<PAGE>
FORM S-4
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1998
REGISTRATION NO. 333-61211
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RADIO UNICA CORP.
AND OTHER REGISTRANTS*
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 513111 65-0776004
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification
Organization) No.)
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8400 N.W. 52ND STREET, SUITE 101
MIAMI, FLORIDA 33166
(305) 463-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
STEVEN E. DAWSON
RADIO UNICA CORP.
8400 N.W. 52ND STREET, SUITE 101
MIAMI, FLORIDA 33166
(305) 463-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPY TO:
C. KEVIN BARNETTE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1440 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20005
(202) 371-7000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
IF THE SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED IN
CONNECTION WITH THE FORMATION OF A HOLDING COMPANY AND THERE IS COMPLIANCE WITH
GENERAL INSTRUCTION G, CHECK THE FOLLOWING BOX. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
*OTHER REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP
CODE AND TELEPHONE
STATE OR OTHER PRIMARY STANDARD NUMBER, INCLUDING AREA
EXACT NAME OF REGISTRANT JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER CODE, OF REGISTRANT'S
AS SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION CODE IDENTIFICATION PRINCIPAL EXECUTIVE
CHARTER ORGANIZATION NUMBERS NUMBER OFFICES
- ------------------------- --------------------- --------------------- ----------------- -------------------------
<S> <C> <C> <C> <C>
Oro Spanish Broadcasting, California 513111 94-2678874 8400 N.W. 52nd St. Suite
Inc. 101
Miami, FL 33166
Radio Unica of San Delaware 513111 65-0813274 8400 N.W. 52nd St. Suite
Francisco, Inc. 101
Miami, FL 33166
Radio Unica of San Delaware 513111 52-2114089 8400 N.W. 52nd St. Suite
Francisco License Corp. 101
Miami, FL 33166
Radio Unica of Miami, Delaware 513111 65-0813271 8400 N.W. 52nd St. Suite
Inc. 101
Miami, FL 33166
Radio Unica of Miami Delaware 513111 52-2114091 8400 N.W. 52nd St.
License Corp. Suite 101
Miami, FL 33166
Radio Unica of Los Delaware 513111 65-0812486 8400 N.W. 52nd St. Suite
Angeles, Inc. 101
Miami, FL 33166
Radio Unica of Los Delaware 513111 52-2114088 8400 N.W. 52nd St. Suite
Angeles License Corp. 101
Miami, FL 33166
Radio Unica of San Delaware 513111 65-0812485 8400 N.W. 52nd St. Suite
Antonio, Inc. 101
Miami, FL 33166
Radio Unica Network, Inc. Delaware 513111 65-0812484 8400 N.W. 52nd St. Suite
101
Miami, FL 33166
Radio Unica Sales Corp. Florida 513111 65-0788821 8400 N.W. 52nd St. Suite
101
Miami, FL 33166
Blaya, Inc. Delaware 513111 65-0803106 8400 N.W. 52nd St. Suite
101
Miami, FL 33166
Radio Unica of Houston Delaware 513111 65-0857122 8400 N.W. 52nd St. Suite
License Corp. 101
Miami, FL 33166
</TABLE>
<PAGE>
SUBJECT TO COMPLETION DATED OCTOBER 20, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
RADIO UNICA CORP.
OFFER TO EXCHANGE
11 3/4% SENIOR DISCOUNT NOTES SERIES B DUE 2006
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR DISCOUNT NOTES DUE 2006
---------------------
Radio Unica Corp., a Delaware corporation ("Radio Unica" or the "Company"),
hereby offers (the "Exchange Offer"), pursuant to a registration statement (the
"Registration Statement"), of which this Prospectus constitutes a part, and the
accompanying letter of transmittal (the "Letter of Transmittal"), to exchange
its issued 11 3/4% Senior Discount Notes due 2006 (the "Old Notes") of which an
aggregate of $158,088,000 principal amount at maturity is outstanding as of the
date hereof, for an equal principal amount at maturity of newly issued 11 3/4%
Senior Discount Notes Series B due 2006 (the "New Notes" and together with the
Old Notes, the "Notes"). The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1998, unless extended.
Cash interest on the New Notes will not accrue or be payable prior to August
1, 2002. Thereafter, cash interest on the New Notes will accrue at a rate of
11 3/4% per annum on the principal amount at maturity of the Notes through and
including the maturity date, and will be payable semi-annually on August 1 and
February 1 of each year, commencing August 1, 2002. The New Notes will be issued
at a substantial discount to their principal amount at maturity, and the holders
of the New Notes will be required to include the accretion of the original issue
discount as gross income for U.S. federal income tax purposes prior to the
receipt of the cash payments to which such income is attributable. See
"Description of the Notes" and "Certain United States Federal Income Tax
Consequences."
The New Notes will be redeemable at any time and from time to time at the
option of the Company, in whole or in part, on or after August 1, 2002, at the
redemption prices set forth herein, plus accrued and unpaid interest to the date
of redemption. In addition, on or prior to August 1, 2001, the Company may
redeem, at its option, up to 35% of the aggregate principal amount at maturity
of the Notes with the net proceeds of one or more Equity Offerings (as defined
herein) at 111.75% of the Accreted Value (as defined herein) thereof, as long as
Notes representing at least $65.0 million of the aggregate initial Accreted
Value of the Notes originally issued remains outstanding after each such
redemption and any such redemption occurs within 90 days of the closing of any
such Equity Offering. See "Description of the New Notes-Optional Redemption."
Upon a Change of Control (as defined herein), the Company will be required
to offer to repurchase the Notes at a purchase price equal to (i) 101% of the
Accreted Value thereof, if the purchase date is on or prior to August 1, 2002,
or (ii) 101% of the principal amount at maturity thereof, plus accrued and
unpaid interest thereon, if any, to the purchase date, if such date is after
August 1, 2002. See "Description of the Notes-Change of Control Offer." In
addition, the Company will be obligated in certain instances to make an offer to
repurchase the Notes at a purchase price equal to (i) 100% of the Accreted Value
thereof, if the purchase date is on or prior to August 1, 2002, or (ii) 100% of
the principal amount at maturity thereof, plus accrued and unpaid interest
thereon, if any, to the purchase date, if such date is after August 1, 2002,
with the net cash proceeds of certain asset sales. See "Description of the
Notes-Certain Covenants-Limitation on Certain Asset Sales."
The New Notes will be general senior unsecured obligations of the Company
and will rank PARI PASSU in right of payment with all existing and future
unsecured and unsubordinated indebtedness of the Company and senior in right of
payment to any subordinated indebtedness of the Company. The New Notes will be
effectively subordinated in right of payment to the Revolving Credit Facility
(as defined herein) and all other secured indebtedness of the Company and its
subsidiaries to the extent of the value of the assets securing such
indebtedness. The New Notes will be unconditionally guaranteed (the
"Guarantees"), on a senior unsecured basis, as to the payment of principal,
premium, if any, and interest, fully and unconditionally, jointly and severally,
by each of the Company's present and future Domestic Restricted Subsidiaries
(the "Guarantors"). As of October 20, 1998, the Company and the Guarantors had
no indebtedness outstanding ranking senior to or PARI PASSU with the Old Notes
and the Guarantees, respectively.
The New Notes are being offered hereby in order to satisfy certain
obligations of the Company under a Registration Rights Agreement, dated July 22,
1998 (the "Registration Rights Agreement"), between the Company, CIBC
Oppenheimer Corp. and Bear, Stearns & Co. Inc. (collectively, the "Initial
Purchasers"). The form and terms of the New Notes will be substantially the same
as the Old Notes, except that the New Notes will have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and hence will not be
subject to certain transfer restrictions, registration rights and related
liquidated damages provisions applicable to the Old Notes. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture (the "Indenture") dated as of July 27, 1998 by and between the
Company and Wilmington Trust Company, as trustee (the "Trustee"). The Indenture
provides for the issuance of both the Old Notes and the New Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all expenses incident to the Exchange Offer (which shall not
include the expenses of any holder in connnection with resales of the New
Notes). Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange any and all outstanding Old Notes validly
tendered and not withdrawn on or prior to the Expiration Date. As used herein,
the "Expiration Date" means 5:00 p.m., New York City Time, on , 1998 or,
if the Exchange Offer is extended, the latest date and time to which the
Exchange Offer is extended. Tenders of the Old Notes may be withdrawn at any
time prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes being tendered for exchange. Old Notes
may be tendered only in integral multiples of $1,000 of principal amount of
maturity. For each Old Note accepted for exchange, the holders of such Old Notes
will receive a New Note having Accreted Value and principal amount at maturity
equal to that of the surrendered Old Note.
New Notes will be represented by permanent global notes in fully registered
form and will be deposited with, or on behalf of, The Depository Trust Company
("DTC") and registered in the name of a nominee of DTC. Beneficial interests in
the permanent global notes will be shown on, and transfers thereof will be
effected through, records maintained by DTC and its participants.
This Prospectus, together with the Letter of Transmittal, is first being
sent on or about , 1998 to all registered holders of the Old Notes and to
the beneficial holders of the Old Notes known to the Company.
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING OLD NOTES IN THE EXCHANGE
OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER [ ], 1998.
<PAGE>
Based on interpretations contained in no-action letters of the Securities
and Exchange Commission (the "Commission"), the Company believes that the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for resale, resold, and otherwise transferred by a holder thereof (other
than (i) a broker-dealer who purchased the Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person who is an affiliate of the Company (within the
meaning of Rule 405 under the Securities Act)), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder is acquiring the New Notes in its ordinary course of business
and is not participating, and has no arrangement or understanding with any
person to participate, in the distribution of the New Notes. The Noteholders
wishing to accept the Exchange Offer must represent to the Company that such
conditions have been met. Each broker-dealer that receives the New Notes for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a Prospectus in connection with any resale of such New Notes. This Prospectus
has been prepared for use in connection with the Exchange Offer and may be used
by the Initial Purchasers in connection with offers and sales related to
market-making transactions in the Old Notes. The Initial Purchasers may act as a
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale. 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 the New Notes received in exchange for the Old Notes where such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that it will use
its reasonable best efforts to make this Prospectus available to any
broker-dealer for use in connection with any such resale for such period of time
as such persons may be required to comply with the prospectus delivery
requirements of the Securities Act (which period shall not exceed 180 days from
the date the Registration Statement becomes effective). See "Plan of
Distribution." EXCEPT AS DESCRIBED IN THIS PARAGRAPH, THIS PROSPECTUS MAY NOT BE
USED FOR AN OFFER TO RESELL, RESALE OR OTHER TRANSFER OF NEW NOTES.
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc. Prior to this Exchange Offer, there has
been no public market for the New Notes. The Company does not intend to apply
for listing of the New Notes on any securities exchange or for quotation of the
New Notes on The Nasdaq Stock Market's National Market or otherwise. The Initial
Purchasers have previously made a market in the Old Notes and the Company has
been advised that the Initial Purchasers currently intend to make a market in
the New Notes, as permitted by applicable laws and regulations, after
consummation of the Exchange Offer. The Initial Purchasers are not obligated to
make a market in the Old Notes or the New Notes and any such market-making
activity may be discontinued at any time without notice at the sole discretion
of the Initial Purchasers. There can be no assurance as to the liquidity of the
public market for the New Notes or that any active public market for the New
Notes will develop or continue. If an active public market does not develop or
continue, the market price and liquidity of the New Notes may be adversely
affected. See "Risk Factors--Absence of Public Trading Market."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUER ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
i
<PAGE>
AVAILABLE INFORMATION
The Company is not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934 as amended
(the "Exchange Act"). The Company will become subject to such requirements upon
the effectiveness of the Registration Statement (defined below). The Company has
filed with the Commission a Registration Statement on Form S-4 under the
Securities Act, and the rules and regulations promulgated thereunder, with
respect to the New Notes offered hereby (the "Registration Statement"). This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and at Citicorp Center,
50 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
documents may be obtained from the Commission at its principal office in
Washington, D.C. upon the payment of the charges prescribed by the Commission.
Information on the operation of the public reference facilities may be obtained
by calling the Commission at 1-800-SEC-0330.
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The Commission's address on the World Wide
Web is http://www.sec.gov.
In addition, the Company has agreed that, whether or not it is required to
do so by the rules and regulations of the Commission, for so long as any of the
Notes remain outstanding, it will furnish to the holders of the Notes and file
with the Commission (unless the Commission will not accept such a filing) (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
was required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent auditors and (ii) all reports that would be required to be filed
with the Commission on Form 8-K if the Company was required to file such
reports. In addition, for so long as any of the Notes are restricted securities
within the meaning of Rule 144(c)(3) under the Securities Act, the Company has
agreed to make available to any prospective purchaser of the Notes or beneficial
owner of the Notes in connection with any sale thereof the information required
by Rule 144A(d)(4) under the Securities Act.
FORWARD-LOOKING STATEMENTS
When used in this Prospectus, the words "believes," "anticipates," "expects"
and other words of similar import are used to identify "forward-looking
statements." All statements other than statements of historical fact included in
this Prospectus, including, without limitation, the statements under "Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere herein, regarding the Company
or any of the transactions described herein, including the timing, financing,
strategies and effects of such transactions, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from expectations are disclosed in this
Prospectus, including, without limitation, in conjunction with the
forward-looking statements in this Prospectus and/or under "Risk Factors." The
Company does not intend to update these forward-looking statements.
ii
<PAGE>
SOURCES OF INFORMATION
Unless otherwise indicated herein, all market revenue rankings and other
market radio advertising revenue information that are contained in this
Prospectus are based on information obtained from HISPANIC BUSINESS magazine.
Unless otherwise noted, references herein to the rank of a station among all the
stations within a market has been determined by reference to all radio stations
ranked by The Arbitron Company ("Arbitron") within the applicable market.
Designated Market Area ("DMA") information contained herein is derived from
Nielsen Media Research, Inc. DMA definitions. A "National Hispanic Arbitron
Rating" point, when used herein, is equivalent to 1% of U.S. Hispanic persons 12
years of age or older. Power ratio information used herein is based on the
Miller, Kaplan, Arase & Co., L.L.P., Spring 1998 POWER RATIO TRENDS BY FORMAT.
Unless otherwise indicated, all references to population and demographic
statistics in this Prospectus are derived from Strategy Research Corporation,
1998 UNITED STATES HISPANIC MARKET STUDY (the "SRC Study"), the United States
Census Bureau and HISPANIC BUSINESS magazine. The SRC Study is sponsored by
advertisers and other businesses targeting the Hispanic market.
iii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY AND SHOULD BE READ IN
CONJUNCTION WITH THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS, AND
RELATED NOTES THERETO, AND OTHER DATA APPEARING ELSEWHERE IN THIS PROSPECTUS.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER
"RISK FACTORS" PRIOR TO TENDERING THEIR OLD NOTES IN THE EXCHANGE OFFER OR
MAKING AN INVESTMENT IN THE NEW NOTES. EXCEPT AS OTHERWISE INDICATED BY THE
CONTEXT, REFERENCES IN THIS PROSPECTUS TO THE "COMPANY" INCLUDE THE COMPANY, ITS
SUBSIDIARIES AND ITS NATIONAL NETWORK OF RADIO STATIONS. UNLESS OTHERWISE
INDICATED HEREIN, REFERENCES IN THIS PROSPECTUS TO "HISPANICS" MEAN HISPANICS IN
THE U.S.
THE COMPANY
The Company is the only national long-form, Spanish-language news/talk,
sports and information AM radio network in the U.S., broadcasting 24-hours a
day, 7-days a week. The Company, which began broadcasting its network
programming on January 5, 1998, produces 17 hours of live and first-run
celebrity-based programming each weekday and 26 hours of such programming each
weekend. With nine Company-operated stations and, as of June 30, 1998, 47
affiliated stations, the Company's network reaches approximately 83% of the U.S.
Hispanic population. The Company-operated stations are located in the top eight
U.S. markets in terms of Spanish-language media spending. These top eight
markets collectively account for approximately 55% of the total U.S. Hispanic
population. Of these stations, four are Company-owned and five are operated
under time brokerage agreements (also known as local marketing agreements and
referred to herein as "LMAs").
The Company believes that its strong programming line-up provides the
Company with a competitive advantage over other Spanish-language radio
broadcasters in appealing to U.S. Hispanic listeners. The Company's programming
line-up includes contemporary-themed talk shows hosted by internationally known
personalities such as Pedro Sevcec, Dr. Isabel Gomez-Bassols, Mauricio Zeillic
and Luis Loria; sports-talk hosted by Jorge Ramos and other top names in sports
broadcasting; and newscasts on the hour, 24 hours a day. Many of the Company's
programs are interactive, allowing listeners nationwide to call in toll-free.
The Company believes that its programming is being well received. Company
research in the Miami market has shown that Radio Unica is the number two
Spanish-language news/talk station in the market, with 21% of respondents
preferring Radio Unica.
The Company's senior management team has extensive experience in
Spanish-language broadcasting. Joaquin F. Blaya, the Company's Chairman and
Chief Executive Officer, formerly the President and Chief Executive Officer of
Telemundo and the President of Univision, has over 30 years of industry
experience and played a key role in Spanish-language media becoming an important
part of the mainstream advertising mix. Jose C. Cancela, the President of the
Company, served as Executive Vice President of Telemundo for six years and as
the Vice President of the Univision Southwest Station Group for two years.
Steven E. Dawson, the Company's Chief Financial Officer, spent six years at
Telemundo, most recently as the Vice President of Finance and Controller.
In July 1998, the Company effected a holding company reorganization,
pursuant to which the Company became a wholly-owned subsidiary of Radio Unica
Holdings Corp. ("Holdings"). Holdings has no assets other than shares of the
Company's capital stock. Warburg, Pincus Ventures, L.P., a private equity
partnership ("Warburg Ventures, L.P."), owns approximately 98% of Holdings'
outstanding stock with members of senior management owning the remaining 2%.
Under additional time-vested and performance-based option plans, senior
management and key talent could increase their ownership of Holdings to
approximately 20%. E.M. Warburg, Pincus & Co., LLC ("Warburg") is the managing
entity of Warburg Ventures, L.P. Warburg has over 25 years of private equity
investment experience and has approximately 100 portfolio companies and over $7
billion under management. Warburg has significant experience in media investing,
including having been an investor in Renaissance Communications, Panavision and
ADVO, among others.
1
<PAGE>
RISK FACTORS
Prospective participants in the Exchange Offer should consider carefully the
information set forth under the caption "Risk Factors" beginning on page 10 and
all other information set forth in this Prospectus before tendering their Old
Notes in the Exchange Offer. This information includes: (i) the Company's high
degree of leverage and the Company's need to continue to generate cash flow that
is sufficient to service its debt obligations; (ii) the Company's limited
operating history and its history of net losses and negative cash flow from
operations; (iii) the restrictions imposed on the Company by the terms of the
Indenture and the Revolving Credit Facility; (iv) the Company's dependence on
certain key personnel; (v) risks associated with the Company's plan to acquire
additional radio stations, including existing restrictions on the Company's
ability to arrange financing for future acquisitions; (vi) the need for the
periodic renewal of the Company's broadcast licenses and the potential for
adverse regulatory changes; (vii) the highly competitive nature of the radio
broadcasting industry; (viii) that the Indenture will require the Company to
make an offer to purchase all of the outstanding Notes upon a Change of Control
and certain events that would constitute a Change of Control would also
constitute a default under the Revolving Credit Facility; and (ix) the lack of a
public market for the New Notes.
2
<PAGE>
THE EXCHANGE OFFER
The form and terms of the New Notes will be substantially identical to those
of the Old Notes except that the New Notes will have been registered under the
Securities Act, and hence will not be subject to certain transfer restrictions,
registration rights and related liquidated damages provisions applicable to the
Old Notes.
<TABLE>
<S> <C>
The Exchange Offer.................. The Company is offering to exchange an aggregate of
$158,088,000 principal amount at maturity of the New
Notes for a like principal amount at maturity of the
Old Notes. The Old Notes may be exchanged only in
multiples of $1,000 of principal amount at maturity.
The Company will issue the New Notes as soon as
practicable after the Expiration Date. See "The
Exchange Offer."
Issuance of the Old Notes;
Registration Rights............... The Old Notes were issued and sold on July 27, 1998
to the Initial Purchasers. In connection therewith,
the Company executed and delivered for the benefit of
the holders of the Old Notes the Registration Rights
Agreement, pursuant to which the Company agreed (i)
to commence an exchange offer under which the New
Notes, registered under the Securities Act with terms
substantially identical to those of the Old Notes,
will be exchanged for the Old Notes pursuant to an
effective registration statement (the "Exchange Offer
Registration Statement") or (ii) cause the Old Notes
to be registered under the Securities Act pursuant to
a resale shelf registration statement (the "Shelf
Registration Statement"). If the Company does not
comply with certain of its obligations under the
Registration Rights Agreement, certain damages will
accrue and be payable when cash interest becomes
payable on the Old Notes. See "The Exchange
Offer--Purpose of the Exchange Offer; Registration
Rights."
Expiration Date..................... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1998, unless extended in
which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is
extended.
Conditions to the Exchange Offer.... The Exchange Offer is subject to certain conditions,
which may be waived by the Company in whole or in
part and from time to time in its reasonable
discretion. See "The Exchange Offer--Certain
Conditions to the Exchange Offer." The Exchange Offer
is not conditioned upon any minimum aggregate
principal amount of Old Notes being tendered for
exchange.
Procedures for Tendering Old
Notes............................. Each holder of Old Notes desiring to accept the
Exchange Offer must complete and sign the Letter of
Transmittal, have the signature thereon guaranteed if
required by the Letter of Transmittal, and mail or
otherwise deliver the Letter of Transmittal, together
with the Old Notes or a Notice of Guaranteed Delivery
and any other required documents (such as evidence of
authority to act satisfactory to the Company in its
sole discretion, if the Letter of Transmittal is
signed by someone acting in a fiduciary or
representative capacity) or, in the case of Global
Notes deliver an Agent's Message (as defined herein)
together with a Book-Entry
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Confirmation (as defined herein), to the Exchange
Agent (as defined herein) at the address set forth
herein prior to the Expiration Date. Any beneficial
owner of the Old Notes whose Old Notes are registered
in the name of a nominee, such as a broker, dealer,
commercial bank or trust company and who wishes to
tender the Old Notes in the Exchange Offer, should
instruct such entity or person to promptly tender on
such beneficial owner's behalf. By executing the
Letter of Transmittal or delivering an Agent's
Message, each holder will represent to the Company,
among other things, that (i) the New Notes acquired
pursuant to the Exchange Offer by the holder and any
beneficial owners of Old Notes are being obtained in
the ordinary course of business of the person
receiving such New Notes, (ii) at the time of the
consummation of the Exchange Offer neither the holder
nor such beneficial owner has an arrangement or
understanding with any person to participate in the
distribution of such New Notes in violation of the
Securities Act, (iii) neither the holder nor such
beneficial owner is an "affiliate," as defined under
Rule 405 promulgated under the Securities Act, of the
Company or any Guarantor or if it is an affiliate
that it will comply with the registration and
prospectus delivery requirements under the Securities
Act and (iv) that it is not acting on behalf of any
person who could not truthfully make the foregoing
representations. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes,
where such Old Notes were acquired by such broker-
dealer as a result of market-making activities or
other trading activities (other than Old Notes
acquired directly from the Company), may participate
in the Exchange Offer but may be deemed an
"underwriter" under the Securities Act and,
therefore, must so acknowledge in the Letter of
Transmittal or will be deemed to have so acknowledged
by delivering an Agent's Message that it will deliver
a prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities
Act. See "The Exchange Offer--Procedures for
Tendering the Old Notes."
Guaranteed Delivery Procedures...... Holders who wish to tender their Old Notes and (i)
whose Old Notes are not immediately available or (ii)
who cannot deliver their Old Notes or any other
documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date (or
complete the procedure for book-entry transfer on a
timely basis), may tender their Old Notes according
to the guaranteed delivery procedures set forth in
the Letter of Transmittal. See "The Exchange Offer--
Guaranteed Delivery Procedures."
Withdrawal Rights................... Tenders of the Old Notes may be withdrawn at any time
prior to the Expiration Date. See "The Exchange
Offer-- Withdrawal Rights."
Acceptance of the Old Notes and
Delivery of the New Notes......... Upon the terms and subject to the conditions of the
Exchange
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Offer, the Company will accept for exchange any and
all Old Notes which are properly tendered in the
Exchange Offer prior to the Expiration Date. The New
Notes issued pursuant to the Exchange Offer will be
delivered as promptly as practicable following the
Expiration Date. See "The Exchange Offer--Terms of
the Exchange Offer."
Resales of the New Notes............ Based on an interpretation by the staff of the
Commission set forth in Exxon Capital Holdings Corp.,
SEC No-Action Letter (available May 13, 1988), Morgan
Stanley & Co., Inc., SEC No-Action Letter (available
June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (available July 2, 1993), the Company believes
that the New Notes issued pursuant to the Exchange
Offer in exchange for the Old Notes may be offered
for resale, resold and otherwise transferred by any
holder thereof (other than any such holder which is
an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such
holder's business and that such holder has no
arrangement or understanding with any person to
participate in the distribution of such New Notes,
and provided, further, that each broker-dealer that
receives the New Notes for its own account in
exchange for the Old Notes must acknowledge that it
will deliver a Prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."
If a holder does not exchange such Old Notes for New
Notes pursuant to the Exchange Offer, such Old Notes
will continue to be subject to the restrictions on
transfer contained in the legend thereon. In general,
the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant
to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state
securities laws. See "The Exchange Offer--
Consequences of Failure to Exchange."
Consequences of Failure to
Exchange.......................... Holders who do not exchange their Old Notes for the
New Notes pursuant to the Exchange Offer will
continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the legend
thereon. In general, the Old Notes may not be offered
or sold, except pursuant to a registration statement
under the Securities Act or any exemption from
registration thereunder and in compliance with
applicable state securities laws. In the event the
Company completes the Exchange Offer, the holders of
Old Notes will have no further rights to registration
or liquidated damages pursuant to the Registration
Rights Agreement. See "The Exchange Offer-- Purpose
of the Exchange Offer; Registration Rights."
Certain Tax Considerations.......... There will be no Federal income tax consequences to
holders exchanging the Old Notes for the New Notes
pursuant to the Exchange Offer and a holder will have
the same adjusted basis and holding period in the New
Notes as in the Old Notes immediately before the
exchange.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Registration Rights Agreement....... The Exchange Offer is intended to satisfy the
registration rights of holders of Old Notes under the
Registration Rights Agreement.
Exchange Agent...................... Wilmington Trust Company is the Exchange Agent. The
address and telephone number of the Exchange Agent
are set forth in "The Exchange Offer--Exchange
Agent."
</TABLE>
DESCRIPTION OF THE NOTES
<TABLE>
<S> <C>
Issuer.............................. Radio Unica Corp.
New Notes........................... Up to $158,088,000 aggregate principal amount at
maturity of the Company's 11 3/4% Senior Discount
Notes Series B due 2006.
Maturity Date....................... August 1, 2006.
Original Issue Discount............. The Old Notes were issued at a substantial discount
to their principal amount at maturity, and the New
Notes will also bear original issue discount for U.S.
Federal income tax purposes. The issue price to
investors per Old Note was $632.56, which represents
a yield to maturity on the Old Notes of 11 3/4% from
July 27, 1998 (computed on a semi-annual bond
equivalent basis). The New Notes will have an initial
Accreted Value equal to the Accreted Value of the Old
Notes for which they were exchanged. Holders of the
New Notes will be required to include the accretion
of the original issue discount as gross income for
U.S. Federal income tax purposes prior to the receipt
of the cash payments to which such income is
attributable. See "Certain United States Federal
Income Tax Consequences."
