Defaulted Interest) to the Persons who are registered Holders
of Securities at the close of business on March 1 or September 1 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
1
<PAGE>
3. Paying Agent and Registrar
Initially, First Trust National Association, a national association, a
banking corporation duly organized and existing under the laws of the State of
[_________] (the "Trustee"), will act as Trustee, Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of March 17,
1998 (as it may be amended or supplemented from time to time in accor dance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors named therein and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. section 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior obligations of the Company
that will rank pari passu in right of payment to all existing and future senior
indebtedness of the Company (including the Revolving Credit Facility) and senior
to all existing and future subordinated indebtedness of the Company, limited to
$174,000,000 aggregate principal amount (subject to Section 2.9 of the
Indenture). This Security is one of the Initial Securities referred to in the
Indenture. The Securities include the Initial Securities and any Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture and the Registration Rights Agree ment. The Initial Securities and the
Exchange Securities are treated, for all purposes, as a single class of
securities under the Indenture. The Indenture imposes certain limitations on:
the Incurrence of Indebtedness by the Company and its Restricted Subsidiaries,
the payment of dividends and other distributions on the Capital Stock of the
Company and its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of the Company and Capital Stock of such Restricted Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the Incurrence of Liens by
the Company or its Restricted Subsidiaries, the sale or
2
<PAGE>
transfer of assets and Capital Stock of Restricted Subsidiaries, the issuance of
Capital Stock of Restricted Subsidiaries, the business activities and
investments of the Company and its Restricted Subsidiaries and, transactions
with Affiliates. In addition, the Indenture limits the ability of the Company
and its Restricted Subsidiaries to restrict distributions and dividends from
Restricted Subsidiaries.
5. Redemption
Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to March 15, 2002. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (ex pressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on March 15 of the years
set forth below:
<TABLE>
<CAPTION>
Period Redemption Price
<C> <C>
2002 105.625%
2003 102.813%
2004 and thereafter 100.00%
</TABLE>
In addition, at any time and from time to time on or prior to March 15,
2001, the Company may redeem in the aggregate up to 331/3% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings received by the Company so long as there is a Public Market for
the Class A Common Stock at the time of such redemption, at a redemption price
(expressed as a percentage of Accreted Value thereof) of 111, to the date of
redemption; provided, however, that at least 662/3% of the original principal
amount of the Securities must remain outstanding after each such redemption.
3
<PAGE>
In the case of any partial redemption, selection of the Securities for
redemp tion will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in principal amount or less will
be redeemed in part. If any Security is to be redeemed in part only, the notice
of redemption relating to such Security shall state the portion of the principal
amount thereof to be redeemed. A new Security in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security.
6. Repurchase Provisions
(c) Upon a Change of Control, each Holder of Securities will have the right
to require the Company to purchase all or any part of the Securities of such
Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) or, in the case of
purchases of Securities prior to March 15, 2001, at a purchase price equal to
101% of the Accreted Value thereof as of the date of purchase as provided in,
and subject to the terms of, the Indenture.
(d) If the Company or a Restricted Subsidiary consummates any Asset
Disposition permitted by the Indenture, when the aggregate amount of Net
Available Cash available after application of the proceeds of such Asset
Disposition pursuant to the Indenture, equals or exceeds $5,000,000, the Company
shall make an Offer to purchase all outstanding Securities pro rata up to a
maximum principal amount (expressed as a multiple of $1,000) of Securities equal
to such Offer Proceeds, at a purchase price in cash equal to, prior to March
15, 2001, 100% of the Accreted Value of such Securities on the purchase date and
thereafter 100% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of purchase and other pari passu debt
obligations subject to a similar covenant at par plus accrued and unpaid
interest, in accordance with the procedures set forth in Section 3.7 of the
Indenture.
7. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer
4
<PAGE>
documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before a selection of Securities to be redeemed and ending on
the date of such selection or (ii) any Securities for a period beginning 15 days
before an interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered holder of this Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, the Subsidiary Guarantors and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or
5
<PAGE>
inconsistency, or to comply with Article IV of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any change that does not adversely
affect the rights of any Securityholder, or to provide for the issuance of
Exchange Securities.
12. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
redemption pursuant to paragraphs 5 and 6 of the Securities, upon declaration or
otherwise; (iii) the failure by the Company to comply with its obligations under
Article IV of the Indenture, (iv) failure by the Company to comply for 30 days
after notice with any of its obligations under the covenants described under
Section 3.9 of the Indenture or under other covenants specified in the Indenture
(in each case, other than a failure to purchase Securities which shall
constitute an Event of Default under clause (ii) above), (v) the failure by the
Company to comply for 60 days after notice with its other agreements contained
in the Indenture, (vi) Indebtedness of the Company or any Restricted Subsidiary
not paid, waived or cured 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 $5,000,000 (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganiza tion of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any final judgment or decree for the payment of money in
excess of $5,000,000 (net of applicable insurance coverage, provided, that the
insurance carriers have acknowl edged coverage) is rendered against the Company
or a Significant Subsidiary and such judgment or decree shall remain unvacated,
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judg ment default provision") or (ix) any
Subsidiary Guarantee ceases to be in full force and effect (except as
contemplated by the terms of the Indenture or such Subsidiary Guarantee) or any
Subsidiary Guarantor denies or disaffirms its obligations under the Indenture or
its Subsidiary Guarantee. However, a default under clause (iv) or (v) will not
constitute an Event of Default until the Trustee or the holders of more than 25%
in principal amount of the outstanding Securities notify the Company of the
default and the Company does not
6
<PAGE>
cure such default within the time specified in clauses (iv) and (v) hereof
after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Securities by notice to
the Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
7
<PAGE>
15. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
16. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Security shall be governed by, and construed in accordance with, the
laws of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
8
<PAGE>
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger
type. Requests may be made to:
Big City Radio, Inc.
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention of: General Counsel
9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature
--------------- --------------------
Signature Guarantee:
------------------------------------
(Signature must be guaranteed)
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
1
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side of
the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
1
<PAGE>
EXHIBIT C
FORM OF SUBSIDIARY GUARANTEE
This Supplemental Indenture, dated as of [__________] (this "Supplemental
Indenture" or "Guarantee"), among [name of Subsidiary Guarantor] (the
"Guarantor"), Big City Radio, Inc. (together with its successors and assigns,
the "Company"), [each other then existing Subsidiary Guarantor under the
Indenture referred to below,] and First Trust National Association, a national
association, as Trustee under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have heretofore executed and delivered
an Indenture, dated as of March 17, 1998 (as amended, supplemented, waived or
otherwise modified, the "Indenture"), providing for the issuance of an aggregate
principal amount of $174,000,000 of 11 1/4% Senior Discount Notes due 2005 of
the Company (the "Securities");
WHEREAS, Section 3.12 of the Indenture provides that the Company is
required to cause each Restricted Subsidiary created or acquired by the Company
to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which
such Subsidiary Guarantor will unconditionally Guarantee, on a joint and several
basis, the full and prompt payment of the principal of, premium, if any and
interest on the Securities on a senior subordinated basis; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the
Company are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Securityholder;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor, the Company[, the other Subsidiary Guarantors] and the Trustee
mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:
<PAGE>
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Subsidiary Guarantee, terms
defined in the Indenture or in the preamble or recital hereto are used herein as
therein defined, except that the term "Holders" in this Guarantee shall refer to
the term "Holders" as defined in the Indenture and the Trustee acting on behalf
or for the benefit of such holders. The words "herein," "hereof" and "hereby"
and other words of similar import used in this Supplemental Indenture refer to
this Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
Guarantee
SECTION 2.1 Guarantee. The Guarantor hereby fully, unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety, jointly and
severally with each other Subsidiary Guarantor, to each Holder of the Securities
the full and punctual payment when due, whether at maturity, by acceleration, by
redemption or otherwise, of the principal of, premium, if any, and interest on
the Securities (all the foregoing being hereinafter collectively called the
"Obligations"). The Guarantor further agrees (to the extent permitted by law)
that the Obligations may be extended or renewed, in whole or in part, without
notice or further assent from it, and that it will remain bound under this
Article II notwithstanding any extension or renewal of any Obligation.
The Guarantor waives presentation to, demand of payment from and protest to
the Company of any of the Obligations and also waives notice of protest for
nonpayment. The Guarantor waives notice of any default under the Securities or
the Obligations. The obligations of the Guarantor hereunder shall not be
affected by (a) the failure of any Holder to assert any claim or demand or to
enforce any right or remedy against the Company or any other person under the
Indenture, the Securities or any other agreement or otherwise; (b) any extension
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of the Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Obligations or any of them; (e) the failure
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of any Holder to exercise any right or remedy against any other Subsidiary
Guarantor; or (f) any change in the ownership of the Company.
The Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment when due (and not a guarantee of collection) and waives any
right to require that any resort be had by any Holder to any security held for
payment of the Obligations.
The obligations of the Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than
payment of the Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of the
Guarantor herein shall not be discharged or impaired or otherwise affected by
the failure of any Holder to assert any claim or demand or to enforce any remedy
under the Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Guarantor or would otherwise
operate as a discharge of the Guarantor as a matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any of the Obligations is rescinded
or must otherwise be restored by any Holder upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder has at law or in equity against the Guarantor by virtue hereof,
upon the failure of the Company to pay any of the Obligations when and as the
same shall become due, whether at maturity, by acceleration, by redemption or
otherwise, the Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders an amount equal to the sum of (i) the unpaid amount of such Obligations
then due and owing and (ii)
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accrued and unpaid interest on such Obligations then due and owing (but only to
the extent not prohibited by law).
The Guarantor further agrees that, as between the Guarantor, on the one
hand, and the Holders, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in the Indenture for the
purposes of the Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any such declaration of acceleration
of such Obligations, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purposes of this
Guarantee.
The Guarantor also agrees to pay any and all reasonable costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or the Holders in
enforcing any rights under this Section.
SECTION 2.2 Limitation on Liability; Termination, Release and Discharge.
The obligations of the Guarantor hereunder will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of the Guarantor (including, without limitation, any guarantees
under the Revolving Credit Facility) and after giving effect to any collections
from or payments made by or on behalf of any other Subsidiary Guarantor in
respect of the obligations of such other Subsidiary Guarantor under its
Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture or as set forth below, result in the obligations of the Subsidiary
Guarantor under this Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Each Subsidiary Guarantor will be permitted to consolidate with or merge
into or sell all or part of its assets or properties to the Company or another
Subsidiary Guarantor without limitation and such merger, sale or other transfer
will not be subject to Section 3.7 of the Indenture. Subject to the other
provisions of the Indenture, each Subsidiary Guarantor will be permitted to
consolidate with or merge into or sell all or substantially all of its assets or
properties to any Person other than the Company or another Subsidiary Guarantor
(whether or not affiliated with the Subsidiary Guarantor). Upon the sale or
disposition of a Subsidiary Guarantor (by merger, consolidation, the sale of all
or substantially all of its assets) to a Person (whether or not an Affiliate of
the Subsidiary Guarantor) which is not a Subsidiary
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<PAGE>
Guarantor of the Company, which sale or disposition is otherwise in compliance
with the Indenture (including Section 3.7 of the Indenture), such Subsidiary
Guarantor shall be deemed released from all its obligations under the Indenture
and its Subsidiary Guarantee and such Subsidiary Guarantee shall terminate;
provided, however, that any such termination shall occur only to the extent that
all obligations of such Subsidiary Guarantor under all of its guarantees of, and
under all of its pledges of assets or other security interests which secure, any
other Indebtedness of the Company shall also terminate upon such release, sale
or transfer.
SECTION 2.3 Right of Contribution. The Subsidiary Guarantor hereby agrees
that to the extent that any Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made on the obligations under the Subsidiary
Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive
contribution from and against the Company or any other Subsidiary Guarantor
(including the Subsidiary Guarantor) who has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be subject
to the terms and conditions of Section 3.6. The provisions of this Section 2.3
shall in no respect limit the obligations and liabilities of the Subsidiary
Guarantor to the Trustee and the Holders and the Subsidiary Guarantor shall
remain liable to the Trustee and the Holders for the full amount guaranteed by
the Subsidiary Guarantor hereunder.
SECTION 2.4 No Subrogation. Notwithstanding any payment or payments made by
the Subsidiary Guarantor hereunder, the Subsidiary Guarantor shall not be
entitled to be subrogated to any of the rights of the Trustee or any Holder
against the Company or any other Subsidiary Guarantor or any collateral security
or guarantee or right of offset held by the Trustee or any Holder for the
payment of the Obligations, nor shall the Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by the Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
the Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by the Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of the Subsidiary Guarantor, and shall, forthwith
upon receipt by the Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by the Subsidiary Guarantor (duly
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<PAGE>
indorsed by the Subsidiary Guarantor to the Trustee, if required), to be applied
against the Obligations.
6
<PAGE>
ARTICLE III
Miscellaneous
SECTION 3.1 Notices. All notices and other communications pertaining to
this Guarantee or any Security shall be in writing and shall be deemed to have
been duly given upon the receipt thereof. Such notices shall be delivered by
hand, or mailed, certified or registered mail with postage prepaid (a) if to the
Subsidiary Guarantor, at its address set forth below, with a copy to the
Company as provided in the Indenture for notices to the Company, and (b) if to
the Holders or the Trustee, as provided in the Indenture. The Subsidiary
Guarantor by notice to the Trustee may designate additional or different
addresses for subsequent notices to or communications with the Subsidiary
Guarantor.
SECTION 3.2 Parties. Nothing expressed or mentioned in this Guarantee is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Guarantee or any provision herein contained.
SECTION 3.3 Governing Law. This Agreement shall be governed by the laws of
the State of New York.
SECTION 3.4 Severability Clause. In case any provision in this Guarantee
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability.
SECTION 3.5 Waivers and Remedies. Neither a failure nor a delay on the part
of the Holders or the Trustee in exercising any right, power or privilege under
this Guarantee shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any right, power or
privilege. The rights, remedies and benefits of the Holders and the Trustee
herein expressly specified are cumulative and not exclusive of any other rights,
remedies or benefits which either may have under this Guarantee or at law, in
equity, by statute or otherwise.
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<PAGE>
SECTION 3.6 Successors and Assigns. Subject to Section 2.2 hereof, (a) this
Guarantee shall be binding upon and inure to the benefit of the Subsidiary
Guarantor, the Trustee, any other parties hereto, the Holders and their
respective successors and assigns and (b) in the event of any transfer or
assignment of rights by any Holder, the rights and privileges conferred upon
that party in this Guarantee and in the Securities shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
conditions of this Guarantee and the Indenture.
SECTION 3.7 Modification, etc. Subject to the provisions of, and except as
otherwise provided in, Article IX of the Indenture (including without limitation
Sections 9.1 and 9.2 thereof), no modification, amendment or waiver of any
provision of this Guarantee, nor the consent to any departure by the Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and consented to by the Trustee (with the consent of the Holders of at
least a majority of the Securities if required by Section 9.2 of the Indenture)
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which it was given. No notice to or demand on the
Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor or any
other guarantor to any other or further notice or demand in the same, similar or
other circumstances.
SECTION 3.8 Entire Agreement. This Guarantee is intended by the parties to
be a final expression of their agreement in respect of the subject matter
contained herein and, together with the Indenture, supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 3.9 Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby. The
Trustee makes no representation or warranty as to the validity or sufficiency
of this Supplemental Indenture.
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<PAGE>
SECTION 3.10 Counterparts. The parties hereto may sign one or more copies
of this Supplemental Indenture in counterparts, all of which together shall
constitute one and the same agreement.
SECTION 3.11 Headings. The headings of the Articles and the sections in
this Guarantee are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NAME OF SUBSIDIARY GUARANTOR],
By:
-------------------------------
Name:
Title:
Address:
BIG CITY RADIO, INC.
By:
-------------------------------
Name:
Title:
[Add signature block for any other existing
Subsidiary Guarantors]
[TRUSTEE]
By:
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<PAGE>
-------------------------------
Name:
Title:
10
<PAGE>
Exhibit 4.3
[FORM OF FACE OF INITIAL SECURITY]
No. [___] Principal Amount $[______________]
CUSIP NO. ____________
11 1/4% Senior Discount Notes due 2005
Big City Radio, Inc., a Delaware corporation, promises to pay to
[___________], or registered assigns, the principal sum of [__________________]
Dollars on March 15, 2005.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: March 17, 1998 BIG CITY RADIO, INC.
By:
--------------------------------
Name: Michael Kakoyiannis
Title: President and
Chief Executive Officer
By:
--------------------------------
Name: Arnold L. Walder
Title: Secretary
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<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Trust National Association, a national association,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
-------------------------------
Authorized Signatory Date: March 17, 1998
2
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11 1/4% Senior Discount Note due 2005
1. Interest
Big City Radio, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.
The Company will pay interest semiannually on March 15 and September 15 of
each year commencing September 15, 2001. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from March 15, 2001. The Company will pay interest
on overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
The initial Accreted Value will increase at the rate of 11 1/4% per annum,
compounded semi-annually, until March 15, 2001, to an aggregate principal amount
on March 15, 2001 of $174,000,000.
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company will
irrevocably deposit with the Trustee or the Paying Agent money sufficient to
pay such principal, premium, if any, and/or interest. The Company will pay
interest (except Defaulted Interest) to the Persons who are registered Holders
of Securities at the close of business on March 1 or September 1 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
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3. Paying Agent and Registrar
Initially, First Trust National Association, a national association, a
banking corporation duly organized and existing under the laws of the State of
[_________] (the "Trustee"), will act as Trustee, Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of March 17,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors named therein and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. section 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior obligations of the Company
that will rank pari passu in right of payment to all existing and future senior
indebtedness of the Company (including the Revolving Credit Facility) and senior
to all existing and future subordinated indebtedness of the Company, limited to
$174,000,000 aggregate principal amount (subject to Section 2.9 of the
Indenture). This Security is one of the Initial Securities referred to in the
Indenture. The Securities include the Initial Securities and any Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture and the Registration Rights Agreement. The Initial Securities and the
Exchange Securities are treated, for all purposes, as a single class of
securities under the Indenture. The Indenture imposes certain limitations on:
the Incurrence of Indebtedness by the Company and its Restricted Subsidiaries,
the payment of dividends and other distributions on the Capital Stock of the
Company and its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of the Company and Capital Stock of such Restricted Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the Incurrence of Liens by
the Company or its Restricted Subsidiaries, the sale or
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<PAGE>
transfer of assets and Capital Stock of Restricted Subsidiaries, the issuance of
Capital Stock of Restricted Subsidiaries, the business activities and
investments of the Company and its Restricted Subsidiaries and, transactions
with Affiliates. In addition, the Indenture limits the ability of the Company
and its Restricted Subsidiaries to restrict distributions and dividends from
Restricted Subsidiaries.
5. Redemption
Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to March 15, 2002. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (ex pressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on March 15 of the years
set forth below:
<TABLE>
<CAPTION>
Period Redemption Price
<C> <C>
2002 105.625%
2003 102.813%
2004 and thereafter 100.00%
</TABLE>
In addition, at any time and from time to time on or prior to March 15,
2001, the Company may redeem in the aggregate up to 331/3% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings received by the Company so long as there is a Public Market for
the Class A Common Stock at the time of such redemption, at a redemption price
(expressed as a percentage of Accreted Value thereof) of 1/4%, to the date of
redemption; provided, however, that at least 662/3% of the original principal
amount of the Securities must remain outstanding after each such redemption.
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<PAGE>
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in principal amount or less will
be redeemed in part. If any Security is to be redeemed in part only, the notice
of redemption relating to such Security shall state the portion of the principal
amount thereof to be redeemed. A new Security in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security.
6. Repurchase Provisions
(a) Upon a Change of Control, each Holder of Securities will have the right
to require the Company to purchase all or any part of the Securities of such
Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) or, in the case of
purchases of Securities prior to March 15, 2001, at a purchase price equal to
101% of the Accreted Value thereof as of the date of purchase as provided in,
and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Disposition permitted by the Indenture, when the aggregate amount of Net
Available Cash available after application of the proceeds of such Asset
Disposition pursuant to the Indenture, equals or exceeds $5,000,000, the Company
shall make an Offer to purchase all outstanding Securities pro rata up to a
maximum principal amount (expressed as a multiple of $1,000) of Securities equal
to such Offer Proceeds, at a purchase price in cash equal to, prior to March
15, 2001, 100% of the Accreted Value of such Securities on the purchase date and
thereafter 100% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of purchase and other pari passu debt
obligations subject to a similar covenant at par plus accrued and unpaid
interest, in accordance with the procedures set forth in Section 3.7 of the
Indenture.
7. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer
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<PAGE>
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange (i) any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before a selection of Securities to be redeemed and ending on
the date of such selection or (ii) any Securities for a period beginning 15 days
before an interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered holder of this Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Securities and
(ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount of the then
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsis-
5
<PAGE>
tency, or to comply with Article IV of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any change that does not adversely
affect the rights of any Securityholder, or to provide for the issuance of
Exchange Securities.
12. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
redemption pursuant to paragraphs 5 and 6 of the Securities, upon declaration or
otherwise; (iii) the failure by the Company to comply with its obligations under
Article IV of the Indenture, (iv) failure by the Company to comply for 30 days
after notice with any of its obligations under the covenants described under
Section 3.9 of the Indenture or under other covenants specified in the Indenture
(in each case, other than a failure to purchase Securities which shall
constitute an Event of Default under clause (ii) above), (v) the failure by the
Company to comply for 60 days after notice with its other agreements contained
in the Indenture, (vi) Indebtedness of the Company or any Restricted Subsidiary
not paid, waived or cured 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 $5,000,000 (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any final judgment or decree for the payment of money in
excess of $5,000,000 (net of applicable insurance coverage, provided, that the
insurance carriers have acknowledged coverage) is rendered against the Company
or a Significant Subsidiary and such judgment or decree shall remain unvacated,
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judgment default provision") or (ix) any
Subsidiary Guarantee ceases to be in full force and effect (except as
contemplated by the terms of the Indenture or such Subsidiary Guarantee) or any
Subsidiary Guarantor denies or disaffirms its obligations under the Indenture or
its Subsidiary Guarantee. However, a default under clause (iv) or (v) will not
constitute an Event of Default until the Trustee or the holders of more than 25%
in principal amount of the outstanding Securities notify the Company of the
default and the Company does not
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<PAGE>
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Securities by notice to
the Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
7
<PAGE>
15. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
16. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Security shall be governed by, and construed in accordance with, the
laws of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
8
<PAGE>
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger type.
Requests may be made to:
Big City Radio, Inc.
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention of: General Counsel
9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
-------------------- -------------------
Signature Guarantee:
----------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without transfer;
or
2[ ] transferred to the Company; or
1
<PAGE>
3[ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended (the "Securities
Act"); or
4[ ] transferred pursuant to an effective registration statement
under the Securities Act; or
5[ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6[ ] transferred to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that
has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter
appears as Section 2.7 of the Indenture); or
-----------
7[ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
- ------------------------------
Signature
Signature Guarantee:
- ------------------------------
(Signature must be guaranteed) Signature
2
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check the box:
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
5
<PAGE>
Exhibit 10.10
EXECUTION COPY
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED CREDIT
AGREEMENT
among
BIG CITY RADIO, INC.