Interest............................ Cash interest on the New Notes will not accrue or be
payable prior to August 1, 2002. Thereafter, cash
interest will accrue at a rate of 11 3/4% per annum
on the principal amount at maturity of the New Notes
through and including the maturity date, and will be
payable semiannually on August 1 and February 1 of
each year, commencing August 1, 2002.
Ranking............................. The New Notes will be general senior unsecured
obligations of the Company and will rank PARI PASSU
in right of payment with all existing and future
unsecured and unsubordinated indebtedness of the
Company and senior in right of payment to any
subordinated indebtedness of the Company. The New
Notes will be effectively subordinated in right of
payment to the Revolving Credit Facility (as defined)
and all other secured indebtedness of the Company to
the extent of the value of the assets securing such
indebtedness. As of October 20, 1998, the Company had
no indebtedness outstanding ranking senior to or PARI
PASSU with the Old Notes and the Guarantees,
respectively. The Indenture (as defined) permits the
Company to incur additional indebtedness (subject to
certain limitations), including certain indebtedness
of its subsidiaries. See "Description of the Notes."
Optional Redemption................. The New Notes will be redeemable at any time and from
time to time at the option of the Company, in whole
or in part on
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
or after August 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest
thereon to the date of redemption. In addition, on or
prior to August 1, 2001, the Company may redeem, at
its option, up to 35% of the aggregate principal
amount at maturity of the Notes with the net proceeds
of one or more Equity Offerings at 111.75% of the
Accreted Value thereof as long as Notes representing
at least $65.0 million of the aggregate initial
Accreted Value of the Notes originally issued remains
outstanding after each such redemption and that such
redemption occurs within 90 days of the closing of
any such Equity Offering. See "Description of the New
Notes--Optional Redemption."
Change of Control................... Upon a Change of Control, the Company will be
required to offer to repurchase the Notes at a
purchase price equal to (i) 101% of the Accreted
Value thereof, if the purchase date is on or prior to
August 1, 2002, or (ii) 101% of the principal amount
at maturity thereof, plus accrued and unpaid interest
thereon, if any, to the purchase date, if such date
is after August 1, 2002. See "Risk
Factors--Obligation to Purchase the Notes Upon a
Change of Control" and "Description of the
Notes--Change of Control Offer."
Asset Sale Proceeds................. The Company will be obligated in certain instances to
make an offer to repurchase the Notes at a purchase
price equal to (i) 100% of the Accreted Value
thereof, if the purchase date is on or prior to
August 1, 2002, or (ii) 100% of the aggregate
principal amount at maturity thereof, plus accrued
and unpaid interest thereon, if any, to the purchase
date, if such date is after August 1, 2002, with the
net cash proceeds of certain asset sales. See
"Description of the Notes--Certain
Covenants-Limitations on Certain Asset Sales."
Guarantees.......................... The Old Notes are, and the New Notes will be,
unconditionally guaranteed (the "Guarantees"), on a
senior unsecured basis, as to the payment of
principal, premium, if any, and interest, fully and
unconditionally, jointly and severally, by the
Guarantors which will consist of the Company's
Domestic Restricted Subsidiaries (as defined herein).
The Guarantee of each individual Guarantor ranks PARI
PASSU in right of payment with all existing and
future unsecured and unsubordinated indebtedness of
each such Guarantor and senior in right of payment to
any subordinated debt of each such Guarantor. As of
October 20, 1998, none of the Guarantors had any
outstanding indebtedness (other than the Guarantees).
Certain Covenants................... The indenture pursuant to which the New Notes will be
issued (the "Indenture") contains covenants for the
benefit of the holders of the Notes that, among other
things, restrict the ability of the Company to: (i)
incur additional Indebtedness (as defined herein);
(ii) pay dividends and make distributions; (iii)
issue stock and preferred stock of subsidiaries; (iv)
make certain investments; (v) repurchase stock; (vi)
create liens; (vii) enter into transactions with
affiliates; (viii) enter into sale and leaseback
transactions; (ix) merge or consolidate the Company;
and (x) transfer and sell assets. These covenants
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
are subject to a number of important exceptions. See
"Description of the Notes--Certain Covenants."
Exchange Rights..................... Holders of New Notes will not be entitled to any
exchange rights with respect to the New Notes.
Holders of Old Notes are entitled to certain exchange
rights pursuant to the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company
is required to offer to exchange the Old Notes for
new notes having substantially identical terms which
have been registered under the Securities Act. This
Exchange Offer is intended to satisfy such
obligation. Once the Exchange Offer is consummated,
the Company will have no further obligations to
register any of the Old Notes not tendered by the
holders for exchange, except pursuant to a shelf
registration statement to be filed under certain
limited circumstances specified in "The Exchange
Offer--Purposes of the Exchange Offer; Registration
Rights." See "Risk Factors--Absence of Public
Market."
Absence of a Public Market for the
New Notes......................... The New Notes will be a new issue of securities with
no established market. Accordingly, there can be no
assurance as to the development or liquidity of any
market for the New Notes.
Use of Proceeds..................... The Company will not receive any proceeds in
connection with the Exchange Offer. In consideration
for issuing the New Notes in exchange for the Old
Notes as described in this Prospectus, the Company
will receive the Old Notes, which will be retired and
canceled.
</TABLE>
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table presents (i) summary historical consolidated financial
data of the Company for the periods indicated and (ii) summary unaudited pro
forma financial data of the Company as of the dates and for the periods
indicated giving effect to the events described in "The Transactions" and
"Unaudited Pro Forma Combined Financial Data" included elsewhere herein as
though they had occurred on the dates indicated therein. The summary unaudited
pro forma financial data are not necessarily indicative of the operating results
or the financial condition that would have been achieved had these events been
consummated on the date indicated and should not be construed as representative
of future operating results or financial condition. The summary historical
consolidated and unaudited pro forma financial data should be read in
conjunction with the financial statements and related notes thereto, with the
"Unaudited Pro Forma Combined Financial Data" and with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FOR THE PERIOD PRO FORMA
FROM SEPTEMBER 12, -------------
1996 (INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED JUNE 30, YEAR ENDED
DECEMBER 31, DECEMBER 31, ----------------------- DECEMBER 31,
1996 1997 1997 1998 1997
------------------- ------------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................ $ -- $ -- $ -- $ 3,463,962 $ 3,903,516
Operating expenses......................... 40,000 1,802,816 440,338 13,797,053 7,435,876
Operating loss............................. (40,000) (1,802,816) (440,338) (10,333,091) (3,532,360)
Interest income (expense), net............. -- (12,765) -- (153,350) (12,585,480)
Other income............................... -- -- -- 2,882 --
-------- ------------- --------- ------------ -------------
Loss before provision (benefit) for income
taxes.................................... (40,000) (1,815,581) (440,338) (10,483,559) (16,117,840)
-------- ------------- --------- ------------ -------------
Provision (benefit) for income taxes....... -- -- -- -- (11,318)
-------- ------------- --------- ------------ -------------
Net loss................................... (40,000) (1,815,581) (440,338) (10,483,559) (16,106,522)
Net loss applicable to common
shareholders............................. $ (40,000) $(1,935,071) $(440,338) $(11,486,573) $(17,749,357)
-------- ------------- --------- ------------ -------------
-------- ------------- --------- ------------ -------------
Net loss per common share applicable to
common shareholders--basic and diluted... $ (13.33) $ (356.10) $ (67.94) $ (569.71) $ (842.80)
-------- ------------- --------- ------------ -------------
-------- ------------- --------- ------------ -------------
Weighted average common shares
outstanding--basic and diluted........... 3,000 5,434 6,481 20,162 21,060
BALANCE SHEET DATA:
Cash and cash equivalents..............................................................................................
Working capital........................................................................................................
Total assets...........................................................................................................
Long-term debt.........................................................................................................
Series A redeemable preferred stock....................................................................................
Stockholders' deficit..................................................................................................
OTHER FINANCIAL DATA:
Depreciation and amortization.............. $ -- $ -- $ -- $ 372,144 $ 1,779,019
EBITDA(1).................................. (40,000) (1,802,816) (440,338) (9,958,065) (1,753,341)
Ratio of earnings to fixed charges(2)......
Fixed charges coverage deficiency(2)....... (40,000) (1,815,581) (440,338) (10,483,559) (16,106,522)
Net cash used in operating activities...... (40,000) (2,209,553) (459,738) (8,894,958)
Net cash used in investing activities...... -- (2,238,585) -- (28,334,589)
Net cash provided by financing
activities............................... 45,000 5,570,000 455,000 36,795,000
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1998
--------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................ $ 4,191,802
Operating expenses......................... 14,904,838
Operating loss............................. (10,713,036)
Interest income (expense), net............. (6,099,134)
Other income............................... --
--------------
Loss before provision (benefit) for income
taxes.................................... (16,812,170)
--------------
Provision (benefit) for income taxes....... --
--------------
Net loss................................... (16,812,170)
Net loss applicable to common
shareholders............................. $(18,616,291)
--------------
--------------
Net loss per common share applicable to
common shareholders--basic and diluted... $ 518.91
--------------
--------------
Weighted average common shares
outstanding--basic and diluted........... 35,876
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 62,437,315
Working capital............................ 69,792,495
Total assets............................... 133,619,087
Long-term debt............................. 100,750,000
Series A redeemable preferred stock........ 36,639,969
Stockholders' deficit...................... (13,102,882)
OTHER FINANCIAL DATA:
Depreciation and amortization.............. $ 1,094,996
EBITDA(1).................................. (9,618,040)
Ratio of earnings to fixed charges(2)......
Fixed charges coverage deficiency(2)....... (16,812,170)
Net cash used in operating activities......
Net cash used in investing activities......
Net cash provided by financing
activities...............................
</TABLE>
- ------------------------
(1) EBITDA is defined as net income (loss) plus (i) provision for income taxes,
(ii) interest expense, net and (iii) depreciation and amortization. EBITDA
is presented not as an alternative measure of operating results or cash flow
from operations (as determined in accordance with generally accepted
accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate
this non-GAAP measure in the same fashion. The Company's EBITDA calculation
is not intended to represent cash used in operating activities, since it
does not include interest and taxes and changes in operating assets and
liabilities, nor is it intended to represent the net increase or decrease in
cash, since it does not include cash provided by (used in) investing and
financing activities.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
portion of rental expense that is representative of the interest factor.
Earnings were insufficient to cover fixed charges.
9
<PAGE>
RISK FACTORS
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS
The Company is highly leveraged. As of June 30, 1998, on an adjusted pro
forma basis after giving effect to the Old Note offering and the Transactions
(as defined herein) and the application of that portion of the net proceeds from
the Old Note offering to be used to retire debt, the Company would have had
approximately $100 million of outstanding long-term indebtedness (consisting of
the Old Notes) and no amounts would be outstanding under the Revolving Credit
Facility.
The Revolving Credit Facility and the Indenture permit the Company to incur
additional indebtedness, subject to certain limitations. The degree to which the
Company is leveraged could have important consequences to holders of the New
Notes, including the following: (i) the Company's ability to obtain additional
financing for working capital, capital expenditures, acquisitions or general
corporate purposes may be impaired; (ii) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of interest on the
Notes (when interest becomes payable thereon in cash) and other Indebtedness (as
defined), thereby reducing the funds available to the Company for other
purposes; (iii) all of the indebtedness outstanding under the Revolving Credit
Facility is secured by substantially all of the assets of the Company and the
Domestic Restricted Subsidiaries, and will mature prior to the Notes; (iv) the
Company is substantially more leveraged than certain of its competitors, which
might place the Company at a competitive disadvantage; (v) the Company may be
hindered in its ability to adjust rapidly to changing market conditions; and
(vi) the Company may be more vulnerable in the event of a downturn in general
economic conditions or in its industry or business. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," "Capitalization," "Description of Revolving Credit Facility"
and "Description of the Notes."
The Company's ability to pay the interest on and retire principal of the New
Notes and the Revolving Credit Facility is dependent upon its future operating
performance, which in turn is subject to general economic conditions and to
financial, business and other factors, many of which are beyond the Company's
control. The Company expects its annual interest expense related to the Notes to
be approximately $5 million to $19 million through August 1, 2006. In the event
that the Company is unable to generate cash flow that is sufficient to service
its obligations in respect of the New Notes and the Revolving Credit Facility,
the Company may be forced to adopt one or more alternatives, such as reducing or
delaying the acquisition of radio stations, attempting to refinance or
restructure its indebtedness, selling material assets or operations or selling
equity. There can be no assurance that any of such actions could be effected on
satisfactory terms or at all, that they would enable the Company to satisfy its
debt service requirements or that they would be permitted by the Revolving
Credit Facility or the Indenture. The failure to generate such sufficient cash
flow or to achieve such alternatives could significantly adversely affect the
market value of the New Notes and the Company's ability to pay the principal of
and interest on the New Notes.
LIMITED HISTORY OF OPERATIONS; NET LOSSES AND NEGATIVE CASH FLOW FROM OPERATIONS
The Company commenced its broadcasting operations in January 1998 and has a
limited operating history. Accordingly, prospective investors have limited
operating history and limited historical financial information upon which to
base an evaluation of the Company's performance and an investment in the New
Notes. The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stages of development.
Since its inception, the Company has not generated significant revenue, has
incurred substantial net losses and has never generated positive cash flow from
operations. Earnings were insufficient to cover fixed charges by $40,000,
$1,815,581, $440,338 and $10,483,559 for the period from September 12, 1996
(inception) through December 31, 1996, the year ended December 31, 1997 and the
six months ended June 30, 1997 and 1998, respectively. On a pro forma basis
after giving effect to the Transactions, earnings would have been insufficient
to cover fixed charges by approximately $16.1 million and $16.8 million for
10
<PAGE>
the year ended December 31, 1997 and the six months ended June 30, 1998,
respectively. The Company had net losses of $1.8 million for the year ended
December 31, 1997 and a net loss of approximately $10.5 million for the six
months ended June 30, 1998. The Company believes that losses will continue while
the Company pursues its strategy of acquiring radio stations and developing its
network. The Company will also incur losses during the initial reformatting and
assimilation process with respect to the radio stations that it acquires. There
can be no assurance that an adequate revenue base will be established or that
the Company's radio stations will become profitable or generate positive cash
flow. Combined losses and negative cash flow may prevent the Company from
pursuing its strategies for growth and may have a material adverse effect on the
Company.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indenture restricts, among other things, the Company's ability to incur
additional indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, create liens on assets, enter into
transactions with affiliates, make investments, loans or advances, consolidate
or merge with or into any other person or convey, transfer or lease all or
substantially all of its assets or change the business conducted by the Company.
In addition, the Revolving Credit Facility contains certain other and more
restrictive covenants and prohibits the Company from prepaying certain
indebtedness, including the New Notes. A breach of any of these covenants could
result in a default under the Revolving Credit Facility or the Indenture. Upon
the occurrence of an event of default under the Revolving Credit Facility, the
lenders could elect to declare all amounts outstanding under the Revolving
Credit Facility to be due and payable, together with accrued and unpaid
interest, and could terminate their commitments to make further extensions of
credit under the Revolving Credit Facility. If the Company were unable to repay
its indebtedness under the Revolving Credit Facility, the lenders could proceed
against the collateral securing such indebtedness. If the indebtedness under the
Revolving Credit Facility were accelerated, there could be no assurance that the
assets of the Company would be sufficient to repay in full such indebtedness and
the Company's other indebtedness, including the New Notes. Substantially all of
the assets of the Company and the Domestic Restricted Subsidiaries are pledged
as security under the Revolving Credit Facility. See "Description of Revolving
Credit Facility" and "Description of the Notes--Certain Covenants."
DEPENDENCE ON KEY PERSONNEL
The Company's business depends on the efforts, abilities and expertise of
its senior officers and other key employees. The loss of a combination of the
foregoing could have a material adverse effect on the Company. The Company
believes that its future success will depend on its ability to attract and
retain highly skilled and qualified personnel and to expand, train and manage
its employee base.
RISKS ASSOCIATED WITH ACQUISITION STRATEGY; FUTURE CAPITAL REQUIREMENTS
One of the Company's growth strategies is to acquire additional radio
stations. Any future acquisitions, investments, strategic alliances or related
efforts will be accompanied by various associated risks, such as the difficulty
of identifying appropriate acquisition candidates, the competition among buyers
of radio stations, the difficulty of assimilating the operations of the
respective entities, the potential disruption of the Company's ongoing business,
the inability of management to capitalize on the opportunities presented by
acquisitions, investments, strategic alliances or related efforts, the failure
to successfully incorporate licensed or acquired technology and rights into the
Company's services, the inability to maintain uniform standards, controls,
procedures and policies and the impairment of relationships with employees and
customers as a result of changes in management. There can be no assurance that
the Company will be successful in overcoming these risks or any other problems
encountered with such acquisitions, investments, strategic alliances or related
efforts. See "Business-Business Strategy." In addition, entities acquired by the
Company may have liabilities, including contingent liabilities, for which the
Company may become responsible.
11
<PAGE>
The Company expects to spend, in the aggregate, approximately $2.5 million
over the next two years for planned equipment purchases and for upgrades of
existing stations. The Company is unable to anticipate, at this time, the amount
of capital that it will require to complete future acquisitions. However,
additional debt or equity financing may be required in order to complete such
acquisitions. The Company's ability to arrange financing will be restricted by
the terms of the Indenture and the Revolving Credit Facility and the cost of
such financing would be dependent upon numerous factors, including general
economic and capital market conditions, conditions in the radio broadcasting
industry, regulatory developments, credit availability from banks or other
lenders, investor confidence in the industry and the Company, the success of the
Company's radio stations, and provisions of tax and securities laws that are
conducive to raising capital. There can be no assurance that financing will be
available to the Company on acceptable terms in the future. If the Company
cannot arrange such financing, it may be forced to curtail its acquisition of
additional radio stations which may have an adverse effect on its long-term
business strategy.
REGULATORY MATTERS AND DEPENDENCE ON LICENSES
Each of the Company's radio stations operates pursuant to one or more
broadcast licenses issued by the Federal Communication Commission (the "FCC"),
that presently have a maximum term of eight years. The Company's broadcast
licenses expire at various times in 2003 and 2005. Although the Company may
apply to renew these licenses, third parties may challenge the Company's renewal
applications. While the Company is not aware of facts or circumstances that
would prevent the Company from having its current licenses renewed, there can be
no assurance that the licenses will be renewed. Failure to obtain the renewal of
any of the Company's broadcast licenses, to obtain FCC approval for an
assignment or transfer to the Company of a license in connection with a radio
station acquisition or to obtain and comply with FCC authorization for the
construction of required facilities or modification of technical parameters or
specifications for operations may have a material adverse effect on the Company.
In addition, if the Company or any of its officers, directors or significant
stockholders violates the FCC's rules and regulations or the Communications Act
of 1934, as amended (the "Communications Act"), is convicted of a felony, or is
otherwise found to be disqualified from being a party to a FCC license, the FCC
may in response to a petition from a third party or on its own motion, in its
discretion, commence a proceeding to impose sanctions against the Company which
could involve the imposition of monetary penalties, the revocation of the
Company's broadcast licenses or other sanctions. In addition, the FCC has the
ability upon the occurrence of certain events to revoke outstanding licenses.
The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of stations that one individual or entity can own, or
in which that individual or entity can hold an attributable interest in a
market, and require FCC approval for transfers of control of FCC licensees and
assignments of FCC licenses. The filing of petitions or complaints against the
Company or other FCC licensees could result in the FCC delaying the grant of, or
refusing to grant, its consent to the assignment of FCC licenses to or from an
FCC licensee or the transfer of control of an FCC licensee. The Communications
Act and FCC rules operate to impose limitations on ownership by Aliens (as
defined in the Communications Act). No corporation owning a broadcast license
may be more than one-fifth directly, or one-fourth indirectly, owned by Aliens,
foreign governments or their representatives. The FCC rules also require, in
certain circumstances, prior approval for changes in voting rights of the
Company's common stock and changes in the Board of Directors of the Company.
While the current regulatory scheme has not had any negative effects on the
Company to date, there can be no assurance that there will not be changes in the
regulatory scheme, the imposition of additional regulations or the creation of
new regulatory agencies, which changes could restrict or curtail the ability of
the Company to acquire, operate and dispose of radio stations or, in general, to
compete profitably with other operators of radio and other media properties.
Moreover, there can be no assurance that there will not be other regulatory
changes, including aspects of deregulation, that will result in a
12
<PAGE>
decline in the value of broadcast licenses held by the Company or adversely
affect the Company's competitive position. See "Business--Federal Regulation of
Radio Broadcasting."
Furthermore, the Communications Act prohibits the assignment of a 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
applications.
COMPETITION; DEPENDENCE ON AUDIENCE SHARE RATINGS AND TECHNOLOGY CHANGES
Radio broadcasting is a highly competitive business. The financial success
of each of the Company's radio stations will depend, to a significant degree,
upon its audience ratings, its share of the overall radio advertising revenue
within its geographic market and the economic health of the market. The audience
ratings and advertising revenue of the Company's individual stations are subject
to change and any adverse change in a particular market could have a material
adverse effect on the Company. Since the Company is in the early stages of its
operations, its network has not yet been rated by Arbitron. The Company's radio
stations compete for audience share and advertising revenue directly with other
FM and AM radio stations and with other media within their respective markets,
such as newspapers, broadcast and cable television, magazines, billboard
advertising, transit advertising, and direct mail advertising. Many of these
entities are larger and have significantly greater resources than the Company.
While the Company already competes with other radio stations with comparable
programming formats in each of its markets, if another radio station in the
market which currently does not have the same programming format as the
Company's stations were to convert its programming format to a format similar to
one of the Company's stations, if a new station were to adopt a competitive
format, or if an existing competitor were to strengthen its operations, the
Company's stations could suffer a reduction in ratings and/or advertising
revenue and could require increased promotional and other expenses. The
Telecommunications Act of 1996 (the "Telecom Act") facilitates the entry of
other radio broadcasting companies into the markets in which the Company
operates or may operate in the future, some of which may be larger and have more
financial resources than the Company. In addition, certain of the Company's
stations compete, and in the future other stations of the Company may compete,
with combinations of stations operated by a single operator. There can be no
assurance that the Company's radio stations will be able to develop, maintain or
increase their current audience ratings and radio advertising revenue. See
"Business--Competition."
Radio broadcasting is also subject to competition from new media
technologies that are being developed or have been introduced, such as digital
audio broadcasting ("DAB"). DAB may provide a medium for the delivery by
satellite (digital audio radio satellite service, or "DARS") or terrestrial
means of multiple multi-channel, multi-format digital radio services with sound
quality equivalent to compact discs to local and national audiences. In
addition, cable television operators are introducing a new service commonly
referred to as "cable radio," which provides cable television subscribers with
several high quality channels of music, news and other information. The Company
cannot predict the effect, if any, that any such new technologies may have on
the radio broadcasting industry or on the Company. See "Business-- Competition."
The profitability of the Company's radio stations is subject to various
other factors which influence the radio broadcasting industry as a whole. The
Company's radio stations may be adversely affected by changes in audience
tastes, priorities of advertisers, new laws and governmental regulations and
policies, changes in broadcast technical requirements, proposals to limit the
tax deductibility of expenses incurred by advertisers and changes in the
willingness of financial institutions and other lenders to finance radio station
acquisitions and operations. The Company cannot predict which, if any, of these
factors might have a significant impact on the radio broadcasting industry in
the future, nor can it predict what impact, if any, the occurrence of these
events might have on the Company. In addition, the profitability of the
Company's radio stations depends on its ability to produce, or otherwise obtain
the right to broadcast, programs that
13
<PAGE>
appeal to such stations' target audiences. There can be no assurance that the
Company will be able to produce or obtain such programming in the future.
OBLIGATION TO PURCHASE THE NOTES UPON A CHANGE OF CONTROL
A Change of Control could require the Company to refinance substantial
amounts of indebtedness. Upon the occurrence of a Change of Control, the holders
of the Notes would be entitled to require the Company to make an offer to
purchase all of the outstanding Notes at a purchase price in cash equal to 101%
of the Accreted Value of such Notes prior to August 1, 2002, or 101% of the
principal amount of such Notes thereafter, together with accrued and unpaid
interest, if any, to the date of purchase. The occurrence of certain of the
events that would constitute a Change of Control would also constitute a default
under the Revolving Credit Facility and might constitute a default under future
indebtedness of the Company. In addition, the Revolving Credit Facility
prohibits the purchase of the Notes by the Company in the event of a Change of
Control, unless and until such time as the indebtedness under the Revolving
Credit Facility is repaid in full. In the event of a Change of Control, there
can be no assurance that the Company would have sufficient resources available
to satisfy its obligations under the Revolving Credit Facility and to the
holders of the Notes. The Company's failure to purchase the Notes in such
instance would result in a default under the Indenture. The inability to repay
the indebtedness under the Revolving Credit Facility, if accelerated, could have
material adverse consequences to the Company and to the holders of the Notes.
Moreover, subject to the terms of the Notes and the Revolving Credit Facility,
the Company could enter into certain leveraged or other transactions that would
not constitute a Change of Control but would increase the amount of outstanding
indebtedness of the Company. Future indebtedness of the Company may also contain
prohibitions of certain events or transactions that could constitute a Change of
Control or require such indebtedness to be repurchased upon a Change of Control.
See "Description of Revolving Credit Facility" and "Description of the
Notes--Change of Control Offer."
ORIGINAL ISSUE DISCOUNT; LIMITATIONS ON HOLDER'S CLAIMS
The Old Notes were issued at a discount from their principal amount at
maturity, and the New Notes will also bear original issue discount for U.S.
Federal income tax purposes. Consequently, holders of the New Notes generally
will be required to include amounts in gross income for U.S. Federal income tax
purposes in advance of receipt of the cash payments to which the income is
attributable. See "Certain United States Federal Income Tax Consequences" for a
more detailed discussion of the U.S. Federal income tax consequences to the
holders of the New Notes resulting from the exchange of Old Notes pursuant to
the Exchange Offer.
If a bankruptcy case is commenced by or against the Company under the U.S.
Bankruptcy Code (as defined herein), the claim of a holder of New Notes with
respect to the principal amount thereof may be limited to an amount equal to the
sum of (i) the issue price of the Old Notes ($632.56 per Old Note) and (ii) that
portion of the original issue discount (as determined on the basis of such issue
price) which is not deemed to constitute "unmatured interest" for purposes of
the U.S. Bankruptcy Code. Any original issue discount that was not amortized as
of any such bankruptcy filing would constitute "unmatured interest."
FRAUDULENT TRANSFER CONSIDERATIONS
The Domestic Restricted Subsidiaries' obligations under the Guarantees may
be subject to review under state or Federal fraudulent transfer laws in the
event of a Domestic Restricted Subsidiary's bankruptcy or other financial
difficulty.
Under those laws, if in a lawsuit by an unpaid creditor or representative of
creditors of a Domestic Restricted Subsidiary, such as a trustee in bankruptcy
or the Domestic Restricted Subsidiary as a debtor in possession under the
Bankruptcy Code, a court were to find that (a) the Domestic Restricted
Subsidiary received less than fair consideration or reasonably equivalent value
for its Guarantee, and (b) when it
14
<PAGE>
entered into the Guarantee (or in some jurisdictions, when it became obligated
to make payments thereunder), it either (i) was rendered insolvent, (ii) was
engaged in a business or transaction for which its remaining unencumbered assets
constituted unreasonably small capital, or (iii) intended to incur or believed
(or reasonably should have believed) that it would incur debts beyond its
ability to pay as they matured, the court could avoid its obligations under the
Guarantee, or subordinate those obligations to its other obligations, and in
either case direct the return of any amounts paid thereunder to the Domestic
Restricted Subsidiary or to a fund for the benefit of its creditors. It should
be noted that a court could avoid a Domestic Restricted Subsidiary's obligations
under the Guarantee without regard to factors (a) and (b) above, if it found
that it entered into the Guarantee with actual intent to hinder, delay, or
defraud its creditors.
A court will likely find that a Domestic Restricted Subsidiary did not
receive fair consideration or reasonably equivalent value for the Guarantee to
the extent that it does not benefit directly from the Notes' proceeds.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all of its property at a fair valuation or
if the present fair saleable value of its assets is less than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured.
CONTROL BY PRINCIPAL STOCKHOLDERS
The Company is privately held. Warburg Ventures, L.P. owns approximately 98%
of the outstanding shares of the common stock, par value $.01 per share, of
Holdings (the "Holdings Common Stock") and the Series A Cumulative Redeemable
Preferred Stock, par value $.01 per share, of Holdings (the "Holdings Preferred
Stock"), which in turn owns 100% of the outstanding shares of common stock, par
value $.01 per share, of the Company (the "Company Common Stock"). The officers
and directors of the Company own the remainder of the Holdings Common Stock and
the Holdings Preferred Stock. Accordingly, Warburg Ventures, L.P. effectively
has the ability to elect the Company's directors and control the Company's
policies and affairs.
ABSENCE OF PUBLIC MARKET
The New Notes are new securities for which there presently is no market.
Although the Initial Purchasers have informed the Company that they currently
intend to make a market in the New Notes, they are not obligated to do so and
any such market-making may be discontinued at any time without notice.
Accordingly, there can be no assurance as to the development or liquidity of any
market for the New Notes or the ability of the holders to sell the New Notes or
the price at which they can sell them. The Company does not intend to apply for
listing of the New Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System
("Nasdaq").
The liquidity of, and trading market for, the Old Notes or the New Notes
also may be adversely affected by general declines in the market for similar
securities. Such a decline may adversely affect such liquidity and trading
markets independent of the financial performance of, and prospects for, the
Company.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
a transaction not subject to the Securities Act and applicable state securities
laws. In general, the Old Notes may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption
15
<PAGE>
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register the Old Notes under the Securities Act. To the extent that Old Notes
are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Old Notes could be adversely affected.
CERTAIN FORWARD-LOOKING STATEMENTS
When used in this Prospectus, the words "believes," "anticipates," "expects"
and other words of similar import are used to identify forward-looking
statements. Discussions containing such forward-looking statements may be found
in the material set forth under "Business," as well as within this Prospectus
generally. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of the risk factors set forth herein and
the matters set forth in this Prospectus generally. The Company undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
16
<PAGE>
THE TRANSACTIONS
HOLDING COMPANY REORGANIZATION. In July 1998, the Company effected a
holding company reorganization (the "Reorganization"). In the Reorganization,
the Company became a wholly owned subsidiary of Holdings and the Company's
stockholders received shares of Holdings Common Stock and Holdings Preferred
Stock bearing identical rights and preferences to the Company Common Stock and
Series A Cumulative Redeemable Preferred Stock of the Company ("Company
Preferred Stock") previously held by such stockholders. Options previously
granted by the Company were assumed by Holdings and are exercisable upon the
same terms and conditions as they were under the Company's stock option plan.
See "Certain Relationships and Related Transactions--Initial Investments in the
Company; Agreement Among Stockholders."
ACQUISITIONS OF RADIO STATIONS. On April 30, 1998, the Company purchased
all of the common stock of Oro Spanish Broadcasting, Inc. ("Oro") for $11.5
million, in order to acquire KIQI (AM) in San Francisco (the "Oro Acquisition").
In connection with this acquisition, the Company entered into a five year non-
compete agreement with the seller for $500,000. The total purchase price was
comprised of $6.0 million in cash and a five year $6.0 million note issued by
the Company bearing interest at 8% per annum. In July 1998, the Company repaid
$5.25 million of the $6.0 million note with borrowings under the Revolving
Credit Facility and issued a new note for $750,000 bearing interest at 8% per
annum that matures October 31, 1999. See "Business--Broadcasting Properties."
On May 13, 1998, the Company completed the acquisition of certain assets of
subsidiaries of One-on-One Sports, Inc. ("One-on-One") for $9.0 million, in
order to acquire WNMA (AM) and WCMQ (AM) in Miami (the "One-on-One
Acquisition"). See "Business--Broadcasting Properties."
On July 30, 1998, the Company completed the acquisition of certain assets of
subsidiaries of Sinclair Communications Inc. ("Sinclair") for $21.0 million in
cash, in order to acquire KBLA (AM) in Los Angeles (the "Sinclair Acquisition").
See "Business--Broadcasting Properties."
On September 11, 1998, the Company obtained 100% ownership of KXYZ (AM) in
Houston by acquiring the remaining 50.1% voting rights and 20% economic
ownership interest in Blaya, Inc. not previously owned by the Company for
$160,000 (the "Blaya Acquisition" and, together with the Oro Acquisition, the
One-on-One Acquisition and the Sinclair Acquisition, the "Radio Station
Acquisitions"). See "Business--Broadcasting Properties" and "Certain
Relationships and Related Transactions--Purchase of Radio Station KXYZ (AM);
Transactions Involving Blaya, Inc."
CONVERSION OF LOANS. In April, May and June 1998, Warburg Ventures, L.P.
loaned the Company approximately $21.8 million, in return for promissory notes
of the Company (the "Promissory Notes"). The funds from the Promissory Notes
were primarily used to finance the Oro Acquisition and the One-on-One
Acquisition. See "Business--Broadcasting Properties." Each of the Promissory
Notes was due on demand and bore interest at the rate of 10% per annum. On June
30, 1998, the Company repaid $15.0 million of the Promissory Notes plus accrued
interest by issuing Warburg Ventures, L.P. 15,239 shares of Company Common Stock
and 150,865 shares of Company Preferred Stock (the "Promissory Notes
Conversion"). The remaining $6.8 million due under the Promissory Notes has been
repaid from amounts borrowed under the Revolving Credit Facility. See "Certain
Relationships and Related Transactions--Loans to the Company."
On April 17, 1998, the Company converted $365,000 in notes payable to
certain stockholders (the "Stockholder Notes") plus accrued interest into 3,835
shares of Company Preferred Stock and 387 shares of Company Common Stock (the
"Stockholder Notes Conversion" and, together with the Promissory Notes
Conversion, the "Stockholder Loan Conversions"). See "Certain Relationships and
Related Transactions--Loans to the Company."
17
<PAGE>
REVOLVING CREDIT FACILITY. On July 8, 1998, the Company entered into a
credit agreement for a $20.0 million Senior Secured Revolving Credit Facility
(the "Revolving Credit Facility"). Prior to the consummation of the Old Notes
offering, the Company borrowed approximately $14.0 million from the Revolving
Credit Facility (the "Initial Revolver Borrowing") and used the proceeds to pay
down the remaining $6.8 million under the Promissory Notes and $5.25 million
under the note payable to Oro (the "Loan Repayments") described above. As of
October 20, 1998, there was no outstanding principal balance under the Revolving
Credit Facility. See "Description of Revolving Credit Facility."
The Reorganization, the Radio Station Acquisitions, the Stockholder Loan
Conversions, the Initial Revolver Borrowing and the Loan Repayments are
collectively referred to herein as the "Transactions."
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the New Notes offered in the
Exchange Offer. In consideration for issuing the New Notes as contemplated in
this Prospectus, the Company will receive in exchange Old Notes in like
principal amount at maturity, the form and terms of which are the same in all
material respects as the form and terms of the New Notes except that the New
Notes have been registered under the Securities Act and hence do not include
certain rights to registration thereunder and do not contain transfer
restrictions or terms with respect to certain payments applicable to the Old
Notes and relating to the Company's registration obligations. The Old Notes
surrendered in exchange for New Notes will be retired and canceled and cannot be
reissued. Accordingly, issuance of the New Notes will not result in any increase
in the indebtedness of the Company.
The net proceeds to the Company from the sale of the Old Notes were
approximately $96.8 million (after deducting discounts to the Initial Purchasers
and other expenses). Of the net proceeds of the offering of the Old Notes (the
"Old Notes Offering"), approximately $35.0 million was used to finance the
acquisition of radio station KBLA in Los Angeles and to repay amounts borrowed
under the Revolving Credit Facility. The Company intends to use the remaining
net proceeds of the Old Notes Offering for future acquisitions and for general
working capital purposes.
Pending any further application of the net proceeds of the Old Notes
Offering, the Company has placed such remaining net proceeds in interest-bearing
bank accounts or invested such proceeds in United States government securities
or other short-term, interest bearing, investment grade securities. The Company
is not currently subject to the registration requirements of the Investment
Company Act of 1940.
18
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998 (i) on an actual basis and (ii) on a pro forma basis for the
Transactions and the Old Notes Offering.
<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------
<S> <C> <C>
ACTUAL PRO FORMA
------------- --------------
Cash and cash equivalents......................................................... $ 692,315 $ 62,437,315
------------- --------------
------------- --------------
Short-term debt:
Stockholder Notes............................................................... $ 6,795,000 $ --
------------- --------------
Total short-term debt......................................................... 6,795,000 --
Long-term debt:
Revolving Credit Facility(1).................................................... -- --
Note Payable.................................................................... 6,000,000 750,000
Notes offered hereby............................................................ -- 100,000,000
------------- --------------
Total debt........................................................................ 12,795,000 100,750,000
------------- --------------
Series A redeemable cumulative preferred stock, $.01 par value, 450,000 shares
authorized, 355,175 shares issued and outstanding............................... 36,639,969 36,639,969
Stockholders' deficit:
Common stock, $.01 par value, 100,000 shares authorized, 35,876 shares issued
and outstanding............................................................... 359 359
Capital deficiency.............................................................. (764,101) (764,101)
Accumulated deficit............................................................. (12,339,140) (12,339,140)
------------- --------------
Total stockholders' deficit................................................... (13,102,882) (13,102,882)
------------- --------------
Total capitalization.............................................................. $ 36,332,087 $ 124,287,087
------------- --------------
------------- --------------
</TABLE>
- ------------------------
(1) Upon consummation of the Old Notes Offering and the application of the
proceeds therefrom as described in "Use of Proceeds," the Company had $20.0
million available for borrowing under the Revolving Credit Facility.
19
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following Unaudited Pro Forma Combined Financial Data gives effect to
the Transactions, and the Old Notes Offering as if they had been consummated:
(i) on June 30, 1998 with respect to the Unaudited Pro Forma Condensed Combined
Balance Sheet, (ii) on January 1, 1998 with respect to the Unaudited Pro Forma
Condensed Combined Statement of Operations for the six months ended June 30,
1998 and (iii) on January 1, 1997 with respect to the Unaudited Pro Forma
Condensed Combined Statement of Operations for the year ended December 31, 1997.
The Unaudited Pro Forma Condensed Combined Statement of Operations for the year
ended December 31, 1997 is based on the audited statements of operations of the
Company and 13 Radio Corp. for the year ended December 31, 1997 and the
unaudited statement of operations of Oro for the twelve months ended November
30, 1997. The Unaudited Pro Forma Condensed Combined Statement of Operations for
the six months ended June 30, 1998 is based on unaudited statement of operations
of the Company for the six months ended June 30, 1998 and Oro's unaudited
statement of operations for the four months ended April 30, 1998. The Unaudited
Pro Forma Condensed Combined Balance Sheet has been derived from the unaudited
balance sheet of the Company as of June 30, 1998.
On March 11, 1998, Blaya, Inc. completed its acquisition of the assets used
in the operation of radio station KXZY (AM) from 13 Radio Corp. for a purchase
price of approximately $6.4 million. Approximately $0.6 million was allocated to
the value of tangible assets less liabilities acquired. The remaining $5.8
million of the total purchase price was allocated to the fair value of the
broadcast license which is being amortized over 30 years. Until September 11,
1998, the Company owned 49.9% of the voting rights and 80% of the economic
ownership rights of Blaya, Inc. and accounted for its investment in Blaya, Inc.
under the equity method of accounting. The operations of 13 Radio Corp. and
Blaya, Inc. are included in the Unaudited Pro Forma Condensed Combined
Statements of Operations because the Company acquired the remaining 50.1% voting
and 20% economic ownership rights in Blaya, Inc. on September 11, 1998 pursuant
to a June 9, 1998 stock purchase agreement with the majority stockholder of
Blaya, Inc.
The Radio Station Acquisitions have been or will be accounted for using the
purchase method of accounting. The total consideration of each such acquisition
has been or will be allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective estimated fair values. The
allocation of the aggregate total consideration included in the Unaudited Pro
Forma Combined Financial Data is preliminary, subject to adjustment when final
appraisals are received and estimates are finalized. Such allocation is not
expected to materially differ from the final allocation.
The Unaudited Pro Forma Combined Financial Data should be read in
conjunction with the financial statements of the Company, 13 Radio Corp. and
Oro, including the notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," appearing elsewhere in this
Prospectus. The Company believes that the assumptions used in the following
statements provide a reasonable basis on which to present pro forma financial
data. The Unaudited Pro Forma Combined Financial Data is presented for
illustrative purposes only and is not necessarily indicative of what the
Company's actual financial position or results of operations would have been had
the Transactions and the Old Notes Offering been consummated as of the
above-referenced dates or the financial position or results of operations of the
Company for any future period.
20
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
RADIO PRO FORMA
UNICA CORP ADJUSTMENTS PRO FORMA
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 692,315 $ (21,000,000 (3) $ 62,437,315
82,905,000(5)
(160,000 (6)
Restricted cash........................................... 4,600,000 -- 4,600,000
Accounts receivable, net.................................. 1,957,539 1,957,539
Prepaid expenses.......................................... 143,094 -- 143,094
Radio broadcasting rights................................. 897,812 -- 897,812
-------------- -------------- --------------
Total current assets.......................................... 8,290,760 61,745,000 70,035,760
Property and equipment, net................................... 4,342,651 5,019,673(4) 10,189,200
826,876(6)
Covenant not to compete....................................... 483,334 -- 483,334
Goodwill...................................................... 4,066,019 -- 4,066,019
Broadcast licenses............................................ 20,175,092 17,130,327(3) 43,036,690
5,731,271(6)
Investment in and advances to equity investee................. 6,467,847 (6,467,847 (6)
Other assets.................................................. 688,384 5,050,000(5) 5,808,084
69,700(6)
-------------- -------------- --------------
Total assets.................................................. $ 44,514,087 $ 89,105,000 $ 133,619,087
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 1,250,187 $ 1,250,187
Accrued expenses.......................................... 1,679,078 1,150,000(4) 2,829,078
Radio broadcasting rights obligation...................... 795,000 795,000
Deferred revenue.......................................... 369,000 369,000
Notes payable to stockholders............................. 6,795,000 (6,795,000 (5) --
-------------- -------------- --------------
Total current liabilities..................................... 10,888,265 (5,645,000) 5,243,265
Deferred tax liability........................................ 4,088,735 4,088,735
Long-term debt................................................ 6,000,000 94,750,000(5) 100,750,000
Commitments and contingencies
Series A redeemable cumulative preferred stock................ 36,639,969 36,639,969
Common stockholders' deficit:
Common stock.............................................. 359 359
Additional paid-in capital (deficiency)................... (764,101) (764,101)
Accumulated deficit....................................... (12,339,140) (12,339,140)
-------------- -------------- --------------
Total common shareholders' deficit............................ (13,102,882) -- (13,102,882)
-------------- -------------- --------------
Total liabilities and common shareholders' deficit............ $ 44,514,087 $ 89,105,000 $ 133,619,087
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
RADIO PRO FORMA
UNICA CORP ORO (1) ADJUSTMENTS PRO FORMA
-------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Net revenue......................................... $ 3,463,962 $ 727,840 $ -- $ 4,191,802
Operating expenses:
Direct operating expenses....................... 888,374 97,204 -- 985,578
Selling, general and administrative expenses.... 4,347,004 617,729 -- 4,964,733
Network expenses 6,883,006 -- (330,000 (6) 6,553,006
Corporate expenses.............................. 1,306,525 -- -- 1,306,525
Depreciation and amortization................... 372,144 32,400 620,626(8) 1,094,996
69,826(6)
-------------- ----------- ------------- --------------
13,797,053 747,333 360,452 14,904,838
Loss from operations................................ (10,333,091) (19,493) (360,452) (10,713,036)
Other Income (expense):
Interest income (expense), net...................... (153,350) (129,166) (124,965 (6) (6,099,134)
(5,691,653 (7)
Other income........................................ -- -- -- --
Equity in earnings of equity investee............... 2,882 -- (2,882 (6) --
-------------- ----------- ------------- --------------
Total other income (expense)........................ (150,468) (129,166) (5,819,500) (6,099,134)
Income before provision for income taxes............ (10,483,559) (148,659) (6,179,952) (16,812,170)
Income tax provision................................ -- -- -- --
-------------- ----------- ------------- --------------
Net loss (10,483,559) (148,659) (6,179,952) (16,812,170)
Accrued dividends on Series A redeemable cumulative
preferred stock................................... 1,003,014 -- 801,107(9) 1,804,121
-------------- ----------- ------------- --------------
Net loss applicable to common shareholders.......... $ (11,486,573) $ (148,659) $ (6,981,059) $ (18,616,291)
-------------- ----------- ------------- --------------
-------------- ----------- ------------- --------------
Net loss per comon share applicable to common
shareholders--basic and diluted................... $ (569.71) $ (518.91)
-------------- --------------
-------------- --------------
Weighted average common shares outstanding--basic
and diluted....................................... 20,162 35,876
-------------- --------------
-------------- --------------
</TABLE>
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
RADIO
RADIO 13 RADIO PRO FORMA UNICA CORP.
UNICA CORP. ORO(2) CORP ADJUSTMENTS PRO FORMA
------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue....................... $ -- $ 2,297,315 $ 1,606,201 $ -- $ 3,903,516
Operating expenses:
Direct operating expenses....... -- 291,508 844,108 1,135,616
Selling, general and
administrative................ 31,124 1,628,633 1,089,792 2,749,549
Network......................... 812,654 -- -- 812,654
Corporate....................... 959,038 -- -- 959,038
Depreciation and amortization... -- 89,471 105,088 1,584,460(8) 1,779,019
------------- ------------ ------------ -------------- --------------
1,802,816 2,009,612 2,038,988 1,584,460 7,435,876
------------- ------------ ------------ -------------- --------------
Income (loss) from operations..... (1,802,816) 287,703 (432,787) (1,584,460) (3,532,360)
Interest expense, net............. (12,765) (345,876) -- (12,226,839 (7) (12,585,480)
------------- ------------ ------------ -------------- --------------
Loss before provision for income
taxes........................... (1,815,581) (58,173) (432,787) (13,811,299) (16,117,840)
Income tax provision (benefit).... -- 800 (12,118) -- (11,318)
------------- ------------ ------------ -------------- --------------
Net loss.......................... (1,815,581) (58,973) (420,669) (13,811,299) (16,106,522)
Accrued dividends on Company
Preferred Stock................. 119,490 -- -- 1,523,345(9) 1,642,835
------------- ------------ ------------ -------------- --------------
Net loss applicable to common
stockholders.................... $ (1,935,071) $ (58,973) $ (420,669) $ (15,334,644) $ (17,749,357)
------------- ------------ ------------ -------------- --------------
------------- ------------ ------------ -------------- --------------
Net loss per common share
applicable to common
stockholders--basic and
diluted......................... $ (356.10) $ (842.80)
------------- --------------
------------- --------------
Weighted average common shares
outstanding--basic and
diluted......................... 5,434 21,060
------------- --------------
------------- --------------
</TABLE>
23
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(1) Represents Oro's results of operations for the four months ended April
30, 1998.
(2) Represents Oro's results of operations for the twelve months ended
November 30, 1997.
(3) Reflects the allocation of the purchase price for the Sinclair
Acquisition which was consummated on July 30, 1998
<TABLE>
<CAPTION>
SINCLAIR
-------------
<S> <C>
Aggregate Purchase Price:
Cash........................................................................... $ 21,000,000
-------------
Less:
Fair value of net tangible assets acquired..................................... 3,869,673
Broadcast licenses............................................................. 17,130,327
-------------
$ --
-------------
-------------
</TABLE>
(4) Adjustment to record the estimated fair value of net tangible assets
(liabilities) acquired in the Sinclair acquisition:
<TABLE>
<CAPTION>
SINCLAIR
------------
<S> <C>
Property and equipment.......................................................... $ 5,019,673
Other liabilities............................................................... (1,150,000)
------------
$ 3,869,673
------------
------------
</TABLE>
(5) Reflects the adjustment to record the following:
<TABLE>
<S> <C> <C>
Issuance of the Notes............................. $100,000,000
Initial borrowing under the Revolving Credit
Facility........................................ 14,000,000
Repayment of indebtedness related to the Oro
Acquisition..................................... (5,250,000)
Repayment of borrowings under the Revolving Credit
Facility........................................ (14,000,000)
-----------
Net increase borrowings........................... $94,750,000
Costs associated with the Offering and the
Revolving Credit Facility....................... (5,050,000)
Repayment of Promissory Notes..................... (6,795,000)
----------
Net proceeds...................................... $82,905,000
----------
----------
</TABLE>
24
<PAGE>
(6) Reflects the adjustment to record the acquisition of the remaining 50.1%
of the voting rights and 20% of the economic ownership rights of Blaya,
Inc., in the Blaya Acquisition:
<TABLE>
<S> <C>
EFFECTS ON FINANCIAL CONDITION:
Cash............................................................ $ 160,000
----------
Less:
Fair value of net tangible assets acquired...................... (5,571,271)
Broadcast License............................................... 5,731,271
----------
Balance......................................................... $ --
----------
Elimination of investments and advances to equity investee...... (6,467,847)
Property and equipment.......................................... 826,876
Other assets.................................................... 69,700
----------
$(5,571,271)
----------
----------
EFFECT ON RESULTS OF OPERATIONS:
Eliminate LMA charge............................................ $ 330,000
Eliminate income in equity investee............................. (2,882)
Depreciation and amortization................................... (69,826)
Eliminate interest income from equity investee.................. (124,965)
----------
$ 132,327
----------
----------
</TABLE>
(7) Represents the additional interest expense that would have been incurred
if the Notes and borrowings under the Revolving Credit Facility had been
outstanding for the entire period:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------- -------------
<S> <C> <C>
Interest expense on the Notes*.................................. $ 11,750,000 $ 5,875,000
Revolving Credit Facility unused commitment fee*................ 100,000 50,000
Interest expense on existing indebtedness....................... (304,411) (573,972)
Debt issuance cost amortization................................. 681,250 340,625
------------- -------------
Net increase in interest expense................................ $ 12,226,839 $ 5,691,653
------------- -------------
------------- -------------
</TABLE>
----------------------------
(*) The interest rate for the Notes is 11.75%. For each increase or decrease
of 0.25% in the base interest rates under the Revolving Credit Facility,
assuming $20 million of aggregate borrowings outstanding under the
Revolving Credit Facility, the annual interest expense attributable to
the Revolving Credit Facility would increase or decrease by $50,000.
(8) Represents amortization of the broadcasting licenses and goodwill over a
30-year period (see Note 4). The allocation of the purchase price to
broadcasting licenses and goodwill is preliminary, subject to adjustment
when final appraisals are received and estimates are finalized.
(9) Represents accrued dividends on the Company's preferred stock into which
the promissory notes and the stockholder notes were coverted. These
dividends have not been declared.
25
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The selected financial data set forth below for, and as of the end of the
period from September 12, 1996 (inception) through December 31, 1996, for, and
as of the year ended December 31, 1997 and for, and as of the six months ended
June 30, 1997 and 1998 have been derived from the consolidated financial
statements of the Company, of which (i) the consolidated financial statements
for, and as of the period from September 12, 1996 (inception) through December
31, 1996, and for, and as of the year ended December 31, 1997 were audited by
Ernst & Young LLP, independent certified public accountants and (ii) the
consolidated financial statements for, and as of the six months ended June 30,
1997 and 1998 are unaudited. In the opinion of management, the consolidated
financial statements for, and as of the six months ended June 30, 1997 and 1998
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations for, and the
financial position at the end of each of such periods. The results of operations
for the six months ended June 30, 1998 are not necessarily indicative of the
results to be expected for the full year or any future period. The selected
historical financial data should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements, including the notes thereto, appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM SEPTEMBER 12,
1996 (INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ---------------------------
1996 1997 1997 1998
------------------ ------------- ----------- --------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.................................... $ -- $ -- $ -- $ 3,463,962
Operating expenses............................. 40,000 1,802,816 440,338 13,797,053
Operating loss................................. (40,000) (1,802,816) (440,338) (10,333,091)
Interest income (expense), net................. -- (12,765) -- (153,350)
Other income................................... -- -- -- 2,882
-------- ------------- ----------- --------------
Loss before provision (benefit) for income
taxes........................................ (40,000) (1,815,581) (440,338) (10,483,559)
-------- ------------- ----------- --------------
Provision (benefit) for income taxes........... -- -- -- --
-------- ------------- ----------- --------------
Net loss....................................... $ (40,000) $ (1,815,581) $ (440,338) $ (10,483,559)
-------- ------------- ----------- --------------
-------- ------------- ----------- --------------
Net loss applicable to common shareholders..... $ (40,000) $ (1,935,071) $ (440,338) $ (11,486,573)
-------- ------------- ----------- --------------
-------- ------------- ----------- --------------
Net loss per common share applicable to common
shareholders-basic and diluted............... $ (13.33) $ (356.10) $ (67.94) $ (569.71)
-------- ------------- ----------- --------------
-------- ------------- ----------- --------------
Weighted average common shares oustanding-basic
and diluted.................................. 3,000 5,434 6,481 20,162
-------- ------------- ----------- --------------
-------- ------------- ----------- --------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DECEMBER 31, JUNE 30,
--------------------------- ----------------------
1996 1997 1997 1998
--------------- ---------- --------- -----------
BALANCE SHEET DATA:
Cash and cash equivalents............ $ 5,000 $1,126,862 $ 262 $ 692,315
Working capital...................... 5,000 1,047,193 19,662 (2,597,505)
Total assets......................... 5,000 6,678,088 19,662 44,514,087
Long-term debt....................... -- -- -- 6,000,000
Series A redeemable cumulative
preferred stock.................... -- 5,316,990 -- 36,639,969
Stockholders' equity (deficit)....... 5,000 (1,922,571) 19,662 (13,102,882)
OTHER FINANCIAL DATA:
Depreciation and amortization........ $ -- $ -- $ -- $ 372,144
EBITDA(1)............................ (40,000) (1,802,816) (440,338) (9,960,947)
Ratio of earnings to fixed
charges(2)......................... -- -- -- --
Fixed charges coverage
deficiency(2)...................... (40,000) (1,815,581) (440,338) (10,483,559)
Net cash used in operating
activities......................... (40,000) (2,209,553) (459,738) (8,894,958)
Net cash used in investing
activities......................... -- (2,238,585) -- (28,334,589)
Net cash provided by financing
activities......................... 45,000 5,570,000 455,000 36,795,000
</TABLE>
- ------------------------
(1) EBITDA is defined as net income (loss) plus (i) provision for income taxes
(ii) interest expense, net and (iii) depreciation and amortization. EBITDA
is presented not as an alternative measure of operating results or cash flow
from operations (as determined in accordance with generally accepted
accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate
this non-GAAP measure in the same fashion. The Company's EBITDA calculation
is not intended to represent cash used in operating activities, since it
does not include interest and taxes and changes in operating assets and
liabilities, nor is it intended to represent the net increase or decrease in
cash, since it does not include cash provided by (used in) investing and
financing activities.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
portion or rental expense that is representative of the interest factor.