The Several Lenders
from Time to Time Parties Hereto
and
The Chase Manhattan Bank,
as Agent
Dated as of March 17, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . 15
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . 15
2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . 15
2.2 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . 16
2.3 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Termination or Reduction of Commitments. . . . . . . . . . . . . . 17
2.5 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . 17
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . 18
2.7 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Conversion and Continuation Options. . . . . . . . . . . . . . . . 19
2.9 Minimum Amounts and Maximum Number of Tranches . . . . . . . . . . 19
2.10 Interest Rates and Payment Dates. . . . . . . . . . . . . . . . . 19
2.11 Computation of Interest and Fees. . . . . . . . . . . . . . . . . 20
2.12 Inability to Determine Interest Rate. . . . . . . . . . . . . . . 20
2.13 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . 21
2.14 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.15 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . 22
2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.17 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18 Change of Lending Office or Replacement of Lender . . . . . . . . 25
2.19 Certain Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . 26
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2. Procedure for Issuance of Letters of Credit.. . . . . . . . . . . 27
3.3. Fees, Commissions and Other Charges.. . . . . . . . . . . . . . . 27
3.4. L/C Participations. . . . . . . . . . . . . . . . . . . . . . . . 27
3.5. Reimbursement Obligation of the Borrower. . . . . . . . . . . . . 28
3.6. Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . . 29
3.7. Letter of Credit Payments.. . . . . . . . . . . . . . . . . . . . 29
3.8. Application.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 29
4.1 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . 30
4.4 Corporate Power; Authorization; Enforceable Obligations. . . . . . 30
4.5 No Legal Documents Bar . . . . . . . . . . . . . . . . . . . . . . 31
4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Page
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . 31
4.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 32
4.10 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . 32
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . 32
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.14 Investment Company Act; Other Regulations . . . . . . . . . . . . 33
4.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.16 Purpose of Loans. . . . . . . . . . . . . . . . . . . . . . . . . 33
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 33
4.18 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.19 FCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 35
5.1 Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . . 35
5.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . 37
SECTION 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 37
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Certificates; Other Information. . . . . . . . . . . . . . . . . . 38
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 39
6.4 Conduct of Business and Maintenance of Existence . . . . . . . . . 39
6.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . 39
6.6 Inspection of Property; Books and Records; Discussions . . . . . . 40
6.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 41
6.9 Assignments of Leases. . . . . . . . . . . . . . . . . . . . . . . 41
6.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Financial Condition Covenants. . . . . . . . . . . . . . . . . . . 42
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . 43
7.3 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 44
7.4 Limitation on Guarantee Obligations. . . . . . . . . . . . . . . . 45
7.5 Limitation on Fundamental Changes. . . . . . . . . . . . . . . . . 45
7.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . 45
7.7 Limitation on Dividends. . . . . . . . . . . . . . . . . . . . . . 46
7.8 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . 46
7.9 Limitation on Investments, Loans and Advances. . . . . . . . . . . 47
7.10 Limitation on Optional Payments and Modifications of Debt
Instruments or Agreements. . . . . . . . . . . . . . . . . . . . . 47
7.11 Limitation on Transactions with Affiliates. . . . . . . . . . . . 48
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Page
7.12 Limitation on Sales and Leasebacks. . . . . . . . . . . . . . . . 48
7.13 Limitation on Changes in Fiscal Year. . . . . . . . . . . . . . . 48
7.14 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . 48
7.15 Limitation on Lines of Business and Local Marketing and Sales
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.16 Restrictions on Member and License Subsidiaries.. . . . . . . . . 49
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 53
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . 53
9.4 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.5 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . 54
9.6 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . 54
9.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . 55
9.9 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . 56
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . 57
10.4 Survival of Representations and Warranties. . . . . . . . . . . . 57
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . 57
10.6 Successors and Assigns; Participations and Assignments. . . . . . 58
10.7 Termination of Guarantee. . . . . . . . . . . . . . . . . . . . . 60
10.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.10 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.12 Submission To Jurisdiction; Waivers. . . . . . . . . . . . . . . 61
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . 61
10.14 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
iii
<PAGE>
SCHEDULES
I Lenders, Addresses and Commitments
4.8 Liens
4.15 Subsidiaries
4.19 FCC Licenses and Permits
7.2(f) Existing Indebtedness
7.4 Guarantee Obligations
7.9 Investments, Loans and Advances
EXHIBITS
A Form of Note
B Form of Closing Certificate
C Form of Legal Opinion of Counsel to the Borrower
D Form of Assignment and Acceptance
E Form of Acknowledgement and Consent
iv
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 17,
1998, among BIG CITY RADIO, INC. a Delaware corporation (the "Borrower"), the
several banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and The Chase Manhattan Bank, a New York banking
corporation, as agent for the Lenders hereunder (in such capacity, the "Agent").
WHEREAS, the Borrower, the Agent, and the lenders parties thereto (the
"Existing Lenders") are parties to the Amended and Restated Credit Agreement,
dated as of December 24, 1997 (as amended and waived to the date hereof, the
"Existing Credit Agreement"), pursuant to which the Existing Lenders made loans
to the Borrower for the purposes set forth therein; and
WHEREAS, the Borrower intends to consummate an offering of
$174,000,000 of its 11.25% senior subordinated notes due 2005 ("the Offering");
and
WHEREAS, in connection with the Offering the Borrower has requested
that the Agent and the Lenders amend and restate the Existing Credit Agreement
as set forth herein;
WHEREAS, in connection with the execution and delivery of this
Agreement, the Agent has agreed to terminate the Guarantee made by Stuart
Subotnick on December 24, 1997 (the "Guarantee") in favor of the Agent,
guaranteeing a portion of the Existing Credit Facility; and
WHEREAS, the Agent and the Lenders are willing to so amend and restate
the Existing Credit Agreement, but only on the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, effective as of the Closing Date (as defined
herein), the parties hereto hereby amend and restate the Existing Credit
Agreement as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent as its prime rate
in effect at its principal office in New York City (the Prime Rate not
being intended to be the lowest rate of interest charged by The Chase
Manhattan Bank in connection with extensions of credit to debtors); "Base
CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of which is one and
the denominator of which is one
1
<PAGE>
minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by
it. Any change in the ABR due to a change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate,
the Base CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agent": The Chase Manhattan Bank, together with its affiliates, as
the arranger of the Commitments and as the agent for the Lenders under this
Agreement and the other Loan Documents.
"Aggregate Outstanding Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Loans made by such Lender then outstanding and (b) such Lender's
Commitment Percentage of the L/C Obligations then outstanding.
"Agreement": this Second Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": the rate per annum set forth in the table below
opposite the ratio of Total Debt to EBITDA then in effect. Such Applicable
Margin shall be in
2
<PAGE>
effect for the period beginning, and determined for each such period as of,
the second Business Day following the date on which the Responsible
Officer's certificate provided pursuant to subsection 6.2(b) is delivered
to the Lenders and ending on the first Business Day following the date on
which the next such Responsible Officer's certificate is delivered to the
Lenders; provided, that, if for any reason the Responsible Officer's
certificate required by subsection 6.2(b) is not delivered in accordance
with such subsection to the Lenders, the ratio of Total Debt to EBITDA
shall, for purposes of determining the Applicable Margin, be deemed to be
greater than or equal to 5.0 to 1 for each day during the period from and
including the day such Responsible Officer's certificate was required to be
delivered pursuant to subsection 6.2(b) to the day such Responsible
Officer's certificate is so delivered; and provided, further, that for the
period from and including the Closing Date to the first Business Day
following the date on which the Borrower is required to deliver the
Responsible Officer's certificate pursuant to subsection 6.2(b) for the
fiscal quarter ending June 30, 1998, the ratio of Total Debt to EBITDA
shall, for purposes of determining Applicable Margin, be deemed to be
greater than or equal to 7.0 to 1.
<TABLE>
<CAPTION>
----------------------------------------------------------------
Total Debt/
EBITDA ABR + LIBOR +
----------------------------------------------------------------
<S> <C> <C>
GREATER THAN OR EQUAL TO 7.0X 2.000% 3.000%
GREATER THAN OR EQUAL TO 6.0X, LESS THAN 7.0X 1.750% 2.750%
GREATER THAN OR EQUAL TO 5.0X, LESS THAN 6.0X 1.500% 2.500%
GREATER THAN OR EQUAL TO 4.0X, LESS THAN 5.0X 1.000% 2.000%
GREATER THAN OR EQUAL TO 3.0X, LESS THAN 4.0X 0.750% 1.750%
LESS THAN 3.0X 0.500% 1.500%
----------------------------------------------------------------
</TABLE>
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Assignee": as defined in subsection 10.6(c).
"Assignment of Leases": any Assignment of Lease executed at any time
by the Borrower or any Subsidiary in favor of the Agent for the benefit of
the Lenders in form and substance reasonably satisfactory to the Agent as
the same may be amended, supplemented or otherwise modified from time to
time.
"Available Commitment": as to any Lender, at any time, an amount
equal to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Aggregate Outstanding Extensions of Credit.
"Board": the Board of Governors of the Federal Reserve System (or any
successor thereto).
3
<PAGE>
"Borrower": as defined in the recitals hereto.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Borrowing Limit": At any time, an aggregate amount not to exceed
four times the aggregate EBITDA of the Restricted Subsidiary Group for the
period of four fiscal quarters most recently ended for which financial
statements have been delivered pursuant to subsection 6.1.
"Business": as defined in subsection 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-2 by S&P or P-2 by Moody's, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's, (f) securities with maturities of one year
or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day which is payable by a member
of the Bank Insurance Fund maintained by the FDIC classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification)
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within the meaning of 12 C.F.R. Section 327.3(d) (or any successor
provision) to the FDIC (or any successor) for the FDIC's (or such
successor's) insuring time deposits at offices of such institution in the
United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan,
that percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars having a maturity of
30 days or more.
"Chase": The Chase Manhattan Bank.
"Closing Date": the date on which the conditions precedent set forth
in subsection 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commercial Letter of Credit": as defined in subsection 3.1(b)(i)(B).
"Commitment": as to any Lender, the obligation of such Lender to make
Loans to and/or issue or participate in Letters of Credit issued on behalf
of the Borrower hereunder in an aggregate principal and/or face amount at
any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule I.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment bears to the aggregate Commitments (or, at
any time after the Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender's Loans then
outstanding bears to the aggregate principal amount of all Loans then
outstanding).
"Commitment Period": the period from and including the Closing Date
to but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": any trade or business, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Communications Act": the Communications Act of 1934, as amended.
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"Consolidated Net Income": for any period, net income of the Borrower
or the Restricted Subsidiary Group, as the case may be, determined on a
consolidated basis in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"EBITDA": with respect to the Borrower or the Restricted Subsidiary
Group, as the case may be, for any period, the sum of (a) the Consolidated
Net Income for such period plus, to the extent deducted in computing such
net income, the sum of (i) income tax expense, (ii) interest expense
(including deferred interest expense) or an allocated amount of interest
expense in the case of the Restricted Subsidiary Group, (iii) depreciation
and amortization expense, (iv) any extraordinary losses and (v) any expense
items with respect to acquisitions by the Borrower or any of its Affiliates
or the Restricted Subsidiary Group, as the case may be, of radio stations
and related assets, and minus to the extent added in computing such net
income, (i) any interest income and (ii) any extraordinary gains, all as
determined with respect to the Borrower or the Restricted Subsidiary Group,
as the case may be, on a consolidated basis (in the case of the Borrower),
in accordance with GAAP.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
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"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its Eurodollar Loans are
then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Existing Credit Agreement": as defined in the recitals hereto.
"Existing Lenders": as defined in the recitals hereto.
"Existing Loans": as defined in subsection 2.1(b).
"FCC": the Federal Communications Commission or any successor to the
functions and powers thereof.
"FCC Licenses": with respect to any radio station owned or operated
by the Borrower or any Subsidiary, all FCC licenses, permits and approvals
necessary for the lawful construction of facilities for, and operation of,
such radio station.
"FCC Rules": as defined in subsection 4.19.
"FDIC": the Federal Deposit Insurance Corporation.
"Final Orders": with respect to the assignment of any FCC License or
transfer of control of any radio station authorized by such FCC License
from one Person to another, an order by the FCC consenting to such
assignment or transfer, in the case of a pro forma assignment or transfer
of control not involving a substantial change in ownership or control, when
effective and, in the case of all other assignments or transfers of
control, when the time for administrative or judicial review has expired
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and the time for the filing of any protest, petition to deny, request for
stay, petition for reconsideration, or appeal has expired and no protest,
petition to deny, request for stay, petition for reconsideration or appeal
is pending.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Forestry Service License": the license in respect of the right to
operate the radio transmitter located on that certain parcel of land
situated within the Angeles National Forest.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
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"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of acceptances or Letters of Credit issued or created for the
account of such Person, (e) all obligations of such Person in respect of
banker's acceptances issued or created for the account of such Person and
(f) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof. For purposes of any calculation hereunder, the
amount of any Indebtedness outstanding at any time, except Indebtedness
under clause (f) of this definition, shall be deemed to be equal to the
then outstanding principal amount of such Indebtedness (including, with
respect to Financing Leases, the implied principal amount thereof
calculated in accordance with GAAP) and the amount of any Indebtedness
outstanding at any time under clause (f) of this definition shall be equal
to the lesser of (i) the then outstanding principal amount of, and all
accrued and unpaid interest on, the liability secured by the applicable
property and (ii) the then fair market value of such property.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Expense": for any period, the amount of interest expense on
the Total Debt of the Borrower for such period, determined on a
consolidated basis in accordance with GAAP.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period in
excess of three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three, six or nine months thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one,
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two, three, six or nine months thereafter, as selected by the Borrower
by irrevocable notice to the Agent not less than three Business Days
prior to the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date or such date of
final payment, as the case may be; and
(iii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month.
"Issuing Bank": The Chase Manhattan Bank, in its capacity as issuer
of any Letter of Credit.
"L/C Commitment": $1,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to subsection 3.5(a).
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Bank.
"Landlord's Consent": A Landlord's Consent executed at any time by a
landlord in respect of any leased property subject to any Assignment of
Lease, in form and substance reasonably satisfactory to the Agent, as the
same may be amended, supplemented or otherwise amended from time to time.
"Letters of Credit": as defined in paragraph 3.1(a).
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"Licenses": as defined in subsection 4.19.
"License Subsidiary": any wholly-owned sole purpose Subsidiary Loan
Party of the Borrower formed for the exclusive purpose of holding FCC
Licenses pursuant to organizational documents reasonably satisfactory to
the Agent.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever which makes
any property or asset available for the payment or performance of any
liability in priority to the payment or performance of ordinary unsecured
creditors (including, without limitation, any conditional sale or other
title retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement
including any Existing Loan.
"Loan Documents": this Agreement, any Notes, any Applications and the
Security Documents.
"Loan Parties": the Borrower and any of its Subsidiaries which is a
party to a Loan Document.
"Local Marketing and Sales Agreement": as to any Person, all
agreements to which such Person is a party pursuant to which such Person
has the right to direct the programming with respect to a radio station
(and related FCC License) owned by another Person and/or pursuant to which
such Person has the right to sell advertising in connection with a radio
station (and related FCC License) owned by another Person.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount finally determined by
legal process or executed settlement agreement to be payable by the
Borrower in excess of $2,500,000 for remedial costs, compliance costs,
compensatory damages, punitive damages, fines, penalties or any combination
thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
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"Member": the collective reference to the Borrower and any
wholly-owned Subsidiary Loan Party of the Borrower which is a member in, or
partner of, any License Subsidiary.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Cash Interest Expense": with respect to the Borrower for any
period, the sum of interest in respect of Total Debt paid by the Borrower
in cash during such period, minus all interest earnings received by the
Borrower in cash during such period, in each case determined on a
consolidated basis in accordance with GAAP.
"Non-Excluded Taxes": as defined in subsection 2.16.
"Note": as defined in subsection 2.5(e).
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans or any Notes and all
other obligations and liabilities of the Borrower to the Agent or to the
Lenders, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any Notes or the other Loan
Documents and any other document made, delivered or given in connection
therewith or herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all reasonable fees and disbursements of counsel to the
Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of this Agreement) or otherwise.
"Operating Agreement": with respect to any FCC License held by a
License Subsidiary, an agreement substantially in the form of Exhibit F to
the Existing Credit Agreement between such License Subsidiary and the
Borrower.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
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"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Properties": as defined in subsection 4.17.
"Register": as defined in subsection 10.6(d).
"Registration Rights Agreements": the Registration Rights Agreement,
dated as of December 18, 1997, by and among the Borrower, Stuart Subotnick
and Anita Subotnick and the Registration Rights Agreement, dated as of
December 23, 1997, by and between the Borrower and Michael Kakoyiannis.
"Regulations G, T, U, and X": Regulations G, T, U, and X of the Board
as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to subsection 3.5(a) for amounts drawn
under Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Required Lenders": at any time, Lenders the Commitment Percentages
of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president and
any vice president of the Borrower, or, with respect to financial matters,
the chief financial officer of the Borrower.
"Restricted Subsidiary Group": For as long as each shall be and
remain wholly-owned by the Borrower, the Stations consisting of (i) those
broadcasting using the FCC licenses held by Big City Radio-LA, L.L.C. and
(ii) any other Stations agreed to by the Agent from time to time.
"Revolving Credit Loans": as defined in subsection 2.1(a).
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"Security Agreement": the Amended and Restated Security Agreement,
dated December 24, 1997, executed by the Borrower and its Subsidiaries, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Security Documents": the collective reference to the Security
Agreement and, from and after its execution and delivery, any Assignment of
Lease.
"Senior Notes": The Borrower's 11.25% Senior Discount Notes due 2005.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"S&P": Standard and Poor's Ratings Services.
"Standby Letter of Credit": as defined in paragraph 3.1(b)(i)(A).
"Stations": any of the radio stations now owned or operated by or
hereafter acquired or operated by the Borrower or any of its Subsidiaries.
"Subordinated Indebtedness": any unsecured Indebtedness of the
Borrower no part of the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) except in the event of a change of control or
unapplied asset sale proceeds, prior to December 31, 2004; the payment of
the principal of and interest on which and other obligations of the
Borrower in respect thereof are subordinated to the prior payment in full
of the principal of and interest (including post-petition interest) on the
Loans and all other obligations and liabilities of the Borrower to the
Agent and the Lenders hereunder on terms and conditions approved in writing
by the Agent; having no financial maintenance covenants and all other terms
and conditions (including, without limitation, interest rates, covenants,
defeasance and defaults (which shall not include a cross default)) which
are satisfactory in form and substance to the Agent (as evidenced by their
prior written approval thereof).
"Subsidiary": as to any Person, a corporation, limited liability
company, partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, limited liability company, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Termination Date": March 31, 2003.
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"Total Debt": with respect to the Borrower at any time, (a) all
Indebtedness of the Borrower and its Subsidiaries minus, (b) all cash and
Cash Equivalents owned by the Borrower and its Subsidiaries free and clear
of any Liens (other than Liens to secure Indebtedness of the Borrower).
"Transferee": as defined in subsection 10.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
(the "Revolving Credit Loans") to the Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Commitment Percentage of the then outstanding
L/C Obligations, does not exceed the lesser of (i) the amount of such Lender's
Commitment and (ii) such Lender's Commitment Percentage of the Borrowing Limit
then in effect. During the Commitment Period the Borrower may use the
Commitments by borrowing, prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Borrower acknowledges and confirms that the Existing Lenders
have made
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revolving credit loans to it under the Existing Credit Agreement (such
revolving credit loans, the "Existing Loans"). The Borrower hereby
represents, warrants, agrees, covenants and reaffirms that: (i) to the
extent arising on or prior to the Closing Date, it has no (and it
permanently and irrevocably waives, and releases the Agent and the Existing
Lenders from any) defense, setoff, claim or counterclaim against the Agent
or any Existing Lender in regard to its Obligations in respect of such
Existing Loans and (ii) reaffirms its obligation to pay such Existing Loans
in accordance with the terms and provisions of this Agreement and the other
Loan Documents.
(c) The Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with subsections 2.2 and 2.8, provided
that no Loan shall be made as a Eurodollar Loan after the day that is one
month prior to the Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Commitments during the Commitment Period on any Business Day,
provided that the Borrower shall give the Agent irrevocable notice (which notice
must be received by the Agent prior to 10:00 A.M., New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans or (b) one Business Day
prior to the requested Borrowing Date, otherwise), specifying (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amount of each
such Loan and the length of the respective initial Interest Periods therefor.
Each borrowing under the Commitments shall be in an amount equal to (x) in the
case of ABR Loans, $100,000 or a whole multiple thereof (or, if the then
Available Commitments are less than $100,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its
pro rata share of each borrowing available to the Agent for the account of the
Borrower at the office of the Agent specified in subsection 10.2 prior to 11:00
A.M., New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Agent. Such borrowing will then be made
available to the Borrower by the Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee for the period from and including the
date hereof to the Termination Date, computed at the rate of 1/2 of 1% per annum
on the average daily amount of the Available Commitment of such Lender during
the period for which payment is made; payable quarterly in arrears on the last
day of each March, June, September and December and on the Termination Date or
such earlier date as the Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
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2.4 Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than five Business Days' notice to the Agent,
to terminate the Commitments or, from time to time, to reduce the amount of
the Commitments, provided that no such termination or reduction shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, the aggregate
principal amount of the Revolving Credit Loans then outstanding , when added
to the then outstanding L/C Obligations, would exceed the Commitments then in
effect. Any such reduction shall be in an amount equal to $100,000 or a
whole multiple thereof and shall reduce permanently the Commitments then in
effect.
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Agent for the account of each Lender
the then unpaid principal amount of each Loan of such Lender on the
Termination Date (or such earlier date on which the Loans become due and
payable pursuant to Section 8). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in subsection 2.10.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower
to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement.
(c) The Agent, acting for this purpose as an agent of the Borrower,
shall maintain the Register pursuant to subsection 10.6(d), and a
subaccount therein for each Lender, in which shall be recorded (i) the
amount of each Loan made hereunder, the Type thereof and, in the case of
Eurodollar Loans, each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, (iii) both the
amount of any sum received by the Agent hereunder from the Borrower and
each Lender's share thereof and (iv) each continuation of a Loan and
each conversion of all or a portion of a Loan thereof to another Type.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.5(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to
maintain the Register or any such account, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to such Borrower by such Lender in
accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Loans of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to
date and principal amount (a "Note").
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2.6 Optional Prepayments. The Borrower may, on the last day of any
Interest Period with respect thereto, in the case of Eurodollar Loans, or at
any time and from time to time, in the case of ABR Loans, prepay the Loans,
in whole or in part, without premium or penalty, upon at least three Business
Days' irrevocable notice to the Agent, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable
to each. Upon receipt of any such notice the Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 2.17.