Earnings were insufficient to cover fixed charges.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION IS BASED UPON THE HISTORICAL FINANCIAL STATEMENTS
INCLUDED ELSEWHERE HEREIN OF THE COMPANY FOR THE PERIOD FROM SEPTEMBER 12, 1996
THROUGH DECEMBER 31, 1996, FOR THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE SIX
MONTHS ENDED JUNE 30, 1997 AND 1998.
GENERAL
Radio Unica Corp., incorporated on September 12, 1996 (inception), was
organized for the purpose of producing, broadcasting and distributing
Spanish-language radio programming in the United States. The Company's strategy
is to develop its radio network as a national advertising platform that is
attractive to national advertisers. The network is comprised of owned and
operated stations, stations operated under LMAs and affiliated stations. From
inception through the year ended December 31, 1997, the Company had no revenue
and had not commenced operations. The Company launched its network on January 5,
1998 with 30 affiliated stations and three stations operated under LMAs. The
Company expects to incur operating losses for the foreseeable future as the
Company develops its network and stations and establishes its base of
advertising revenues.
The Company generates revenue from sales of network advertising time and
sales of advertising time on the Company-owned stations and stations operated
under LMAs (collectively "O&Os"). Advertising rates are, in large part, based
upon the network's and each station's ability to attract audiences in
demographic groups targeted by advertisers. All revenues are stated net of any
agency commissions.
The Company's operating expenses consist of network programming expenses,
marketing and selling costs, including commissions paid to the Company's sales
staff, technical and engineering costs, and general and administrative expenses.
As is true of other radio operators, the Company's performance is
customarily measured by its earnings before net interest, taxes, depreciation
and amortization ("EBITDA"). EBITDA is defined as net income (loss) plus (i)
provision for income taxes (ii) interest expense, net and (iii) depreciation and
amortization. EBITDA is presented not as an alternative measure of operating
results or cash flow from operations (as determined in accordance with generally
accepted accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate this
non-GAAP measure in the same fashion. The Company's EBITDA calculation is not
intended to represent cash used in operating activities, since it does not
include interest and taxes and changes in operating assets and liabilities, nor
is it intended to represent the net increase or decrease in cash, since it does
not include cash provided by (used in) investing and financing activities.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997
NET REVENUE. Net revenue for the six months ended June 30, 1998 were
approximately $3.5 million relating to sales of network advertising and sales of
advertising on the Company's O&Os. The Company began broadcasting on January 5,
1998 with 30 affiliated stations and three stations operated under LMAs:
KVCA-Los Angeles, KZDC-San Antonio and KXYZ-Houston. WNMA-Miami began operating
under an LMA on February 1, 1998 and KIQI-San Francisco began operating under an
LMA on March 1, 1998. The Company was not operating its network or stations
during the six month period ended June 30, 1997 and as a result had no revenues.
28
<PAGE>
OPERATING EXPENSES. Operating expenses for the six months ended June 30,
1998 were approximately $13.8 million as compared to approximately $440,000 for
the six months ended June 30, 1997.
Direct operating expenses for the six months ended June 30, 1998 related to
engineering and programming costs for the Company's O&Os.
Selling, general and administrative expenses of approximately $4.3 million
related to the operations of the Company's O&Os.
Network expenses of approximately $6.9 million related to the operations of
the Company's network including engineering, programming, sales and
administration.
Corporate expenses for the six months ended June 30, 1998 of approximately
$1.3 million related to the costs of executive management, legal and
professional fees and other costs, an increase of approximately $866,000 over
the comparable period in the prior year. Corporate expenses for the six months
ended June 30, 1997 included primarily legal and professional fees, promotional
costs and travel expenses incurred during the development stage.
EBITDA. EBITDA was approximately $(10.0) million for the six months ended
June 30, 1998 as compared to approximately $(440,000) for the six months ended
June 30, 1997. The decrease in EBITDA is a result of the increased cost
associated with the operations of the Company's network and the Company's O&Os.
OTHER INCOME (EXPENSE). Other income (expense) for the six months ended
June 30, 1998 included interest income of approximately $312,000, interest
expense of approximately $465,000 and equity earnings of approximately $3,000.
Interest income primarily relates to interest earned on amounts held in escrow
related to pending station acquisitions. Interest expense relates primarily to
the interest on the promissory notes due to stockholders. Equity earnings is the
Company's share of earnings in Blaya, Inc., an equity investee, which owns
KXYZ-AM Houston. The Company had no other income or expense during the six
months ended June 30, 1997.
NET LOSS. The Company incurred a net loss of approximately $10.5 million
for the six months ended June 30, 1998 as compared to approximately $440,000 for
the six months ended June 30, 1997. The increase in the net loss is a result of
the increased costs associated with the operations of the Company's network and
the Company's O&Os.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE PERIOD FROM SEPTEMBER 12, 1996
(INCEPTION) THROUGH
DECEMBER 31, 1996
NET REVENUE. During the year ended December 31, 1997 and for the period
from inception through December 31, 1996, the Company had no revenue and had not
begun operations.
OPERATING EXPENSES. Operating expenses for the year ended December 31, 1997
were approximately $1.8 million as compared to $40,000 for the period from
inception through December 31, 1996. The increase in costs was associated with
the Company's planned launching of its network and operations.
Selling, general and administrative expenses of $31,124 for the year ended
December 31, 1997 primarily related to sales personnel hired for the Company's
stations operated under LMAs.
Network expenses of $812,654 for the year ended December 31, 1997 included
costs related to the developing and launching of the network including
programming, sales, engineering and administration.
Corporate expenses of $959,038 for the year ended December 31, 1997
primarily related to the costs of personnel, legal and professional fees and
travel associated with the development of the Company. Corporate expenses for
the period from inception through December 31, 1996 were primarily related to
legal and professional fees and travel expenses.
29
<PAGE>
EBITDA. EBITDA was approximately $(1.8) million for the year ended December
31, 1997 as compared to $(40,000) for the period from inception through December
31, 1996.
INTEREST EXPENSE. Interest expense for the year ended December 31, 1997
related to certain promissory notes due to stockholders.
NET LOSS. The Company incurred a net loss of approximately $1.8 million for
the year ended December 31, 1997 and $40,000 for the period from inception
through December 31, 1996. The increase in the net loss was related to the
increased costs incurred in 1997 associated with the Company's planned launching
of its network and operations.
LIQUIDITY AND CAPITAL RESOURCES
Due to the developmental nature of the Company, the Company has had negative
cash flows since inception. Working capital and financing for the Company's
acquisitions to date have been provided primarily by the issuance of Promissory
Notes, Company Common Stock and Company Preferred Stock to the Company's
principal shareholder.
The Company's primary sources of liquidity will be the Revolving Credit
Facility and the net proceeds from the Old Notes issued on July 27, 1998 (see
Note 4 to interim financial statements). The Revolving Credit Facility is a
senior secured revolver with $20.0 million of available borrowings subject to
certain conditions.
Net cash used in operating activities was approximately $8.9 million for the
six months ended June 30, 1998 as compared to approximately $460,000 for the six
months ended June 30, 1997. The increase in cash used in operating activities
during the six-month period ended June 30, 1998 is due to the increased costs
associated with the operations of the Company's network and O&Os. Net cash used
in operating activities for the year ended December 31, 1997 and for the period
from inception through December 31, 1996 was approximately $2.2 million and
$40,000, respectively. Net cash used in operating activities increased during
1997 as compared to 1996 as a result of the Company's planned launching of its
network and programming during 1997.
Net cash used in investing activities for the six months ended June 30, 1998
was approximately $28.3 million as the Company acquired radio stations, funded
escrow accounts related to acquisitions, made investments in and advances to an
equity investee and acquired property and equipment for its O&Os. No cash was
used in investing activities for the comparable period in the prior year. Net
cash used in investing activities for the year ended December 31, 1997 was
approximately $2.2 million as the Company advanced funds to an equity investee
and acquired property and equipment related to its network and stations operated
under LMAs. No cash was used in investing activities in 1996.
Capital expenditures primarily related to the purchase of broadcast
equipment for the network and O&Os, leasehold improvements, computer equipment
and telecommunications equipment. For the six months ended June 30, 1998,
capital expenditures were approximately $2.6 million. For the year ended
December 31, 1997, capital expenditures were approximately $1.2 million. The
Company expects to spend, in the aggregate, approximately $2.5 million over the
next two years for planned equipment purchases and for upgrades of existing
stations.
Net cash provided by financing activities for the six months ended June 30,
1998 was approximately $37 million as compared to $455,000 for the six months
ended June 30, 1997. The increase in cash provided by financing activities
during the six months ended June 30, 1998 is partially due to additional capital
which was raised through the issuance of preferred and common stock. In
addition, the Company entered into promissory notes payable with WPV of
approximately $21.8 million. Net cash provided by financing activities for the
year ended December 31, 1997 were approximately $5.6 million mostly as a result
of the increase of $5.2 million in preferred and common stock. The funds were
mainly used to acquire radio
30
<PAGE>
stations, fund escrow accounts related to acquisitions, make investments and
advances to an equity investee and acquire property and equipment.
The Company believes that its current cash position, the proceeds from the
issuance of the Old Notes and the borrowing availability under the Revolving
Credit Facility will provide adequate resources to fund the Company's operating
expenses, working capital requirements, capital expenditures and acquisitions
until the implementation of its business strategy provides the Company with
sufficient operating cash flow. Upon the implementation of its business
strategy, the Company believes that cash from operating activities should be
sufficient to permit the Company to meet required cash interest obligations
(which will consist of cash interest expense on the Notes commencing August 1,
2002 of approximately $19.0 million annually), capital expenditures of
approximately $1.2 million per year for existing owned and operated stations,
and operating obligations. In the event that the Company is unable to generate
the cash flow that is sufficient to service its obligations, the Company may be
forced to adopt one or more alternatives, such as refinancing or restructuring
its indebtedness, selling material assets or operations or selling equity. There
can be no assurance that such business strategy will be successfully
implemented. Furthermore there can be no assurance that any such actions could
be effected on satisfactory terms or at all, that they would enable the Company
to satisfy its debt service requirements or that they would be permitted by the
terms of the Notes or the Revolving Credit Facility. The failure to generate
such sufficient cash flow or to achieve such alternatives could significantly
adversely affect the market value of the Notes and the Company's ability to pay
the principal of and interest on the Notes.
The known impact on future operating results related to the Notes will be an
annual interest expense through August 1, 2006 as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------
(IN MILLIONS)
<S> <C>
1998 $ 5.0
1999 12.7
2000 14.2
2001 16.0
2002 17.9
2003 18.6
2004 18.6
2005 18.6
2006 10.8
</TABLE>
Expected interest payments under the terms of the Notes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------
(IN MILLIONS)
<S> <C>
2003 $ 18.6
2004 18.6
2005 18.6
2006 18.6
</TABLE>
Amortization charges resulting from the Notes and the Transactions will be
approximately $2.1 million annually.
YEAR 2000 ISSUES
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
developed an implementation plan to resolve the issue. The Year 2000 issue is
the result of computer programs being written using two digits rather than four
to define the applicable year. Any of the Company's computer programs that have
time/date sensitive
31
<PAGE>
software and hardware may recognize a date using "00" as the year and 1900
rather than the year 2000. This could result in a major system failure or
miscalculation. The Company presently believes that based on the results of
recent investigations, the Company's primary information and communication
systems are believed to be compliant with Year 2000 requirements. The Company's
cost of compliance has been minimal and any future costs are not anticipated to
be material to financial condition and results of operations.
The Year 2000 issue creates risk for the Company from unforeseen problems in
its own computer systems and from third parties on which the Company relies.
Accordingly, the Company is requesting assurances from all software vendors from
which it has purchased or from which it may purchased software that the software
sold to the Company correctly processes all date information at all times. In
addition, the Company is querying its customers and suppliers as to their
progress in identifying and addressing problems that their computer systems will
face in correctly processing date information as the Year 2000 approaches and is
reached. However, there are no assurances that the Company will identify all
date handling problems in its business systems or that the Company will be able
to successfully remedy Year 2000 compliance issue that are discovered. To the
extent that the Company is unable to resolve its Year 2000 issues prior to
January 1, 2000 operating results could be adversely affected. In addition, the
Company could be adversely affected if other entities (e.g., vendors or
customers) not affiliated with the Company do not appropriately address their
own Year 2000 compliance issues in advance of their occurrence.
32
<PAGE>
BUSINESS
INTRODUCTION
The Company is a wholly-owned subsidiary of Holdings. Holdings has no assets
other than shares of the Company's capital stock. Each of the Guarantors is a
direct or indirect wholly-owned subsidiary of the Company.
The Company is the only national long-form, Spanish-language news/talk,
sports and information AM radio network in the U.S., broadcasting 24-hours a
day, 7-days a week. The Company, which began broadcasting its network
programming on January 5, 1998, produces 17 hours of live and first-run
celebrity-based programming each weekday and 26 hours of such programming each
weekend. With nine Company-operated stations and, as of June 30, 1998, 47
affiliated stations, the Company's network reaches approximately 83% of the U.S.
Hispanic population. The Company-operated stations are located in the top eight
U.S. markets in terms of Spanish-language media spending. These top eight
markets collectively account for approximately 55% of the total U.S. Hispanic
population. Of these stations, four are Company-owned, and five are operated
under LMAs. On the strength of its celebrity-based programming line-up, the
Company launched its network with thirty affiliated stations and added another
seventeen affiliated stations in the six-month period following launch. The
majority of the Company's affiliated stations broadcast more programming than
the required eight-hour minimum and nine have branded themselves Radio Unica
stations, broadcasting substantially all of the Company's programming.
The Company believes that its strong programming line-up provides the
Company with a competitive advantage over other Spanish-language radio
broadcasters in appealing to U.S. Hispanic listeners. The Company's programming
line-up includes contemporary-themed talk shows hosted by internationally known
personalities such as Pedro Sevcec, Dr. Isabel Gomez-Bassols, Mauricio Zeillic
and Luis Loria; sports-talk hosted by Jorge Ramos and other top names in sports
broadcasting; and newscasts on the hour, 24 hours a day. Many of the Company's
programs are interactive, allowing listeners nationwide to call in toll-free.
The Company believes that its programming is being well received. Company
research in the Miami market has shown that Radio Unica is the number two
Spanish-language news/talk station in the market, with 21% of respondents
preferring Radio Unica. In addition, since the Company began tracking phone
calls in March 1998, the Company's talk shows have been averaging 5,000 to 6,000
calls per day during the Company's three hours of fully interactive programming,
implying a 1 to 2 point National Hispanic Arbitron Rating based on an
independent radio industry consultant's estimate. The Company acquired the
exclusive Spanish-language radio broadcast rights in the U.S. to the 1998 World
Cup, the most popular sporting event among U.S. Hispanics. In conjunction with
the 1998 World Cup, the Company began a broad media campaign to promote the
Radio Unica network.
MARKET OPPORTUNITY
The Hispanic population is currently one of the fastest growing segments of
the U.S. population, growing at approximately five times the rate of the
non-Hispanic population, and represents the fifth largest Hispanic population in
the world. The Hispanic population, which consisted of 23.7 million people (9.5%
of the U.S. population) in 1990, is estimated to be 30.5 million people (11.3%
of the U.S. population) in 1998, and is expected to grow to 45.8 million people
(15.4% of the U.S. population) by 2010. Approximately 55% of the Hispanic
population is concentrated in the top eight markets, making the group relatively
easy to reach with broadcast media. Hispanic households on average are larger
and younger and spend a larger percentage of their total household income on
consumer products than non-Hispanic households. Furthermore, approximately 69%
of all Hispanics, regardless of income or educational level, use Spanish as the
language most frequently spoken at home. This percentage is expected to remain
relatively constant through 2010. Consequently, the aggregate number of
Hispanics speaking Spanish in the home is expected to increase significantly in
the foreseeable future.
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<PAGE>
According to published reports, total advertising expenditures targeting
Hispanics grew from $730 million in 1992 to approximately $1.4 billion in 1997,
representing a compound annual growth rate of 14%. Radio is an increasingly
important medium for advertisers targeting the Hispanic market. Approximately
27% of the $1.4 billion in advertising expenditures in 1997 targeting Hispanics
was spent on Spanish-language radio, compared with 8% for all U.S. media
advertising. The Company believes that advertiser interest in the Hispanic
population will continue to grow primarily because Hispanic consumer spending,
which is expected to total approximately $380 billion in 1998, is expected to
grow at an annual rate of 7.8% over the next 12 years to $939 billion in 2010,
far outpacing the expected growth in total U.S. consumer spending. In addition,
Hispanic consumer spending currently represents approximately 6.6% of all U.S.
consumer spending while Hispanic-targeted advertising expenditures represent
approximately 1% of all U.S. advertising expenditures. The Company believes that
this disparity will narrow and fuel growth in Hispanic-targeted advertising as
major advertisers continue to find that Spanish-language advertising is a more
effective means to target the growing Hispanic audience than English-language
advertising.
The Company was formed in 1996 by Joaquin F. Blaya, a former senior
executive of Univision Holdings, Inc. (together with its predecessors and
affiliates, "Univision") and Telemundo Group, Inc. (together with its
predecessors and affiliates, "Telemundo") with over 30 years of experience in
Spanish-language broadcasting. Mr. Blaya was instrumental in establishing those
Spanish-language television networks, and he established the Company on the
belief that nationwide advertisers would support a national Spanish-language
radio network with appealing, original programming reaching large numbers of
Hispanics on a cost-effective basis. The Company believes that prior to the
Company's formation, Univision and Telemundo were the only alternatives for
advertisers seeking to reach a large portion of the national Hispanic population
cost-effectively and that Univision and Telemundo have been able to obtain
advertising rate increases as a result.
BUSINESS STRATEGY
To capitalize on the apparent market opportunity, the Company has created a
national, Spanish-language AM radio network based on the following business
strategy:
PROVIDE HIGH QUALITY, POPULAR PROGRAMMING. The Company produces a strong
line-up of news, information, sports, talk and entertainment programs hosted by
internationally known personalities such as Pedro Sevcec, Dr. Isabel
Gomez-Bassols, Mauricio Zeillic, Jorge Ramos, and Luis Loria. Certain of these
celebrities, who are well known in the Hispanic world and have hosted or are
currently hosting popular shows on the Univision and Telemundo networks, create
exclusive shows for the Company and are compensated through revenue-sharing
and/or equity participation contracts with the Company. Two of the Company's
most popular shows are "Sevcec en Vivo," a three-hour talk show devoted to
in-depth coverage of the top news stories of the day, issues of importance to
the Hispanic population and interviews with prominent figures and "Dra. Isabel,"
an advice program hosted by Dr. Isabel Gomez-Bassols that focuses on such issues
as personal relationships, child rearing and adapting to a new culture. With
their many years of Spanish-language broadcasting experience, the Company's
senior management believes that the Company is well positioned to continue to
create and produce high quality programming that will appeal to the Hispanic
market and establish strong brand-name recognition for the Radio Unica network.
The Company's exclusive radio coverage of the 1998 World Cup drew significant
listener interest and was a major promotional tool for the Company's ongoing
network programming.
FOCUS ON AM RADIO NEWS/TALK FORMAT. News/talk radio is a proven concept
with broad listener appeal and attractive economics. News/talk radio is the #1
program format in both the U.S. and Mexico and typically allows twice as many
commercial minutes per hour compared to a typical FM music format. As a result,
according to industry sources, news/talk radio in the general market on average
commands approximately 1.47% of a market's radio advertising dollars for every
1.0% of audience share. In addition, AM stations typically have lower purchase
prices than FM stations, resulting in lower costs of entry to a market for the
Company.
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<PAGE>
CONTROL TOP HISPANIC MARKETS WITH COMPANY-OPERATED STATIONS. The Company
currently operates stations in the top eight markets in the U.S. in terms of
Spanish-language media spending. The Company plans to acquire a station in New
York to replace its current station operated under an LMA and has options to
acquire stations in Los Angeles, Chicago and San Antonio currently operated
under LMAs. In addition, the Company will seek to acquire stations in other key
Hispanic markets such as Dallas and Phoenix. The Company believes that by having
Company-operated stations in the top eight and other key Hispanic markets, it
can deliver to advertisers a large portion of the U.S. Hispanic population more
cost effectively than what they could achieve by contracting on a local basis.
EXPAND NETWORK REACH THROUGH USE OF AFFILIATED STATIONS. The Company
reaches markets outside of the top eight through its network of 47 affiliated
stations. By using affiliated stations in smaller Hispanic markets, the Company
reduces its initial capital requirements while still having the reach of a
nationwide network. Affiliated stations receive the benefits of reduced
programming costs and access to the Company's strong programming line-up, which
recently included the 1998 World Cup. Substantially all of the affiliated
stations are under two-year contracts, the majority of which require the
affiliated stations to broadcast at least eight-hours per day of the Company's
network programming. The Company does not pay the affiliated stations to
broadcast its programming.
TARGET TOP 50 NATIONAL HISPANIC ADVERTISERS WITH IN-HOUSE SALES FORCE. The
Company's sales strategy is to target the top 50 national Hispanic advertisers
who control approximately 75% of Spanish-language advertising. The Company
believes that by using its in-house sales force of 43 people, with offices in
eight key markets, it will have better control and accountability over the sales
process. The Company believes that its sales strategy has been effective. For
the Company's 1998 World Cup coverage, AT&T, MoneyGram and Corona, among others,
purchased national sponsorship and advertising packages. For the Company's
ongoing network programming, Proctor & Gamble, the largest Hispanic advertiser,
has committed to purchase advertising for certain of its brands. Negotiations
are ongoing with other national advertisers.
MAINTAIN LOW-COST STRUCTURE AND MODERN NETWORK TECHNOLOGY. The Company's
programming is delivered via satellite to the Company-operated and affiliated
stations nationwide. Each station receives the programming through a decoder
system controlled by the Company. Through a relationship with a satellite
services provider, the satellite delivery system has full redundancy and back-up
capabilities. The Company's modern network production studio located in Miami
has the ability to easily produce and distribute programming, commercials and
promotional recordings to each of the Company-operated stations via a wide area
network. Stand-alone digital systems are being installed at each
Company-operated station to record the data distributed by the network. As a
result, the Company-operated stations are able to maintain minimal staff to
operate production equipment. In addition, the Company's network technology
allows the Company to broadcast different versions of commercials directed at
different geographic regions.
CREATE A STRONG BRAND IDENTITY. The Company is establishing a highly
professional and recognized brand identity by promoting the Radio Unica name
on-air, utilizing music for station imaging and launching other marketing
efforts, including its website at www.unicaweb.com, which are intended to
increase Radio Unica's brand recognition. Nine of the Company's affiliated
stations have branded themselves Radio Unica stations. The Company has hired
experienced personnel at the corporate level for these marketing efforts and
similar services that would not otherwise be available on a cost-efficient basis
to its Company-operated and affiliated stations on an individual basis.
THE HISPANIC AUDIENCE IN THE UNITED STATES
Management believes that Spanish-language radio, in general, and the
Company, in particular, have benefitted and will continue to benefit from a
number of factors, including projected Hispanic population
35
<PAGE>
growth, high Spanish-language retention among Hispanics, increasing Hispanic
buying power and greater advertiser spending on Spanish-language media.
HISPANIC POPULATION GROWTH AND CONCENTRATION. The Company's audience
consists almost exclusively of Hispanics, one of the most rapidly growing
segments of the U.S. population. The 1998 Hispanic population is estimated to be
30.5 million (11.3% of the total U.S. population), an increase of 28.7% from
23.7 million (9.5% of the total U.S. population) in 1990. The overall Hispanic
population is growing at approximately five times the rate of the non-Hispanic
U.S. population and is expected to grow to 32.4 million and 45.8 million (11.8%
and 15.4% of the total U.S. population) in 2000 and 2010, respectively.
Approximately 55% of all Hispanics are located in the eight U.S. cities with the
largest Hispanic populations. Radio Unica broadcasts in each of these cities.
SPANISH-LANGUAGE USE. Approximately 69% of all Hispanics, regardless of
income or educational level use Spanish as the language most frequently spoken
at home. This percentage is expected to remain relatively constant through 2010.
Consequently the number of Hispanics speaking Spanish in the home is expected to
increase significantly in the foreseeable future, growing from 16.2 million in
1990 to 22.4 million in 2000 and 27.8 million in 2010. The Company believes that
the strong Spanish-language retention among Hispanics indicates that the
Spanish-language media has been and will continue to be an important source of
news, sports and entertainment for Hispanics.
GREATER HISPANIC BUYING POWER. The Hispanic population represents estimated
total consumer expenditures of $380 billion in 1998 (6.6% of the total U.S.
consumer expenditures), an increase of 76.4% since 1990. Hispanics are expected
to account for $443 billion (7.0% of the U.S. total consumer expenditures) by
2000, and $939 billion (8.9% of the U.S. total consumer expenditures) by 2010,
far outpacing the expected growth in total U.S. consumer expenditures.
In addition to the anticipated growth of the Hispanic population, the
Hispanic audience has several other characteristics that the Company believes
make it attractive to advertisers. The Company believes the larger size
(averaging 3.6 persons per household compared to the general public's average of
2.6 persons per household) and younger age of Hispanic households leads
Hispanics to spend more per household on many categories of goods. The average
Hispanic household spends approximately 28% more per year on food at home,
approximately 100% more on children's clothing, approximately 35% more on
footwear, approximately 11% more on phone services, and approximately 23% more
on laundry and household cleaning products than the average non-Hispanic
household. Hispanics are expected to continue to account for a disproportionate
share of growth in spending nationwide in many important consumer categories as
the Hispanic population and its disposable income continue to grow. These
factors make Hispanics an attractive target audience for many major U.S.
advertisers.
INCREASED SPANISH-LANGUAGE ADVERTISING. According to published sources,
$1.4 billion of total advertising expenditures were directed towards
Spanish-language media in 1997, representing an annual compound growth rate of
14% since 1993. Of these amounts, approximately 27% of the $1.4 billion in
advertising expenditures in 1997 targeting Hispanics was directed towards
Spanish-language radio advertising. The Company believes that major advertisers
have found that Spanish-language radio advertising is a more effective means to
target the growing Hispanic audience than English-language broadcast media. See
"--Advertising."
BROADCASTING PROPERTIES
The Company broadcasts its programming through stations owned and operated
by the Company, through stations owned by third parties that are operated by the
Company under LMAs, and through stations owned and operated by third parties
under affiliation agreements ("AFAs").
36
<PAGE>
OWNED AND OPERATED STATIONS
The Company owns radio stations in Los Angeles, Miami, San Francisco and
Houston.
LOS ANGELES. The Company's station KBLA(AM), operating on 1580 kHz, serves
the Los Angeles market, which has a population of approximately 16.3 million, of
which approximately 6.3 million or 38.7% are Hispanic. Spanish-language radio
advertising spending in the market was approximately $94.8 million in 1997. The
Company acquired substantially all of the assets used in the operation of KBLA
from Sinclair for a purchase price of $21 million on July 30, 1998. The acquired
assets include the broadcast license, the transmitter site and related
transmitter equipment. Radio Korea U.S.A. Inc. currently operates the station,
broadcasting in the Korean language, pursuant to an LMA with Sinclair (the
"Radio Korea Agreement"). The Company is in discussions to terminate the Radio
Korea Agreement. KBLA is licensed at 50,000 watts during the daytime. KBLA's
transmitter site is located in Los Angeles and enables this station to reach
substantially all of the Los Angeles DMA.
MIAMI. The Company's station WNMA(AM), operating on 1210 kHz, serves the
Miami market, which has a population of approximately 3.7 million, of which
approximately 1.4 million or 38.1% are Hispanic. Spanish-language radio
advertising spending in the market was approximately $53.4 million in 1997. The
Company acquired substantially all of the assets used in the operation of WNMA
from subsidiaries of One-on-One in May 1998 for a purchase price of $9 million.
The acquired assets included the broadcast license, the transmitter site and
related transmitter equipment. Prior to the acquisition, One-on-One operated the
station with an English language sports talk format. WNMA is licensed at 25,000
watts during the daytime. WNMA's transmitter site is located in Miami Springs,
Florida and enables this station to reach substantially all of the Miami DMA.
In connection with the acquisition of WNMA, the Company acquired WCMQ (AM),
operating on 1700 kHz. This station, which operates in the expanded band, is
time brokered to a third party. Based on current FCC guidelines, the license of
either WNMA or WCMQ must be relinquished by the Company by October 8, 2002.
SAN FRANCISCO. The Company's station KIQI(AM), operating on 1010 kHz,
serves the San Francisco/ San Jose market, which has a population of
approximately 6.8 million, of which approximately 1.2 million or 18.4% are
Hispanic. Spanish-language radio advertising spending in the market was
approximately $18.3 million in 1997. The Company acquired all of the issued and
outstanding shares of Oro, the licensee of KIQI, in April 1998 for a purchase
price of $12 million. Oro is currently operated as a wholly-owned subsidiary of
the Company. Prior to the acquisition, Oro operated the station for
approximately 17 years with a Spanish-language format. KIQI is licensed at
10,000 watts during the daytime. KIQI's transmitter site is located in Oakland,
California and enables this station to reach substantially all of the San
Francisco DMA.
HOUSTON. The Company's station KXYZ(AM), operating on 1320 kHz, serves the
Houston market, which has a population of approximately 4.7 million, of which
approximately 1.1 million or 24.2% are Hispanic. Spanish-language radio
advertising spending in the market was approximately $18.4 million in 1997. The
Company acquired an 80% economic interest in substantially all of the assets
used in the operation of KXYZ in March 1998 from 13 Radio Corp. ("13 Radio"),
through an investment in Blaya, Inc., and acquired the remaining interest from
Joaquin F. Blaya in September 1998. See "Certain Relationships and Related
Transaction." Blaya, Inc. acquired substantially all of the assets of 13 Radio
for $6.4 million. The acquired assets included the broadcast license, the
transmitter site, related transmitter equipment, studios and related studio
equipment. Prior to the acquisition, 13 Radio operated the station for
approximately 13 years with a Spanish-language format. KXYZ is licensed at 5,000
watts during the daytime. KXYZ's transmitter site is located in Pasadena, Texas
and enables this station to reach substantially all of the Houston DMA.
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<PAGE>
LOCAL MARKETING AGREEMENTS
The Company has entered into LMAs with respect to radio stations in Los
Angeles, San Antonio, Dallas, New York and Chicago. Pursuant to these LMAs, the
Company operates, and supplies all programming for, the stations.
LOS ANGELES. The Company operates station KVCA(AM), operating on 670 kHz,
in Los Angeles pursuant to a LMA with Lotus Oxnard Corp. ("Lotus"). The term of
this LMA is through December 31, 2001 and the Company's annual LMA payment is $2
million in 1998 and increases $200,000 per year thereafter. The Company has an
option to purchase the assets of KVCA. The option is exercisable from June 24,
2001 through September 30, 2001. KVCA is licensed at 5,000 watts during the
daytime. KVCA's transmitter site is located in Simi Valley, California and
enables this station to reach a significant portion of the Los Angeles DMA.
SAN ANTONIO. The Company operates station KZDC(AM), operating on 1250 kHz,
in San Antonio pursuant to a LMA with Lotus. Spanish-language radio advertising
spending in the market was approximately $19.2 million in 1997. The term of this
LMA is through December 31, 2001 and the Company's annual LMA payment ranges
from $200,000 in 1998 to $275,000 in 2001. The Company has an option to purchase
the assets of KZDC. The option is exercisable from June 24, 2001 through
September 30, 2001. KZDC is licensed at 5,000 watts during the daytime. KZDC's
transmitter site is located in San Antonio and enables this station to reach
substantially all of the San Antonio DMA.
CHICAGO. The Company operates station WYPA(AM), operating on 820 kHz, in
Chicago pursuant to a LMA with Achievement Radio Holdings, Inc. ("Achievement").
Spanish-language radio advertising spending in the market was approximately
$22.5 million in 1997. The term of this LMA is through June 8, 1999 and may be
extended at the Company's option for an additional twelve months (the "Renewal
Term"). The Company's annual LMA payment for the first year is $1,416,000 and
$1,458,480 for the second year. The Company has an option to purchase the assets
of WYPA. The option is exercisable from June 9, 1998 through June 9, 1999 and
will be exercisable for the Renewal Term if the LMA is extended. After January
8, 1999, Achievement may offer the station for sale and must give written notice
to the Company if it desires to accept an offer to purchase from a third party.
The Company may exercise its option and purchase the station under the terms and
conditions of the option or for the consideration specified in the offer, if
lower. If the Company declines to exercise the option in the event of a third
party offer, the LMA terminates 6 months from the date of delivery of the third
party purchase agreement. WYPA is licensed at 5,000 watts during the daytime.
WYPA's transmitter site is located just outside of Chicago and enables the
station to reach substantially all of the Chicago DMA.
DALLAS. The Company operates station KDFT(AM), operating on 540 kHz, in
Dallas pursuant to a LMA with The Freedom Network, Inc. Spanish-language radio
advertising spending in the market was approximately $10.2 million in 1997. The
term of this LMA is through May 18, 2000 and the Company's LMA payment is
approximately $44,786 per month through May 30, 1999 and $56,546 per month
thereafter. KDFT is licensed at 1,000 watts during the daytime. KDFT's
transmitter site is located in Ferris, Texas and enables this station to reach
substantially all of the Dallas DMA.
NEW YORK. The Company operates station WBAH(AM), operating on 1660 kHz, in
New York pursuant to a LMA with Children's Radio of New York, Inc. ("Children's
Radio"). Spanish-language radio advertising spending in the market was
approximately $42.7 million in 1997. The term of this LMA is through August 31,
1998. The Company has an option to extend the term of the LMA to either: (i) the
date on which Children's Radio closes the sale of WBAH to Catholic Radio Network
LLC ("Catholic Radio") or (ii) the date on which the agreement for Children's
Radio sale of WBAH to Catholic Radio is terminated. The Company made a lump sum
LMA payment of $175,000 upon the execution of the LMA and will pay a prorated
fee equal to $1,902 per day if the term of the LMA is extended past August 31,
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1998. WBAH is licensed at 10,000 watts during the daytime. WBAH's transmitter
site is located in Secaucus, New Jersey and enables this station to reach
substantially all of the New York DMA.
AFFILIATION AGREEMENTS
The Company has entered into AFAs with substantially all of its affiliated
radio stations. Pursuant to the AFAs, the Company supplies programming for the
affiliated stations which are typically required to carry a minimum of eight
hours per day of the Company's network programming. The AFAs typically provide
that the Company's programming will include a certain number of minutes per hour
of network advertising to be sold by the Company and a certain number of minutes
per hour for local advertising to be sold by the station. The terms of the AFAs
are generally one to two years, subject to earlier termination under certain
circumstances. Some of the AFAs grant the Company a right of first refusal in
the event the station owner offers to sell the station.
The following tables set forth certain information concerning the stations
owned and operated by the Company and the stations covered by LMAs or AFAs and
their respective markets:
COMPANY-OPERATED STATIONS AND MARKETS
<TABLE>
<CAPTION>
HISPANIC
POPULATION IN HISPANIC
RANK BY PURCHASE MARKET POPULATION
HISPANIC MARKET COMPANY-OWNED PRICE (IN AS A % OF
POPULATION SERVED/STATION OR LMA (IN MILLIONS) THOUSANDS) TOTAL MARKET
- ----------------- ------------------------------- --------------- ------------- ------------- -----------------
<C> <S> <C> <C> <C> <C>
1 Los Angeles
KBLA(AM) Owned $ 21.0 6,326 38.7%
KVCA(AM) LMA N/A
2 New York
WBAH(AM) LMA N/A 3,645 18.1%
3 Miami
WNMA(AM) Owned $ 9.0 1,423 38.1%
4 San Francisco/ San Jose
KIQI(AM) Owned $ 12.0 1,243 18.4%
5 Chicago
WYPA(AM) LMA N/A 1,198 12.0%
6 Houston
KXYZ(AM) Owned $ 6.4 1,141 24.2%
7 San Antonio
KZDC(AM) LMA N/A 1,065 51.6%
9 Dallas/ Ft. Worth
KDFT(AM) LMA N/A 787 14.9%
----- ------
Totals $ 48.4 16,828
----- ------
----- ------
<CAPTION>
HISPANIC
RANK BY POPULATION
HISPANIC AS A % OF
POPULATION U.S. HISPANICS
- ----------------- ---------------
<C> <C>
1
20.8%
2
12.0%
3
4.7%
4
4.1%
5
3.9%
6
3.7%
7
3.5%
9
2.6%
-----
55.3%
-----
-----
</TABLE>
39
<PAGE>
AFFILIATED STATIONS IN THE TOP 50 MARKETS
<TABLE>
<CAPTION>
HISPANIC
POPULATION HISPANIC HISPANIC
RANK BY IN MARKET POPULATION POPULATION
HISPANIC (IN AS A % OF AS A % OF
MARKET SERVED STATIONS* POPULATION THOUSANDS) TOTAL MARKET U.S. HISPANICS
- --------------------------------------------- ----------------- ---------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
McAllen/Brownsville/Harlingen (TX) KVJY(AM) 8 824 89.5% 2.7%
San Diego (CA) XEMMM(AM) 10 706 25.3% 2.3%
Fresno (CA) KGST(AM) 11 680 41.6% 2.2%
El Paso (TX) KSVE(AM) 13 667 74.5% 2.2%
Albuquerque (NM) KALY(AM) 14 656 38.4% 2.2%
Sacramento (CA) KZAC(AM) 15 612 17.9% 2.0%
KLNA(FM)
Denver (CO) KBNO(AM) 16 398 13.0% 1.3%
Washington (DC) WACA(AM) 18 361 6.4% 1.2%
Tucson (AZ) KNXN(AM) 21 305 30.4% 1.0%
Tampa (FL) WLUV(AM) 22 280 7.8% 0.9%
Austin (TX) KTAE(AM) 23 276 22.9% 0.9%
Salinas/Monterey (CA) KCTY(AM) 24 246 35.6% 0.8%
KRAY(FM)
Orlando (FL) WFIV(AM) 25 232 8.3% 0.8%
Laredo (TX) KLAR(AM) 27 193 98.4% 0.6%
Yuma/El Centro (CA) KICO(AM) 31 164 62.6% 0.5%
KQVO(FM)
Portland (OR) KWIP(AM) 35 133 5.0% 0.4%
Colorado Springs (CO) KXRE(AM) 37 128 17.5% 0.4%
Detroit (MI) WKVD(FM) 43 110 2.3% 0.4%
Providence (RI) WPMZ(AM) 46 87 5.7% 0.3%
New Orleans (LA) KGLA(AM) 48 69 4.0% 0.2%
Springfield (MA) WSPR(AM) 50 64 9.7% 0.2%
</TABLE>
- ------------------------
* Bold stations brand themselves as Radio Unica stations.
As of October 20, 1998, the Company had an additional 17 affiliated stations
in markets ranked 51 and higher. These markets collectively account for less
than 2% of the Hispanic population.
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PROGRAMMING
The Company's network programming is broadcast 24 hours a day, seven days a
week, and includes talk, information, news, sports and entertainment programs
which are designed to appeal to the general Hispanic audience. The radio
news/talk format is a proven English-language formula used by several major
networks, including ABC Radio Networks, Jones Satellite Networks and Westwood
One, which has experienced increasing audience share over the last several years
and is the #1 radio format in both the U.S. and Mexico.
The Company currently produces 19 hours per day of live and first run
programming Monday through Friday and 26 hours of such programming each weekend
at its network production studio in Miami. The Company's daily program schedule
begins with a three-hour talk and information program focusing on current events
followed by an hour of world news. From mid-morning until late afternoon the
Company broadcasts a series of talk and information shows that focus on topics
including personal and family problem solving, immigration law and policy, and
entertainment news. During the evening commute, the Company broadcasts
entertainment programming, including sports news and talk shows. The Company's
evening programming contains talk and information programs whose subjects range
from entertainment to the paranormal. In addition, during the 1998 World Cup,
the Company broadcasted live, play-by-play coverage of the matches and a daily
program with 1998 World Cup news and interviews with 1998 World Cup
participants.
TALK AND INFORMATION PROGRAMS. Three of the most popular programs produced
by the Company are "Sevcec en Vivo", a three-hour talk show hosted by Pedro
Sevcec devoted to in-depth coverage of the top news stories of the day, issues
of importance to the Hispanic population and interviews with prominent figures;
"Dra. Isabel", an advice program hosted by Dr. Isabel Gomez-Bassols that focuses
on such issues as personal relationships and child rearing; and
"Inmigracion . . . Preguntas y Respuestas", a program hosted by Fulvia Peimbert
that focuses on the rules of the U.S. immigration system. The format of these
programs allows listeners to participate via toll-free phone lines.
NEWS. The Company produces newscasts on the hour, 24 hours a day, including
an hour-long late morning newscast, all of which focus on events of interest to
Hispanic audiences. The Company also produces a three-hour national morning news
program Monday through Saturday, "Esta Manana en Unica", that allows local
stations the opportunity to insert local segments of news, weather, sports and
other information. In addition, the Company has a five-year agreement with the
publisher of El Nuevo Herald newspaper, the Spanish-language version of the
Miami Herald (the "Herald"), under which the Company and the Herald jointly
produce and sell advertising for the local segments inserted in "Esta Manana en
Unica" broadcast Monday through Friday mornings on the Company's Miami station.
El Nuevo Herald is the number one Spanish-language newspaper in Miami and the
U.S. in terms of circulation.
SPORTS. The Company's regular sports programming includes "Unica en
Deportes" a sports talk show hosted by Jorge Ramos which features sports news
and interviews appealing to Hispanic audiences. In addition, under an agreement
with Univision Network Limited Partnership, the Company obtained exclusive
Spanish-language radio broadcasting rights in the U. S. for all of the 1998
World Cup soccer matches. The purchase price for such rights was $2.65 million.
These rights allowed the Company to produce its own play-by-play description of
each of the 56 matches in the 1998 World Cup, an estimated total of
approximately 168 hours of programming. The Company has recently acquired radio
broadcasting rights for several large soccer events including Copa America 1999
and 2001, Copa Oro 2000 and 2002, and elimination games for the 2002 World Cup.
ENTERTAINMENT. The Company also produces afternoon entertainment programing
featuring comedians, entertainment-world news, gossip and interviews with major
Hispanic celebrities. The show is hosted by Mauricio Zeilic and others. Mauricio
Zeilic has been hosting entertainment shows for more than 20
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<PAGE>
years and is currently the host of an entertainment segment of Telemundo's daily
afternoon magazine show.
ON-AIR TALENT. The Company has contracts with some of the Hispanic world's
best known media personalities to host its programs. Pedro Sevcec was the host
of Telemundo's popular TV newsmagazine, "Ocurrio Asi," and currently hosts his
own talk show on Telemundo called "Sevcec." "Sevcec" is one of Telemundo's
highest rated shows. Prior to joining Telemundo, Mr. Sevcec was the editor of El
Nuevo Herald. Dr. Isabel Gomez-Bassols is a noted psychologist and educator and
makes regular appearances on such popular television shows as "Cristina,"
"Sevcec" and "Miami Ahora." Jorge Ramos has served as sports anchor for
Telemundo since 1994 and in his career has broadcast four World Cups. All of
these personalities are under contracts with the Company that include revenue
sharing and/or equity participation agreements.
ADVERTISING
The Company believes that radio is one of the most efficient and cost
effective means for advertisers to reach targeted demographic groups.
Advertising rates charged by a radio station are based primarily on the
station's ability to attract listeners in a given market and on the
attractiveness to advertisers of the station's listener demographics. Rates vary
depending upon a program's popularity among the listeners an advertiser is
seeking to attract, the number of advertisers vying for available air time and
the availability of alternative media in the market. Radio advertising rates
generally are highest during the morning and afternoon drive-time hours. The
Company believes that its rates are somewhat below the rates charged by
similarly-rated and even lower-rated English-language stations in the Company's
markets although the Company believes this differential will narrow and that the
Company should be able to increase its rates as advertisers recognize the
desirability of targeting the growing Hispanic population in the United States.
The Company employs its own sales representatives to obtain advertising
revenues and currently does not use third party national representatives or
"rep" firms. As a result, the Company has more control over and greater
accountability from its sales force. The Company believes that its sales force
is important in maintaining relationships with key advertisers and agencies and
identifying new advertisers. The Company pays sales commissions to its sales
staff upon the receipt from advertisers of the payments related to such sales.
The Company offers assistance to advertisers by providing them with content and
production advice and services and with studio facilities to produce
commercials.
Virtually all of the Company's revenue is derived from advertising sales.
Advertising revenue is broken down into two categories: station and network.
STATION ADVERTISING. Station advertising consists of local and national
advertising. Local advertising time is sold by the Company's local sales force
to the local community. The Company generates its local advertising revenues
primarily from local merchants and service providers. National advertising time
is sold by the Company's national sales force to clients outside the local
community. The Company generates its national advertising revenues primarily
from regional and national businesses which wish to reach Hispanic audiences in
particular local market(s) but not all of the markets in which the Company's
programming is broadcast.
NETWORK ADVERTISING. Network revenue is earned by sales of advertising time
by the Company's national sales force on the Company's network programming. The
Company attracts network advertising expenditures from diverse industries, with
advertising for food and beverages, personal care products, automobiles, other
household goods and telephone services representing the majority of network
advertising. Network advertisers typically wish to target the entire U.S.
Hispanic audience.
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<PAGE>
COMPETITION
The radio broadcasting business is highly competitive. Competition for
advertising revenues is based on the size of the applicable market, the cost of
such advertising and the effectiveness of such advertising. The Company believes
that it is competitive in the size of market it reaches and the cost and
effectiveness of advertising time it sells.
The Company competes for listeners and revenues with other Spanish-language
and English-language radio stations. The Company also competes for viewers and
revenues with television stations, other video media, suppliers of cable
television programs, direct broadcast systems, newspapers, magazines and other
forms of entertainment and advertising.
SEASONALITY
The Company's revenues and cash flow are expected to be typically lowest in
the first calendar quarter and highest in the fourth calendar quarter. Seasonal
fluctuations are common in the radio broadcasting industry and are due primarily
to fluctuations in consumer spending.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS
In the course of its business, the Company uses various trademarks, trade
names and service marks, including its logos, in its advertising and promotions.
The Company believes the strength of its trademarks, trade names and service
marks are important to its business and intends to continue to protect and
promote its marks as appropriate. The Company does not hold or depend upon any
material patent, government license, franchise or concession, except the
broadcast licenses granted by the FCC.
EMPLOYEES
As of October 20, 1998, the Company employed approximately 153 full-time
employees. As of such date, none of the Company's employees were represented by
unions. Management believes that its relations with its employees are good.
STATION AND OFFICE FACILITIES
The Company's corporate headquarters are located in Miami, Florida. The
types of properties required to support each of the Company's owned and operated
stations and stations operated under LMAs include offices, studios and towers
where broadcasting transmitters and antenna equipment are located. The Company
leases space in the building housing its corporate headquarters under a lease
expiring in 2004. The studios and offices of the Company's owned and operated
stations and of the stations operated by the Company under LMAs are located in
leased facilities with lease terms expiring from 2000 to 2007. The Company owns
the transmitter, building and equipment for each of its owned and operated
stations.
The transmitter sites for the Company's stations are material to the
Company's overall operations. Management believes that the Company's properties
are in good condition and are suitable for its operations; however, the Company
continually seeks opportunities to upgrade its properties.
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. 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
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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 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 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 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: (i) the station has served the public
interest, convenience and necessity; (ii) there have been no serious violations
by the licensee of the Communications Act or the rules and regulations of the
FCC; and (iii) 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.
None of the Company's licenses are currently subject to renewal proceedings.
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
44
<PAGE>
appeals are sought within the applicable time periods, an action by the FCC or
its staff becomes a "Final Order."
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 applications. 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."
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.
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
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<PAGE>
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 to 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 or directors of the
Company have any other media interests besides those of the Company that
implicate the FCC's multiple ownership limits except that affiliates of Warburg
Ventures, L.P. hold interests in several daily newspapers none of which is
published in communities served by the Company's stations.
The FCC will consider a radio station providing programming and sales on
another local radio station pursuant to a LMA 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 (collectively,
"Aliens"). 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. 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, none of the
Company's officers, directors or stockholders are known to be Aliens.
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. The U.S. Court of Appeals for the D.C. Circuit,
however, recently found that these requirements are unconstitutional. The rules
remain in effect pending action on the FCC's request for rehearing. 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.
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 an LMA
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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 in certain circumstances the LMA is entered into in anticipation of the
sale of the station, with the proposed acquirer 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), 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-operated stations in
the Los Angeles market are subject to this limitation. Once the Sinclair
Acquisition is completed and the Company begins broadcasting on KBLA, the
Company intends to lease the station to a third party under an LMA or sell its
option in KVCA to a third party.
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, or (v) affect the Company's competitive position in
relationship to other advertising media in its markets. 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 benchmark 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 implementing 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.
LITIGATION
The Company is not currently involved in any material litigation and is not
aware of any such litigation threatened against it.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of the Company and certain key employees of Radio Unica
Network, Inc. as of the date of this Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>
Joaquin F. Blaya.................................... 52 Chairman of the Board and Chief Executive Officer
Jose C. Cancela..................................... 40 President
Steven E. Dawson.................................... 34 Chief Financial Officer, Secretary and Director
Andrew C. Goldman................................... 50 Executive Vice President, Business Affairs and
Director
Blaine R. Decker.................................... 46 Executive Vice President, Network Sales
Omar Marchant....................................... 63 Vice President, Programming of Radio Unica Network,
Inc.
Adriana Grillet..................................... 45 Vice President, Affiliate Relations of Radio Unica
Network, Inc.
Roy Pressman........................................ 44 Vice President, Engineering of Radio Unica Network,
Inc.
John D. Santoleri................................... 34 Director
Sidney Lapidus...................................... 60 Director
</TABLE>
JOAQUIN F. BLAYA. Mr. Blaya has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since August 1997. From 1995 through
1996, Mr. Blaya served as the President of Solomon International Latino, the
Latin American division of Solomon International Enterprises, an international
telecommunications company. From 1992 through 1995, Mr. Blaya was the President,
Chief Executive Officer and a member of the Board of Directors of Telemundo, the
second largest U.S. Spanish-language television network. Prior to that, Mr.
Blaya was employed by Univision since 1971 in various positions, the latest
being President and a member of Univision's Board of Directors.
JOSE C. CANCELA. Mr. Cancela has been President of the Company since
September 1998. He initially joined the Company in July 1998 serving as
President, Network. From 1992 through 1998, Mr. Cancela served as Executive Vice
President of Telemundo, responsible for the overall management of Telemundo's
owned and operated television stations in Puerto Rico and Miami. From 1990 to
1992, Mr. Cancela was the Vice President of the Univision Southwest Station
Group.
STEVEN E. DAWSON. Mr. Dawson has been Chief Financial Officer, Secretary
and a Director of the Company since August 1997. From 1991 through 1997, Mr.
Dawson was employed by Telemundo in several positions, the most recent being
Vice President, Finance and Controller. Prior to that, Mr. Dawson was employed
at Coopers & Lybrand since 1986. Mr. Dawson is a Certified Public Accountant.
ANDREW C. GOLDMAN. Mr. Goldman has been a Director and Executive Vice
President, Business Affairs of the Company since August 1997. Mr. Goldman served
in different capacities for Univision from 1981 to 1993 including as Executive
Vice President and President of Galavision. Prior to joining Univision, Mr.
Goldman was the Senior Vice President of Marketing at Teleprompter Corporation.
Mr. Goldman has
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served as President and Director of Cable Television Administration and
Marketing Society (CTAM), and as Founder and Director of the Cable Advertising
Bureau (CAB).
BLAINE R. DECKER. Mr. Decker has served as the Company's Executive Vice
President, Network Sales since October 1997. He was previously employed by
KWHY-TV--Los Angeles as General Sales Manager from November 1995 through October
1997. From February 1984 through February 1995, Mr. Decker was employed by
Univision as Senior Vice President, Network Sales and in other management
positions. Prior to joining Univision, Mr. Decker was employed by Arbitron
Ratings Company as Vice President of Sales and Marketing from January 1980
through February 1984.
OMAR MARCHANT. Mr. Marchant has served as Radio Unica Network, Inc.'s Vice
President, Programming and as Creative Director since September 1997. Mr.
Marchant has been employed in various media-related capacities including TV
host, radio disc jockey, radio director, producer and creator of jingles, and
producer of TV specials for the Latin and general market. Additionally, Mr.
Marchant served as Senior Vice President and Creative Director for Telemundo
from June 1992 through July 1994 and as Vice President and Director of
Promotions and Special Events or in other capacities for Univision from
September 1972 through July 1994.
ADRIANA GRILLET. Ms. Grillet has served as Radio Unica Network, Inc.'s Vice
President, Affiliate Relations since August 1997. Ms. Grillet had previously
served as Director of Affiliate Relations for Caracol (Latino Broadcasting
Company) from April 1996 through July 1997 and CBS--Americas from February 1992
through April 1996. From 1992 through 1996 Ms. Grillet also served as a program
production consultant at WADO-NY and from 1988 through 1992 as Senior Program
Producer.
ROY PRESSMAN. Mr. Pressman has served as Radio Unica Network, Inc.'s Vice
President, Engineering since December 1997. Mr. Pressman has over 20 years of
experience in building and managing radio station facilities. From August 1997
to December 1997, Mr. Pressman served as Director of Engineering at Clear
Channel Communications, Inc. ("Clear Channel"). He was employed as Vice
President, Engineering at Paxson Communications Corp., the predecessor to Clear
Channel, from August 1993 to July 1997. Prior to that, Mr. Pressman was employed
as Director of Engineering at Gilmore Broadcasting, Inc.
JOHN D. SANTOLERI. Mr. Santoleri has been a Director of the Company since
August 1997. Mr. Santoleri is a Managing Director and a member of Warburg, where
he has been employed since 1989. Warburg is the managing entity of Warburg
Ventures, L.P., the Company's controlling stockholder. Prior to joining Warburg,
Mr. Santoleri was a Vice President of the New York based real estate consulting
firm, The Harlan Company, Inc. Mr. Santoleri is also a director of Axxess
Technologies, Inc., Grubb & Ellis Company, NexCycle, Inc., and Petrie Retail,
Inc.
SIDNEY LAPIDUS. Mr. Lapidus, a Director of the Company since September
1998, is a Managing Director and a member of Warburg, where he has been employed
since 1967. Mr. Lapidus is also a director of Caribiner International, Inc.,
Grubb & Ellis Company, Information Holdings Inc., Journal Register Company,
Knoll Inc., Lennar Corp. and several private companies.
NON-COMPETE AGREEMENTS
Joaquin F. Blaya and Steven E. Dawson each entered into separate
Non-Competition and Confidentiality Agreements on August 13, 1997 pursuant to
which they have each agreed, among other things, that: (i) until the later of
(a) August 13, 2002 or (b) two years after the termination of their respective
employment (if terminated for cause or if voluntarily resigned) they will not
engage directly or indirectly in any business directly competitive to that of
the Company or any of its subsidiaries; (ii) during the two year period after
their respective termination (if terminated for cause or if voluntarily
resigned) they will not hire, offer to hire or entice away any of the Company's
officers, employees, affiliates or agents; and (iii)
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they will not at any time divulge, furnish, use, publish or make accessible to
others any confidential information about the Company.