2.7 Mandatory Prepayments. (a) The Borrower shall immediately
prepay the Loans made to it to the extent the aggregate principal amount of
such Loans outstanding at any time exceeds the total amount of the
Commitments to the Borrower as reduced pursuant to subsection 2.4.
(b) Unless the Borrower indicates otherwise, the mandatory
prepayments pursuant to this subsection 2.7 shall first be used to
prepay the then outstanding ABR Loans made to the Borrower and second to
prepay the then outstanding Eurodollar Loans made to the Borrower in the
order in which such Eurodollar Loans become due. In the event the
amount of any prepayment of Loans required to be made under this
subsection 2.7(b) shall exceed the aggregate principal amount of such
Loans which are ABR Loans (the amount of any such excess being called
the "Excess Amount"), the Borrower shall have the right, in lieu of
making such prepayment in full, to prepay all such outstanding ABR Loans
when due and to deposit on the date of the required prepayment an amount
equal to the Excess Amount with the Agent in a cash collateral account
maintained by and in the sole dominion and control of the Agent. Any
amounts so deposited shall be held by the Agent as collateral security
for the Obligations and applied to the prepayment of the applicable
Eurodollar Loans at the end of the current Interest Periods applicable
thereto. On any Business Day on which (A) collected amounts remain on
deposit in or to the credit of such cash collateral account after giving
effect to the payments made on such day pursuant to this subsection
2.7(b) and (B) the Borrower shall have delivered to the Agent a written
request or a telephonic request (which shall be promptly confirmed in
writing) that such remaining collected amounts be invested in the Cash
Equivalents specified in such request, the Agent shall invest such
remaining collected amounts in such Cash Equivalents on an overnight
basis; provided, however, that the Agent shall have continuous dominion
and full control over any such investments (and over any interest that
accrues thereon) to the same extent that it has dominion and control
over such cash collateral account. Any such deposited amounts so
invested (together with any interest thereon) shall be deposited in such
cash collateral account not later than 11:30 a.m. on the next succeeding
Business Day.
(c) The provisions of subsection 2.17 shall apply to all mandatory
prepayments pursuant to this subsection 2.7.
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2.8 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Agent at least two Business Days' prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Agent at least three Business Days' prior irrevocable notice of
such election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Loans and ABR
Loans may be converted as provided herein, provided that (i) no Loan may be
converted into a Eurodollar Loan when any Event of Default has occurred and
is continuing and the Agent has or the Required Lenders have determined that
such a conversion is not appropriate and (ii) no Loan may be converted into a
Eurodollar Loan after the date that is one month or 30 days, respectively,
prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
the Borrower giving notice to the Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in
subsection 1.1, of the length of the next Interest Period to be
applicable to such Loans, provided that no Eurodollar Loan may be
continued as such (i) when any Event of Default has occurred and is
continuing and the Agent has or the Required Lenders have determined
that such a continuation is not appropriate or (ii) after the date that
is one month or 30 days prior to the Termination Date (in the case of
continuations of Loans) and provided, further, that if the Borrower
shall fail to give such notice or if such continuation is not permitted
such Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period.
2.9 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of the Loans comprising each Eurodollar borrowing
shall be equal to $500,000 or a whole multiple of $100,000 in excess thereof.
In no event shall there be more than 5 Eurodollar borrowings outstanding at
any time.
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other
amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), the principal of the
Loans and any such overdue interest, commitment fee or other amount
shall bear interest at a rate per annum which is (x) in the case of the
overdue
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principal, the rate that would otherwise be applicable thereto pursuant to
the foregoing provisions of this subsection plus 2% or (y) in the case of
any such overdue interest, commitment fee or other amount, the rate
described in paragraph (b) of this subsection 2.10 plus 2%, in each case
from the date of such non-payment until such overdue principal, interest,
commitment fee or other amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.11 Computation of Interest and Fees. (a) Commitment fees and,
whenever it is calculated on the basis of the Prime Rate, interest shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed; and, otherwise, interest shall be calculated on the basis
of a 360-day year for the actual days elapsed. The Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Agent
shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Agent in determining any interest rate
pursuant to subsection 2.10(a) or (b).
2.12 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination, in the
absence of manifest error, shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, or
(b) the Agent shall have received notice from the Required Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as ABR Loans (provided that prior to 1:00 p.m. on the Business Day
preceding the first day of such Interest Period, the Borrower may revoke its
notice of borrowing, in which case no such Loans shall be made),
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(y) any Loans that were to have been converted on the first day of such Interest
Period to Eurodollar Loans that were to be continued as such for such Interest
Period, shall be converted to or continued as ABR Loans and (z) any outstanding
Eurodollar Loans that were to be continued as such for such Interest Period
shall be converted, on the first day of such Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Agent, no further Eurodollar Loans
shall be made or continued as such, nor shall the Borrower have the right to
convert ABR Loans to Eurodollar Loans. The Agent agrees to withdraw any such
notice as soon as reasonably practicable after the Agent is notified of a change
in circumstances which makes such notice inapplicable.
2.13 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee hereunder and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Loans shall be made pro rata according to the
respective outstanding principal amounts of the Loans then held by the Lenders.
All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without set off or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Agent, for the account of the Lenders,
at the Agent's office specified in subsection 10.2, in Dollars and in
immediately available funds. The Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on any Eurodollar Loan) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension, unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its Commitment Percentage of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on the
Borrowing Date therefor, such Lender shall pay to the Agent, on demand,
such amount with interest thereon at a rate equal to the daily average
Federal Funds Effective Rate (as defined in the Section 1.1 definition of
"ABR") for the period until such Lender makes such amount immediately
available to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be conclusive
in the absence of manifest error. If such Lender's Commitment Percentage
of such borrowing is not made available to the Agent by such Lender within
three Business Days of such Borrowing Date, the Agent
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shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to ABR Loans hereunder, on demand, from the
Borrower.
2.14 Illegality. (a) Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (i) such Lender shall
promptly, after becoming aware thereof, notify the Agent and the Borrower
thereof, (ii) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be cancelled and (iii) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.17. If
circumstances subsequently change so that it is no longer unlawful for an
affected Lender to make or maintain Eurodollar Loans as contemplated hereunder,
such Lender will, as soon as reasonably practicable after such Lender knows of
such change in circumstances, notify the Borrower and the Agent, and upon
receipt of such notice, the obligations of such Lender to make or continue
Eurodollar Loans or to convert ABR Loans into Eurodollar Loans shall be
reinstated.
(b) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of subsection 2.14(a) with respect to such Lender, it
will, if requested by the Borrower and to the extent permitted by law or by
the relevant Governmental Authority, endeavor in good faith to change the
lending office at which it books its Eurodollar Loans hereunder if such
change would make it lawful for such Lender to continue to make or maintain
Eurodollar Loans as contemplated hereunder; provided, however, that such
change can be made in such a manner that such Term Loan Lender, in its sole
determination, suffers no increased cost or economic, legal or regulatory
disadvantage.
2.15 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by subsection 2.16 and changes in the rate of
tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or
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any other acquisition of funds by, any office of such Lender which is
not otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender
such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or
under any Letter of Credit to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for
such reduction. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower
(with a copy to the Agent) of the event by reason of which it has become so
entitled. Notwithstanding any other provision of this subsection 2.15, no
Lender shall demand compensation for any increased cost or reduction
referred to above if it shall not at the time be the general policy or
practice of such Lender to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, if
any.
(c) A certificate as to any additional amounts payable pursuant to
this subsection 2.15 submitted by such Lender to the Borrower (with a copy
to the Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding (i) any taxes imposed by jurisdictions outside
of the United States of America, (ii) any taxes imposed by the United States or
any political subdivision thereof by means of withholding at the source, if and
to the
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extent that such taxes shall be in effect and shall be applicable on the date
hereof, to payments to be made to such lender, existing taxes on the date hereof
and (iii) any net income taxes and franchise taxes (imposed in lieu of net
income taxes), imposed on the Agent or any Lender as a result of a present or
former connection between the Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or any Note). If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Agent or any Lender hereunder or under any Note, the amounts so
payable to the Agent or such Lender shall be increased to the extent necessary
to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agent and the Lenders for any incremental taxes, interest or penalties that
may become payable by the Agent or any Lender as a result of any such failure.
The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, and (B) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the case may be;
(ii) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Agent;
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unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
2.17 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
2.18 Change of Lending Office or Replacement of Lender. (a) Each
Lender agrees that if it makes any demand for payment under subsection 2.15 or
2.16(a), or if any adoption or change of the type described in subsection 2.15
shall occur with respect to it, it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under subsection 2.15 or 2.16(a), or would eliminate or reduce the effect of any
adoption or change described in subsection 2.15.
(b) If the Borrower becomes obligated to pay additional amounts
described in subsections 2.15 or 2.16(a) as a result of any condition described
in such subsections and
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payment of such amounts is demanded by any Lender, then the Borrower may, on ten
(10) Business Days' prior written notice to the Agent and such Lender, cause
such Lender to (and such Lender shall) assign pursuant to subsection 10.6 all of
its rights and obligations under this Agreement to a Lender or other entity
selected by the Borrower for a purchase price equal to the outstanding principal
amount of such Lender's Loans and all accrued interest and fees and losses and
expenses of the types referred to in subsection 2.17, provided, that in no event
shall the assigning Lender be required to pay or surrender to such purchasing
Lender or other entity any of the fees received by such assigning Lender
pursuant to this Agreement.
2.19 Certain Fees. On the dates provided therein, the Borrower agrees
to pay to the Agent for its own account the fees set forth in the Fee Letter,
dated December 1, 1997 between the Borrower and Chase.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Bank, in reliance on the agreements of the other Lenders set forth
in subsection 3.4(a), agrees to issue letters of credit ("Letters of Credit")
for the account of the Borrower on any Business Day during the Commitment Period
in such form as may be approved from time to time by the Issuing Bank; provided
that the Issuing Bank shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance,(i) the L/C Obligations would exceed the
L/C Commitment,(ii) the Available Commitment would be less than zero, or (iii)
the Aggregate Outstanding Extensions of Credit would exceed the Borrowing Limit.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (A) a
standby letter of credit issued to support obligations of the Borrower,
contingent or otherwise, in connection with the working capital and
business needs of the Borrower in the ordinary course of business,
including in connection with any acquisition permitted by Section 7.9(c)
(a "Standby Letter of Credit"), or (B) a commercial letter of credit
issued in respect of the purchase of goods or services by the Borrower
and its Subsidiaries in the ordinary course of business (a "Commercial
Letter of Credit") and
(ii) expire no later than the Termination Date.
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New
York.
(d) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Bank or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law.
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3.2. Procedure for Issuance of Letters of Credit. The Borrower may
from time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may request. Upon receipt of any Application, the Issuing Bank will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Bank and
the Borrower. The Issuing Bank shall furnish a copy of such Letter of Credit to
the Borrower promptly following the issuance thereof.
3.3. Fees, Commissions and Other Charges. (a) The Borrower shall pay
to the Agent, for the account of the Issuing Bank and the L/C Participants, a
letter of credit commission with respect to each Letter of Credit, computed
quarterly in arrears for the period from the date of issuance of such Letter of
Credit to the termination or expiration thereof at the rate per annum equal to
the Applicable Margin then in effect for Eurodollar loans, calculated on the
basis of a 365 (or 366-, as the case may be) year, of the daily average
available amount under such Letter of Credit during the period for which such
fee is calculated. Such commissions shall be payable in arrears on each L/C Fee
Payment Date.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Bank and the L/C Participants all fees and commissions
received by the Agent for their respective accounts pursuant to this subsection.
3.4. L/C Participations. (a) The Issuing Bank irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing Bank
to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Bank, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's
Commitment Percentage in the Issuing Bank's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Bank that, if a draft is paid under any Letter of Credit
for which the Issuing Bank is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Bank upon demand at the Issuing Bank's address for notices specified
herein an amount equal to such L/C Participant's Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
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(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to paragraph 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Bank under any Letter of Credit is paid to
the Issuing Bank within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Bank on demand an amount equal to
the product of (1) such amount, times (2) the daily average Federal funds rate,
as quoted by the Issuing Bank, during the period from and including the date
such payment is required to the date on which such payment is immediately
available to the Issuing Bank, times (3) a fraction, the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to paragraph 3.4(a) is not in fact made available to the Issuing Bank by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Bank shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans hereunder. A certificate of the Issuing
Bank submitted to any L/C Participant with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Bank receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Bank), or any payment of interest on account thereof, the Issuing
Bank will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Bank shall be required to be returned by the Issuing Bank, such L/C
Participant shall return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.
3.5. Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse the Issuing Bank on each date on which the Issuing Bank
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Bank for the amount of (i) such draft
so paid and (ii)any taxes, fees, charges or other costs or expenses incurred by
the Issuing Bank in connection with such payment. Each such payment shall be
made to the Issuing Bank at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding ABR Loans which were then
overdue.
(c) Each drawing under any Letter of Credit shall constitute a request
by the Borrower to the Agent for a borrowing pursuant to subsection 2.2 of ABR
Loans in the amount of such drawing. The Borrowing Date with respect to such
borrowing shall be the date of such drawing.
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3.6. Obligations Absolute. (a) The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit.
(b) The Borrower also agrees with the Issuing Bank that the Issuing
Bank shall not be responsible for, and the Borrower's Reimbursement Obligations
under subsection 3.5(a) shall not be affected by, among other things,(i) the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or (ii)
any dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Bank's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence of willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Bank to the Borrower.
3.7. Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing Bank
to the Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in connection with
such presentment are in conformity with such Letter of Credit.
3.8. Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Agent and each Lender that:
4.1 Financial Condition. (a) The audited balance sheet of the
Borrower as at December 31, 1996 and the related statements of operations and of
cash flows for the year
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ended on such date, reported on by KPMG Peat Marwick LLP, copies of which
have heretofore been furnished to each Lender, present fairly, in all
material respects, the financial condition of the Borrower as at such date,
and the results of the Borrower's operations and its cash flows for the year
then ended.
(b) The unaudited balance sheet of the Borrower as at September 30,
1997 and the related unaudited statements of operations and of cash flows for
the nine-month period ended on such date, certified by a Responsible Officer,
copies of which have heretofore been furnished to each Lender, are complete and
correct and present fairly, in all material respects, the financial condition of
the Borrower as at such date, and the results of the Borrower's operations and
its cash flows for the nine-month period then ended (subject to normal year-end
audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). The
Borrower did not have, at the date of the most recent balance sheet referred to
above, any contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto. During the
period from December 31, 1996 to and including the date hereof, there has been
no sale, transfer or other disposition by the Borrower of any material part of
its business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the financial condition of the Borrower at December 31, 1996.
4.2 No Change. (a) Since September 30, 1997 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) during the period from December 31, 1996 to and
including the date hereof no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Borrower nor has any of the
Capital Stock of the Borrower been redeemed, retired, purchased or otherwise
acquired for value by the Borrower.
4.3 Corporate Existence; Compliance with Law. The Borrower and each
of its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate or
other power and authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified as a foreign corporation or other
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except in the cases of clauses (c) and (d) to the extent that the failure to
so qualify or comply therewith could not reasonably be expected, in the
aggregate, to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. The
Borrower and each Subsidiary has the corporate or other power and authority, and
the legal right, to
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make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder and has taken all necessary corporate
or other action to authorize the borrowings on the terms and conditions of this
Agreement and each of the other Loan Documents and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which any Loan
Party is a party other than (i) the consents of landlords to the collateral
assignments of leases pursuant to the Assignments of Leases and (ii) any filings
required by the Uniform Commercial Code in order to perfect and/or insure the
priority of Liens created pursuant to the Loan Documents. This Agreement has
been, and each other Loan Document to which any Loan Party is a party will be,
duly executed and delivered on behalf of such Loan Party. This Agreement
constitutes, and each other Loan Document to which any Loan Party is a party
when executed and delivered will constitute, a legal, valid and binding
obligation of such Loan Party enforceable against such Loan Party in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
4.5 No Legal Documents Bar. The execution, delivery and performance
of the Loan Documents to which any Loan Party is a party and the borrowings
hereunder will not violate any Requirement of Law or Contractual Obligation of
such Loan Party and will not result in, or require, the creation or imposition
of any Lien (other than those Liens created or imposed pursuant to the Loan
Documents) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower or any Subsidiary, threatened by or against the
Borrower or any Subsidiary or against any of their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. No Loan Party is in default under or with respect to
any of its Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8 Ownership of Property; Liens. The Borrower and its Subsidiaries
have good record and marketable title in fee simple to, or a valid leasehold
interest in, all their real property, and good title to, or a valid leasehold
interest in, all their other property, and none of such property is subject to
any Lien except as set forth on Schedule 4.8 and as otherwise permitted by
subsection 7.3.
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4.9 Intellectual Property. The Borrower and its Subsidiaries own, or
are licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of their business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower or any of
its Subsidiaries know of any valid basis for any such claim which could
reasonably be expected to have a Material Adverse Effect. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
4.11 Taxes. The Borrower and its Subsidiaries have filed or caused to
be filed all material tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other material taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or such Subsidiary); no tax Lien has been filed, and, to
the knowledge of the Borrower and its Subsidiaries, no claim is being asserted,
with respect to any such tax, fee or other charge, which, in each case, could
reasonably be expected to have a Material Adverse Effect.
4.12 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulations G, T, U or X as now and
from time to time hereafter in effect. If requested by any Lender or the Agent,
the Borrower will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1 or FR Form
U-1 referred to in said Regulation G or U, as the case may be.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect, and each Plan has
complied in all material respects with the applicable provisions of ERISA and
the Code except where such non-compliance could not be reasonably expected to
have a Material Adverse Effect. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period that could reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions
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used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits by more than
$500,000. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made except in each instance where such withdrawal or liability could not
reasonably be expected to have a Material Adverse Effect. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X) which limits its ability to incur
Indebtedness.
4.15 Subsidiaries. All of the Subsidiaries of the Borrower at the
date hereof are listed on Schedule 4.15 to this Agreement.
4.16 Purpose of Loans. The proceeds of the loans shall be used by the
Borrower for working capital purposes in the ordinary course of business,
including the making of acquisitions in accordance with the provisions of
Section 7.9(c).
4.17 Environmental Matters.
(a) To the best knowledge of the Borrower, the facilities and
properties owned, leased or operated by the Borrower and its Subsidiaries
(the "Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law except in
either case insofar as such violation or liability, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(b) To the best knowledge of the Borrower, the Properties and all
operations at the Properties are in compliance, and, to the Borrower's
knowledge, have in the last 5 years been in compliance (provided that, in
the case of any Properties acquired in the last 5 years, such knowledge is
based, for the period prior to such acquisition on the representations made
to the Borrower by the Person from which the Properties were acquired),
with all applicable Environmental Laws, and there is no contamination at,
under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower (the
"Business") except in either case with respect to any instances of
non-compliance or violation which
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individually or in the aggregate would not be reasonably likely to result
in the payment of a Material Environmental Amount.
(c) The Borrower has not received any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to
any of the Properties or the Business, nor does the Borrower have knowledge
or reason to believe that any such notice will be received or is being
threatened except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental
Amount.
(d) To the knowledge of the Borrower (provided that, in the case of
any Properties acquired in the last 5 years, such knowledge is based, for
the period prior to such acquisition on the representations made to the
Borrower by the Person from which the Properties were acquired), materials
of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law except insofar as any
such violation or liability referred to in this paragraph, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower is or will be named as a party with
respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Properties or the Business except
insofar as such proceeding, action, decree, order or other requirement, or
any aggregation thereof, is not reasonably likely to result in the payment
of a Material Adverse Amount.
(f) To the knowledge of the Borrower, there has been no release or
threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of the Borrower in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could
reasonably give rise to liability to the Borrower or any Subsidiary under
Environmental Laws except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental
Amount.
4.18 Solvency. (a) The assets of the Borrower at their fair valuation
exceed the liabilities of the Borrower, including contingent liabilities; (b)
the capital of the Borrower
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is not unreasonably small to conduct the business of the Borrower; and (c)
the Borrower has the ability to pay the Loans made to it and its obligation
under the other Loan Documents and its other debts arising in the normal
course of business as such debts mature and does not intend to, or believe
that it will, incur debt beyond its ability to pay as such debts mature.
4.19 FCC Matters. Each Loan Party has duly and timely filed all
material filings which are required to be filed by it under the
Communications Act, and is in all material respects in substantial compliance
with the Communications Act, including, without limitation, Section 310
thereof, and the rules and regulations of the FCC relating thereto (the "FCC
Rules") except as set forth on Schedule 4.19. Each Loan Party is qualified
to control, and the Borrower is qualified to be, a broadcast licensee under
the Communications Act and the FCC Rules. Schedule 4.19 lists all of the FCC
Licenses and all other material permits, authorizations and licenses of any
Governmental Authorities granted or assigned to the Loan Parties in
connection with the operation of the radio stations owned by the Loan Parties
(collectively, the "Licenses"), and such Licenses are the only material FCC
authorizations, licenses and permits necessary for the conduct of the
businesses of the Loan Parties as of the date hereof. All of such Licenses
are issued in the name of, or have been validly assigned to, the Borrower or
a License Subsidiary and are validly issued and in full force and effect, and
the Loan Parties have fulfilled and performed all of their obligations with
respect thereto and have full power and authority to operate thereunder, and
all applications with respect to FCC consents to the assignment of the
Licenses or the transfer of control of the radio stations which are owned by
the Borrower on the date hereof to the License Subsidiaries have been filed
with the FCC.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction, immediately prior to or
concurrently with such effectiveness on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) for the account of
each Lender requesting the same, a Note conforming to the requirements
hereof and executed by a duly authorized officer of the Borrower and
(iii) the Acknowledgment and Consent, substantially in the form of
Exhibit E, executed and delivered by a duly authorized officer of each
Loan Party, with a counterpart or a conformed copy for each Lender.
(b) Consummation of the Offering. The Offering shall have been
consummated for net cash proceeds of at least $120,000,000 and the
terms of the Senior Notes shall be reasonably satisfactory to the Agent.
(c) Indenture; Related Agreements. The Agent shall have received,
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Indenture for the Senior Notes and
such other documents or
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instruments as may be reasonably requested by the Agent, including, without
limitation, a copy of any debt instrument, security agreement or other
material contract to which the Borrower may be a party.
(d) Closing Certificate. The Agent shall have received, with a
counterpart for each Lender, a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit B, with appropriate
insertions and attachments, satisfactory in form and substance to the
Agent, executed by the President or any Vice President and the Secretary
or any Assistant Secretary of the Borrower.
(e) Proceedings of the Borrower. The Agent shall have received,
with a counterpart for each Lender, a copy of the resolutions, in form
and substance satisfactory to the Agent, of the Board of Directors of
the Borrower authorizing (i) the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party, (ii)
the borrowings contemplated hereunder and (iii) the granting by it of
the Liens created pursuant to the Security Documents, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Closing
Date, which certificate shall be in form and substance satisfactory to
the Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(f) Incumbency Certificate. The Agent shall have received, with a
counterpart for each Lender, a Certificate of the Borrower, dated the
Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document satisfactory in form and substance
to the Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Borrower.