EXECUTIVE COMPENSATION
The following sets forth all compensation awarded to, earned by or paid for
services rendered to the Company and its subsidiaries in all capacities during
the year ended December 31, 1997 by the Company's Chief Executive Officer and
the four other most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
COMPENSATION(A) SECURITIES
------------------------- UNDERLYING OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS (#) (B) ($)(C)
- ------------------------------------------------------------ ---------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Joaquin F. Blaya............................................ $ 145,834 -- 2,590.4763 $ 4,375
Chairman of the Board and Chief Executive Officer
Herbert M. Levin(d)......................................... $ 114,583 -- 2,057.1428 $ 2,005
Chief Operating Officer and President
Steven E. Dawson............................................ $ 88,667 -- 609.5238 $ 2,065
Chief Financial Officer and Secretary
Andrew C. Goldman........................................... $ 50,000 -- 874.6666 --
Executive Vice President--Business
Blaine R. Decker............................................ $ 52,500 -- 304.7623 --
Executive Vice President, Network Sales
</TABLE>
- ------------------------
(a) The compensation reflected in this chart represents the partial year amounts
paid during fiscal year 1997. Messrs. Blaya, Levin, Dawson and Goldman each
began employment at the Company in August 1997. Mr. Decker began employment
at the Company in October 1997.
(b) This column represents the number of shares of Company Common Stock
underlying options granted to each Named Executive Officer during fiscal
year 1997.
(c) Amounts in this column represent the Company's matching contributions to a
401k Plan.
(d) Mr. Levin resigned from his positions as Chief Operating Officer, President
and Director of the Company in August 1998.
STOCK OPTION PLANS/ARRANGEMENTS
Prior to the consummation of the Reorganization, each of the Named Executive
Officers held options to purchase shares of Company Common Stock (the
"Options"). Upon consummation of the Reorganization, each Option was converted
into an option to purchase Holdings Common Stock (the "Holdings' Options"). See
"The Transactions." The following table sets forth certain information
concerning Options granted to the Named Executive Officers during the year ended
December 31, 1997.
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMPANY COMMON PERCENT OF TOTAL
STOCK OPTIONS GRANTED TO EXERCISE GRANT DATE
UNDERLYING EMPLOYEES IN LAST PRICE EXPIRATION PRESENT
NAME OPTIONS GRANTED FISCAL YEAR PER SHARE DATE VALUE(H)
- -------------------------- -------------------- --------------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Joaquin F. Blaya.......... 695.6522 (a) $ 10.00 8/18/04 $ 1,801.74
530.4015 (b) $ 10.00 8/18/04 1,373.74
507.2797 (c) $ 10.00 8/18/04 1,313.85
400.0000 (d) (e) 8/17/07(f) 1,036.00
457.1429 (d) (e) 8/17/07 (f) 1,184.00
-------------------- ---------------
2,590.4763 33.8 % 6,709.33
Herbert M. Levin(g)....... 521.7391 (a) $ 10.00 8/18/04 1,351.30
336.4984 (b) $ 10.00 8/18/04 871.53
475.0958 (c) $ 10.00 8/18/04 1,230.50
373.3333 (d) (e) 8/17/07 (f) 966.93
350.4762 (d) (e) 8/17/07 (f) 907.73
-------------------- ---------------
2,057.1428 26.8 % 5,327.99
Steven E. Dawson.......... 224.0000 (c) $ 10.00 8/18/04 580.16
228.2667 (d) (e) 8/17/07 (f) 591.21
157.2571 (d) (e) 8/17/07 (f) 407.30
-------------------- ---------------
609.5238 7.9 % 1,578.67
Andrew C. Goldman......... 347.8261 (a) $ 10.00 8/18/04 900.87
233.3233 (b) $ 10.00 8/18/04 604.31
50.8506 (c) $ 10.00 8/18/04 131.70
113.2444 (d) (e) 8/17/07 (f) 293.30
129.4222 (d) (e) 8/17/07 (f) 335.20
-------------------- ---------------
874.6666 11.4 % 2,265.38
Blaine R. Decker.......... 133.3333 (c) $ 10.00 8/18/04 345.33
80.0000 (d) (e) 8/17/07 (f) 207.20
91.4290 (d) (e) 8/17/07 (f) 236.80
-------------------- ---------------
304.7623 4.0 % 789.33
</TABLE>
- ------------------------
(a) Represents Options which were fully vested at the time of grant.
(b) Represents Options which vest at a rate of 20% per year.
(c) Represents Options which vest based on the Company's achievement of certain
EBITDA targets established by the Board of Directors of the Company.
(d) Represents Options which vest upon the occurrence of: (a) the sale by the
Company of all or substantially all of its assets, (b) an initial public
offering, or (c) an issuance of capital stock of the Company if as a result
thereof Warburg Ventures, L.P. and/or one of its affiliates in the aggregate
would cease to own more of the Company Common Stock than any other single
stockholder.
(e) The exercise prices of these options are based on a formula specified in the
option certificate.
(f) These options expire on the earlier of the date indicated or the day
following the closing of a sale or an initial public offering.
(g) Mr. Levin resigned from his positions as Chief Operating Officer, President
and Director of the Company in August 1998. Pursuant to the terms of his
severance agreement, all of his Options, both vested and non-vested, have
been cancelled.
(h) The Black Scholes model was used to calculate the grant date present value.
None of the Named Executive Officers exercised Options during the year ended
December 31, 1997.
51
<PAGE>
PRINCIPAL STOCKHOLDERS OF HOLDINGS
The following table sets forth, as of the date of this Prospectus, certain
information regarding the beneficial ownership of Holdings' voting stock by (i)
each person known to the Company and/or Holdings to own beneficially more than
5% of any class of Holdings' outstanding voting stock, (ii) each director and
each named officer of the Company and/or Holdings and (iii) all directors and
executive officers of the Company and/or Holdings as a group. Except as
otherwise indicated, each stockholder listed below has sole voting and
investment power with respect to shares beneficially owned by such person. Prior
to the Reorganization, the stockholders listed below held shares of Company
Common Stock and Company Preferred Stock, which were converted into shares of
Holdings Common Stock and Holdings Preferred Stock, respectively, upon
consummation of the Reorganization. See "The Transactions."
<TABLE>
<CAPTION>
PREFERRED
COMMON STOCK STOCK (A) VOTING POWER
--------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL
ISSUED % (B) ISSUED % VOTES % (B)
---------- --------- ------------ --------- ---------- ---------
Warburg, Pincus Ventures, L.P. (c) (d)........... 35,269.43 98.9 349,167.33 98.9 3,526,943 98.8
Joaquin F. Blaya................................. 1,120.90(e) 3.0 2,109.53 0.6 22,216 0.6
Andrew C. Goldman................................ 539.31(f) 1.4 971.74 0.3 10,257 0.3
Steven E. Dawson................................. 0(g) 0.0 0 0 0 0.0
Blaine R. Decker................................. 0(h) 0.0 0 0 0 0.0
John D. Santoleri (c) (d)........................ 35,269.43 98.9 349,167.33 98.9 3,526,943 98.8
Sidney Lapidus (c) (d)........................... 35,269.43 98.9 349,167.33 98.9 3,526,943 98.8
All Directors and Officers as a Group............ 35,663.14 100.0 353,065.12 100.0 3,368,169 100.0
</TABLE>
- ------------------------
(a) The holders of Holdings' Preferred Stock have the right to cast 10 votes for
each share.
(b) Shares issuable upon exercise of Holdings' Options that are exercisable
currently or within the next sixty days are deemed to be outstanding for the
purpose of computing the percentage ownership and overall voting power of
persons beneficially owning such Holdings' Options, but have not been deemed
to be outstanding for the purpose of computing the percentage ownership of
overall power of any other person.
(c) The business address for such person is 466 Lexington Avenue, New York, New
York 10017.
(d) The sole general partner of Warburg Ventures, L.P. is Warburg, Pincus & Co.
("WP"), a New York general partnership. Warburg manages Warburg Ventures,
L.P. The members of Warburg are substantially the same as the partners of
WP. WP, as the sole general partner of Warburg Ventures, L.P., has a 15%
interest in the profits of Warburg Ventures, L.P. Mr. Santoleri and Mr.
Lapidus are each Managing Directors and members of Warburg and general
partners of WP. As such, Mr. Santoleri and Mr. Lapidus may each be deemed to
have an indirect pecuniary interest in an indeterminate portion of the
shares beneficially owned by Warburg Ventures, L.P.
(e) Includes 907.81 shares issuable upon exercise of Holdings' Options that are
currently exercisable or exercisable within sixty days of this Prospectus
and does not include 1,682.66 shares issuable upon exercise of Holdings'
Options that have not yet vested.
(f) Includes 441.16 shares issuable upon exercise of Holdings' Options that are
currently exercisable or exercisable within sixty days of this Prospectus
and does not include 433.51 shares issuable upon exercise of Holdings'
Options that have not yet vested.
(g) Does not include 609.52 shares issuable upon exercise of Holdings' Options
that have not yet vested.
(h) Does not include 304.76 shares issuable upon exercise of Holdings' Options
that have not yet vested.
52
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PURCHASE OF RADIO STATION KXYZ(AM); TRANSACTIONS INVOLVING BLAYA, INC.
Blaya, Inc., a Delaware corporation, was formed in October 1997 to
facilitate the purchase of radio station KXYZ (AM) located in Houston, Texas
("KXYZ"). Upon such formation, the Company acquired 499 shares of Blaya Inc.'s
common stock (which represented a 49.9% interest in Blaya, Inc.) and Joaquin F.
Blaya acquired 501 shares of Blaya, Inc.'s common stock (which represented a
50.1% interest in Blaya, Inc.). On December 24, 1997, Blaya, Inc. entered into
an asset purchase agreement with 13 Radio to acquire substantially all of the
assets necessary to operate KXYZ for a cash purchase price of $6.4 million. In
connection with the purchase, the Company advanced $1,016,590 to Blaya, Inc.
On March 6, 1998, the Company acquired 800 shares of Blaya, Inc.'s Class B
common stock, representing 49.9% of the voting rights and 80% of the economic
ownership rights in Blaya, Inc., in exchange for its 499 shares of Blaya, Inc.'s
common stock and $640,000. On the same day, the Company loaned Mr. Blaya
$160,000 in exchange for a 10 year 9% promissory note. These proceeds were used
by Mr. Blaya (together with the surrender of 501 shares of Blaya, Inc.'s common
stock then held by him) to acquire 200 shares of Blaya, Inc.'s Class A common
stock, representing 50.1% of the voting rights and 20% of the ownership rights
in Blaya, Inc.
On March 10, 1998, the Company loaned $5.7 million to Blaya, Inc. in
exchange for a promissory note. The proceeds were used to complete the asset
purchase agreement with 13 Radio and to pay related closing costs. The
promissory note bore interest at 9%, compounded quarterly and payable annually,
and was secured by substantially all of the assets of Blaya, Inc.
On September 11, 1998, the Company purchased all of Mr. Blaya's interest in
Blaya, Inc. for $160,000 and Mr. Blaya repaid the $160,000, plus interest, he
owed to the Company pursuant to the 10 year 9% promissory note. Upon the
Company's purchase of Mr. Blaya's shares, Blaya, Inc. became a wholly-owned
subsidiary of the Company. Effective September 11, 1998, the $5.7 million
promissory note was cancelled by the Company and accounted for as a contribution
to Blaya, Inc.'s capital.
INITIAL INVESTMENTS IN THE COMPANY; AGREEMENTS AMONG STOCKHOLDERS
On August 11, 1997, Warburg Ventures, L.P., Joaquin F. Blaya, Herbert M.
Levin, Andrew C. Goldman, Alan Stess, Barrett Alley (collectively, the
"Investors") and the Company, entered into a Securities Purchase Agreement (the
"Purchase Agreement") pursuant to which the Investors purchased (the "Initial
Investment") an aggregate of 21,000 shares of the Company Common Stock and
207,900 shares of the Company Preferred Stock. The purchase price for the
Company Common Stock was $10 per share and the purchase price for the Company
Preferred Stock was $100 per share. In addition, Warburg Ventures, L.P. was
given the option at any time on or prior to three years from the date of the
Purchase Agreement and upon the request of the Chief Executive Officer ("CEO")
of the Company, to purchase an additional 198,000 shares of the Company
Preferred Stock and 20,000 shares of the Company Common Stock (the "Additional
Shares") on the same terms as the shares purchased in the Initial Investment.
Each of the other Investors and the Senior Executives (as defined in the
Purchase Agreement) of the Company had the right to acquire its pro rata shares
(based on the original shares and vested options owned by such Investor or
Senior Executive) of the Additional Shares on the same terms and conditions.
For so long as Warburg Ventures, L.P. owned more than 5% of the Company
Preferred Stock, the Company agreed to (among other things) furnish certain
financial reports to the Investors and to cause each of its significant
employees to enter into agreements relating to non-disclosure of information and
confidentiality and not to compete with the Company. The Company also agreed to
use its reasonable best efforts to cause its Board of Directors to consist of
six persons, who were to be designated jointly by Warburg Ventures, L.P. and the
CEO. However, Warburg Ventures, L.P. had the right at any time, in its sole
discretion, to designate a majority of the directors, provided, further,
however, that if Warburg
53
<PAGE>
Ventures, L.P. designated a majority of the directors, it agreed not to make any
material change in the nature of the business conducted by the Company without
the consent of the CEO.
Pursuant to the Purchase Agreement the Company also agreed that for so long
as any Company Preferred Stock remained outstanding, it would not, without the
prior approval of Warburg Ventures, L.P., (i) become a party to a merger or
consolidation, sell or lease any of its assets other than in the ordinary course
of business or voluntarily dissolve, liquidate or wind up, (ii) engage in any
business other than the operation or ownership of the Network (as defined in the
Purchase Agreement), (iii) purchase or redeem any shares of its capital stock,
(iv) declare or pay any dividends except for dividends declared and paid on the
Company Preferred Stock, (v) create, incur, or assume any additional
indebtedness, except for commitments of up to an aggregate of $200,000 in any
fiscal year, (vi) make any capital expenditures in excess of that set forth in
the budget prepared according to the Purchase Agreement, (vii) acquire any
properties, assets or stock of another entity, except in the ordinary course of
business, (viii) amend its Articles of Incorporation or Bylaws, (ix) create or
issue any series or shares of capital stock, options, warrants or other rights
to purchase or acquire its capital stock, (x) hire, fire or change the
compensation of any of the Chief Executive Officer, Chief Financial Officer or
Chief Operating Officer, (xi) engage in any transactions with any of its
officers, directors or stockholders or any Affiliate or Associate of such
person, (xii) create, incur or suffer to exist any mortgage, pledge, lien,
security interest or other encumbrance except as provided in the annual budget
or (xiii) engage or discharge its independent certified public accountants or
legal counsel.
Additionally, the Purchase Agreement provided that the Company would not
make a registered public offering of its securities without the prior consent of
Warburg Ventures, L.P. Warburg Ventures, L.P. had demand registration rights and
the other Investors could have registered their Shares with Warburg Ventures,
L.P.'s demand registration statement. All of the Investors had piggy-back
registration rights with respect to any registration statement initiated by the
Company. The Investors also had preemptive rights to purchase any new securities
offered by the Company on the same terms as such new securities were offered
until there is a public offering of the Company's securities.
All of the stockholders or holders of Options (including Warburg Ventures,
L.P. and the Investors) entered into a Stockholders' Agreement, dated as of
August 11, 1997 (the "Stockholders' Agreement") to remain in effect until the
Company completed an initial public offering which resulted in aggregate gross
proceeds of at least $21 million. Pursuant to the Stockholders' Agreement, each
of the stockholders agreed (i) not to sell, offer to sell or otherwise dispose
of its shares of Company Common Stock and Company Preferred Stock, other than
those included in such public offering, for a period of at least 180 days from
the effective date of a registration statement in connection with such public
offering and (ii) for a period of five years, to grant the Company a right of
first refusal with respect to any of its shares of Company Common Stock and
Company Preferred Stock that the stockholder proposed to sell or otherwise
dispose of. If Warburg Ventures, L.P. had decided to sell the Company, each of
the stockholders would have been obligated to sell its stock pursuant to such
sale. If the employment of any stockholder terminated, the Company and then
Warburg Ventures, L.P. and Messrs. Blaya and Levin had the option to purchase
any stock owned by such stockholder.
As part of the Reorganization, Holdings assumed the rights and obligations
of the Company with respect to the agreements described above with the Company's
stockholders, (who became stockholders of Holdings), on the same terms and
conditions as the Stockholder Agreement.
LOANS TO THE COMPANY
On July 15, 1997, Joaquin F. Blaya, Herbert M. Levin and Andrew C. Goldman,
each a Named Executive Officer of the Company, and Barrett Alley, a stockholder
of the Company, loaned the Company an aggregate of $100,000. The loan was due
upon demand and bore interest at a rate of 9% per annum. In April 1998, the
Company fully repaid the loan by issuing Messrs. Blaya, Levin, Goldman and Alley
40.584,
54
<PAGE>
40.584, 18.156 and 7.476 shares of Company Common Stock, respectively, and
401.7816, 401.7816, 179.7444 and 74.0124 shares of Company Preferred Stock,
respectively.
On July 24, 1997, Warburg Ventures, L.P. loaned the Company $265,000. The
loan was due upon demand and bore interest at a rate of 8% per annum. The funds
from the loan were used to pay a deposit to Univision Network Limited
Partnership ("Univision Network L.P.") pursuant to the Radio Broadcasting Rights
Agreement, dated as of July 30, 1997(the "World Cup Rights Agreement"), entered
into by and between Univision Network L.P. and the Company for the exclusive
Spanish-language radio broadcast rights in the United States for the 1998 World
Cup. Warburg Ventures, L.P. also arranged for the issuance of a letter of credit
(the "Original Letter of Credit") in the amount of $2,385,000 to Univision
Network L.P. on behalf of the Company to secure the Company's payments under the
World Cup Rights Agreement. In April 1998, the Company fully repaid the loan by
issuing Warburg Ventures, L.P. 280.5231 shares of Company Common Stock and
2,777.1788 shares of Company Preferred Stock. On July 9, 1998, the Original
Letter of Credit was replaced by a letter of credit issued by Canadian Imperial
Bank of Commerce (the "CIBC Letter of Credit") for the remaining amount of
$795,000.
On April 3, April 27, May 19 and June 16, 1998, Warburg Ventures, L.P.
loaned the Company $5,000,000, $11,000,000, $5,000,000 and $795,000 in exchange
for the Promissory Notes. The funds from the Promissory Notes were primarily
used to finance the Oro Acquisition and the One-on-One Acquisition. See "The
Transactions." Each of the Promissory Notes was due upon demand and bore
interest at the rate of 10% per annum. On June 30, 1998, the Company repaid
$15,000,000 of the Promissory Notes plus accrued interest by issuing Warburg
Ventures, L.P. 15,238.9041 shares of Company Common Stock and 150,865.1507
shares of Company Preferred Stock. The remaining $6,795,000 due under the
Promissory Notes has been repaid from amounts borrowed under the Revolving
Credit Facility.
55
<PAGE>
DESCRIPTION OF REVOLVING CREDIT FACILITY
On July 8, 1998, the Company entered into a credit agreement for a senior
secured revolving credit facility (the "Revolving Credit Facility") providing
for up to $20.0 million of availability with Canadian Imperial Bank of Commerce
or an affiliate ("CIBC") under specified circumstances. The Revolving Credit
Facility will mature on the earlier of 91 days before the first cash interest is
due on the Notes or September 30, 2002. Amounts outstanding under the Revolving
Credit Facility bear interest at a rate of either (i) the higher of (x) CIBC's
prime rate and (y) the Federal Funds Rate plus 0.50% plus, in the case of clause
(x) or (y) 1.25% or (ii) LIBOR plus 2.50%. The Company's obligations under the
Revolving Credit Facility have been guaranteed by Holdings and all of the
subsidiaries of the Company. The Company's and guarantors' obligations under the
Revolving Credit Facility have been secured by: (i) first priority and perfected
liens on and security interests in all of the present and future assets of and
the ownership interests (including all equity) in the Company and any of its
subsidiaries; (ii) first priority and perfected liens on and security interests
in all of the present and future assets of Holdings; and (iii) a pledge of the
stock of all of the wholly-owned subsidiaries of the Company which hold the
broadcast licenses of the radio stations which are owned and operated by the
Company and its subsidiaries. The Company will pay certain fees in connection
with the Revolving Credit Facility, including a commitment fee of 0.50% per
annum on the aggregate unused portion of the Revolving Credit Facility. The
Revolving Credit Facility provides that any amounts drawn on the CIBC Letter of
Credit shall be deducted from the total amount available to the Company under
the Revolving Credit Facility.
The Revolving Credit Facility contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, (i) limitations on indebtedness, guarantees, liens, negative
pledges, sales and leasebacks, mergers, acquisitions and dispositions,
transactions with affiliates, dividends, investments, changes in business lines
and amendments of material agreements and (ii) requirements to maintain certain
minimum loan-to-value and senior leverage ratios.
The Revolving Credit Facility contains customary events of default,
including, among others, payment defaults and default in the performance of
other covenants, breach of representations or warranties, cross-default to other
indebtedness, certain bankruptcy or ERISA defaults, the entry of certain
judgments against the Company or any subsidiary, and any security interest or
guarantee ceases to be in effect. 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).
56
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER; REGISTRATION RIGHTS
The Old Notes were sold by the Company on July 27, 1998 (the "Issue Date")
to the Initial Purchasers. The Company has entered into the Registration Rights
Agreement pursuant to which it has agreed, for the benefit of the holders of the
Old Notes, that it will, at its cost, (i) within 60 days after the Issue Date,
file a registration statement (the "Exchange Offer Registration Statement") with
the Commission with respect to a registered offering to exchange the Old Notes
for the New Notes, which will have terms substantially identical in all material
respects to the Old Notes (except that the New Notes will not contain terms with
respect to transfer restrictions), and (ii) within 150 days after the Issue
Date, use its reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act. Upon the Exchange
Offer Registration Statement being declared effective, the Company will offer
the New Notes in exchange for surrender of the Old Notes. The Company will use
its best reasonable efforts to keep the Exchange Offer open for not less than 30
days (or longer if required by applicable law) after the date notice of the
Exchange Offer is mailed to the holders of the Old Notes. For each Old Note
surrendered to the Company pursuant to the Exchange Offer, the holder of such
Old Note will receive a New Note having a principal amount at maturity and
Accreted Value equal to that of the surrendered Old Note. The Registration
Statement, of which this Prospectus is part, is intended to constitute the
Exchange Offer Registration Statement and otherwise to satisfy certain of the
Company's obligations under the Registration Rights Agreement summarized below.
Under existing Commission interpretations, the New Notes would in general be
freely transferable after the Exchange Offer without further registration under
the Securities Act; provided that in the case of broker-dealers, a prospectus
meeting the requirements of the Securities Act must be delivered as required.
The Company has agreed for a period of 180 days after consummation of the
Exchange Offer to make available a prospectus meeting the requirements of the
Securities Act to any broker-dealer for use in connection with any resale of any
such New Notes acquired as described below. A broker-dealer which delivers such
a prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act, and will be
bound by the provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
Each holder of the Old Notes that wishes to exchange such Old Notes for New
Notes in the Exchange Offer will be required to make certain representations
including representations that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) at the time of the
consummation of the Exchange Offer it will have no arrangement or understanding
with any person to participate in the distribution of the New Notes in violation
of the Securities Act, (iii) it is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Company or any of the Guarantors, or if it is an
affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, and (iv) it is not
acting on behalf of any person who could not truthfully make the foregoing
representations.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
New Notes. If the holder is a broker-dealer that will receive New Notes for its
own account in exchange for the Old Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect such an Exchange Offer, or if for any other
reason the Exchange Offer is not consummated within 180 days of the Issue Date,
the Company will, at its own expense, (a) as promptly as practicable, file the
Shelf Registration Statement covering resales of the Old Notes (the "Shelf
Registration Statement"), (b) use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and (c)
use its reasonable best efforts to keep effective the Shelf Registration
Statement
57
<PAGE>
until two years after its effective date. The Company will, in the event of the
Shelf Registration Statement, provide to each holder of the Old Notes copies of
the prospectus which is a part of the Shelf Registration Statement, notify each
such holder when the Shelf Registration Statement for the Old Notes has become
effective and take certain other actions as are required to permit unrestricted
resales of the Old Notes. A holder of the Old Notes that sells such Old Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification rights and
obligations).
The Registration Rights Agreement provides that if (i) the Exchange Offer
Registration Statement or Shelf Registration Statement is not filed within 60
days after the Issue Date; (ii) an Exchange Offer Registration Statement or
Shelf Registration Statement is not declared effective within 150 days after the
Issue Date; or (iii) either (A) the Company has not exchanged the New Notes for
all Old Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to 180 days after the Issue Date or (B) the Exchange Offer
Registration Statement ceases to be effective at any time prior to the time that
the Exchange Offer is consummated as to all Old Notes validly tendered or (C) if
applicable, the Shelf Registration Statement has been declared effective and
such Shelf Registration Statement ceases to be effective at any time prior to
the second anniversary of its effective date (each of such events referred to in
clauses (i) through (iii) above is a "Registration Default"), the Company will
pay as additional interest to each holder of the Old Notes an amount (the
"Damage Amount") equal to 0.5% per annum of the average Accreted Value of the
Old Notes for the first 90-day period following the occurrence of a Registration
Default and increased by an additional 0.25% per annum of the average Accreted
Value of the Old Notes for each subsequent 90-day period during which the
Registration Default remains uncured, up to a maximum rate of 2.0% per annum.
Damage Amounts and the interest payable with respect thereto (the "Assessed
Damage Amounts") will not be payable prior to the time cash interest is payable
on the Old Notes. Assessed Damage Amounts will bear interest at the same rate as
the Old Notes. Although Assessed Damage Amounts will continue to accrue interest
as described in the preceding sentence, Damage Amounts will cease to accrue
after the date on which such Registration Default is cured.
If the Exchange Offer is made and the Initial Purchasers continue to hold
Old Notes, the Initial Purchasers may exchange such Old Notes for other notes
identical to the New Notes except for transfer restrictions ("Private Exchange
Notes"). If they receive Private Exchange Notes, the Initial Purchasers
thereafter will have the right for a period after consummation of the Exchange
Offer to request the Company to file a shelf registration statement covering the
Private Exchange Notes. If such requested shelf registration is not filed or
does not become effective by the times provided in the Registration Rights
Agreement, the Company will pay as liquidated damages to holders of Private
Exchange Notes the Damage Amount as provided above until such time as it does
become effective.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit hereto.
As used in this Prospectus, the term "holder" means a person in whose name
Old Notes are registered on the books of the Company or any person who has
obtained a properly completed bond power or proxy from the registered holder.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all the Old
Notes validly tendered and not withdrawn prior to the Expiration Date. As of the
date of this Prospectus, $158.088 million aggregate principal amount at maturity
of the Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first
58
<PAGE>
being sent on or about [ ], 1998, to all registered holders of Old
Notes and to all beneficial holders of Old Notes known to the Company. The
Company's obligation to accept the Old Notes for exchange pursuant to the
Exchange Offer is subject to certain conditions as set forth under "--Certain
Conditions to the Exchange Offer" below. The Company will issue $1,000 principal
amount at maturity of New Notes in exchange for each $1,000 principal amount at
maturity of outstanding Old Notes accepted in the Exchange Offer. Holders may
tender some or all of their Old Notes pursuant to the Exchange Offer. See
"--Consequences of Failure to Exchange." However, the Old Notes may be tendered
only in integral multiples of $1,000 of principal amount at maturity.
The New Notes will evidence the same debt as the Old Notes for which they
are exchanged, and are entitled to the benefits of the Indenture. The form and
terms of the New Notes are the same as the form and terms of the Old Notes
except that the New Notes have been registered under the Securities Act and
hence will not bear legends restricting the transfer thereof.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Indenture in connection with the Exchange Offer. The Company intends to
conduct the Exchange Offer in accordance with the applicable requirements of
Regulation 14E under the Exchange Act.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, such unaccepted Old Notes will be returned, without expense to the
holder thereof, as promptly as practicable after the Expiration Date.
Holders whose Old Notes are not tendered or are tendered but not accepted in
the Exchange Offer will continue to hold such Old Notes and will be entitled to
all the rights and preferences, subject to the limitations applicable thereto,
under the Indenture. Following consummation of the Exchange Offer, the holders
of Old Notes will continue to be subject to the existing restrictions upon
transfer thereof and the Company will have no further obligation to such holders
to provide for the registration under the Securities Act of the Old Notes held
by them. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected. See "Risk Factors--Consequences of Failure to
Exchange Old Notes."
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses; Solicitation of Tenders."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
[ ], 1998, unless the Company extends the Exchange Offer, in which
case the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice (such notice, if given orally,
to be confirmed in writing) and will make a public announcement thereof, each
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
The Company reserves the right at its reasonable discretion (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) to terminate
the Exchange Offer and not accept any Old Notes if
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any of the conditions set forth below under "--Certain Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Company, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (iv) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment by means of a Prospectus supplement that will be distributed to all
holders of Old Notes, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to holders of Old Notes, if the Exchange
Offer would otherwise expire during such five to ten business day period. During
any extension of the Expiration Date, all Old Notes previously tendered will
remain subject to the Exchange Offer and may be accepted for exchange by the
Company.
The Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
Cash interest will not accrue on the New Notes prior to August 1, 2002. No
interest will be paid on the Old Notes accepted for exchange. The New Notes will
have principal amount at maturity and Accreted Value equal to the Old Notes for
which they are exchanged.
PROCEDURES FOR TENDERING THE OLD NOTES
Only a registered holder of Old Notes or a person who has received a bond
power or proxy from a registered holder may tender such Old Notes in the
Exchange Offer. The tender to the Company of the Old Notes by a holder thereof
pursuant to one of the procedures set forth below and the acceptance by the
Company thereof will constitute a binding agreement between the tendering holder
of Old Notes and the Company upon the terms and subject to the conditions set
forth in this Prospectus and the Letter of Transmittal.
Except as set forth below, a holder who wishes to tender the Old Notes for
exchange pursuant to the Exchange Offer must transmit a properly completed and
duly executed Letter of Transmittal, including all other documents required by
such Letter of Transmittal, to the Exchange Agent at one of the addresses set
forth below under "Exchange Agent" on or prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal or (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes into the Exchange Agent's account at the Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder of Old Notes must comply with the
guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD
NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDERS THEREOF. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of Old Notes who has
not completed the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal or (ii)
for the account of an Eligible Institution (as defined below). In the event that
a signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, is required to be guaranteed, such guarantee must be by a firm which is
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a member of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States or
otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (collectively, "Eligible Institutions"). If the Old Notes
are registered in the name of a person other than the person signing the Letter
of Transmittal, the Old Notes surrendered for exchange must be endorsed by, or
be accompanied by, a written instrument or instruments of transfer or exchange,
in satisfactory form as determined by the Company in its reasonable discretion,
duly executed by the registered holder thereof with the signature thereon
guaranteed by an Eligible Institution.
If the Letter of Transmittal is signed by a person or persons other than the
registered holder or holders, such Old Notes must be endorsed by the registered
holder thereof with signature guaranteed by an Eligible Institution or
accompanied by appropriate powers of attorney with signature guaranteed by an
Eligible Institution, in either case signed exactly as the name or names of the
registered holder or holders that appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of its authority so to act
must be submitted with the Letter of Transmittal.
By tendering, each holder will represent to the Company that, among other
things, (i) any New Notes to be received by it will be acquired in the ordinary
course of its business, (ii) at the time of the consummation of the Exchange
Offer it will have no arrangement or understanding with any person to
participate in the distribution of the New Notes in violation of the Securities
Act, (iii) it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of the Company or any of the Guarantors, or if it is an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, and (iv) it is not acting on behalf of
any person who could not truthfully make the foregoing representations. If the
tendering holder is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a Prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a Prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY OR THE COMPANY DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of the Old Notes tendered for exchange will be
determined by the Company in its discretion, which determination shall be final
and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right in its
discretion to waive any defects or irregularities or conditions of the Exchange
Offer as to any particular Old Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Old Notes in the Exchange Offer). The interpretation of the terms and
conditions of the Exchange Offer as to any particular Old Notes either before or
after the Expiration Date (including the Letter of Transmittal and instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with the tenders of Old
Notes for exchange must be cured within such reasonable period of time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
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Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
ACCEPTANCE OF THE OLD NOTES FOR EXCHANGE; DELIVERY OF THE NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "--Certain Conditions to the Exchange Offer" below. For purposes
of the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, and if the Company has given oral or
written notice (such notice, if given orally, to be confirmed in writing)
thereof to the Exchange Agent.
In all cases, issuance of the New Notes for the Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal or
an Agent's Message and all other required documents. If any tendered Old Notes
are not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if certificates representing the Old Notes are submitted for a
greater principal amount at maturity than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after receipt of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of the Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for transfer. However, the exchange for the Old Notes so
tendered will only be made after timely confirmation of such book-entry transfer
of Old Notes into the Exchange Agent's account, and timely receipt by the
Exchange Agent of a duly completed Letter of Transmittal or an Agent's Message
(as such term is defined in the next sentence) and any other documents required
by the Letter of Transmittal on or prior to the Expiration Date or pursuant to
the guaranteed delivery procedures described below. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility and received by
the Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from a participant tendering Old Notes that are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible
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Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder and the amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates of all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation and Agent's Message, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn at any time prior to the
Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at one of the addresses set
forth below under "Exchange Agent." Any such notice of withdrawal must specify
the name of the person having tendered the Old Notes to be withdrawn, identify
the Old Notes to be withdrawn (including the principal amount at maturity of
such Old Notes), and (where certificates for Old Notes have been transmitted)
specify the name in which such Old Notes are registered, if different from that
of the withdrawing holder. If certificates for Old Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any note of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer procedures described above, such Old Notes will
be credited to an account maintained with the Book-Entry Transfer Facility for
the Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "Procedures for
Tendering the Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the Expiration Date, there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental regulatory or
administrative agency or commission (i) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof, or (ii) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Old Notes pursuant
to the Exchange Offer; or any statute, rule, regulation, order or injunction
shall be sought, proposed, introduced, enacted, promulgated or deemed applicable
to the Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any government or governmental
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authority, domestic or foreign, or any action shall have been taken, proposed or
threatened, by any government, governmental authority, agency or court, domestic
or foreign, that in the reasonable judgment of the Company might directly or
indirectly result in any of the consequences referred to in clause (i) or (ii)
above or, in the reasonable judgment of the Company, might result in the holders
of New Notes having obligations with respect to resales and transfers of New
Notes which exceed those described herein, or would otherwise make it
inadvisable to proceed with the Exchange Offer.
If the Company determines in good faith that any of the conditions are not
met, the Company may (i) refuse to accept any Old Notes and return all tendered
Old Notes to exchanging holders, (ii) extend the Exchange Offer and retain all
Old Notes tendered prior to the expiration of the Exchange Offer, subject,
however, to the rights of holders to withdraw such Old Notes (see "--Withdrawal
Rights") or (iii) waive certain of such unsatisfied conditions with respect to
the Exchange Offer and accept all properly tendered Old Notes which have not
been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a Prospectus
supplement that will be distributed to all holders.
The foregoing conditions are for the benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its discretion. The failure by the Company at any time to
exercise the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent addressed as follows:
By Registered or Certified Mail or Overnight Courier:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Operations
By Hand:
Wilmington Trust Company
c/o Harris Trust Co. of New York, as Agent
88 Pine Street, 19th Floor
Wall Street Plaza
New York, New York 10005
Attn: Corporate Trust Operations
By Facsimile:
(for Eligible Institutions only)
(302) 651-1079
Confirm by telephone:
(302) 651-1562
Kristin Long
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
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FEES AND EXPENSES; SOLICITATION OF TENDERS
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be $ which
includes fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Old Notes pursuant to the Exchange Offer. If, however, certificates
representing the New Notes or the Old Notes for principal amounts at maturity
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered
holders tendered, or if a transfer tax is imposed for any reason other than the
exchange of the Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted to the Exchange
Agent, the amount of such transfer taxes will be billed directly to such
tendering holder.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders in any jurisdiction in which the making
of the Exchange Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction.
ACCOUNTING TREATMENT
The New Notes will be recorded by the Company at the same carrying value as
the Old Notes, as recorded in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The costs of the Exchange Offer will be expensed over the term of
the New Notes.
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DESCRIPTION OF THE NOTES
The Old Notes were, and the New Notes will be, issued under an Indenture,
dated as of July 27, 1998 (the "Indenture"), by and between the Company, the
Guarantors and Wilmington Trust Company, as trustee (the "Trustee"). The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"TIA") as in effect on the date of the Indenture. The Notes are subject to all
such terms, and holders of the Notes are referred to the Indenture and the TIA
for a statement of them. The following description sets forth the material terms
and provisions of the Indenture. A copy of the form of Indenture is filed as an
exhibit to the Registration Statement. Definitions relating to certain
capitalized terms are set forth under "-- Certain Definitions." Capitalized
terms that are used but not otherwise defined herein have the meanings ascribed
to them in the Indenture and such definitions are incorporated herein by
reference. As used in this "Description of the Notes," the "Company" refers to
Radio Unica Corp., but not its Subsidiaries.
GENERAL
The Notes are and will be limited to $158,088,000 million aggregate
principal amount at maturity. The Old Notes are, and the New Notes will be,
senior unsecured obligations of the Company and will rank PARI PASSU in right of
payment with all existing and future unsecured unsubordinated indebtedness of
the Company and senior in right of payment to any subordinated indebtedness of
the Company. The Old Notes are, and the New Notes will be, effectively
subordinated in right of payment to the Senior Credit Facility and all other
secured indebtedness of the Company to the extent of the value of the assets
securing such indebtedness. Based on the issue price of the Old Notes, the yield
to maturity of the New Notes is 11 3/4% per annum (computed on a semi-annual
bond equivalent basis).
The Old Notes are, and the New Notes will be, unconditionally guaranteed, on
a senior unsecured basis, as to payment of principal, premium if any, and
interest, jointly and severally by the Guarantors.
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on August 1, 2006. Cash interest will not accrue or be
payable on the Notes prior to August 1, 2002. Thereafter, cash interest on the
Notes will accrue at the rate of 11 3/4% per annum and will be payable
semi-annually on each August 1 and February 1, commencing August 1, 2002, to the
holders of record of Notes at the close of business on the July 15 and January
15 immediately preceding such interest payment date. Cash interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from August 1, 2002. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole at any
time or in part from time to time, on or after August 1, 2002 at the following
redemption prices (expressed as percentages of the principal amount of maturity
thereof), together, in each case, with accrued and unpaid interest, if any, to
the redemption date, if redeemed during the twelve-month period beginning on
August 1 of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2002.............................................................................. 105.875%
2003.............................................................................. 102.938%
2004 and thereafter............................................................... 100.000%
</TABLE>
In addition, the Company may redeem in the aggregate up to 35% of the
aggregate principal amount at maturity of the Notes at any time and from time to
time prior to August 1, 2001 at a redemption price equal to 111.75% of the
Accreted Value thereof, out of the Net Proceeds of one or more Equity Offerings;
PROVIDED that Notes representing not less than $65.0 million of the aggregate
initial Accreted Value of
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Notes is outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 90 days following the closing of any such
Equity Offering.
In the event of a redemption of fewer than all of the Notes, the Trustee
will select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which such Notes are listed,
or if such Notes are not then listed on a national securities exchange, on a pro
rata basis, by lot or in such other manner as the Trustee deems fair and
equitable. The Notes will be redeemable in whole or in part upon not less than
30 nor more than 60 days' prior written notice, mailed by first class mail to a
holder's last address as it appears on the register maintained by the Registrar
of the Notes. On and after any redemption date, Accreted Value will cease to
accrete or interest will cease to accrue, as the case may be, on the Notes or
portions thereof called for redemption unless the Company fails to redeem any
such Note.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON ADDITIONAL INDEBTEDNESS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, incur (as defined) any Indebtedness (including
Acquired Indebtedness); PROVIDED that if no Default or Event of Default will
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness, the Company may incur Indebtedness (and the
Company and its Restricted Subsidiaries may incur Acquired Indebtedness) if
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Company's Consolidated Leverage Ratio
is less than 7.0 to 1. The accretion of original issue discount (and any
accruals of interest) will not be deemed an incurrence of Indebtedness for
purposes of this covenant.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness; provided that the Company will not incur any
Permitted Indebtedness that ranks junior in right of payment to the Notes that
matures prior to the Stated Maturity of the Notes or has an Average Life shorter
than the Notes; provided, further, that the Company will not incur any
Indebtedness owed to a Foreign Restricted Subsidiary unless such Indebtedness is
subordinated in right of payment to the Company's obligations under the Notes.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness of the Company or such Restricted Subsidiary unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinate in right of payment to the Notes
pursuant to subordination provisions that are substantively identical to the
subordination provisions of such Indebtedness (or such agreement) that are most
favorable to the holders of any other Indebtedness of the Company or such
Restricted Subsidiary, as the case may be.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default will have occurred and be continuing at the
time of or immediately after giving effect to such Restricted Payment;
(b) immediately after giving PRO FORMA effect to such Restricted Payment, the
Company could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under "-- Limitation on Additional Indebtedness"
above; and
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(c) immediately after giving effect to such Restricted Payment, the aggregate of
all Restricted Payments declared or made after the Issue Date does not
exceed the sum of (1) 100% of the Company's EBITDA from the Issue Date to
the date of determination minus 1.4 times the Company's Consolidated
Interest Expense from the Issue Date to the date of determination (or in the
event such amount shall be a deficit, minus 100% of such deficit) and (2)
100% of the aggregate Net Proceeds received by the Company from the issuance
or sale after the Issue Date (other than to a Subsidiary) of (A) Capital
Stock (other than Disqualified Capital Stock) of the Company or (B) any
Indebtedness or other securities of the Company that are convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified
Capital Stock) of the Company, which have been so converted, exercised or
exchanged, as the case may be; EXCLUDING, in the case of clause (c)(2), any
Net Proceeds from a Equity Offering to the extent used to redeem the Notes
in accordance with the second paragraph of "-Optional Redemption" above. For
purposes of determining under this clause (c) the amount expended for
Restricted Payments, cash distributed will be valued at the face amount
thereof and property other than cash will be valued at its fair market
value.
The provisions of this covenant will not prohibit (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture, (ii) the repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company or Indebtedness subordinated to the
Notes by conversion into, or by or in exchange for, shares of Capital Stock of
the Company (other than Disqualified Capital Stock), or out of the Net Proceeds
of the substantially concurrent sale (other than to a Subsidiary of the Company)
of other shares of Capital Stock of the Company (other than Disqualified Capital
Stock), (iii) the redemption, repayment or retirement of Indebtedness of the
Company subordinated to the Notes in exchange for, by conversion into, or out of
the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness of the Company (other than any Indebtedness owed to a Subsidiary)
that (A) is contractually subordinated in right of payment to the Notes to at
least the same extent as the Indebtedness being redeemed or retired, (B) is
scheduled to mature either (I) no earlier than the Stated Maturity of the
Indebtedness being redeemed or retired or (II) after the Stated Maturity of the
Notes, (C) the portion, if any, of which Indebtedness that is scheduled to
mature on or prior to the Stated Maturity of the Notes has an Average Life at
the time such Indebtedness is incurred that is equal to or greater than the
Average Life of the portion of the Indebtedness being redeemed or retired that
is scheduled to mature on or prior to the Stated Maturity of the Notes and (D)
is in an aggregate principal amount that is equal to or less than the sum of (x)
the aggregate principal then outstanding under the Indebtedness being redeemed
or retired, (y) the amount of accrued and unpaid interest, if any, and premiums
owed, if any, not in excess of preexisting prepayment provisions on such
Indebtedness being redeemed or retired and (z) the amount of customary fees,
expenses and costs related to the incurrence of such Indebtedness, (iv) the
retirement of any shares of Disqualified Capital Stock of the Company by
conversion into, or by exchange for, shares of Disqualified Capital Stock of the
Company, or out of the Net Proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of other shares of Disqualified Capital
Stock of the Company that (A) is subordinated to the Notes to at least the same
extent as the Disqualified Capital Stock being retired, (B) is scheduled to be
mandatorily redeemed, if at all, either (I) no earlier than the Disqualified
Capital Stock being retired or (II) after the Stated Maturity of the Notes, (C)
the portion, if any, of which Disqualified Capital Stock that is scheduled to be
mandatorily redeemed on or prior to the Stated Maturity of the Notes has a
weighted average life to mandatory redemption at the time such Disqualified
Capital Stock is issued that is equal to or greater than the weighted average
life to mandatory redemption of the portion of the Disqualified Capital Stock
being retired that is scheduled to be mandatorily redeemed on or prior to the
Stated Maturity of the Notes, and (D) has an aggregate liquidation preference
that is equal to or less than the sum of (a) the aggregate liquidation
preference then outstanding of the Disqualified Capital Stock being retired, (b)
the amount of accrued and unpaid dividends, if any, and premiums owed, if any,
not in excess of preexisting redemption provisions on such Disqualified Capital
Stock being retired and (c) the amount of customary fees, expenses and costs
related to the issuance of such Disqualified Capital Stock; PROVIDED that any
such Net Proceeds and the Fair Market Value of any Capital Stock issued in
exchange for
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such retired Disqualified Capital Stock are excluded from clause (c)(2) of the
immediately preceding paragraph (and were not included therein at any time) and
are not used to redeem the Notes pursuant to "--Optional Redemption" above, (v)
the purchase, redemption or other acquisition for value of shares of Capital
Stock (other than Disqualified Capital Stock) or options on such shares held by
the Company's officers or employees or former officers or employees (or their
estates or beneficiaries under their estates) upon the death, disability,
retirement or termination of employment of such current or former officers or
employees pursuant to the terms of an employee benefit plan or any other
agreement pursuant to which such shares of Capital Stock or options were issued
or pursuant to a severance, buy-sale or right of first refusal agreement with
such current or former officer or employee; PROVIDED that the aggregate cash
consideration paid, or distributions or payments made (which may include
distributions or dividends to Holdings for such purpose), pursuant to this
clause (v) shall not exceed $10,000,000 in the aggregate; PROVIDED that in
calculating the aggregate amount of Restricted Payments made subsequent to the
Issue Date for purposes of clause (c) of the immediately preceding paragraph,
amounts expended pursuant to clauses (i) and (v) (but not (ii), (iii), and (iv))
will be included in any subsequent calculation; and PROVIDED FURTHER, that,
except in the case of clauses (i) and (v) of this paragraph, no Default or Event
of Default shall have occurred and be continuing or occur as a consequence of
the actions or payments set forth herein.
Not later than the date of making any Restricted Payment, the Company will
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant described above were computed, which calculations may
be based upon the Company's latest available financial statements, and that no
Default or Event of Default has occurred and is continuing and no Default or
Event of Default will occur immediately after giving effect to any such
Restricted Payments.
Notwithstanding the foregoing, the Issuer may declare and make dividend
payments to Holdings as long as Holdings uses such amounts to pay (A) franchise
taxes and other fees required to maintain Holdings' corporate existence and (B)
taxes associated with operations of the Issuer and its subsidiaries, and such
amounts shall not be deemed Restricted Payments.
LIMITATION ON INVESTMENTS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any Investment other than (i) a Permitted Investment or (ii) an
Investment that is made as a Restricted Payment in compliance with "--
Limitation on Restricted Payments" above, after the Issue Date.
LIMITATION ON LIENS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind (other than Permitted Liens) upon any property or asset of the
Company or any of its Restricted Subsidiaries or any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary of the Company which owns property or
assets, now owned or hereafter acquired, unless (i) if such Lien secures
Indebtedness which is PARI PASSU with the Notes, then the Notes are secured on
an equal and ratable basis with the obligations so secured until such time as
such obligation is no longer secured by a Lien or (ii) if such Lien secures
Indebtedness which is subordinated to the Notes, any such Lien will be
subordinated to a Lien securing the Notes to the same extent as such
Indebtedness is subordinated to the Notes.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
(each an "Affiliate Transaction") or extend, renew, waive or otherwise modify
the terms of any Affiliate Transaction entered into prior to the Issue Date
unless (i) such Affiliate Transaction is between or among the Company and its
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Wholly Owned Subsidiaries; or (ii) the terms of such Affiliate Transaction are
fair and reasonable to the Company or such Restricted Subsidiary, as the case
may be, and the terms of such Affiliate Transaction are at least as favorable as
the terms which could be obtained by the Company or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties. In any Affiliate Transaction (or any series of
related Affiliate Transactions which are similar or part of a common plan)
involving an amount or having a fair market value in excess of $1,000,000 which
is not permitted under clause (i) above, the Company must obtain a resolution of
the Board of Directors of the Company certifying that such Affiliate Transaction
complies with clause (ii) above. In any Affiliate Transaction (or any series of
related Affiliate Transactions which are similar or part of a common plan)
involving an amount or having a fair market value in excess of $5,000,000 which
is not permitted under clause (i) above, the Company must obtain a favorable
written opinion as to the fairness to the Company from a financial point of view
of such transaction or transactions, as the case may be, from an Independent
Financial Advisor.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "--Limitation on Restricted
Payments" above, (ii) reasonable fees, compensation and equity incentives in the
form of Capital Stock (other than Disqualified Capital Stock) paid to and
indemnity provided on behalf of, officers, directors or employees of the Company
or any Restricted Subsidiary of the Company as determined in good faith by the
Company's Board of Directors or senior management, (iii) any agreement as in
effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous in any material respect to the holders
than the original agreement as in effect on the Issue Date or (iv) any standard
tax sharing agreement now or hereinafter in effect among any of Holdings, the
Issuer or any of the Guarantors.
LIMITATION ON CREATION OF SUBSIDIARIES
The Company will not create or acquire, and will not permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the Issue Date, (ii) a Restricted
Subsidiary that is acquired or created in connection with the acquisition by the
Company of one or more related businesses or assets, or (iii) an Unrestricted
Subsidiary; PROVIDED, HOWEVER, that each Restricted Subsidiary acquired or
created pursuant to clause (ii) shall have executed a guarantee, satisfactory in
form and substance to the Trustee (and with such documentation relating thereto
as the Trustee shall require, including, without limitation, a supplement or
amendment to the Indenture and opinions of counsel as to the enforceability of
such guarantee), pursuant to which such Domestic Restricted Subsidiary will
become a Guarantor. As of the Issue Date, the Company had no Domestic Restricted
Subsidiaries other than the Guarantors. See "Description of the Notes
- --General."
LIMITATION ON CERTAIN ASSET SALES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless (i) the Company or such applicable
Restricted Subsidiary, as the case may be, receives consideration at the time of
such sale or other disposition at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the Board
of Directors of the Company, and evidenced by a board resolution); (ii) not less
than 85% of the consideration received by the Company or such applicable
Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents other than in the case where the Company is undertaking a Permitted
Asset Swap; and (iii) the Asset Sale Proceeds received by the Company or such
Restricted Subsidiary are applied (a) first, to the extent the Company or any
such Subsidiary, as the case may be, elects, or is required, to prepay, repay or
purchase Indebtedness under the Senior Credit Facility within 180 days following
the receipt of the Asset Sale Proceeds from any Asset Sale; PROVIDED that any
such repayment will result in a permanent reduction of the commitments
thereunder in an amount equal to the principal amount so repaid; (b) second, to
the
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extent of the balance of Asset Sale Proceeds after application as described
above, to the extent the Company elects, to an investment in assets (including
Capital Stock or other securities purchased in connection with the acquisition
of Capital Stock or property of another Person) used or useful in businesses
similar or ancillary to the business of the Company or any such Restricted
Subsidiary as conducted on the Issue Date; PROVIDED that (1) such investment
occurs or the Company or any such Restricted Subsidiary enters into contractual
commitments to make such investment, subject only to customary conditions (other
than the obtaining of financing), within 270 days following receipt of such
Asset Sale Proceeds and (2) Asset Sale Proceeds so contractually committed are
so applied within 360 days following the receipt of such Asset Sale Proceeds;
and (c) third, if on such 180th day in the case of clause (iii)(a), 270th day in
the case of clause (iii)(b)(1) or 360th day in the case of clause (iii)(b)(2)
with respect to any Asset Sale, the Available Asset Sale Proceeds exceed $5
million, the Company will apply an amount equal to such Available Asset Sale
Proceeds to an offer to repurchase the Notes, at a purchase price determined as
described below (an "Excess Proceeds Offer"). If an Excess Proceeds Offer is not
fully subscribed, the Company may retain the portion of the Available Asset Sale
Proceeds not required to repurchase Notes and such retained portion will not be
considered in the calculation of "Available Asset Sale Proceeds" with respect to
any subsequent offer to purchase Notes.
If the Company is required to make an Excess Proceeds Offer, the Company
will mail, within 30 days following the date specified in clause (iii)(c) above,
a notice to the holders stating, among other things: (1) that such holders have
the right to require the Company to apply the Available Asset Sale Proceeds to
repurchase such Notes at a purchase price in cash equal to (x) 100% of the
Accreted Value thereof, if the applicable purchase date is on or prior to August
1, 2002, or (y) 100% of the principal amount at maturity thereof, plus accrued
and unpaid interest, if any, to the purchase date, if the purchase date is after
August 1, 2002; (2) the purchase date, which will be no earlier than 30 days and
not later than 45 days from the date such notice is mailed; (3) the instructions
that each holder must follow in order to have such Notes purchased; and (4) the
calculations used in determining the amount of Available Asset Sale Proceeds to
be applied to the purchase of such Notes.
In the event of the transfer of substantially all of the property and assets
of the Company and its Restricted Subsidiaries as an entirety to a Person in a
transaction permitted under "--Merger, Consolidation or Sale of Assets" below,
the successor Person will be deemed to have sold the properties and assets of
the Company and its Restricted Subsidiaries not so transferred for purposes of
this covenant, and will comply with the provisions of this covenant with respect
to such deemed sale as if it were an Asset Sale.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and other securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection with the repurchase of
Notes pursuant to an Excess Proceeds Offer. To the extent that the provisions of
any securities laws or regulations conflict with the "Asset Sale" provisions of
the Indenture, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
"Asset Sale" provisions of the Indenture by virtue thereof.
LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES
The Company will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock (except Preferred Stock issued to the Company or a Wholly Owned
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly Owned Subsidiary of the Company) to hold any such Preferred Stock unless
the Company or such Restricted Subsidiary would be entitled to incur or assume
Indebtedness in compliance with the "Limitation on Additional Indebtedness"
covenant in an aggregate principal amount equal to the aggregate liquidation
value of the Preferred Stock to be issued.