(g) Corporate Documents. The Agent shall have received, with a
counterpart for each Lender, a true and complete copy of the certificate
of incorporation of the Borrower, certified as of the Closing Date as a
complete and correct copy thereof by the Secretary or an Assistant
Secretary of the Borrower.
(h) Consents, Licenses and Approvals. The Agent shall have
received, with a counterpart for each Lender, a certificate of a
Responsible Officer of the Borrower (i) attaching copies of all
consents, authorizations and filings referred to in subsection 4.19, and
(ii) stating that such consents, licenses and filings are in full force
and effect, and each such consent, authorization and filing shall be in
form and substance satisfactory to the Agent.
(i) Fees. The Agent shall have received for the account of each
Lender, an annual administrative fee in the aggregate amount for all
banks of $20,000, payable on the Closing Date and on each March 31,
thereafter, commencing on March 31, 1999.
(j) Legal Opinion. The Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of Paul, Weiss,
Wharton, Rifkind & Garrison, counsel to the Borrower, substantially in
the form of Exhibit C;
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<PAGE>
Such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require;
(k) Insurance. The Agent shall have received evidence in form and
substance satisfactory to it that all of the requirements of Section 6.3
of the Security Agreement shall have been satisfied.
(l) Prepayment of Existing Credit Agreement. All Loans outstanding
under the Existing Credit Agreement (together with accrued interest
thereon) in excess of the Commitments hereunder and all accrued and
unpaid fees under the Existing Credit Agreement shall have been paid or
repaid simultaneously with the funding under this Agreement.
(m) Additional Matters. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with
the transactions contemplated by this Agreement and the other Loan
Documents shall be satisfactory in form and substance to the Agent, and
the Agent shall have received such other documents in respect of any
aspect or consequence of the transactions contemplated hereby or thereby
as it shall reasonably request.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by the Borrower and the other Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as
of the date thereof that the conditions contained in this subsection have
been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect or any other amount is owing to any Lender or the Agent hereunder
or under any other Loan Document, the Borrower shall, and (except in the case
of Sections 6.1 and 6.2) shall cause each Subsidiary to:
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<PAGE>
6.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated
balance sheet of the Borrower as at the end of such year and the related
consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising out of the
scope of the audit, by KPMG Peat Marwick LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet of
the Borrower as at the end of such quarter and the related unaudited
consolidated statements of income and retained earnings and of cash
flows of the Borrower for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein) except that the quarterly financial statements
provided pursuant to subsection 6.1(b) shall only be required to include
footnotes to the extent such footnotes would be required to be included in a
Quarterly Report filed on Form 10-Q filed with the Securities and Exchange
Commission.
6.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a Responsible
Officer stating that to the best of such Responsible Officer's knowledge,
the Borrower during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate;
(c) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a Responsible
Officer specifying the
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<PAGE>
Borrowing Limit and setting forth the calculations for such amounts in
reasonable detail satisfactory to the Agent.
(d) not later than thirty days prior to the end of each fiscal year
of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower for the succeeding
fiscal year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have been
prepared in good faith on the basis of reasonable assumptions and that
such Responsible Officer has no reason to believe they are incorrect or
misleading in any material respect;
(e) within five days after the same are sent, copies of all
financial statements which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all
its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided
on the books of the Borrower or such Subsidiary.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except if (i) in
the reasonable business judgment of the Borrower or such Subsidiary, as the
case may be, it is in its best economic interest not to preserve and maintain
such rights, privileges or franchises, and such failure to preserve and
maintain such rights, privileges or franchises would not, in the aggregate,
be reasonably likely to have a Material Adverse Effect or result in any Event
of Default; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep all property useful
and necessary in its business in good working order and condition (normal
wear and tear accepted), except to the extent that the failure to do so with
respect to any such property would not be reasonably likely to have a
Material Adverse Effect; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies engaged in the same or a similar business; and
furnish to each Lender, upon written request, full information as to the
insurance carried.
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<PAGE>
6.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records
at any reasonable time on any Business Day and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and
employees of the Borrower and with its independent certified public
accountants; provided that the Agent or such Lender shall notify the Borrower
prior to any contact with such accountants and shall give the Borrower the
opportunity to participate in such discussions.
6.7 Notices. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any Subsidiary or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any Subsidiary and any Governmental Authority, which in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
Subsidiary in which the amount involved is $1,000,000 or more and not
covered by insurance or which could reasonably be expected to have a
Material Adverse Effect;
(d) any filing or communication with the FCC constituting or
relating to any challenge to the validity of any FCC License or the
transfer thereof to the Borrower or any Subsidiary, or the qualification
of the licensee under such FCC License;
(e) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan; and
(f) any other development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
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<PAGE>
6.8 Environmental Laws. (a) Comply with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, and use its reasonable best efforts
to ensure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except to the extent that
failure to do so could not be reasonably expected to have a Material Adverse
Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect.
6.9 Assignments of Leases. Use all commercially reasonable efforts
to effectuate the due execution and delivery of Assignments of Leases in
respect of any real property leased by the Borrower or any Subsidiary and
used in the transmission or broadcasting of radio signals by any of the
Stations (except that the Forestry Service License shall not be assigned
pursuant to an Assignment of Leases or any other agreement) and related
Landlord's Consent within 180 days of the Closing Date or if later, the date
of entering into or acquisition of such lease. Upon execution, the Borrower
shall furnish any (i) Assignments of Leases, executed and delivered by a duly
authorized officer of the Borrower, and (ii) Landlords Consents, executed and
delivered by duly authorized representatives of the parties thereto, to the
Agent, with a conformed copy for each Lender.
6.10 Further Assurances. (a) From time to time hereafter, the
Borrower will execute and deliver, or will cause to be executed and
delivered, such additional instruments, certificates or documents, and will
take all such actions, as the Agent may reasonably request, for the purposes
of implementing or effectuating the provisions of this Agreement and the
other Loan Documents, or of more fully perfecting or renewing the rights of
the Agent and the Lenders with respect to the Collateral (or with respect to
any additions thereto or replacements or proceeds thereof or with respect to
any other property or assets hereafter acquired by the Borrower which may be
deemed to be part of the Collateral) pursuant hereto or thereto. Upon the
exercise by the Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any
Governmental Authority, including, without limitation, the FCC, the Borrower
will execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that
the Agent or such Lender may reasonably require to obtain from the Borrower
for such governmental consent, approval, recording, qualification or
authorization.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary, promptly upon the request of the Agent: (i)
execute and deliver to the Agent, for the benefit of the Lenders, such
amendments or supplements to the Security Agreement as the Agent shall deem
necessary or advisable to grant to the Agent, for the benefit of the Lenders,
a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower
or
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<PAGE>
any of its Subsidiaries, (ii) deliver to the Agent any certificates, if any,
representing such Capital Stock, together with undated stock powers executed
and delivered in blank by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become
a party to the Security Agreement pursuant to documentation which is in form
and substance reasonably satisfactory to the Agent, and (B) to take all
actions necessary or advisable to cause the Lien created by the Security
Agreement to be duly perfected in accordance with all applicable Requirements
of Law, including, without limitation, the filing of financing statements in
such jurisdictions as may be requested by the Agent and (iv) if requested by
the Agent, deliver to the Agent legal opinions relating to the matters
described in clauses (i), (ii) and (iii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
(c) Notwithstanding anything herein or in the Security Agreement,
to the extent this Agreement or any other Loan Document purports to require
any Loan Party to grant to the Agent, on behalf of the Lenders, a security
interest in the FCC Licenses of any Loan Party now owned or hereafter
acquired, as the case may be, the Agent, on behalf of the Lenders, shall only
have a security interest in such FCC Licenses at such times and to the extent
that a security interest in such licenses is permitted under applicable law.
Notwithstanding anything to the contrary contained herein or in the other
Loan Documents, the Agent will not take any action pursuant to this Agreement
or any other Loan Document that would constitute or result in any assignment
of any FCC License or any change of control of any Loan Party without first
obtaining the prior approval of the FCC or other state or Governmental
Authority, if, under the then existing law, such assignment of any FCC
License or change of control would require the prior approval of the FCC or
other state or Governmental Authority. Prior to the exercise by the Agent of
any power, right, privilege or remedy pursuant to this Agreement which
requires any consent, approval, recording, qualification or authorization of
any Governmental Authority or instrumentality, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certificates, instruments and other documents and papers that the Agent may
reasonably require to obtain for such governmental consent, approval,
recording, qualification or authorization. Without limiting the generality
of the foregoing, the Borrower will use its best efforts upon the reasonable
request of the Agent to assist in obtaining from the appropriate governmental
authorities the necessary consents and approvals, if any, for the assignment
or transfer of such authorizations, licenses and permits to the Agent or its
designee upon or following acceleration of the payment of the Loans in
accordance with the provisions hereof.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect, or any other amount is owing to any Lender or the Agent hereunder
or under any other Loan Document, the Borrower shall not, and (except with
respect to subsection 7.1) shall not permit any of its Subsidiaries to,
directly or indirectly:
7.1 Financial Condition Covenants. Permit for any period of four
consecutive fiscal quarters ending during any "Test Period" set forth below
the ratio of (i) Consolidated
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EBITDA of the Restricted Subsidiary Group for such period to (ii) the portion
of the Interest Expense for such period required to be paid in cash to be
less than the ratio set forth opposite such Test Period below:
<TABLE>
<CAPTION>
Test Period Ratio
------------ ------
<S> <C>
Closing Date - December 30, 2001 2.00 to 1.00
December 31, 2001 - June 29, 2002 1.75 to 1.00
June 30, 2002 - thereafter 2.00 to 1.00
</TABLE>
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Loan Parties under this Agreement and the
other Loan Documents;
(b) Indebtedness of the Borrower incurred to finance the acquisition
of fixed or capital assets or additions thereto (whether pursuant to a
loan, a Financing Lease or otherwise) in an aggregate principal amount not
exceeding as to the Borrower $2,000,000 at any time outstanding;
(c) current liabilities of the Borrower (other than for borrowed
money) incurred in the ordinary course of their business and in accordance
with customary trade practices;
(d) Indebtedness of the Borrower to any Subsidiary and of any Loan
Party to the Borrower or to any other Subsidiary;
(e) Indebtedness with respect to any surety bonds required in the
ordinary course of business of the Borrower and its Subsidiaries, provided
that such Indebtedness shall not at any time exceed $250,000 in the
aggregate;
(f) existing Indebtedness set forth on Schedule 7.2(f) and any renewal
or refinancing of such Indebtedness, provided the amount of such
Indebtedness is not increased and the maturity and weighted average life
thereof are not shortened;
(g) Subordinated Indebtedness incurred in connection with the
acquisition of the assets (and related liabilities) constituting a radio
station pursuant to subsection 7.9(c) in an aggregate amount outstanding
not to exceed $5,000,000 at any time;
(h) Indebtedness of the Borrower and its Subsidiaries represented by
the Senior Notes and the Guarantees of the Senior Notes in an aggregate
amount outstanding not to exceed $174,000,000; and
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<PAGE>
(i) additional Indebtedness (not otherwise permitted hereunder) of
the Borrower not exceeding $5,000,000 in aggregate principal amount at
any one time outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary
course of business which are not overdue for a period of more than 60
days or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) leases, subleases, easements, rights-of-way, encroachments and
other survey defects, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are
not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower;
(f) Liens securing Indebtedness of the Borrower permitted by
subsection 7.2(b) incurred to finance the acquisition of fixed or
capital assets or additions thereto, provided that (i) such Liens shall
be created substantially simultaneously with the acquisition of such
fixed or capital assets or additions thereto, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of the original purchase price of
such property at the time it was acquired; and
(g) Liens created pursuant to the Security Documents; and
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<PAGE>
(h) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all Subsidiaries)
$5,000,000 in aggregate amount at any time outstanding.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except Guarantee Obligations (a)
pursuant to the Loan Agreements, (b) in existence on the date hereof and
listed on Schedule 6.4 and any renewals thereof, provided the amount thereof
is not increased or extended and the maturity thereof is not shortened, (c)
relating to the unsecured guarantees of the Senior Notes, or (d) Guarantee
Obligations incurred after the date hereof in an aggregate amount not to
exceed $2,000,000 at any one time outstanding.
7.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business; except that so long as after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, any
Subsidiary (other than a License Subsidiary) of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be
the surviving corporation) or with or into any one or more wholly owned
Subsidiaries (other than a License Subsidiary) of the Borrower (provided that
the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation).
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, except:
(a) the sale or other disposition of property in the ordinary course
of business;
(b) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(c) the sale of the assets together with the related liabilities
constituting radio station WRKL-AM;
(d) advances, loans, extensions of credit or capital contributions,
investments and the like permitted by subsection 7.9;
(e) as permitted by subsection 7.5;
(f) any sale or other transfer of any fixed or capital asset in
connection with the incurrence of Indebtedness permitted by subsection
7.2(b);
(g) any sale of obsolete assets in the ordinary course of business;
and
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<PAGE>
(h) the sale or other disposition of other assets (not otherwise
permitted hereunder) in an aggregate amount not to exceed $5,000,000 in
any twelve month period.
7.7 Limitation on Dividends. Declare or pay any dividend (other
than dividends payable solely in common stock of the Borrower) on, or make
any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or
any warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations
of the Borrower or any Subsidiary, except that so long as after giving effect
thereto no Default or Event of Default shall have occurred and be continuing,
the Borrower may (a) repurchase its Capital Stock owned by management
employees or (b) make payments to management employees upon termination of
employment in connection with the exercise of stock options, stock
appreciation rights or similar equity incentives or equity based incentives
pursuant to management incentive plans in an aggregate amount per year not to
exceed $1,000,000.
7.8 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or
capital assets (excluding any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations
and any expenditure from the proceeds of casualty insurance used to repair or
replace the assets affected by such casualty loss and any asset acquired as
part of the acquisition of a Station permitted by Section 7.9(c)) except for
expenditures in the ordinary course of business not exceeding, in the
aggregate for the Borrower during any of the fiscal periods of the Borrower
set forth below, the amount set forth opposite such fiscal period below:
<TABLE>
<CAPTION>
Fiscal Period Amount
--------------- ----------
<S> <C>
The fiscal year ending
December 31, 1998 4,000,000
The fiscal year ending
December 31, 1999 2,000,000
Each fiscal year ending
thereafter 1,000,000
</TABLE>
; provided that any amount not expended in any fiscal year (up to 50% of the
amount for such fiscal year set forth above) may be carried forward into the
next succeeding fiscal year.
7.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures
46
<PAGE>
or other securities of or any assets constituting a business unit of, or make
any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) the acquisition of the assets (and related liabilities)
constituting a radio station (including the right to hold and operate
all related Licenses issued by the FCC); provided that (i) after giving
effect thereto, no Default or Event of Default shall have occurred or be
continuing and (ii) on a pro forma basis, the Borrower shall be in
compliance with subsection 7.1 as of the last day of the period of four
fiscal quarters for which financial statements have most recently been
provided (assuming such acquisition (and any incurrence of Indebtedness)
had occurred on the first day of such period) and (iii) the Borrower
shall have provided the Agent with the necessary calculations under
clause (ii) in certificate form and in sufficient detail reasonably
satisfactory to the Agent.
(d) investments in the Loan Parties;
(e) loans and advances to officers, directors and other employees
of the Borrower or its Subsidiaries for (i) commissions and travel and
entertainment expenses in the ordinary course of business and (ii)
relocation expenses and other similar expenses;
(f) loans by the Borrower to its employees or employees of its
Subsidiaries in connection with management incentive plans in an amount
not to exceed $1,000,000 in the aggregate at any one time outstanding;
(g) investments, loans and advances in existence on the date hereof
and listed on Schedule 7.9, and extensions, renewals, modifications or
restatements thereof; provided the amount thereof is not increased; and
(h) if in the reasonable judgment of the Borrower or any of its
Subsidiaries, any customer is deemed to be in a reorganization or unable
to make a timely cash payment on Indebtedness of such customer owing to
it, each of the Borrower and its Subsidiaries may invest in securities
issued by such customer or any affiliate thereof in lieu of cash
payments; provided that the Borrower or such Subsidiary, as the case may
be, has paid no new consideration (other than forgiveness of
Indebtedness) therefor.
7.10 Limitation on Optional Payments and Modifications of Debt
Instruments or Agreements. (a) Make any optional payment or prepayment on
or redemption or purchase of any Indebtedness (other than the Loans), or (b)
amend, modify or change, or consent or agree to any amendment, modification
or change to any of the terms of any such Indebtedness (other than any such
amendment, modification or change which would extend the maturity or
47
<PAGE>
reduce the amount of any payment of principal thereof or which would reduce
the rate or extend the date for payment of interest thereon).
7.11 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of the Borrower's or a Subsidiary's business and (c)
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate, except that the
foregoing restrictions shall not apply to (i) any transaction with an officer
or a member of the Board of Directors of the Borrower or a Subsidiary entered
into in the ordinary course of business (including compensation and employee
benefit arrangements), (ii) transactions and agreements in existence on the
date hereof (including without limitation the Registration Rights
Agreements), (iii) directors' fees, (iv) employment agreements approved by
the Board of Directors of the Borrower or a Subsidiary as in effect on the
date hereof and any extensions thereof on substantially equivalent terms, (v)
loans to employees not exceeding $1,000,000 in the aggregate outstanding at
any time and (vi) the provision of certain legal, tax and accounting services
by Metromedia Company and its employees to the Borrower and its Subsidiaries.
7.12 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or any Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Subsidiary.
7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year
of the Borrower to end on a day other than December 31.
7.14 Limitation on Negative Pledge Clauses. Enter into with any
Person any agreement, other than this Agreement and any industrial revenue
bonds, purchase money mortgages or Financing Leases permitted by this
Agreement (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby), which prohibits or limits the
ability of the Borrower or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired.
7.15 Limitation on Lines of Business and Local Marketing and Sales
Agreements. (a) Enter into any business, except for those businesses in
which the Borrower or any Subsidiary is engaged on the date of this Agreement
or which are directly related thereto or (b) without the consent of the
Required Lenders, enter into any Local Marketing and Sales Agreement.
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7.16 Restrictions on Member and License Subsidiaries. (a) Permit
any FCC License to be held by any Person other than a License Subsidiary 90
days after the later of the Closing Date or acquisition of such FCC License.
(b) Permit any FCC License held by any License Subsidiary not to be
the subject of an Operating Agreement or amend any Operating Agreement
without the consent of the Agent.
(c) Permit any Member other than the Borrower to engage in any
activity or business or have any employees or incur any Indebtedness or
Contractual Obligations or grant any Liens other than (i) activities and
obligations incidental to its membership or partnership interest in a
License Subsidiary or (ii) pursuant to the Loan Documents.
(d) Permit any License Subsidiary to engage in any activity or
business or have any employees or incur any Indebtedness or Contractual
Obligations or grant any Liens other than (i) activities or obligations
incidental to its holding of FCC Licenses and the related Operating
Agreement or (ii) pursuant to the Loan Documents.
(e) (i) permit any License Subsidiary or Member to fail to satisfy
customary corporate or other applicable formalities, including the
holding of regular board of directors' and shareholders' or other
required meetings and the maintenance of offices and records, (ii)
permit any bank account of any License Subsidiary or any Member to be
commingled with any bank account of the Borrower or any of its other
Subsidiaries, (iii) any financial statements distributed to any
creditors of the Borrower or any of its other Subsidiaries to fail to
clearly establish the separateness of the Members and the License
Subsidiaries from the Borrower and its other Subsidiaries, and (iv)
take, and not permit any Member or any License Subsidiary to take, any
action, or conduct its affairs in a manner, which is likely to result in
the corporate existence of any Member or of any License Subsidiary being
ignored, or in the assets and liabilities of any Member or of any
License Subsidiary being substantively consolidated with those of the
Borrower or any of its other Subsidiaries in a bankruptcy,
reorganization or other insolvency proceeding.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due in accordance with the terms thereof
or hereof; or the Borrower shall fail to pay any interest on any Loan,
or any other amount payable hereunder, within five days after any such
interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in
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any certificate, document or financial or other statement furnished by it at
any time as required by this Agreement or any such other Loan Document shall
prove to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any covenant contained in Section 7 hereof
or Section 5 of the Security Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or
(e) The Borrower or any other Loan Party shall, unless waived by
the Lender in each instance, (i) default in any payment of principal of
or interest of any Indebtedness (other than the Loans) or in the payment
of any Guarantee Obligation, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created, after giving effect to any consents or
waivers relating thereto, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or
defaults shall have occurred is at least $2,500,000; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or beneficiaries of such
Guarantee Obligation (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; or
(f) (i) The Borrower or any other Loan Party shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Borrower or
any other Loan Party shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or
any other Loan Party any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Borrower or any other Loan Party
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets
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which results in the entry of an order for any such relief which shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower or any other
Loan Party shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Borrower or any other
Loan Party shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect
to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Required Lenders is likely
to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other
event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any other Loan Party involving in the aggregate a liability
(not paid or fully covered by insurance) of $2,500,000 or more, and all
such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or
(ii) the Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) The Borrower shall lose, fail to keep in force, suffer the
termination or revocation or nonrenewal of, or terminate, forfeit or
suffer an amendment to any FCC License at any time owned by it which in
any such case would have a Material Adverse Effect;
(k)(i) Any Person or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) other than
Stuart Subotnick and his
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family, affiliates and heirs shall obtain the power (whether or not
exercised) to elect a majority of the Borrower's directors or (ii) the
Borrower shall fail to own, directly or indirectly, free and clear of
all Liens (other than pursuant to the Security Documents) 100% of the
Capital Stock of any License Subsidiary or Member or (iii) the Board of
Directors of the Borrower shall not consist of a majority of Continuing
Directors; "Continuing Directors" shall mean the directors of the
Borrower on the Closing Date and each other director, if such other
director's nomination for election to the Board of Directors of the
Borrower is recommended by a majority of the then Continuing Directors;
or
(l) Any of the subordination provisions of any Subordinated
Indebtedness shall cease, for any reason to be in full force and effect,
or the Borrower or the holders of a majority of such Indebtedness shall
so assert;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) of this Section with respect
to the Borrower, automatically the Commitments shall immediately terminate
and the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding letters
of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other Event
of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Agent may, or upon the request of
the Required Lenders, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to
the preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Bank and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of the Borrower under this Agreement and the other Loan
Documents. Amounts held in such cash collateral account shall be applied by
the Agent to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the Notes. After all such
Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations
of the Borrower hereunder and under the Notes shall have been paid in full,
the balance, if any, in such cash collateral account shall be returned to the
Borrower. The
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Borrower shall execute and deliver to the Agent, for the account of the
Issuing Bank and the L/C Participants, such further documents and instruments
as the Agent may request to evidence the creation and perfection of the
security interest in such cash collateral account.
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent,
in such capacity, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for
the negligence or misconduct of any agents or attorneys in-fact selected by
it with reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
or any other Loan Document or for any failure of the Borrower or any other
Loan Party to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any other Loan Party.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit,
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letter, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent.
The Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or
any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and
the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower or any other Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Borrower
and the other Loan Parties and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the
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business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according
to their respective Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have
been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or any action
taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in
this subsection shall survive the payment of the Loans and all other amounts
payable hereunder.
9.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower and its Subsidiaries as though the Agent were not
the Agent hereunder and under the other Loan Documents. With respect to the
Loans made by it and with respect to any Letter of Credit issued or
participated in by it, the Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.
9.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower, whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the
term "Agent" shall mean such successor agent effective upon such appointment
and approval, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any holders of the
Loans. After any retiring Agent's resignation as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and the other Loan
Documents.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders,
the Agent may, from time to time, (a) enter into with the Borrower or the
other Loan Parties written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to
this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Borrower or the other Loan Parties hereunder
or thereunder or (b) waive, on such terms and conditions as the Required
Lenders or the Agent, as the case may be, may specify in such instrument, any
of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i)
reduce the amount or extend the scheduled date of maturity of any Loan or of
any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Commitment,
in each case without the consent of each Lender affected thereby, or (ii)
amend, modify or waive any provision of this subsection or reduce the
percentage specified in the definition of Required Lenders or Required
Lenders, or consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan Documents
or release all or substantially all of the Collateral, in each case without
the written consent of all the Lenders, or (iii) amend, modify or waive any
provision of Section 9 without the written consent of the then Agent or any
provision of Section 3 without the consent of the Issuing Bank. Any such
waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon the Borrower, the Lenders,
the Agent, the Loan Parties and all future holders of the Loans. In the case
of any waiver, the Borrower, the Lenders, the Loan Parties and the Agent
shall be restored to their former positions and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made (a) in the case of delivery
by hand, when delivered, (b) in the case of delivery by mail, three days
after being deposited in the mails, postage prepaid, or (c) in the case of
delivery by facsimile transmission, when sent and receipt has been confirmed,
addressed as follows in the case of the Borrower and the Agent, and as set
forth in Schedule I in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
The Borrower: Big City Radio, Inc.
11 Skyline Drive
Hawthorne, New York 10532
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Attention: Mr. Michael Kakoyiannis,
President
Fax: 914-592-4356
with a copy to: Arnold L. Wadler, Esq.
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, New Jersey 07073-2137
Fax: 201-531-2803
The Agent: The Chase Manhattan Bank
270 Park Avenue, 37th Floor
New York, New York 10017
Attention: John Haltmaier
Fax: 212-622-0136
and a copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: James M. Dubin, Esq.
Fax: 212-757-3990
provided that any notice, request or demand to or upon the Agent, the Issuing
Bank or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.8, 2.13 or 3.2
shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agent for all its reasonable and documented out-of-pocket
costs and expenses incurred in connection with the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent,
(b) to pay or
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reimburse the Agent and, from and after the occurrence of a Default or an
Event of Default, each Lender for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable and documented fees and disbursements of
counsel to each Lender and of counsel to the Agent, (c) to pay, indemnify,
and hold each Lender and the Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender and the Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to
the violation of, noncompliance with or liability under, any Environmental
Law applicable to the operations of the Borrower or any of the Properties
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder
to the Agent or any Lender with respect to indemnified liabilities arising
from (i) the gross negligence or willful misconduct of the Agent or any such
Lender or (ii) legal proceedings commenced against the Agent or any such
Lender by any security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor solely in its
capacity as such. The agreements in this subsection shall survive repayment
of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
lending business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("Participants") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. The Borrower
agrees that if amounts outstanding under this Agreement are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default,
58
<PAGE>
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest
in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 10.6 as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.15, 2.16 and 2.17 with respect to
its participation in the Commitments and the Loans outstanding from time to
time as if it was a Lender; provided that, in the case of subsection 2.16,
such Participant shall have complied with the requirements of said subsection
and provided, further, that no Participant shall be entitled to receive any
greater amount pursuant to any such subsection than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had
no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
lending business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any affiliate thereof or, with the
consent of the Agent and the Borrower (which shall not, in either case, be
unreasonably withheld), to an additional bank or financial institution ("an
Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit D, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender
or an affiliate thereof, by the Agent) and delivered to the Agent for its
acceptance and recording in the Register of the aggregate principal amount of
the Loans and the aggregate amount of the Available Commitment of all the
Lenders then outstanding (or such lesser amount as may be agreed to by the
Borrower and the Agent); provided that no such assignment shall be effective
unless it is for a minimum amount of at least $5,000,000. Upon such
execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto).
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in subsection 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Agent and the Lenders may (and, in the case of
any Loan or other obligation hereunder not evidenced by a Note, shall) treat
each Person whose name is recorded in the Register as the owner of a Loan or
other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding
59
<PAGE>
any notice to the contrary. Any assignment of any Loan or other obligation
hereunder not evidenced by a Note shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall
be available for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Agent) together with payment to
the Agent of a registration and processing fee of $3,500, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders
and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Borrower in connection with such
Lender's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions
do not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Termination of Guarantee. In connection with this Agreement,
the existing Guarantee of up to $6,000,000 of the Loans made by Stuart
Subotnick, dated May 30, 1996, as amended, supplemented or otherwise modified
from time to time, shall be terminated effective as of the Closing Date and
the Agent agrees to mark such Guarantee "cancelled" and return the original
document to the Borrower.
10.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
60
<PAGE>
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with
respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 10.2 or at such other
address of which the Agent shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
Each of the Borrower, the Agent and the Lenders hereby irrevocably
and unconditionally waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
61
<PAGE>
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
Agent and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BIG CITY RADIO, INC.
By: /s/ Michael Kakoyiannis
-----------------------------------
Title:
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By: /s/ John Haltmeier
-----------------------------------
Title:
63
<PAGE>
SCHEDULE I
Lenders, Addresses and Commitments
<TABLE>
<S> <C>
The Chase Manhattan Bank $15,000,000
270 Park Avenue
New York, New York 10017
Attention: John Haltmaier
Facsimile number: (212) 270-4584
</TABLE>
<PAGE>
SCHEDULE 4.8
Liens
Liens in favor of Toshiba American Information Systems, Inc. on
equipment of the Borrower acquired pursuant to a lease transaction.
<PAGE>
SCHEDULE 4.15
Subsidiaries
Big City Radio-NYC, L.L.C.
Big City Radio-CHI, L.L.C.
Big City Radio-LA, L.L.C.
Odyssey Traveling Billboards, Inc.
WRKL Rockland Radio, L.L.C.
<PAGE>
SCHEDULE 4.19
FCC Licenses and Permits
The FFC authorizations for the following are held by Big City Radio,
Inc. or a License Subsidiary for Big City, Inc.:
<TABLE>
<CAPTION>
Call Sign Station Location Renewal File No.
- --------- ---------------- ----------------
<S> <C> <C>
WRKL(AM) New City, NY BR-910201XE
WQA-988 Associated with WRKL(AM) N/A
WWXY(FM) Briarcliff Manor, NY BRH-910201YN
WWVY(FM) Hampton Bays, NY BRH-910131WO
WWZY(FM) Long Branch, NJ BRH-910201YP
WVVX-FM Highland Park, IL BRH-960807YJ
WJDK(FM) Morris, IL BRH-960801S6
WMG-515 Associated with WJDK(FM) N/A
KLYY(FM) Arcadia, CA BRH-970731XJ
KLYY-FM1 Burbank, CA Renewal associated with
KLYY(FM)
KSYY(FM) Fallbrook, CA BRH-970731UB
KVYY(FM) Ventura, CA BRH-970731XK
K252BF Temecula, CA BRFT-979731XR
</TABLE>
<PAGE>
The FCC license for WRKL(AM) is in the process of being assigned to
WRKL Rockland Radio, L.L.C. The FCC licenses for WWXY(FM), WWVY(FM), and
WWZY(FM) are in the process of being assigned to Big City Radio-NYC, L.L.C.
The FCC licenses for KLYY(FM), KSYY(FM), KVYY(FM), and K252BF are in the
process of being assigned to Big City Radio-LA, L.L.C. The FCC licenses for
WJDK(FM) and WVVX-FM are in the process of being assigned to Big City
Radio-CHI, L.L.C. Big City Radio, Inc. is the sole member manager of Big
City Radio-CHI, L.L.C., Big City Radio-LA, L.L.C., Big City Radio-NYC, L.L.C.
and WRKL Rockland Radio, L.L.C.
Big City Radio, Inc. has also requested the FCC to update the
licensee of each of the following to the Big City Radio, Inc. or one of its
License Subsidiaries:
<TABLE>
<S> <C>
WGW-933 Associated with WWVY(FM), Hampton Bays, NY
KPK-855 Associated with WWXY(FM), Briarcliff Manor, NY
WHE-822 Associated with WWZY(FM), Long Branch, NJ
KX-7964 Associated with WRKL(KAM), New City, NY
WLP-470 Associated with KVYY(FM), Ventura, CA
WLI-911 Associated with KVYY(FM), Ventura, CA
WLE-596 Associated with KLYY(FM), Arcadia, CA
</TABLE>
2
<PAGE>
SCHEDULE 7.2(f)
Existing Indebtedness
<TABLE>
<S> <C>
Notes Payable on Station Vans $47,706.00
Omnipoint Holdback from WZVU purchase $150,000,000
------------
Total $197,706.00
</TABLE>
<PAGE>
SCHEDULE 7.4
Guarantee Obligations
None.
<PAGE>
SCHEDULE 7.9
Investments, Loans and Advances
<TABLE>
<S> <C>
Cablevision (Tower) Deposit $ 57,821.00
L-T Tax Deposit $ 73,155.00
----------
Total $130,976.00
</TABLE>
<PAGE>
Exhibit 10.11
BIG CITY RADIO, INC.
$174,000,000
11 1/4% Senior Discount Notes due 2005
PURCHASE AGREEMENT
March 12, 1998
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT ALEX BROWN INCORPORATED
ING BARING (U.S.) SECURITIES, INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Big City Radio, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell $174,000,000 aggregate principal amount of its 11 1/4%
Senior Discount Notes due 2005 (the "Notes") which Notes are guaranteed (the
"Guarantees") by the subsidiary guarantors (the "Subsidiary Guarantors")
named on the signature pages hereof (the Guarantees and the Notes are
collectively referred to herein as the "Securities;" and the Company and the
Subsidiary Guarantors are collectively referred to herein as the "Issuers").
The Securities will be issued pursuant to an Indenture to be dated as of
March 18, 1998 (the "Indenture"), by and among the Company, the Subsidiary
Guarantors and First Trust National Association, a national association, as
trustee (the "Trustee"). The Issuers hereby confirm their agreement with
Chase Securities Inc. ("CSI"), Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), BT Alex Brown Incorporated ("Alex Brown"), ING Baring
(U.S.) Securities, Inc. ("INGBS," and together with CSI, DLJ and Alex Brown,
the "Initial Purchasers") concerning the purchase of the Securities from the
Issuers by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon an
<PAGE>
exemption therefrom. The Issuers have prepared a preliminary offering
memorandum dated February 25, 1998 (the "Preliminary Offering Memorandum")
and will prepare an offering memorandum, dated the date hereof (the "Offering
Memorandum"), setting forth information concerning the Issuers and the
Securities. Copies of the Preliminary Offering Memorandum have been, and
copies of the Offering Memorandum will be, delivered by the Issuers to the
Initial Purchasers pursuant to the terms of this Agreement. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum
shall be deemed to include all amendments and supplements thereto, unless
otherwise noted. The Issuers hereby confirm that they have authorized the use
of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
which the Issuers will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") registering an
issue of senior discount notes of the Company and related guarantees
(together, the "Exchange Securities") which are identical in all material
respects to the Securities (except that the Exchange Securities will not
contain terms with respect to transfer restrictions) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Issuers. The
Issuers, jointly and severally, represent and warrant to, and agree with, the
several Initial Purchasers on and as of the date hereof and the Closing Date
(as defined in Section 3) or on and as of such other date as specified herein
that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Issuers make no representation or warranty as to information contained in
or omitted from the Preliminary Offering Memorandum or the Offering
Memorandum in reliance upon and in conformity with written information
relating to the Initial Purchasers furnished to the Issuers by or on behalf
of any Initial Purchaser specifically for use therein (the "Initial
Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum,
2
<PAGE>
as of its respective date, contains all of the information that, if
requested by a prospective purchaser of the Securities, would be required
to be provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 2 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The Company and each of its subsidiaries have been duly organized,
are validly existing as corporations or limited liability companies in good
standing under the laws of their respective jurisdictions of organization
and have the power (corporate or other) and authority to carry on their
respective businesses as described in the Offering Memorandum and to own,
lease and operate their respective properties, and are duly qualified and
are in good standing as foreign corporations or limited liability companies
authorized to do business in each jurisdiction in which the nature of their
respective businesses or their ownership or leasing of property requires
such qualification, except where the failure to be so qualified could not
be reasonably expected to have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible or exchangeable securities, commitments of sale or liens
granted or issued by the Company or any of its subsidiaries relating to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of the Company or any of its subsidiaries except as otherwise
disclosed in the Offering Memorandum.
(f) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, nonassessable
and not subject to any preemptive or similar rights.
(g) All the outstanding shares of capital stock of each subsidiary of
the Company have been duly authorized and are validly issued, fully paid
and nonassessable and not subject to any preemptive or similar rights and
are owned, directly or indirectly, by the Company.
(h) The Company has an authorized capitalization as set forth in all
material respects in the Offering Memorandum under the heading
"Capitalization."
(i) Neither the Company nor any of its subsidiaries is in violation of
its charter,
3
<PAGE>
by-laws or other constitutive documents; and neither the Company nor any of
its subsidiaries is in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan
agreement, mortgage or lease or in any other agreement or instrument each
of which is material to the Company and its subsidiaries, taken as a whole,
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective property is
bound.
(j) The Issuers have full corporate or limited liability company
right, power and authority to execute and deliver this Agreement, the
Indenture, the Registration Rights Agreement and the Securities
(collectively, the "Transaction Documents") and to perform their respective
obligations hereunder and thereunder; and all corporate or other action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(k) This Agreement has been duly authorized, executed and delivered by
each of the Issuers.
(l) The execution, delivery and performance of each of the Transaction
Documents by each of the Issuers, as the case may be, the issuance,
authentication, sale and delivery of the Securities and the compliance by
each of the Issuers, as the case may be, with the terms thereof, the
compliance by each of the Issuers, as the case may be, with all the
provisions hereof and the consummation of the transactions contemplated by
the Transaction Documents will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws or other constitutive documents of the
Company or its subsidiaries or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and
its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
the Company or any of its subsidiaries or any of their respective property
or (iv) result in the suspension, termination or revocation of any
Authorization (as defined below) of the Company or of any of its
subsidiaries or any other impairment of the rights of the holder of any
such Authorization.
(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or, to the Company's knowledge, could be a party or to
which any of their respective property is or, to the Company's knowledge,
could be subject that are required to be described in the Offering
Memorandum and are not so described; nor are there any statutes,
regulations,
4
<PAGE>
contracts or other documents that are required to be described in the
Offering Memorandum that are not so described as required.
(n) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws") or any provisions of the Employee Retirement Income Security Act of
1974, as amended, or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and
its subsidiaries, taken as a whole.
(o) The Company and each of its subsidiaries possess such permits,
licenses, approvals, consents, and other authorizations (collectively,
"Government Licenses") issued by the appropriate federal, state, or local
regulatory agencies or bodies necessary to conduct the Company's and each
of its subsidiaries' respective businesses as they are currently operated
and as they are currently proposed to be conducted, except as discussed in
the Offering Memorandum; each of the Governmental Licenses is valid, in
full force and effect, has not been suspended, revoked, cancelled, or
modified in any adverse way, and is not subject to any conditions or
requirements that are not generally imposed by the relevant government
bodies upon the holders of such authorizations generally; to the Company's
knowledge, except for proceedings that affect the radio broadcasting
industry generally and as described in the Offering Memorandum, there is
not pending any application, petition, objection or other pleading with any
government body which questions the validity of or contests any of the
Governmental Licenses; no application, action, or proceeding is pending or,
to the Company's knowledge, threatened, that would permit, or after notice
or lapse of time or both would permit, any modification, revocation,
suspension or termination of any of the Governmental Licenses or may result
in the revocation, modification, non-renewal, suspension, or termination of
any of the Governmental Licenses, the issuance of a cease-and-desist order,
or the imposition of any administrative or judicial sanction with respect
to any of the Governmental Licenses; and the Company and each of its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply could not,
singly or in the aggregate, be reasonably expected to have a material
adverse effect on the business, prospects, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole.
(p) The Company and each of its subsidiaries have such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and have made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without
limitation, under any applicable Environmental Laws and the Communications
Act (as defined below), as are necessary to own, lease, license and operate
their respective properties and to conduct their respective businesses,
except where the failure to have any such Authorization or to
5
<PAGE>
make any such filing or notice could not, singly or in the aggregate, be
reasonably expected to have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole. To the best of the Company's knowledge,
each such Authorization is valid and in full force and effect and the
Company and each of its subsidiaries are in compliance with all the terms
and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of
any notice from any authority or governing body) which allows or, after
notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse
of time or both, would result in any other impairment of the rights of the
holder of any such Authorization; and no such Authorization contains any
restrictions that, singly or in the aggregate, are materially burdensome to
the Company and its subsidiaries, taken as a whole; except where such
failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction
could not, singly or in the aggregate, be reasonably expected to have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole.
(q) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby have not and will not
(A) require any consent, approval, authorization or other order of the
Federal Communications Commission (the "FCC") or (B) violate or conflict
with the Communications Act of 1934, as amended, and the rules and
regulations of the FCC thereunder (collectively called the "Communications
Act") or rulings or court decrees thereunder. Subsequent to the execution
of this Agreement, the Company may be required to file certain customary
notifications or documents with the FCC.
(r) To the best of the Company's knowledge, the operation of the radio
stations identified in the Offering Memorandum under the caption "Business"
(collectively, the "Radio Stations") in the manner and to the full extent
now operated or proposed to be operated as described in the Offering
Memorandum is in accordance with the Authorizations issued by the FCC, the
Communications Act and all orders, rules and regulations of the FCC. To the
best of the Company's knowledge, no event has occurred which permits (nor
has an event occurred which with notice or lapse of time or both would
permit) the revocation, suspension or termination of the Authorizations
issued by the FCC or which might result in any other material impairment of
the rights of the Company or any of its subsidiaries therein or thereunder,
and the Company and its subsidiaries each are in compliance with all
statutes, orders, rules or regulation of the FCC relating to or affecting
the broadcasting operations of any of its Radio Stations.
(s) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related
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constraints on operating activities and any potential liabilities to third
parties) which could, singly or in the aggregate, be reasonably expected to
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole.
(t) KPMG Peat Marwick LLP are independent public accountants with
respect to the Company, WZVU-FM ("WZVU") and WVVX, Inc. ("WVVX") and each
of their respective subsidiaries within the meaning of Rule 101 of the Code
of Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder. Holtz
Rubenstein & Co. LLP are independent public accountants with respect to the
Company and each of its subsidiaries within the meaning of Rule 101 of the
Code of Professional Conduct of the AICPA and its interpretations and
rulings thereunder.
(u) The pro forma financial statements of the Company and the related
notes thereto set forth in the Offering Memorandum (and in each case, any
amendment or supplement thereto) (i) have been prepared on a basis
consistent with the historical financial statements of the Company, (ii)
give effect to the assumptions used in the preparation thereof on a
reasonable basis and (iii) in good faith present fairly the historical and
proposed transactions contemplated therein. Such pro forma financial
statements have been prepared in accordance with the applicable
requirements of Rule 11-02 of Regulation S-X promulgated by the Commission.
The other pro forma financial and statistical information and data set
forth in the Offering Memorandum (and any supplement or amendment thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with the pro forma financial statements.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The financial statements included in the Offering Memorandum (and
any amendment or supplement thereto), together with related notes, present
fairly the financial position, results of operations and changes in
financial position of the Company, WZVU and WVVX on the basis stated
therein at the respective dates, as applicable, or for the respective
periods to which they apply; such statements and related notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved; and the other
financial and statistical information and data set forth in the Offering
Memorandum (and any amendment or supplement thereto) are, in all material
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<PAGE>
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(x) All tax returns required to be filed by the Company or any of its
subsidiaries in any jurisdiction have been filed, other than those filings
being contested in good faith and other than those filings of which the
failure to file could not, singly or in the aggregate, be reasonably
expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities have been paid, other
than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without penalty or interest.
(y) The Company and each of its subsidiaries is not and, after giving
effect to the offering and sale of the Securities and the application of
the proceeds thereof as described in the Offering Memorandum, will not be,
an "investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(z) Since the respective dates as of which information is given in the
Offering Memorandum, other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, prospects,
management or operations of the Company or any of its subsidiaries, (ii)
there has not been any material adverse change or any development involving
a prospective material adverse change in the capital stock or in the
long-term debt of the Company or any of its subsidiaries and (iii) neither
the Company nor any of its subsidiaries has incurred any material liability
or obligation, direct or contingent.
(aa) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers, or counsel for the Initial Purchasers,
pursuant to the terms hereof shall be deemed to be a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.
(bb) The Company and each of its subsidiaries maintain insurance
covering their respective properties, operations, personnel and businesses
to the extent necessary to insure against such losses and risks as are
reasonably adequate in accordance with customary industry practice to
protect the Company, each of its subsidiaries and their respective
businesses.
(cc) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Issuers and, assuming the due authorization,
execution and delivery by each of the other parties thereto, will
constitute a valid and legally binding agreement of the
8
<PAGE>
Issuers, enforceable against the Issuers in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and as to rights of indemnification or contribution thereunder may be
limited by principles of public policy or federal or state securities laws
relating thereto.
(dd) The Indenture has been duly authorized, executed and delivered by
the Issuers and, assuming the due authorization, execution and delivery by
each of the other parties thereto, will constitute a valid and legally
binding agreement of the Issuers, enforceable against the Issuers in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered in
a proceeding in equity or at law). On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(ee) The Securities have been duly authorized by the Issuers and, when
duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
by the Issuers and will constitute valid and legally binding obligations of
the Issuers entitled to the benefits of the Indenture and enforceable
against the Issuers in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(ff) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(gg) To the best knowledge of the Company and its subsidiaries, no
action has been taken and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body which
prevents the issuance of the Securities or suspends the sale of the
Securities in any jurisdiction; no injunction, restraining order or order
of any nature by any federal or state court of competent jurisdiction has
been issued with respect to the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Securities or the use
of the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
best knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which could
reasonably be expected to materially interfere with or adversely
materially affect the issuance of the Securities or in any manner draw into
question the validity or enforceability of any of the Transaction Documents
or any action taken or to
9
<PAGE>
be taken pursuant thereto; and the Company has materially complied with any
and all requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(hh) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the application of
the net proceeds therefrom and to the other transactions related thereto as
described in the Offering Memorandum) will be Solvent. As used in this
paragraph, the term "Solvent" means, with respect to the Company on a
particular date, that on such date (i) the present fair market value (or
present fair saleable value) of the assets of the Company taken as a whole
is not less than the total amount required to pay the probable liabilities
of the Company on its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured, (ii) the
Company is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and
become due in the normal course of business, (iii) assuming the sale of the
Securities and the application of the net proceeds therefrom as
contemplated by this Agreement and the Offering Memorandum, the Company is
not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities as they mature and (iv) the Company is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which the Company is engaged. In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(ii) Neither the Company nor any of its subsidiaries owns any "margin
securities" as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Securities will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
(jj) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(kk) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
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<PAGE>
(ll) Neither the Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(mm) None of the Company or any of its affiliates or any other person
acting on its or their behalf has engaged, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(nn) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") in connection with
the offering of the Securities.
(oo) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in
good faith.
(pp) The following sets forth a complete and accurate list of the
subsidiaries of the Company: Big City Radio-NYC, L.L.C., a Delaware limited
liability company, Big City Radio-CHI, L.L.C., a Delaware limited liability
company, Big City Radio-LA, L.L.C., a Delaware limited liability company,
Odyssey Traveling Billboards, Inc., a Delaware corporation and WRKL
Rockland Radio, L.L.C., a Delaware limited liability company.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Issuers agree, jointly and severally,
to issue and sell to each of the Initial Purchasers, severally and not jointly,
and each of the Initial Purchasers, severally and not jointly, agrees to
purchase from the Issuers, the principal amount of Securities set forth opposite
the name of such Initial Purchaser on Schedule 1 hereto at a purchase price
equal to 69.893% of the principal amount thereof. The Issuers shall not be
obligated to deliver any of the Securities except upon payment for all of the
Securities to be purchased as provided herein.
(b) The Initial Purchasers have advised the Issuers that they propose to
offer the Securities for resale upon the terms and subject to the conditions set
forth herein and in the Offering Memorandum. Each Initial Purchaser, severally
and not jointly, represents, warrants and agrees that (i) it has not solicited
offers for, or offered or sold, and will not solicit offers for, or offer or
sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (ii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer,
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<PAGE>
sell or deliver the Securities, as part of their initial offering, only (A)
within the United States to persons whom it reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers"), as defined in Rule 144A
under the Securities Act ("Rule 144A"), or if any such person is buying for one
or more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) outside the United States to
persons other than U.S. persons in reliance on Regulation S.
(c) In connection with the offer and sale of Securities in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) Such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) None of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S.
(iv) At or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, it will have sent to each distributor, dealer or
other person receiving a selling concession, fee or other remuneration that
purchase Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering of the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(v) It has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates
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<PAGE>
or with the prior written consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by
Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents, warrants
and agrees that (i) it has not offered or sold and prior to the date six months
after the Closing Date will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document received by
it in connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees that, prior
to or simultaneously with the confirmation of sale by such Initial Purchaser to
any purchaser of any of the Securities purchased by such Initial Purchaser from
the Issuers pursuant hereto, such Initial Purchaser shall furnish to that
purchaser a copy of the Offering Memorandum (and any amendment or supplement
thereto that the Issuers shall have furnished to such Initial Purchaser prior to
the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Issuers and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(e)
and (f), counsel for the Issuers and for the Initial Purchasers, respectively,
may rely upon the accuracy of the representations and warranties of the Initial
Purchasers and their compliance with their agreements contained in this Section
2, and each Initial Purchaser hereby consents to such reliance.
(f) The Issuers acknowledge and agree that the Initial Purchasers may sell
Securities to any affiliate of an Initial Purchaser and that any such affiliate
may sell Securities purchased by it to an Initial Purchaser in each case,
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
3. Delivery of and Payment for the Securities. (a) Delivery of and payment
for the Securities shall be made at the offices of Paul, Weiss, Rifkind, Wharton
& Garrison, New York, New York, or at such other place as shall be agreed upon
by the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
March 18, 1998, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
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<PAGE>
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify
prior to the Closing Date or by such other means as the parties hereto
shall agree prior to the Closing Date against delivery to the Initial
Purchasers of the certificates evidencing the Securities. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of the Initial
Purchasers hereunder. Upon delivery, the Securities shall be in global
form, registered in such names and in such denominations as CSI on behalf
of the Initial Purchasers shall have requested in writing not less than two
full business days prior to the Closing Date. The Company agrees to make
one or more global certificates evidencing the Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York
at least 24 hours prior to the Closing Date.
4. Further Agreements of the Issuers. The Issuers agree with each of the
several Initial Purchasers:
(a) at any time prior to completion of the resale of the Securities by
the Initial Purchasers, to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any event
which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from time to
time) in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; to advise the
Initial Purchasers promptly of any order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its best efforts to prevent the issuance of
any such order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and one
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
one counsel for the Initial Purchasers and not to effect any such amendment
or supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
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<PAGE>
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Issuers, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) at any time prior to completion of the resale of the Securities,
to promptly take from time to time such actions as the Initial Purchasers
may reasonably request to qualify the Securities for offering and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may designate and to continue such qualifications in effect for
so long as required for the resale of the Securities; and to arrange for
the determination of the eligibility for investment of the Securities under
the laws of such jurisdictions as the Initial Purchasers may reasonably
request; provided that the Company and its subsidiaries shall not be
obligated to qualify as foreign business organizations in any jurisdiction
in which they are not so qualified or to file a general consent to service
of process in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
be eligible and to maintain such eligibility for clearance and settlement
through
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The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
such term is defined in the Securities Act) which could be integrated with
the sale of the Securities in a manner which would require registration of
the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or in
any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances where
such offer, sale, contract or disposition would cause the exemption afforded
by Section 4(2) of the Securities Act to cease to be applicable to the
offering and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) for a period of 180 days from the date of the Offering Memorandum,
not to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce any
offer, sale, contract for sale of or other disposition of any debt securities
issued or guaranteed by the Company or any of its subsidiaries (other than
the Securities) without the prior written consent of the Initial Purchasers;
(l) during the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or any of
its affiliates and resold in a transaction registered under the Securities
Act;
(m) not to, for so long as the Securities are outstanding, be or become,
or be or become owned by, an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act of 1940, as amended,
and to not be or become, or be or become owned by, a closed-end investment
company required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act) not
to, either alone or with one or more other persons, bid for or purchase, for
any account in which it or any of its affiliated purchasers has a beneficial
interest, any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not to, make
bids or purchase for the purpose of creating actual, or
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<PAGE>
apparent, active trading in or of raising the price of the Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to do and perform all things required to be done and performed by it
under this Agreement that are within its control on or prior to or after the
Closing Date, as applicable, and to use its best efforts to satisfy all
conditions precedent on its part to the delivery of the Securities;
(q) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date which would require
the Offering Memorandum to be amended or supplemented pursuant to Section
4(d);
(s) prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with
respect to the Issuers, their condition, financial or otherwise, or earnings,
business affairs or business prospects (except for routine oral marketing
communications in the ordinary course of business and consistent with the
past practices of the Issuers and of which the Initial Purchasers are
notified), without the prior written consent of the Initial Purchasers,
unless in the judgment of the Issuers and their counsel, and after
notification to the Initial Purchasers, such press release or communication
is required by law;
(t) to not voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of the Securities;
and
(u) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds;" and
(v) subsequent to the execution of this Agreement, to file certain
customary notifications or documents with the FCC.
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
statements of the Issuers and their respective officers made in any
certificates delivered pursuant hereto, to the performance by the Issuers of
their obligations hereunder, and to each of the following additional terms
and conditions:
(a) All the representations and warranties of the Issuers contained in
this Agreement
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<PAGE>
shall have been true and correct in all material respects on the date of this
Agreement and shall be true and correct in all material respects on the
Closing Date with the same force and effect as if made on and as of the
Closing Date (except that such phrase "in all material respects" shall be
disregarded to the extent that any such representation and warranty is
qualified by "material," "material adverse effect" or any similar terms or by
any phrase using any of such terms).
(b) The Offering Memorandum (and any amendments or supplements thereto)
shall have been printed and copies distributed to the Initial Purchasers as
promptly as practicable on or following the date of this Agreement or at such
other date and time as to which the Initial Purchasers may agree; and no stop
order suspending the sale of the Securities in any jurisdiction shall have
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) None of the Initial Purchasers shall have discovered and disclosed
to the Issuers on or prior to the Closing Date that the Offering Memorandum
(without giving effect to any amendment or supplement thereto) or any
amendment or supplement thereto contains an untrue statement of a fact which,
in the opinion of counsel for the Initial Purchasers, is material or omits to
state any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein
not misleading.
(d) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and the
Offering Memorandum, and all other legal matters relating to the Transaction
Documents and the transactions contemplated thereby, shall be satisfactory in
all material respects to the Initial Purchasers, and the Issuers shall have
furnished to the Initial Purchasers all documents and information that they
or their counsel may reasonably request to enable them to pass upon such
matters.
(e) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the Issuers,
on the Closing Date, shall have furnished to the Initial Purchasers their
written opinion, as counsel for the Issuers, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
in Annex B hereto.
(f) The Initial Purchasers, on the Closing Date, shall have received
from Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial
Purchasers, an opinion, dated the Closing Date, as to the matters referred to
in paragraphs (i), (vi), (vii), (viii), (xii) and (xv) of Annex B. In giving
such opinions with respect to the matters covered by paragraph (xv), Paul,
Weiss, Rifkind, Wharton & Garrison and Skadden, Arps, Slate, Meagher & Flom
LLP may each state that their opinion and belief are based upon their
participation in the preparation of the Offering Memorandum, but are without
independent check or verification (except as specified).
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<PAGE>
(g) Hogan & Hartson, L.L.P., special radio communications counsel for
the Issuers, on the Closing Date, shall have furnished to the Initial
Purchasers their written opinion, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth in Annex C hereto.
(h) Arnold L. Wadler, Executive Vice President, General Counsel and
Secretary for the Company, on the Closing Date, shall have furnished to the
Initial Purchasers, his written opinion, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers, substantially to the effect set forth in Annex D
hereto.
(i) The Company, on the date hereof, shall have furnished to the Initial
Purchasers a letter (the "Initial Letter") of KPMG Peat Marwick LLP and Holz
Rubenstein & Co., LLP, addressed to the Initial Purchasers and dated the date
hereof, in form and substance satisfactory to the Initial Purchasers, with
respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(j) The Company shall have furnished to the Initial Purchasers a letter
(the "Bring-Down Letter") of KPMG Peat Marwick LLP addressed to the Initial
Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of a
date not more than three business days prior to the date of the Bring-Down
Letter), that the conclusions and findings of such accountants with respect
to the financial information and other matters covered by the Initial Letter
are accurate and (iii) confirming in all material respects the conclusions
and findings set forth in the Initial Letter.
(k) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer and its
chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have been
set forth in a supplement or amendment to the Offering Memorandum so that the
Offering Memorandum (as so amended or supplemented) would not include any
untrue statement of a material fact and would not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (C) all the representations and warranties of the
Issuers contained in this Agreement are true and correct in all material
respects on the date of this Agreement and are
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<PAGE>
true and correct in all material respects on the Closing Date with the same
force and effect as if made on and as of the date hereof (except that such
phrase "in all material respects" shall be disregarded to the extent that any
such representation and warranty is qualified by "material," "material
adverse effect" or any similar terms or by any phrase using any of such
terms), the Issuers have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder on or prior
to the Closing Date, and subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no material
adverse change in the financial position or results of operation of the
Company or any of its subsidiaries, or any change, or any development
including a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company and
its subsidiaries taken as a whole, except as set forth in the Offering
Memorandum.
(l) The Initial Purchasers shall have received an executed counterpart
of the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of each of the Issuers.
(m) The Indenture shall have been duly executed and delivered by each of
the Issuers and the Trustee, the Initial Purchasers shall have received an
executed counterpart of the Indenture and the Securities shall have been duly
executed and delivered by the Company and duly authenticated by the Trustee.
(n) The Securities shall have been approved by the NASD for trading in
the PORTAL Market.
(o) If any event shall have occurred that requires the Issuers under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to comment
thereon, and copies thereof shall have been delivered to the Initial
Purchasers reasonably in advance of the Closing Date.
(p) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchasers would materially impair the
ability of the Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(q) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, the effect of
which, in any such case described above, is, in the
20
<PAGE>
judgment of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by this Agreement and
the Offering Memorandum (exclusive of any amendment or supplement thereto).
(r) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale of
the Securities; and no injunction, restraining order or order of any other
nature by any federal or state court of competent jurisdiction shall have
been issued as of the Closing Date which would prevent the issuance or sale
of the Securities.
(s) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or any
of the Company's other debt securities or preferred stock by any "nationally
recognized statistical rating organization", as such term is defined by the
Commission for purposes of Rule 436(g)(2) of the rules and regulations of the
Commission under the Securities Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its rating
of the Securities or any of the Company's other debt securities or preferred
stock.
(t) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or limited, or minimum
prices shall have been established on any such exchange or market by the
Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have been
suspended or (ii) any moratorium on commercial banking activities shall have
been declared by federal or New York state authorities or (iii) an outbreak
or escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) the
effect of which, in the case of this clause (iv), is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or the delivery of the Securities on the
terms and in the manner contemplated by this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(u) Each of the Issuers shall not have failed, on or prior to the
Closing Date, to perform or comply with any of the agreements herein
contained and required to be performed or complied with by each of the
Issuers on or prior to such date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and
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<PAGE>
substance reasonably satisfactory to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder may
be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment
for the Securities if, prior to that time, any of the events described in
Section 5(p), (q), (r), (s) or (t) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for
the purchase of the Securities which such defaulting Initial Purchaser agreed
but failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers. If, after giving effect to any
arrangements for the purchase of the Securities of a defaulting Initial
Purchaser by the Initial Purchasers as described above, the aggregate
principal amount of such Securities which remains unpurchased does not exceed
one-tenth of the aggregate principal amount of all the Securities, then the
Issuers shall have the right to require each non-defaulting Initial Purchaser
to purchase the principal amount of Securities which such Initial Purchaser
agreed to purchase hereunder and, in addition, to require each such
non-defaulting Initial Purchaser to purchase its pro rata share (based on the
principal amount of Securities which such Initial Purchaser agreed to
purchase hereunder) of the Securities of such defaulting Initial Purchaser or
Purchasers for which such arrangements have not been made. If after giving
effect to any arrangements for the purchase of the Securities of a defaulting
Initial Purchaser by the Issuers and the Initial Purchasers the aggregate
principal amount of Securities which remains unpurchased exceeds one-tenth of
the aggregate principal amount of all the Securities or if the Issuers do not
exercise their right to require the Initial Purchasers to purchase additional
Securities as described above or if no such arrangements are made within 36
hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Company, except that
the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 12 and except that the provisions of
Sections 9 and 10 shall not terminate and shall remain in effect. As used in
this Agreement, the term "Initial Purchasers" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not listed in
Schedule 1 hereto that, pursuant to this Section 7, purchases Securities
which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any
non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial
Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of
counsel for the Issuers or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
shall have been terminated pursuant to Section 6 or 7, (b) the Company shall
fail to tender the Securities for delivery to
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<PAGE>
the Initial Purchasers for any reason permitted under this Agreement or (c)
the Initial Purchasers shall decline to purchase the Securities for any
reason permitted under this Agreement, the Company shall reimburse the
Initial Purchasers for such out-of-pocket expenses (including reasonable fees
and disbursements of one firm of attorneys plus necessary local counsel for
the Initial Purchasers) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase and
resale of the Securities. Notwithstanding the foregoing, if this Agreement is
terminated pursuant to Section 7 by reason of the default of one or more of
the Initial Purchasers, the Company shall not be obligated to reimburse any
defaulting Initial Purchaser on account of such expenses.
9. Indemnification. (a) The Issuers, jointly and severally agree to
indemnify and hold harmless each Initial Purchaser, its directors, its
officers and each person, if any, who controls any Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including
any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto) or any preliminary offering memorandum, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Initial
Purchaser furnished in writing to the Issuers by such Initial Purchaser
through CSI expressly for use therein. The foregoing indemnity agreement with
respect to any untrue statement or omission from a preliminary offering
memorandum shall not inure to the benefit of any Initial Purchaser from whom
the person asserting any such losses, liabilities, claims, damages or
expenses purchased Securities, or any person controlling such Initial
Purchaser, if a copy of the Offering Memorandum as then amended or
supplemented (if the Issuers shall have furnished such Initial Purchaser such
amended or supplemented Offering Memorandum on a timely basis) was not sent
or given by or on behalf of the Initial Purchasers to such person, if such
was required by law, at or prior to the written confirmation of the sale of
such Securities to such person and the untrue statement contained in or
omission from such preliminary offering memorandum was corrected in such
Offering Memorandum (or such Offering Memorandum as amended or supplemented).
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<PAGE>
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Issuers , their directors, their officers and
each person, if any, who controls the Issuers within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Issuers to such Initial Purchaser
but only with reference to information relating to such Initial Purchaser
furnished in writing to the Issuers by such Initial Purchaser through CSI
expressly for use in the Offering Memorandum (or any amendment or supplement
thereto) or any preliminary offering memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 9(a) or Section
9(b) (the "indemnified party"), the indemnified party shall promptly notify
the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party shall assume the defense of
such action, including the employment of counsel reasonably satisfactory to
the indemnified party and the payment of all reasonable fees and expenses of
such counsel, as incurred (except that in the case of any action in respect
of which indemnity may be sought pursuant to both Sections 9(a) and 9(b), the
Initial Purchaser shall not be required to assume the defense of such action
pursuant to this Section 9(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of such Initial
Purchaser). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action within a reasonable
period of time or employ counsel reasonably satisfactory to the indemnified
party or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and
the indemnified party shall have been reasonably advised by such counsel that
a conflict may exist between the indemnified party and the indemnifying party
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the indemnified party). In any such case,
the indemnifying party shall not, in connection with any one action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by CSI, in the case of parties indemnified pursuant
to Section 9(a), and by the Issuers, in the case of parties indemnified
pursuant to Section 9(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action
(i) effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than thirty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party), the indemnifying party shall have received notice of the terms of the
settlement at least 30 days prior to the settlement being entered into and,
prior to the date of such settlement, the indemnifying
24
<PAGE>
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action 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 the indemnified party.
10. Contribution. (a) To the extent the indemnification provided for in
Section 9 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages, liabilities or judgments referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause
10(a)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
10(a)(i) above but also the relative fault of the Issuers on the one hand and
the Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Issuers on the one hand and the Initial
Purchasers on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Issuers, and the total discounts and commissions received by the
Initial Purchasers, bear to the gross proceeds from the sale of the
Securities, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Issuers on the one hand and
the Initial Purchasers 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 Issuers or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(b) The Issuers and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such indemnified party in connection with investigating
or defending any matter, including any action, that could have given rise to
such losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of Sections 9 and 10, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total discounts and
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<PAGE>
commissions received by such Initial Purchaser with respect to the Securities
purchased exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute pursuant to this Section 10 are several in proportion to the
respective purchase obligations for the Securities and not jointly.
(c) The remedies provided for in Sections 9 and 10 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchasers, the Issuers and
their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Issuers and the
Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Offering Memorandum and any amendments
or supplements thereto; (c) the costs of reproducing and distributing each of
the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities,
including stamp duties and transfer taxes, if any, payable upon issuance of
the Securities; (e) the fees and expenses of the Company's counsel and
independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(h) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of one counsel for the Initial
Purchasers); (g) any fees charged by rating agencies for rating the
Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement which are not otherwise specifically provided for in this
Section 12; provided, however, that except as provided in this Section 12 and
Section 8, the Initial Purchasers shall pay their own costs and expenses,
including the fees of their counsel, transfer taxes on resales of any of the
Securities held by them and any advertising expenses connected with any
offers they may make.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or
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<PAGE>
made by or on behalf of the Issuers or the Initial Purchasers pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of any of them or any of their
respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
14. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by
mail or telecopy transmission to Chase Securities Inc., 270 Park Avenue,
New York, New York 10017, Attention: Legal Department (telecopier no.:
(212) 270-0994); or
(b) if to the Issuers, shall be delivered or sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: General Counsel (telecopier no.: (201) 531-2803)
with a copy (which shall not constitute notice) to: Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10021, Attention: James M. Dubin (telecopier no. (212) 373-2042);
provided that any notice to an Initial Purchaser pursuant to Section 9(c)
shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Issuers shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial
Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under
the Securities Act.
16. Initial Purchasers' Information. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Initial
Purchasers; (ii) the legend on the inside front cover page concerning
over-allotment and trading activities by the Initial Purchasers; and (iii)
the statements concerning the Initial Purchasers contained in the third,
ninth, twelfth and thirteenth paragraphs under the heading "Plan of
Distribution" and that the Initial Purchasers shall not be deemed to have
provided any information (and therefore are not responsible for any
statements or omissions) pertaining to any arrangement or agreement with
respect to any party other than the Initial Purchasers.
17. Governing Law. This Agreement shall be governed by and construed in
27
<PAGE>
accordance with the laws of the State of New York.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
28
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement by and among the Company, the
Subsidiary Guarantors and the several Initial Purchasers in accordance with
its terms.
Very truly yours,
BIG CITY RADIO, INC.
By: /s/ P.R. Thomson
--------------------------------
Name: P.R. Thomson
Title: V.P. and CFO
SUBSIDIARY GUARANTORS:
BIG CITY RADIO--NYC, L.L.C.
By: /s/ P.R. Thomson
--------------------------------
Name: P.R. Thomson
Title: V.P. and CFO
BIG CITY RADIO--CHI, L.L.C.
By: /s/ P.R. Thomson
--------------------------------
Name: P.R. Thomson
Title: V.P. and CFO
BIG CITY RADIO--LA, L.L.C.
By: /s/ P.R. Thomson
--------------------------------
Name: P.R. Thomson
Title: V.P. and CFO
ODYSSEY TRAVELING BILLBOARDS, INC.
By: /s/ James B. Singleton
--------------------------------
Name: James B. Singleton
Title: Assistant Secretary
WRKL ROCKLAND RADIO, L.L.C.
By: /s/ P.R. Thomson
--------------------------------
Name: P.R. Thomson
Title: V.P. and CFO
29
<PAGE>
Accepted:
CHASE SECURITIES INC.
By: /s/ Stephanie Cuskley
----------------------------
Name: Stephanie Cuskley
Title: Managing Director
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
30
<PAGE>
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Michael Connolly
--------------------------------
Name: Michael Connolly
Title: Vice President
Address for notices pursuant to Section 9(c):
2121 Avenue of the Stars, Suite 3100
Los Angeles, California 90067
Attention: Warren C. Woo
31
<PAGE>
BT ALEX BROWN INCORPORATED
By: /s/ Edward P. Garden
--------------------------------
Name: Edward P. Garden
Ttile: Managing Director
Address for notices pursuant to Section 9(c):
130 Liberty Street, 30th Floor
New York, NY 10006
Attention: Ed Garden
32
<PAGE>
ING BARING (U.S.) SECURITIES, INC.
By: /s/ Adrian Mackay
--------------------------------
Name: Adrian Mackay
Title: Principal
Address for notices pursuant to Section 9(c):
230 Park Avenue
New York, NY 10169
Attention: Adrian Mackay
33
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Principal
Amount
Initial Purchasers of Securities
- ------------------ -------------
<S> <C>
Chase Securities Inc.......................... $ 78,300,000
Donaldson, Lufkin & Jenrette Securities
Corporation................................. 78,300,000
BT Alex Brown Incorporated..................... 8,700,000
ING Baring (U.S.) Securities, Inc. ............ 8,700,000
Total.............................. $174,000,000
</TABLE>
S-1
<PAGE>
ANNEX A
[Form of Exchange and Registration Rights Agreement]
A-1
[Filed as Exhibit 10.12]
<PAGE>
ANNEX B
[Form of Opinion of Counsel for the Issuers]
Paul, Weiss, Rifkind, Wharton & Garrison shall have furnished to the
Initial Purchasers their written opinion, as counsel for the Issuers,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, substantially to
the effect set forth below:
(i) Each of the Company and Odyssey Traveling Billboards, Inc. is
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and each other Subsidiary
Guarantors is duly formed and is validly existing as a limited liability
company in good standing under the laws of the state of Delaware.
(ii) Each of the Issuers has the corporate or limited liability
company power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum and to
enter into and perform its obligations under the Purchase Agreement.
(iii) All descriptions in the Offering Memorandum of contracts and
other documents to which the Issuers are a party are in all material
respects accurate and fair summaries thereof.
(iv) The Indenture conforms as to form in all material respects with
the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(v) Each of the Issuers has the corporate or limited liability company
right, power and authority to execute and deliver each of the
Transaction Documents to which it is a party and to perform its
obligations thereunder; and all corporate or limited liability company
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly and
validly taken.
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by each of the Issuers.
(vii) Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by each of the Issuers
and, assuming due authorization, execution and delivery thereof by the
Trustee, constitutes a valid and legally binding agreement
B-1
<PAGE>
of each of the Issuers enforceable against each of the Issuers in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(viii) The Securities have been duly authorized and issued by each of
the Issuers which is issuing them and, assuming due authentication
thereof by the Trustee and upon payment and delivery in accordance with
the Purchase Agreement, will constitute valid and legally binding
obligations of each of the Issuers entitled to the benefits of the
Indenture and enforceable against each of the Issuers in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights and remedies generally
and by general equitable principles (whether considered in a proceeding
in equity or at law).
(ix) No authorization, approval, consent or order of any court or
governmental authority or agency under the laws of the Federal
government of the United States or the State of New York or under the
General Corporation Law of the State of Delaware (other than those under
the Securities Act, or as may be required under the securities or Blue
Sky laws of the various states or foreign jurisdictions or the National
Association of Securities Dealers, Inc., and other than those under the
Communications Act or any published rules, regulations or policies of
the FCC thereunder, as to each of which such counsel need express no
opinion and the Registration Rights Agreement) is required in connection
with the due authorization, execution and delivery of the Purchase
Agreement or for the offering, issuance or sale of the Securities to the
Initial Purchasers.
(x) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(xi) The execution, delivery and performance by each of the Issuers
of each of the Transaction Documents to which it is a party and
compliance by each of the Issuers with its obligations under the terms
thereof will not, to such counsel's knowledge, conflict with or
constitute a breach of, or default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Issuers and their respective subsidiaries pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note or lease (except for such conflicts, breaches, defaults or liens,
charges or encumbrances that could not, singly or in the aggregate, be
reasonably expected to result in a material adverse effect on the
business, prospects, financial condition or results of operations of the
Issuers and their respective subsidiaries, taken as a whole), nor will
such action result in any violation of the provisions of the respective
certificate of incorporation, bylaws, certificate of formation or other
constitutive document of each of the Issuers, or any applicable law,
statute, rule or regulation of the Federal government of the United
States (excluding the FCC) or the State of
B-2
<PAGE>
New York or under the General Corporation Law of the State of Delaware, or,
to such counsel's knowledge, any judgment, order, writ or decree of any
government, government instrumentality (excluding the FCC) or court having
jurisdiction over the Issuers, any of their respective subsidiaries or any
of their respective properties, assets or operations except for such
violations of law, statute, rule, regulation, judgment, order, writ or
decree that could not be reasonably expected to result in a material
adverse effect on the business, prospects, financial condition or results
of operations of the Issuers and their respective subsidiaries, taken as a
whole.
(xii) Each of the Issuers is not an "investment company" as defined in
the Investment Company Act of 1940, as amended.
(xiii) Neither the consummation of the transactions contemplated by
the Purchase Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T, U or X of the Federal Reserve
Board.
(xiv) Assuming (i) the accuracy of the representations, warranties and
agreements of the Issuers and of the Initial Purchasers set forth in the
Purchase Agreement, (ii) the due performance by the Issuers of the
covenants and agreements set forth in the Purchase Agreement, (iii) the
compliance by the Initial Purchasers and the Issuers with the offering and
transfer procedures and restrictions described in the Offering Memorandum,
(iv) the accuracy of the representations and warranties made as provided in
the Purchase Agreement and the Offering Memorandum by purchasers to whom
the Initial Purchasers initially resell the Securities and (v) that
purchasers to whom the Initial Purchasers initially resell the Securities
receive a copy of the Offering Memorandum prior to such sale, the offer,
sale and delivery of the Securities to the Initial Purchasers in the manner
contemplated by the Purchase Agreement and the Offering Memorandum and the
initial resale of the Securities by the Initial Purchasers in the manner
contemplated in the Offering Memorandum and the Purchase Agreement do not
require registration under the Securities Act, and the Indenture does not
require qualification under the Trust Indenture Act, it being understood
that such counsel expresses no opinion as to any subsequent resale of any
Security.
(xv) Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Issuers, special
counsel for the Issuers, representatives of the independent accountants of
the Issuers, and the Initial Purchasers at which the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon, and does not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (or any amendments or supplements thereto) and has made
no independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that have led
such counsel to believe that the Offering Memorandum (or any amendments or
supplements thereto), as of its date and as of the date hereof, contained
or contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in
B-3
<PAGE>
light of the circumstances under which they were made, not misleading,
except that such counsel expresses no opinion or belief with respect to the
financial statements and schedules and other financial and statistical data
included therein or excluded therefrom.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of employees, responsible
officers and other representatives of the Company and public officials.
B-4
<PAGE>
ANNEX C
[Form of Opinion of Special Radio Communications Counsel for the Issuers]
Hogan and Hartson, L.L.P. shall have furnished to the Initial Purchasers
their written opinion, as special radio communications counsel for the Issuers,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, substantially to
the effect set forth below.
(i) No authorization, approval, order, consent or filing under the
Communications Act or any published rules, regulations or policies of the
FCC thereunder or with the FCC on the part of the Issuers or their
respective subsidiaries with regard to any of the FCC Licenses (as defined
below) is required in connection with the issuance of the Securities
pursuant to the Purchase Agreement, other than such has been obtained or
filed and other than filings with the FCC required subsequent to the
issuance and sale of the Securities. The issuance and sale of the
Securities pursuant to the Purchase Agreement, does not violate applicable
provisions of the Communications Act or any published rules, regulations or
policies of the FCC thereunder.
(ii) A schedule to such counsel's opinion sets forth a complete list
of the broadcast station authorizations issued by the FCC to the Issuers
and their respective subsidiaries (the "FCC Licenses"). To such counsel's
knowledge, and except as noted on a schedule to such opinion, the FCC
Licenses are the only licenses, permits or authorizations required under
the Communications Act for the broadcast of signals on the main station
frequency of each of the Stations. Except as noted on a schedule to such
opinion, each of the FCC Licenses is valid and in full force and effect on
the date hereof.
(iii) Applications for renewals of the FCC Licenses are pending at the
FCC, as indicated on a schedule to such counsel's opinion. To such
counsel's knowledge, there is no FCC order, judgment, decree, notice of
apparent liability or order of forfeiture, investigation or other
proceeding pending or threatened, by or before the FCC against the Issuers
or any of their respective subsidiaries that might result in revocation,
cancellation, suspension, non-renewal, or short-term renewal of the FCC
Licenses, except FCC rulemaking proceedings generally affecting the radio
broadcasting industry.
C-1
<PAGE>
ANNEX D
[Form of Opinion of General Counsel and Secretary for the Company]
Arnold L. Wadler shall have furnished to the Initial Purchasers his written
opinion, as general counsel and secretary for the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) To the best of his knowledge, Mr. Wadler does not know of any
legal or governmental proceeding pending or threatened to which the Company
or any of its subsidiaries is or could be a party or to which any of their
respective property is or could be subject that is required to be described
in the Offering Memorandum and is not so described, or of any statute,
regulation, contract or other document that is required to be described in
the Offering Memorandum that is not so described as required;
(ii) To the best of his knowledge, the Company and its subsidiaries
each has such Authorizations of, and has made all filings with and notices
to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without
limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its respective properties and to conduct
its business, except where the failure to have any such Authorization or to
make any such filing or notice could not, singly or in the aggregate, be
reasonably expected to have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole; each such Authorization is valid and in
full force and effect and the Company and each of its subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results
or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; and such
Authorizations contain no restrictions that are burdensome to the Company
and its subsidiaries, taken as a whole; except where such failure to be
valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly
or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole;
(iii) To the best of his knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter, bylaws, certificate of
formation or other constitutive documentation or in default in any respect
in the performance of any material contract, loan agreement,
D-1
<PAGE>
mortgage, deed of trust, material lease or other material written contract
or agreement or of any respective order, award or decree of any court,
arbitrator or governmental or administrative body binding upon or affecting
it or by which any of its respective properties or assets is bound or
affected, except for violations or defaults which could not reasonably be
expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(iv) All the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party, except as otherwise disclosed in the Offering Memorandum.
D-2
<PAGE>
Exhibit 10.12
BIG CITY RADIO, INC.
$174,000,000
11 1/4% Senior Discount Notes due 2005
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
March 17, 1998
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT ALEX BROWN INCORPORATED
ING BARING (U.S.) SECURITIES, INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Big City Radio, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Chase Securities Inc. ("CSI"), Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), BT Alex Brown Incorporated ("Alex
Brown"), ING Baring (U.S.) Securities, Inc. ("INGBS," and together with CSI,
DLJ and Alex Brown, the "Initial Purchasers"), upon the terms and subject to
the conditions set forth in a purchase agreement dated March 12, 1998 (the
"Purchase Agreement"), $174,000,000 aggregate principal amount of its 11 1/4%
Senior Discount Notes due 2005 (the "Notes"), which Notes are guaranteed (the
"Guarantees") by the subsidiary guarantors (the "Subsidiary Guarantors")
named on the signature pages hereof (the Guarantees and the Notes are
collectively referred to herein as the "Securities"). Capitalized terms used
but not defined herein shall have the meanings given to such terms in the
Purchase Agreement.
<PAGE>
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company and the Subsidiary Guarantors
agree with the Initial Purchasers, for the benefit of the holders (including
the Initial Purchasers) of the Securities, the Exchange Securities (as
defined herein) and the Private Exchange Securities (as defined herein)
(collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Company and the Subsidiary Guarantors
shall (i) prepare and, not later than 60 days following the date of original
issuance of the Securities (the "Issue Date"), file with the Commission a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer to
the Holders of the Securities (the "Registered Exchange Offer") to issue and
deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Company guaranteed on a like basis
by the Subsidiary Guarantors (such debt securities and guarantees,
collectively the "Exchange Securities") that are identical in all material
respects to the Securities, except for the transfer restrictions relating to
the Securities, (ii) use their reasonable best efforts to cause the Exchange
Offer Registration Statement to become effective under the Securities Act no
later than 150 days after the Issue Date and the Registered Exchange Offer to
be consummated no later than 180 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called
the "Exchange Offer Registration Period"). The Exchange Securities will be
issued under the Indenture or an indenture (the "Exchange Securities
Indenture") by and among the Company, the Subsidiary Guarantors and the
Trustee or such other bank or trust company that is reasonably satisfactory
to the Initial Purchasers, as trustee (the "Exchange Securities Trustee"),
such indenture to be identical in all material respects to the Indenture,
except for the transfer restrictions relating to the Securities (as described
above).
Upon the effectiveness of the Exchange Offer Registration Statement, the
Company and the Subsidiary Guarantors shall as promptly as practicable
commence the Registered Exchange Offer, it being the objective of such
Registered Exchange Offer to enable each Holder electing to exchange
Securities for Exchange Securities (assuming that such Holder (a) is not an
affiliate (as defined in Rule 405 under the Securities Act) of the Company or
the Subsidiary Guarantors or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Securities that have, or that are reasonably likely to
have, the status of an unsold allotment in an initial distribution, (c)
acquires the Exchange Securities in the ordinary course of such Holder's
business and (d) has no arrangements or understandings with any person to
participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the
2
<PAGE>
several states of the United States. The Company, the Subsidiary Guarantors,
the Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant
to current interpretations by the Commission's staff of Section 5 of the
Securities Act, each Holder that is a broker-dealer electing to exchange
Securities, acquired for its own account as a result of market-making
activities or other trading activities, for Exchange Securities (an
"Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover, in
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer. In addition, each Holder that is not an
Exchanging Dealer will be required to represent that it is not engaged, and
does not intend to engage in, the distribution (as defined in the Securities
Act) of the Exchange Securities.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an
initial distribution, or any Holder is not entitled to participate in the
Registered Exchange Offer, the Company and the Subsidiary Guarantors shall,
upon the request of any such Holder and receipt of an opinion of counsel for
such Holder, reasonably satisfactory in form and substance to outside counsel
of the Company, to the effect that the Private Exchange (as defined below)
does not require compliance with the registration requirements of the
Securities Act, simultaneously with the delivery of the Exchange Securities
in the Registered Exchange Offer, issue and deliver to any such Holder, in
exchange for the Securities held by such Holder (the "Private Exchange"), a
like aggregate principal amount of debt securities of the Company guaranteed
on a like basis by the Subsidiary Guarantors (such debt securities and
guarantees, collectively the "Private Exchange Securities") that are
identical in all material respects to the Exchange Securities, except for the
transfer restrictions relating to such Private Exchange Securities. The
Private Exchange Securities will be issued under the same indenture as the
Exchange Securities, and the Company and the Subsidiary Guarantors shall use
their reasonable best efforts to cause the Private Exchange Securities to
bear the same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company and the
Subsidiary Guarantors shall:
(a) 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;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice of
the Registered Exchange Offer is mailed to the Holders;
3
<PAGE>
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York City time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are applicable
to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange Offer
and any Private Exchange, as the case may be, the Company and the Subsidiary
Guarantors shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(b) deliver or deposit with the Trustee for cancellation all Securities
so accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Company and the Subsidiary Guarantors shall use their reasonable
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 used by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons
must comply with such requirements in order to resell the Exchange
Securities; provided that (i) in the case where such prospectus and any
amendment or supplement thereto must be delivered by an Exchanging Dealer,
such period shall be the lesser of 180 days and the date on which all
Exchanging Dealers have sold all Exchange Securities held by them and (ii)
the Company and the Subsidiary Guarantors shall make such prospectus and any
amendment or supplement thereto available to any broker-dealer for use in
connection with any resale of any Exchange Securities for a period of not
less than 90 days after the consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may be,
shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one
class and that none of the Securi-
4
<PAGE>
ties, the Exchange Securities or the Private Exchange Securities will have
the right to vote or consent as a separate class on any matter.
The Exchange Securities and Private Exchange Securities issued pursuant
to the Registered Exchange Offer and the Private Exchange will accrete in
value from the Accreted Value (as defined in the Indenture) at the last
accretion date on the Securities surrendered in exchange therefor or, if no
accretion has been made on the Securities, from the Issue Date. Interest
payable in cash on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been
paid on the Securities, from March 15, 2001.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company and the Subsidiary Guarantors that at
the time of the consummation of the Registered Exchange Offer (i) any
Exchange Securities received by such Holder will be acquired in the ordinary
course of such Holder's business, (ii) such Holder will have no arrangements
or understanding with any person to participate in and is not participating
in, and does not intend to participate in, the distribution of the Securities
or the Exchange Securities within the meaning of the Securities Act and (iii)
such Holder is not an affiliate (as defined in Rule 405 under the Securities
Act) of the Company or the Subsidiary Guarantors or an Exchanging Dealer; or
if it is such an affiliate or such an Exchanging Dealer such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the Subsidiary
Guarantors will ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof
and any supplement thereto complies in all material respects with the
Securities Act and the rules and regulations of the Commission thereunder,
(ii) any Exchange Offer Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Exchange Offer Registration Statement, and
any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
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.
2. Shelf Registration. If (i) because of any change in law or applicable
interpretations thereof by the Commission's staff the Company and the
Subsidiary Guarantors are not permitted to effect the Registered Exchange
Offer as contemplated by Section 1 hereof, or (ii) any Securities validly
tendered pursuant to the Registered Exchange Offer and not withdrawn or are
not exchanged for Exchange Securities within 180 days after the
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Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer pursuant to the terms of
this Agreement and held by it following the consummation of the Registered
Exchange Offer, or (iv) any applicable law or interpretations do not permit
any Holder to participate in the Registered Exchange Offer, or (v) any Holder
that participates in the Registered Exchange Offer does not receive freely
transferable Exchange Securities in exchange for tendered Securities, or (vi)
the Company and the Subsidiary Guarantors so elect, then the following
provisions shall apply:
(a) The Company and the Subsidiary Guarantors shall use their reasonable
best efforts to file as promptly as practicable (but in no event more than 60
days after so required or requested pursuant to this Section 2) with the
Commission, and thereafter shall use their reasonable best efforts to cause
to be declared effective, a shelf registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined below) by the Holders thereof from time to
time who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement, in accordance with the
methods of distribution set forth in such registration statement (hereafter,
a "Shelf Registration Statement" and, together with any Exchange Offer
Registration Statement, a "Registration Statement").
(b) The Company and the Subsidiary Guarantors shall use their reasonable
best efforts to keep the Shelf Registration Statement continuously effective
in order to permit the prospectus forming part thereof to be used by Holders
of Transfer Restricted Securities for a period ending on the earlier of (i)
two years from the Issue Date or such shorter period that will terminate when
all the Transfer Restricted Securities covered by the Shelf Registration
Statement have been sold pursuant thereto or when a subsequent Shelf
Registration Statement covering the Transfer Restricted Securities has been
declared effective under the Securities Act and (ii) the date on which the
Securities become eligible for resale without volume restrictions pursuant to
Rule 144 under the Securities Act (in any such case, such period being called
the "Shelf Registration Period"). The Company and the Subsidiary Guarantors
shall be deemed not to have used their reasonable best efforts to keep the
Shelf Registration Statement effective during the requisite period if the
Company or any of the Subsidiary Guarantors voluntarily takes any action that
would result in Holders of Transfer Restricted Securities covered thereby not
being able to offer and sell such Transfer Restricted Securities during that
period, unless such action is required by applicable law, rules or
regulations or unless the Company and the Subsidiary Guarantors comply with
this Agreement.
(c) Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors will ensure that (i) any Shelf Registration Statement
and any amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the Securities Act
and the rules and regulations of the Commission thereunder, (ii) any Shelf
Registration Statement and any amendment thereto
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(in either case, other than with respect to information included therein in
reliance upon or in conformity with written information furnished to the
Company or any of the Subsidiary Guarantors by or on behalf of any Holder
specifically for use therein (the "Holders' Information")) does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of
any Shelf Registration Statement, and any supplement to such prospectus (in
either case, other than with respect to Holders' Information), does not
include an untrue statement of a material fact or 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.
3. Liquidated Damages. (a) The parties hereto agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company or any of
the Subsidiary Guarantors fails to fulfill its obligations under Section 1 or
Section 2, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if (i) the applicable Registration
Statement is not filed with the Commission on or prior to the 60th day after
the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is not declared effective on or
prior to the 150th day after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 60
days after publication of the change in law or interpretation), (iii) the
Registered Exchange Offer is not consummated on or prior to the 180th day
after the Issue Date, or (iv) the Shelf Registration Statement is filed and
declared effective on or prior to the 150th day after the Issue Date (or in
the case of a Shelf Registration Statement required to be filed in response
to a change in law or the applicable interpretations of Commission's staff,
if later, within 60 days after publication of the change in law or
interpretation) but shall thereafter cease to be effective (at any time that
the Company and the Subsidiary Guarantors are obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an
additional Registration Statement filed and declared effective (each such
event referred to in clauses (i) through (iv), a "Registration Default"), the
Company and the Subsidiary Guarantors will be obligated to pay liquidated
damages to each Holder of Transfer Restricted Securities, during the period
of one or more such Registration Defaults, in an amount equal to $ 0.192 per
week per $1,000 principal amount (or Accreted Value (as defined in the
Indenture dated the date hereof, among the Company, the Subsidiary Guarantors
and the Trustee) as the case may be) of Transfer Restricted Securities
held by such Holder until (i) the applicable Registration Statement is filed,
(ii) the Exchange Offer Registration Statement is declared effective and the
Registered Exchange Offer is consummated, (iii) the Shelf Registration
Statement is declared effective or (iv) the Shelf Registration Statement
again becomes effective, as the case may be. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. As used
herein, the term "Transfer Restricted Securities" means (i) each Security
until the date on which such Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Security or Private Exchange Security until the date on which it
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<PAGE>
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iii) each Security or
Private Exchange Security until the date on which it is distributed to the
public pursuant to Rule 144 under the Securities Act or is saleable pursuant
to Rule 144(k) under the Securities Act. Notwithstanding anything to the
contrary in this Section 3(a), the Company and the Subsidiary Guarantors
shall not be required to pay liquidated damages to a Holder of Transfer
Restricted Securities if such Holder failed to comply with its obligations to
make the representations set forth in the second to last paragraph of Section
1 or failed to provide the information required to be provided by it, if any,
pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under the
Indenture immediately upon the happening of each and every Registration
Default. The Company and the Subsidiary Guarantors shall pay the liquidated
damages due on the Transfer Restricted Securities by depositing with the
Paying Agent (which may not be the Company for these purposes), in trust, for
the benefit of the Holders thereof, prior to 10:00 a.m., New York City time,
on the next interest payment date or the next accretion date specified by the
Indenture and the Securities, sums sufficient to pay the liquidated damages
then due. The liquidated damages due shall be payable on each interest
payment date or the next accretion date, specified by the Indenture and the
Securities to the record holder entitled to receive the interest payment to
be made or the accretion in value on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the date of
the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided for in
this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to be declared and remain effective or (iii) the
Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company and the Subsidiary Guarantors shall (i) furnish to each
Initial Purchaser, prior to the filing thereof with the Commission, a copy of
the Registration Statement and each amendment thereof and each supplement, if
any, to the prospectus included therein and shall use their reasonable best
efforts to reflect in each such document, when so filed with the Commission,
such comments as any Initial Purchaser may reasonably propose; (ii) include
the information set forth in Annex A hereto on the cover, in Annex B hereto
in the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Annex C hereto in the "Plan of Distribution" section of
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<PAGE>
the prospectus forming a part of the Exchange Offer Registration Statement,
and include the information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if
requested by any Initial Purchaser, include the information required by Items
507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part
of the Exchange Offer Registration Statement.
(b) The Company and the Subsidiary Guarantors shall advise each Initial
Purchaser, each Exchanging Dealer which has notified the Company that it will
be an Exchanging Dealer and the Trustee on behalf of the Holders (if
applicable) and, if requested by any such person, confirm such advice in
writing (which advice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company or any Subsidiary Guarantor of any
notification with respect to the suspension of the qualification of the
Securities, the Exchange Securities or the Private Exchange Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein
in order that the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company and the Subsidiary Guarantors will make every reasonable
effort to obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of any Registration Statement.
(d) The Company and the Subsidiary Guarantors will furnish to each
Holder of Transfer Restricted Securities included within the coverage of any
Shelf
9
<PAGE>
Registration Statement, without charge, at least one conformed copy of such
Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules and, if any such Holder so
requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(e) The Company and the Subsidiary Guarantors will, during the Shelf
Registration Period, promptly deliver to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment
or supplement thereto as such Holder may reasonably request; and the Company
and the Subsidiary Guarantors consent to the use of such prospectus or any
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection with the offer and sale of the Transfer
Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
(f) The Company and the Subsidiary Guarantors will furnish to each
Initial Purchaser and each Exchanging Dealer which has notified the Company
that it will be an Exchanging Dealer and to any other Holder who so requests,
without charge, at least one conformed copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any Initial Purchaser or any such
Exchanging Dealer or any such Holder so reasonably requests in writing, all
exhibits thereto (including those, if any, incorporated by reference).
(g) The Company and the Subsidiary Guarantors will, during the Exchange
Offer Registration Period or the Shelf Registration Period, as applicable,
promptly deliver to each Initial Purchaser, each Exchanging Dealer which has
notified the Company that it will be an Exchanging Dealer and such other
persons that are required by law to deliver a prospectus following the
Registered Exchange Offer, without charge, as many copies of the final
prospectus included in the Exchange Offer Registration Statement or the Shelf
Registration Statement and any amendment or supplement thereto as such
Initial Purchaser, Exchanging Dealer or other persons may reasonably request;
and each of the Company and the Subsidiary Guarantors consents to the use of
such prospectus or any amendment or supplement thereto by any such Initial
Purchaser, Exchanging Dealer or other selling Holders of Transfer Restricted
Securities, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company and the Subsidiary Guarantors will use their reasonable best efforts
to register or qualify, or cooperate with the selling Holders of Securities,
Exchange Securities or Private Exchange Securities included therein and their
respective counsel in connection with the registration or qualification of,
such Securities, Exchange Securities or Private Exchange Securities for offer
and sale under the securities or blue sky laws of such jurisdictions within
the United States as any such selling Holder reasonably requests in writing
and do
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<PAGE>
any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Securities, Exchange Securities or
Private Exchange Securities covered by such Registration Statement; provided,
that where Exchange Securities are held by an Exchanging dealer; or
Securities, Exchange Securities or Private Exchange Securities are offered
pursuant to an underwritten offering, counsel to the Initial Purchasers
shall, at the cost and expense of the Company, perform the blue sky
investigations and file the registrations and qualifications required to be
filed pursuant to this provision (h); provided, further that neither the
Company nor any of the Subsidiary Guarantors will be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so
subject.
(i) The Company and the Subsidiary Guarantors will cooperate with the
selling Holders of Securities, Exchange Securities or Private Exchange
Securities to facilitate the timely preparation and delivery of certificates
representing Securities, Exchange Securities or Private Exchange Securities
to be sold pursuant to any Registration Statement free of any restrictive
legends and in such denominations and registered in such names as the selling
Holders thereof may reasonably request in writing at least 2 business days
prior to the delivery of Securities, Exchange Securities or Private Exchange
Securities sold pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company and the Subsidiary Guarantors are
required to maintain an effective Registration Statement, the Company and the
Subsidiary Guarantors will promptly prepare and file with the Commission a
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities, Exchange Securities or Private
Exchange Securities from a Holder, the prospectus will not include an untrue
statement of a material fact or 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.
(k) Not later than the effective date of the applicable Registration
Statement, the Company and the Subsidiary Guarantors will provide a CUSIP
number for the Exchange Securities and the Private Exchange Securities, as
the case may be, and provide the applicable trustee with printed certificates
for the Exchange Securities or the Private Exchange Securities, as the case
may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Subsidiary Guarantors will comply with all
applicable rules and regulations of the Commission and the Company will make
generally available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earning statement
satisfying the provisions of
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Section 11(a) of the Securities Act; provided that in no event shall such
earning statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such 12-month period is a fiscal year) beginning with
the first month of the Company's first fiscal quarter commencing after the
effective date of the applicable Registration Statement, which statement
shall cover such 12-month period.
(m) The Company and the Subsidiary Guarantors will cause the Indenture
or the Exchange Securities Indenture, as the case may be, to be qualified
under the Trust Indenture Act as required by applicable law in a timely
manner.
(n) The Company and the Subsidiary Guarantors may require each Holder of
Transfer Restricted Securities to be registered pursuant to any Shelf
Registration Statement to furnish to the Company and the Subsidiary
Guarantors such information concerning such Holder and the distribution of
such Transfer Restricted Securities as the Company and the Subsidiary
Guarantors may from time to time reasonably require for inclusion in such
Shelf Registration Statement, and the Company and the Subsidiary Guarantors
may exclude from such registration the Transfer Restricted Securities of any
Holder that fails to furnish such information within a reasonable time after
receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company and the Subsidiary Guarantors pursuant to Section
4(b)(ii) through (v), such Holder will discontinue disposition of such
Transfer Restricted Securities until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(j) or until
advised in writing (the "Advice") by the Company and the Subsidiary
Guarantors that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company and the Subsidiary Guarantors are required to
maintain an effective Registration Statement (the "Effectiveness Period"),
such Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities covered
by such Registration Statement shall have received (x) the copies of the
supplemental or amended prospectus contemplated by Section 4(j) (if an
amended or supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company and the
Subsidiary Guarantors shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all such
other action, if any, as Holders of a majority in aggregate principal amount
of the Securities, Exchange Securities and Private Exchange Securities being
sold or the managing underwriters (if any)
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<PAGE>
shall reasonably request in order to facilitate any disposition of
Securities, Exchange Securities or Private Exchange Securities pursuant to
such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company and the
Subsidiary Guarantors shall (i) make reasonably available for inspection by a
representative of, and Special Counsel (as defined below) acting for, Holders
of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold and any underwriter
participating in any disposition of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Shelf Registration Statement,
all relevant financial and other records, pertinent corporate documents and
properties of the Company, the Subsidiary Guarantors and their respective
subsidiaries (the "Records") and (ii) use their reasonable best efforts to
have their respective officers, directors, employees, accountants and
counsel supply all relevant information reasonably requested by such
representative, Special Counsel or any such underwriter (an "Inspector") in
connection with such Shelf Registration Statement. Records which the Company
deter mined in good faith to be confidential and any Records which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (ii) the
release of such Record is ordered pursuant to a subpoena or other order from
a court of competent jurisdiction, (iii) the information in such Records has
been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspectors or (iv) disclosure of
such information is, in the opinion of counsel of any Inspector, necessary
or advisable in connection with any action, claim, suit or proceeding,
directly or indirectly involving such Inspector and arising out of or related
to this Agreement or any transactions contemplated by this Agreement.
(r) In the case of a Shelf Registration Statement, the Company and the
Subsidiary Guarantors shall, if requested by Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) in connection with such Shelf Registration Statement,
use their reasonable best efforts to cause (i) their counsel to deliver an
opinion relating to the Shelf Registration Statement and the Securities, Ex
change Securities or Private Exchange Securities, as applicable, in customary
form, (ii) their respective officers to execute and deliver all customary
documents and certificates requested by Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold, their Special Counsel or the managing under writers
(if any) and (iii) their independent public accountants to provide a comfort
letter or letters in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of
Auditing Standards No. 72.
5. Registration Expenses. The Company and the Subsidiary Guarantors
will bear all expenses incurred in connection with the performance of their
obligations under Sections 1, 2, 3 and 4 and the Company and the Subsidiary
Guarantors will reim-
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burse the Initial Purchasers and the Holders for the reasonable and
documented fees and disbursements of one firm of attorneys (in addition to
any local counsel) chosen by the Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities to be sold pursuant to each Registration Statement (the "Special
Counsel") acting for the Initial Purchasers or Holders in connection
therewith.
6. Indemnification. (a) In the event of a Shelf Registration Statement
or in connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Subsidiary Guarantors shall, jointly and
severally, indemnify and hold harmless each Holder of Securities, Exchange
Securities or Private Exchange Securities covered by any such Registration
Statement (including, without limitation, any such Initial Purchaser or
Exchanging Dealer), its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, without limitation, any
loss, claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which
that Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and, subject to the provisions of
Section 6(c) below, shall reimburse each Holder promptly upon demand for any
legal or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company or the Subsidiary Guarantors shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in
or omission or alleged omission from any of such documents in reliance upon
and in conformity with any Holders' Information; and provided, further, that
with respect to any such untrue statement in or omission from any related
preliminary prospectus, the indemnity agreement contained in this Section
6(a) shall not inure to the benefit of any Holder from whom the person
asserting any such loss, claim, damage, liability or action received
Securities, Exchange Securities or Private Exchange Securities to the extent
that such loss, claim, damage, liability or action of or with respect to such
Holder results from the fact that both (A) a copy of the final prospectus was
not sent or given to such person at or prior to the written confirmation of
the sale of such Securities, Exchange Securities or Private Exchange
Securities to such
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<PAGE>
person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in
either case, such failure to deliver the final prospectus was a result of
non-compliance by the Company and the Subsidiary Guarantors with Section
4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Company and the Subsidiary Guarantors, their
respective affiliates, officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company or any of the
Subsidiary Guarantors within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 6(b) and
Section 7 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any of the Subsidiary Guarantors may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Holders' Information furnished to the Company
or the Subsidiary Guarantors by such Holder, and shall reimburse the Company
and the Subsidiary Guarantors promptly upon demand for any legal or other
expenses reasonably incurred by the Company and the Subsidiary Guarantors in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that no such Holder shall be liable for any indemnity claims hereunder in
excess of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to
such Shelf Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 6(a) or Section
6(b) (the "indemnified party"), the indemnified party shall promptly notify
the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party shall assume the defense of
such action, including the employment of counsel reason ably satisfactory to
the indemnified party and the payment of all reasonable fees and expenses of
such counsel, as incurred (except that in the case of any action in respect
of which indemnity may be sought pursuant to both Sections 6(a) and 6(b), a
Holder shall not be required to assume the defense of such action pursuant to
this Section 6(c), but may employ separate counsel and participate in the
defense thereof, but the fees
15
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and expenses of such counsel, except as provided below, shall be at the
expense of such Holder). Any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action
within a reasonable period of time or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been reasonably
advised by such counsel that a conflict may exist between the indemnified
party and the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by such Holder,
in the case of parties indemnified pursuant to Section 6(a), and by the
Company and the Subsidiary Guarantors, in the case of parties indemnified
pursuant to Section 6(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action
(i) effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than thirty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party), the indemnifying party shall have received notice of the terms of the
settlement at least 30 days prior to the settlement being entered into and,
prior to the date of such settlement, the indemnifying party shall have
failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified
party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability on claims that are or could have
been the subject matter of such action 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 the indemnified party.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
16
<PAGE>
appropriate to reflect the relative benefits received by the Company and the
Subsidiary Guarantors from the offering and sale of the Securities, on the
one hand, and a Holder with respect to the sale by such Holder of Securities,
Exchange Securities or Private Exchange Securities, on the other, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Subsidiary Guarantors on the one hand and such Holder on the
other with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations.. The relative benefits received by
the Company and the Subsidiary Guarantors on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by or on behalf of the
Company and the Subsidiary Guarantors as set forth in the table on the cover
of the Offering Memorandum, on the one hand, bear to the total proceeds
received by such Holder with respect to its sale of Securities, Exchange
Securities or Private Exchange Securities, on the other. The relative fault
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 the Company or the Subsidiary
Guarantors or information supplied by the Company or the Subsidiary
Guarantors on the one hand or to any Holders' Information supplied by such
Holder on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7 were to be determined
by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above
in this Section 7 shall be deemed to include, for purposes of this Section 7,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities,
Exchange Securities or Private Exchange Securities sold by such indemnifying
party to any purchaser exceeds the amount of any damages which such
indemnifying party has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
8. Rules 144 and 144A. The Company and the Subsidiary Guarantors shall
use their reasonable best efforts to file the reports required to be filed by
them under the Securities Act and the Exchange Act in a timely manner and, if
at any time the
17
<PAGE>
Company or any of the Subsidiary Guarantors is not required to file such
reports, it will, upon the written request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of such Holder's securities pursuant to Rules 144 and 144A under
the Securities Act. The Company and the Subsidiary Guarantors covenant that they
each will take such further action as any Holder of Transfer Restricted
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including, without limitation, the requirements
of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer
Restricted Securities, the Company or any of the Subsidiary Guarantors shall
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 8
shall be deemed to require the Company or any of the Subsidiary Guarantors to
register any of their respective securities ties pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted Securities
covered by any Shelf Registration Statement are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of such Transfer Restricted Securities included in
such offering, subject to the consent of the Company and the Subsidiary
Guarantors (which shall not be unreasonably withheld or delayed), and such
Holders shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement 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 Subsidiary Guarantors have obtained the written consent of Holders of a
majority in aggregate gate principal amount of the then outstanding Securities,
the Exchange Securities and the Private Exchange Securities, taken as a single
class. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities, Exchange Securities or Private Exchange
Securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Securities, the
Exchange Securities and the
18
<PAGE>
Private Exchange Securities being sold by such Holders pursuant to such
Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder or Exchanging Dealer, at the most current address
given by such Holder or Exchanging Dealer to the Company in accordance with
the provisions of this Section 10(b), which address initially is, with
respect to each Holder, the address of such Holder maintained by the
Registrar under the Indenture, with a copy in like manner to Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation, BT
Alex. Brown Incorporated and ING Baring (U.S.) Securities, Inc. c/o Chase
Securities, Inc., 270 Park Avenue, 4th floor, New York, New York 10017;
(ii) if to an Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(iii) if to the Company or the Subsidiary Guarantors, initially at
the address of the Company set forth in the Purchase Agreement with a
copy to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019; attention James M. Dubin;
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company, the Subsidiary Guarantors and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) 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.
(e) Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.
19
<PAGE>
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company, by any
Subsidiary Guarantor or by any Holder of any of its respective obligations
under this Agreement, each Holder, the Company or any Subsidiary Guarantors,
as the case may be, in addition to being entitled to exercise all rights
granted by law, including recovery of damages (other than the recovery of
damages for a breach by the Company and the Subsidiary Guarantors of their
obligations under Sections 1 or 2 hereof for which liquidated damages have
been paid pursuant to Section 3 hereof), will be entitled to specific
performance of its rights under this Agreement. The Company, each Subsidiary
Guarantor and each Holder agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement (except with respect to a breach by the Company
or the Subsidiary Guarantors of their obligations under Sections 1 or 2 for
which liquidated damages are the sole remedy) and hereby further agree that,
in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Company and the Subsidiary
Guarantors, jointly and severally, represent, warrant and agree that (i) they
have not entered into, shall not, on or after the date of this Agreement,
enter into any agreement that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof,
(ii) they have not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of their
respective debt securities to any person and (iii) without limiting the
generality of the foregoing, without the written consent of the Holders of a
majority in aggregate principal amount of the then outstanding Transfer
Restricted Securities, they shall not grant to any person the right to
request the Company or the Subsidiary Guarantors to register any debt
securities of the Company or the Subsidiary Guarantors under the Securities
Act unless the rights so granted are not in conflict or inconsistent with the
provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company, the Subsidiary
Guarantors nor any of their respective security holders (other than the Holders
of Transfer Restricted Securities in such capacity) shall have the right to
include any securities of the Company in any Shelf Registration or Registered
Exchange Offer other than Transfer Restricted Securities.
(k) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
20
<PAGE>
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
21
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Subsidiary Guarantors named herein and the Initial Purchasers.
Very truly yours,
BIG CITY RADIO, INC.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
SUBSIDIARY GUARANTORS:
BIG CITY RADIO--NYC, L.L.C.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
BIG CITY RADIO--CHI, L.L.C.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
BIG CITY RADIO--LA, L.L.C.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
ODYSSEY TRAVELING BILLBOARDS, INC.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
WRKL ROCKLAND RADIO, L.L.C.
By: /s/ Michael Kakoyiannis
-----------------------------
Name: Michael Kakoyiannis
Title: President and CEO
22
<PAGE>
Accepted:
CHASE SECURITIES INC.
By: /s/ Stephanie Cuskley
-----------------------------------
Authorized Signatory
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael Connolly
-----------------------------------
Authorized Signatory
BT ALEX BROWN INCORPORATED
By: /s/ Edward P. Garden
-----------------------------------
Authorized Signatory
ING BARING (U.S.) SECURITIES, INC.
By: /s/ Adrian Mackay
-----------------------------------
Authorized Signatory
23
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Registered Exchange Offer may be deemed to be an "underwriter"
within the meaning of the Securities Act and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
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 a broker-dealer in connection
with resales of Exchange Securities received in exchange for Securities where
such Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company and the Subsidiary
Guarantors have agreed that, for a period of 180 days after the Expiration Date
(as defined herein), they will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in
exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Securities. See "Plan of
Distribution."
B-2
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Securities. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Securities where
such Securities were acquired as a result of market-making activities or other
trading activities. The Company and the Subsidiary Guarantors have agreed that,
for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until _______________, 1998,
all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Company and the Subsidiary Guarantors will not receive any proceeds
from any sale of Exchange Securities by broker-dealers. Exchange Securities
received by broker-dealers for their own account pursuant to the Registered
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 Exchange Securities 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 at 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
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission 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 meeting the requirements of the
Securities Act, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company and the
Subsidiary Guarantors will promptly send additional copies of this Prospectus
and any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal. The Company and the
Subsidiary Guarantors have agreed to pay all expenses incident to the
Registered Exchange Offer (including the expenses of one counsel for the Holders
of the Securities) other than commissions or concessions of any broker-dealers
and will indem-
C-3
<PAGE>
nify the Holders of the Securities (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
C-4
<PAGE>
ANNEX D
o CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-------------------------------------
Address:
----------------------------------
----------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
D-5
<PAGE>
EXHIBIT 11.1
BIG CITY RADIO, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
<S> <C> <C> <C>
1995 1996 1997
------------- ------------- --------------
Net loss............................................................ $ (4,005,000) $ (3,098,000) $ (16,918,000)
------------- ------------- --------------
------------- ------------- --------------
Weighted average number of shares outstanding - primary: Weighted
average number of common shares outstanding....................... 6,088,000 8,024,000 9,539,000
Dilutive effect of stock options after application of treasury stock
method............................................................ -- -- --
------------- ------------- --------------
Weighted average number of shares outstanding....................... 6,088,000 8,024,000 9,539,000
------------- ------------- --------------
------------- ------------- --------------
Net loss per share:
Primary........................................................... $(.66) $(.39) $(1.77)
------------- ------------- --------------
------------- ------------- --------------
</TABLE>
<PAGE>
Exhibit 21.1
LIST OF SUBSIDIARIES
Big City Radio - NYC, L.L.C., a Delaware limited liability company.
Big City Radio - LA, L.L.C., a Delaware limited liability company.
Big City Radio - CHI, L.L.C., a Delaware limited liability company.
WRKL Rockland Radio, L.L.C., a Delaware limited liability company.
Odyssey Traveling Billboards, Inc., a Delaware corporation.
<PAGE>
EXHIBIT 23.1
The Board of Directors
Big City Radio, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Big City Radio, Inc. of our report dated March 20, 1998, relating to
the consolidated balance sheets of Big City Radio, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' deficit, and cash flows for each of the years in the
two-year period ended December 31, 1997, and Schedule II, Combined Financial
Statement Schedules Valuation and Qualifying Accounts for the years ended
December 31, 1997 and 1996, which report appears in the December 31, 1997,
annual report on Form 10-K of Big City Radio, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Los Angeles, California
March 30, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
AND REPORT ON SCHEDULES
We consent to the inclusion in this Form 10-K of Big City Radio, Inc. of our
report dated September 19, 1997, on our audit of the financial statements of Big
City Radio, Inc. and to the references to our firm under the caption "Selected
Financial Data".
Our audit of the financial statements referred to in our aforementioned
report also included the financial statement schedule of Big City Radio, Inc.
listed in Item 27.1. This financial statement schedule is the responsibility of
the Corporation's management. Our responsibility is to express an opinion based
on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Holtz Rubenstein & Co., LLP
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
March 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 80
<SECURITIES> 0
<RECEIVABLES> 2,538
<ALLOWANCES> 213
<INVENTORY> 0
<CURRENT-ASSETS> 2,657
<PP&E> 3,504
<DEPRECIATION> 825
<TOTAL-ASSETS> 60,108
<CURRENT-LIABILITIES> 2,876
<BONDS> 0
0
0
<COMMON> 140
<OTHER-SE> 24,892
<TOTAL-LIABILITY-AND-EQUITY> 60,108
<SALES> 0
<TOTAL-REVENUES> 10,460
<CGS> 0
<TOTAL-COSTS> 20,518
<OTHER-EXPENSES> (101)
<LOSS-PROVISION> 304
<INTEREST-EXPENSE> 4,348
<INCOME-PRETAX> (14,305)
<INCOME-TAX> 2,300
<INCOME-CONTINUING> (16,605)
<DISCONTINUED> 0
<EXTRAORDINARY> (313)
<CHANGES> 0
<NET-INCOME> (16,918)
<EPS-PRIMARY> (1.77)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 234
<SECURITIES> 500
<RECEIVABLES> 1,749
<ALLOWANCES> 212
<INVENTORY> 0
<CURRENT-ASSETS> 2,313
<PP&E> 1,861
<DEPRECIATION> 384
<TOTAL-ASSETS> 38,963
<CURRENT-LIABILITIES> 2,019
<BONDS> 0
0
0
<COMMON> 94
<OTHER-SE> (3,894)
<TOTAL-LIABILITY-AND-EQUITY> 38,963
<SALES> 0
<TOTAL-REVENUES> 7,944
<CGS> 0
<TOTAL-COSTS> 14,842
<OTHER-EXPENSES> (6,827)
<LOSS-PROVISION> 190
<INTEREST-EXPENSE> 2,627
<INCOME-PRETAX> (3,098)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,098)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,098)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> 0
</TABLE>