LIMITATION ON CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary of the Company or (ii)
permit any of its Restricted Subsidiaries to issue
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any Capital Stock other than (A) to the Company or a Wholly Owned Subsidiary of
the Company, (B) issuances or sales to foreign nationals of shares of Capital
Stock of Foreign Restricted Subsidiaries, or (C) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary, so long as in the case of this clause (c)
such issuance and sale is made as a Restricted Payment in compliance with
"--Limitation on Restricted Payments" above and any remaining Investment in such
Unrestricted Subsidiary could be made at such time in compliance with
"--Limitation on Investments" above. The foregoing restrictions will not apply
to either (x) an Asset Sale made in compliance with "--Limitation on Certain
Asset Sales" above or the issuance of Preferred Stock in compliance with
"Limitation on Preferred Stock of Restricted Subsidiaries" above or (y) a
Permitted Lien.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to (a)(i) pay dividends or make any other
distributions to the Company or any Restricted Subsidiary of the Company (A) on
its Capital Stock or (B) with respect to any other interest or participation in,
or measured by, its profits or (ii) repay any Indebtedness or any other
obligation owed to the Company or any Restricted Subsidiary of the Company, (b)
make loans or advances or capital contributions to the Company or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries, except for Permitted Liens and
for such encumbrances or restrictions existing under or by reason of (i)
encumbrances or restrictions existing on the Issue Date to the extent and in the
manner such encumbrances and restrictions are in effect on the Issue Date, (ii)
the Indenture, the Notes and the Guarantees, (iii) applicable law, (iv) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person (including any
Subsidiary of the Person), so acquired, (v) customary non-assignment provisions
in leases or other agreements; (vi) Refinancing Indebtedness; PROVIDED that such
restrictions are no more restrictive than those contained in the agreements
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded, (vii) customary restrictions in security agreements or
mortgages securing Indebtedness of the Company or a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements and mortgages, (viii) customary restrictions with respect to
a Restricted Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary or (ix) the Senior Credit
Facility.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The Company will not, and will not permit any of its Restricted
Subsidiaries, to enter into any Sale and Lease-Back Transaction unless (i) the
consideration received in such Sale and Lease-Back Transaction is at least equal
to the fair market value of the property sold, as determined in good faith by
the Board of Directors of the Company and evidenced by a board resolution and
(ii) the Company could incur the Attributable Indebtedness in respect of such
Sale and Lease-Back Transaction in compliance with "--Limitation on Additional
Indebtedness" above.
LIMITATION ON CONDUCT OF BUSINESS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, engage in any business which is not the same, similar or related to the
business in which the Company and its Restricted Subsidiaries are engaged on the
Issue Date.
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PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
CHANGE OF CONTROL OFFER
Upon the occurrence of a Change of Control, the Company will be obligated to
make an offer to purchase (the "Change of Control Offer") each holder's
outstanding Notes at a purchase price (the "Change of Control Purchase Price")
equal to (x) 101% of the Accreted Value thereof as of the Change of Control
Payment Date (as defined), if the Change of Control Payment Date is on or prior
to August 1, 2002, or (y) 101% of the principal amount at maturity, plus accrued
and unpaid interest, if any, to the Change of Control Payment Date, if the
Change of Control Payment Date is after August 1, 2002, in each case in
accordance with the procedures set forth below.
Within 20 days of the occurrence of a Change of Control, the Company will
(i) cause a notice of the Change of Control Offer to be sent at least once to
the Dow Jones News Service or similar business news service in the United States
and (ii) send by first-class mail, postage prepaid, to the Trustee and to each
holder of the Notes, at the address appearing in the register maintained by the
Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date (which
will be a Business Day no earlier than 30 days nor later than 45 days from
the date such notice is mailed (the "Change of Control Payment Date"));
(3) that any Note not tendered will continue to accrete Accreted Value
or accrue interest, as the case may be;
(4) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrete Accreted Value or accrue
interest, as the case may be, after the Change of Control Payment Date;
(5) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Change of Control
Payment Date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of the Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased;
(7) that holders whose Notes are being purchased only in part will be
issued Notes equal in principal amount at maturity to the unpurchased
portion of principal amount at maturity of the Notes surrendered;
(8) any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance; and
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(9) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment Notes or portions thereof validly tendered and
not withdrawn pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Notes or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof tendered to the Company. The Paying Agent will promptly mail to
each holder of Notes so accepted payment in an amount equal to the purchase
price for such Notes, and the Company will execute and issue, and the Trustee
will promptly authenticate and mail to such holder, a new Note equal in
principal amount at maturity to any unpurchased portion of the Notes
surrendered; provided that each such new Note will be issued in an original
principal amount in denominations of $1,000 principal amount at maturity and
integral multiples thereof.
The Indenture requires that if the Senior Credit Facility is in effect, or
any amounts are owing thereunder or in respect thereof, at the time of
occurrence of a Change of Control, prior to the mailing of the notice to holders
described in the preceding paragraph, but in any event within 20 days following
any Change of Control, the Company covenants to (i) repay in full all
obligations under or in respect of the Senior Credit Facility or offer to repay
in full all obligations under or in respect of the Senior Credit Facility and
repay the obligations under or in respect of the Senior Credit Facility of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the Senior Credit Facility to permit the repurchase of the Notes as described
above. The Company must first comply with the covenant described in the
preceding sentence before being required to purchase Notes in the event of a
Change of Control; PROVIDED that the Company's failure to comply with the
covenant described in the preceding sentence constitutes an Event of Default
described in clause (iii) under "Events of Default" below if not cured within 60
days after the notice required by such clause. As a result of the foregoing, a
holder of the Notes may not be able to compel the Company to purchase the Notes
unless the Company is able at the time to refinance all of the obligations under
or in respect of the Senior Credit Facility or obtain requisite consents under
the Senior Credit Facility. Failure by the Company to make a Change of Control
Offer when required by the Indenture constitutes a default under the Indenture
and, if not cured within 60 days after notice, constitutes an Event of Default.
The Indenture provides that (A) if the Company or any of its Restricted
Subsidiaries has issued any outstanding (i) Indebtedness that is subordinated in
right of payment to the Notes or (ii) Preferred Stock, and the Company or such
Restricted Subsidiary is required to make a change of control offer or to make a
distribution with respect to such subordinated indebtedness or Preferred Stock
in the event of a change of control, the Company will not consummate any such
offer or distribution with respect to such subordinated indebtedness or
Preferred Stock until such time as the Company will have paid the Change of
Control Purchase Price in full to the holders of Notes that have accepted the
Company's Change of Control Offer and will otherwise have consummated the Change
of Control Offer made to holders of the Notes and (B) the Company will not issue
Indebtedness that is subordinated in right of payment to the Notes or Preferred
Stock with change of control provisions requiring the payment of such
Indebtedness or Preferred Stock prior to the payment of the Notes in the event
of a Change in Control under the Indenture.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company will not sell, assign, transfer, lease, convey or otherwise
dispose of through a consolidation, amalgamation, merger or other transaction
all or substantially all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related transactions) to, any Person
unless: (i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company, are sold, assigned,
transferred, leased, conveyed or otherwise disposed of is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia and expressly assumes, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
of the obligations of the Company under the Indenture, the Notes and the
Guarantees and the obligations thereunder remain in full force and effect; (ii)
immediately before and immediately after giving effect to such transaction, no
Default or Event of Default will have occurred and be continuing; (iii)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis, the Consolidated Net Worth of the Company or such Person, as
the case may be, is at least equal to the Consolidated Net Worth of the Company
immediately before such transaction or series of transactions; and (iv)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis, the Company or such Person, as the case may be, could incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under "-- Certain Covenants -- Limitation on Additional Indebtedness" above;
PROVIDED, that a Person that is a Guarantor may merge into or amalgamate with
the Company or another Person that is a Guarantor and the Company and Holdings
may merge into or amalgamate with each other without complying with this clause
(iv).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company will deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company will be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
GUARANTEES
The Notes are guaranteed on a senior unsecured basis by each of the
Company's present and future Domestic Restricted Subsidiaries.
The obligations of each Guarantor are limited to the maximum amount that
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collection from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all of its assets or Capital Stock is sold, in each case in a
transaction in compliance with "--Certain Covenants--Limitation on Certain Asset
Sales" above, the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets in compliance with "Merger,
Consolidation or Sale of Assets" above, or the
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Guarantor is designated an Unrestricted Subsidiary in compliance with "--Certain
Covenants--Limitation on Restricted Payments," and such Guarantor has delivered
to the trustee an Officers' Certificate and an opinion of counsel, each stating
that all conditions precedent herein provided for relating to such transaction
have been complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any Accreted Value, principal of, or premium,
if any, on the Notes whether at maturity, upon redemption or otherwise;
(ii) default for 30 days in payment of any interest on the Notes;
(iii) default by the Company or any Restricted Subsidiary in the
observation or performance of the covenants set forth in the "Change of
Control Offer" covenant, or the "Merger, Consolidation or Sale of Assets"
covenant after written notice from the Trustee or the holders of not less
than 25% in aggregate principal amount at maturity of the Notes then
outstanding;
(iv) default by the Company or any Restricted Subsidiary of the Company
in the observance or performance of any other covenant in the Notes or the
Indenture for 30 days after written notice from the Trustee or the holders
of not less than 25% in aggregate principal amount at maturity of the Notes
then outstanding;
(v) default in the payment at final maturity of an aggregate amount of
$3,500,000 or more with respect to any Indebtedness of the Company or any
Restricted Subsidiary thereof, or the acceleration of any such Indebtedness
aggregating $3,500,000 or more which default is not cured, waived or
postponed pursuant to an agreement with the holders of such Indebtedness
within 60 days after written notice as provided in the Indenture, or such
acceleration is not rescinded or annulled within 30 days after written
notice as provided in the Indenture;
(vi) any final judgment or judgments (not covered by insurance) which
can no longer be appealed for the payment of money in excess of $3,500,000
is rendered against the Company or any Restricted Subsidiary thereof, and is
not discharged for any period of 60 consecutive days during which a stay of
enforcement is not in effect;
(vii) certain events involving bankruptcy, insolvency or reorganization
of the Company or any Significant Restricted Subsidiary thereof; and
(viii) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void and unenforceable or
any of the Guarantees is found to be invalid or any of the Guarantors denies
its liability under its Guarantee (other than by reason of a release of such
Guarantor in accordance with the terms of the Indenture).
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of Accreted Value or principal or
premium, if any, or interest on the Notes) if the Trustee considers it to be in
the best interest of the holders of the Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization with respect to either of the Company) will have occurred and be
continuing, then the Trustee or the holders of not less than 25% in aggregate
principal amount at maturity of the Notes then outstanding may declare the Notes
to be immediately due and payable in an amount equal to (x) the Accreted Value
of the Notes outstanding on the date of acceleration, if such declaration is
made on or prior to August 1, 2002 or (y) the entire principal amount at
maturity of the Notes outstanding on the date of acceleration plus accrued and
unpaid interest, if any, to the date of acceleration if such declaration is made
after August 1, 2002, and the same will become immediately due
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and payable; PROVIDED, that after such acceleration but before a judgment or
decree based on acceleration is obtained by the Trustee, the holders of a
majority in aggregate principal amount at maturity of outstanding Notes may,
under certain circumstances, rescind and annul such acceleration if (i) all
Events of Default, other than nonpayment of Accreted Value, principal, premium,
if any, or interest that has become due solely because of the acceleration, have
been cured or waived as provided in the Indenture, (ii) to the extent the
payment of such interest is lawful, interest on overdue installments of interest
and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, (iii) the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (iv) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the above Events of
Default, the Trustee has received an Officers' Certificate and an opinion of
counsel that such Event of Default has been cured or waived. No such rescission
will affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default resulting from certain events of bankruptcy, insolvency
or reorganization shall occur, the Accreted Value or principal and all premium
and interest with respect to all of the Notes will be due and payable
immediately without any declaration or other act on the part of the Trustee or
the holders of the Notes.
The holders of a majority in principal amount at maturity of the Notes then
outstanding will have the right to waive any existing Default or compliance with
any provision of the Indenture or the Notes and to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
subject to certain limitations provided for in the Indenture and under the TIA.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder has
previously given to the Trustee written notice of a continuing Event of Default
and unless the holders of at least 25% in aggregate principal amount at maturity
of the outstanding Notes has made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee, and unless the
Trustee has not received from the holders of a majority in aggregate principal
amount at maturity of the outstanding Notes a direction inconsistent with such
request and has failed to institute such proceeding within 60 days.
Notwithstanding the foregoing, such limitations do not apply to a suit
instituted on such Note on or after the respective due dates expressed in such
Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (a) to defease and
be discharged from any and all of its obligations with respect to the Notes
(except for the obligations to register the transfer or exchange of such Notes,
to replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain
an office or agency in respect of the Notes and to hold monies for payment in
trust) ("defeasance") or (b) to be released from its obligations under certain
covenants contained in the Indenture ("covenant defeasance") upon the deposit
with the Trustee (or other qualifying trustee), in trust for such purpose, of
money and/or non-callable U.S. government obligations which through the payment
of accreted value and interest in accordance with their terms will provide
money, in an amount sufficient to pay the Accreted Value of, premium, if any,
and interest on the Notes, on the scheduled due dates therefor or on a selected
date of redemption in accordance with the terms of the Indenture. Such a trust
may only be established if, among other things, (i) the Company has delivered to
the Trustee an opinion of counsel (as specified in the Indenture) (A) to the
effect that neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and (B)
to the effect that holders of the Notes or persons in their positions will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income tax
on the same amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not occurred (which
opinion shall, in the case of defeasance, describe either a private ruling
concerning the Notes or a published ruling of the Internal Revenue Service to
such effect), (ii) no Default or Event of Default shall have occurred and be
continuing on the date of
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such deposit or insofar as Events of Default from bankruptcy, insolvency or
reorganization events are concerned, at any time in the period ending on the
91st day after the date of deposit; (iii) such defeasance or covenant defeasance
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (iv) the Company will have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Notes over any other creditors of
the Company or with the intent of defeating, hindering, delaying or defrauding
any other creditors of the Company or others; (v) the Company will have
delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that all conditions precedent provided for or relating to the
defeasance or the covenant defeasance have been complied with; (vi) the Company
will have delivered to the Trustee an opinion of counsel to the effect that (A)
the trust funds will not be subject to any rights of holders of Indebtedness
other than the Notes and (B) after the 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' rights
generally; and (vii) certain other customary conditions precedent are satisfied.
MODIFICATION OF INDENTURE
From time to time, the Company and the Trustee may, without the consent of
holders of the Notes, amend or supplement the Indenture for certain specified
purposes, including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not adversely affect the rights of any holder. The
Indenture contains provisions permitting the Company and the Trustee, with the
consent of holders of at least a majority in principal amount at maturity of the
outstanding Notes, to modify or supplement the Indenture, except that no such
modification shall, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture, (ii) reduce the rate of or change the
time for payment of interest, including defaulted interest, on any Note, (iii)
reduce the Accreted Value or principal amount at maturity of or premium on or
change the stated maturity of any Note or change the date on which any Notes may
be subject to redemption or repurchase or reduce the redemption or repurchase
price therefor, (iv) make any Note payable in money other than that stated in
the Note or change the place of payment from New York, New York, (v) waive a
default on the payment of the Accreted Value or principal amount of, interest
on, or redemption payment with respect to any Note, (vi) make any change in
provisions of the Indenture protecting the right of each holder of Notes to
receive payment of Accreted Value or principal amount of and interest on such
Note on or after the due date thereof or to bring suit to enforce such payment,
or permitting holders of a majority in principal amount at maturity of Notes to
waive Defaults or Events of Default; or (vii) modify or change any provision of
the Indenture or the related definitions affecting the ranking of the Notes in a
manner which adversely affects the holders of Notes.
REPORTS TO HOLDERS
If the Company is subject to the periodic reporting requirements of the
Exchange Act, it will furnish the information required thereby to the Commission
and to the holders of the Notes. The Indenture provides that even if the Company
is entitled under the Exchange Act not to furnish such information to the
Commission or to the holders of the Notes, it will nonetheless continue to
furnish such information to the Commission and holders of the Notes.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 105 days after the end
of the Company's fiscal year and on or before 60 days after the end of each the
first, second and third fiscal quarters in each year an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
has
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occurred. If they do, the certificate will describe the Default or Event of
Default, its status and the intended method of cure, if any.
THE TRUSTEE
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the continuance
of an Event of Default, the Trustee will perform only such duties as are
specifically set forth in the Indenture. During the existence of an Event of
Default, the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption and,
further, is not required to transfer or exchange any Note for a period of 15
days before selection of the Notes to be redeemed.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"ACCRETED VALUE" means, as of any date prior to August 1, 2002, an amount
per $1,000 principal amount at maturity of Notes that is equal to the sum of (a)
the initial offering price of each Note and (b) the portion of the excess of the
principal amount at maturity of each Note over such initial offering price which
shall have been amortized on a daily basis and compounded semiannually on each
August 1 and February 1 at the rate of 11 3/4% per annum from the Issue Date
through the date of determination computed on the basis of a 360-day year of
twelve 30-day months; and, as of any date on or after August 1, 2002, the
Accreted Value of each Note shall mean the aggregate principal amount at
maturity of such Note.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or is merged into or consolidated with any other Person or which is
assumed in connection with the acquisition of assets from such Person and, in
each case, not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such merger,
consolidation or acquisition.
"ADJUSTED NET ASSETS" of any Person at any date shall mean the lesser of the
amount by which (x) the fair value of the property of such Person exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee of such Person at such date and
(y) the present fair salable value of the assets of such Person at such date
exceeds the amount that will be required to pay the probable liability of such
Person on its debts (after giving effect to all other fixed and contingent
liabilities and after giving effect to any collection from any subsidiary of
such Person in respect of the obligations of such Person under the Guarantee of
such Person), excluding Indebtedness in respect of the Guarantee of such Person,
as they become absolute and matured.
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"AFFILIATE" means, with respect to any specific Person, any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise PROVIDED that, for purposes of the covenant described under "--
Certain Covenants -- Limitation on Transactions with Affiliates" beneficial
ownership of at least 10% of the voting securities of a Person, either directly
or indirectly, shall be deemed to be control.
"ASSET ACQUISITION" means (a) an Investment by the Company or any Restricted
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary
of the Company, or shall be merged with or into the Company or any Restricted
Subsidiary of the Company or (b) the acquisition by the Company or any
Restricted Subsidiary of the Company of the assets of any Person (other than a
Restricted Subsidiary of the Company) which constitute all or substantially all
of the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in the
ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
assignment, transfer, lease or other disposition (including any Sale and
Lease-Back Transaction), other than to the Company or any of its Restricted
Subsidiaries, in any single transaction or series of related transactions of (a)
any Capital Stock of or other equity interest in any Restricted Subsidiary of
the Company or (b) any other property or assets of the Company or of any
Restricted Subsidiary thereof; PROVIDED that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $1,000,000,
(ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company as permitted under "-- Merger,
Consolidation or Sale of Assets," (iii) sales or other dispositions of
programming or advertising time, or inventory, receivables and other current
assets in the ordinary course of business and (iv) sales or other dispositions
of equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of the Company or its
Restricted Subsidiaries.
"ASSET SALE PROCEEDS" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary of the Company from such
Asset Sale (including cash received as consideration for the assumption of
liabilities incurred in connection with or in anticipation of such Asset Sale),
after (a) provision for all income or other taxes measured by or resulting from
such Asset Sale, (b) payment of all brokerage commissions, underwriting and
other fees and expenses related to such Asset Sale, (c) provision for minority
interest holders in any Restricted Subsidiary of the Company as a result of such
Asset Sale, (d) repayment of Indebtedness that is required to be repaid in
connection with such Asset Sale and (e) deduction of appropriate amounts to be
provided by the Company or a Restricted Subsidiary of the Company as a reserve,
in accordance with GAAP, against any liabilities associated with the assets sold
or disposed of in such Asset Sale and retained by the Company or a Restricted
Subsidiary after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other noncash consideration received by the Company or any Restricted Subsidiary
of the Company from such Asset Sale or other disposition upon the liquidation or
conversion of such notes or noncash consideration into cash.
"ATTRIBUTABLE INDEBTEDNESS" in respect of a Sale and Lease-Back Transaction
means, as at the time of determination, the greater of (i) the fair value of the
property subject to such arrangement and (ii) the present value of the total
obligations (discounted at the rate borne by the Notes, compounded semi-
annually) of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended).
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"AVAILABLE ASSET SALE PROCEEDS" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clauses (iii)(a) or (iii)(b), and which have not yet been the
basis for an Excess Proceeds Offer in accordance with clause (iii)(c) of the
first paragraph of "-- Certain Covenants -- Limitation on Certain Asset Sales".
"AVERAGE LIFE" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"BOARD OF DIRECTORS" means (i) in the case of a Person that is a
corporation, the board of directors of such Person and (ii) in the case of any
other Person, the board of directors, board of managers, management committee or
similar governing body or any authorized committee thereof responsible for the
management of the business and affairs of such Person.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
"CAPITALIZED LEASE OBLIGATIONS" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct 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, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $50,000,000; (v) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(ii) prior to the consummation of an Equity Offering as contemplated by the
first sentence in the definition thereof, the Permitted Holders shall cease
collectively to control at least a majority of the voting power of the Board of
Directors of the Company or Holdings, (iii) any Person (including a Person's
Affiliates and associates), other than a Permitted Holder, becomes the
beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of more than 50% of the total
voting power of the Common Stock of the Company or Holdings, (iv) there shall be
consummated any consolidation or merger of the Company or Holdings in which the
Common Stock of the Company or Holdings would be converted into cash, securities
or other property, other than a merger or consolidation of the Company or
Holdings in which the holders of the Common Stock of the Company or Holdings
outstanding immediately prior to the consolidation or merger
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hold, directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger, or (v)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company or Holdings
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company or Holdings has
been approved by 66 2/3% of the directors then still in office who either where
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company or Holdings.
"COMMON STOCK" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Restricted Subsidiaries on a
consolidated basis (including, but not limited to, (i) Redeemable Dividends, but
only if paid or accrued and declared, on Preferred Stock, (ii) imputed interest
included in Capitalized Lease Obligations, (iii) all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (iv) the net costs associated with hedging obligations,
(v) amortization of other financing fees and expenses, (vi) the interest portion
of any deferred payment obligation, (vii) amortization of discount or premium,
if any, and (viii) all other non-cash interest expense (other than interest
amortized to cost of sales)) plus, without duplication, all net capitalized
interest for such period and all interest incurred or paid under any guarantee
of Indebtedness (including a guarantee of principal, interest or any combination
thereof) of any Person, plus the amount of all dividends or distributions paid
on Disqualified Capital Stock (other than dividends paid or payable in shares of
Capital Stock of the Company) less the amortization of deferred financing costs.
"CONSOLIDATED LEVERAGE RATIO" means, with respect to any Person, the ratio
of (i) the sum of the aggregate outstanding amount of Indebtedness of such
Person and its Restricted Subsidiaries as of the date of calculation (the
"Transaction Date") on a consolidated basis determined in accordance with GAAP
to (ii) such Person's EBITDA for the four full fiscal quarters (the "Four
Quarter Period") ending on or prior to the date of determination for which
financial statements are available. For purposes of this definition, "EBITDA"
shall be calculated after giving effect on a pro forma basis to (i) the
incurrence or repayment of any Indebtedness of such Person or any of its
Restricted Subsidiaries (and the application of the proceeds thereof) giving
rise to the need to make such calculation and any incurrence or repayment of
other Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, including
without limitation any incurrance or repayment under the Senior Credit Facility
occurring during the Four Quarter Period or at any time subsequent to the last
day of the Four Quarter Period and on or prior to the Transaction Date, as if
such incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period and (ii)
any Asset Sales or Asset Acquisitions (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 Restricted Subsidiaries (including any Person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness and also including any
EBITDA attributable to the assets or Person which is the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period) occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period; provided that in connection with any such Asset Acquisition, such pro
forma
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calculation (i) may give effect to projected quantifiable savings in programming
costs and sales personnel (consistent with the savings actually achieved by the
Company in connection with prior acquisitions) adopted, in good faith, by the
Company or one of its Restricted Subsidiaries through a Board Resolution
certified by an Officers' Certificate filed with the Trustee and (ii) shall not
give effect to any operating losses of the acquired assets or Person. Such
Officers' Certificate shall be signed by the Chief Financial Officer and another
officer of the Company. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, the preceding sentence shall
give effect to the incurrence of such guaranteed Indebtedness, so long as such
guaranteed Indebtedness is outstanding, as if such Person or any Restricted
Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness.
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED, that (a) the Net Income of any Person (the "other Person") in which
the Person in question or any of its Restricted Subsidiaries has less than a
100% interest (other than a Restricted Subsidiary) and the Net Income of any
Unrestricted Subsidiary shall be excluded except to the extent of the amount of
dividends or distributions actually paid to the Person in question or any of its
Restricted Subsidiaries by the other Person or Unrestricted Subsidiary, as the
case may be, during such period, (b) the Net Income of any Restricted Subsidiary
of the Person in question that is subject to any restriction or limitation on
the payment of dividends or the making of other distributions to such Person
shall be excluded to the extent of such restriction or limitation, (c)(i) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (ii) any net gain (but not
loss) resulting from an Asset Sale by the Person in question or any of its
Restricted Subsidiaries other than in the ordinary course of business shall be
excluded, (d) extraordinary gains and losses shall be excluded, (e) income or
loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued) shall be excluded, and (f) in the case of a
successor to the referent Person by consolidation or merger or as a transferee
of the referent Person's assets, any earnings of the successor corporation prior
to such consolidation, merger or transfer of assets shall be excluded.
"CONSOLIDATED NET WORTH" means with respect to any Person at any date, the
consolidated stockholders' equity or members' capital of such Person less the
amount of such stockholders' equity or members' capital attributable to
Disqualified Capital Stock of such Person and its Subsidiaries, as determined
accordance with GAAP.
"DEFAULT" means any condition or event that is, or with the passage of time
or giving of any notice expressly required under the Indenture (or both) would
be, an Event of Default.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include any Preferred Stock of a Person or a Restricted
Subsidiary of such Person, with respect to either of which, under the terms of
such Preferred Stock, by agreement or otherwise, such Person or Restricted
Subsidiary is obligated to pay current dividends or distributions in cash during
the period prior to the maturity date of the Notes; PROVIDED, that Preferred
Stock of a Person or any Restricted Subsidiary thereof that is issued with the
benefit of provisions requiring a change of control offer to be made for such
Preferred Stock in the event of a change of control of such Person or Restricted
Subsidiary which provisions have substantially the same effect as the provisions
of the Indenture described under "Change of Control," shall not be deemed to be
Disqualified Capital Stock solely by virtue of such provisions.
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"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of a Person
whose jurisdiction of incorporation or formation is the United States, any State
thereof or the District of Columbia.
"EBITDA" means, with respect to any Person and its Restricted Subsidiaries,
for any period, an amount equal to (a) the sum of (i) Consolidated Net Income
for such period, plus (ii) the provision for taxes for such period based on
income or profits to the extent such income or profits were included in
computing Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (i) hereof, plus (iii) Consolidated Interest
Expense for such period (but only including Redeemable Dividends in the
calculation of such Consolidated Interest Expense to the extent that such
Redeemable Dividends have not been excluded in the calculation of Consolidated
Net Income), plus (iv) depreciation for such period on a consolidated basis,
plus (v) amortization of intangibles and radio programming obligations (net of
cash payments with respect to radio programming obligations) for such period on
a consolidated basis, plus (vi) any other non-cash items reducing Consolidated
Net Income for such period, minus (b) all non-cash items increasing Consolidated
Net Income for such period, all for such Person and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP; PROVIDED, that, for
purposes of calculating EBITDA during any fiscal quarter, cash income from a
particular Investment of such Person shall be included only (x) to the extent
cash income has been received by such Person with respect to such Investment
during each of the previous four fiscal quarters or (y) to the extent the cash
income derived from such Investment is attributable to Cash Equivalents.
"EQUITY OFFERING" means an initial public offering by the Company or
Holdings of shares of its Qualified Capital Stock (however designated and
whether voting or non-voting) and any and all rights, warrants or options to
acquire such Qualified Capital Stock, provided that such an initial public
offering includes shares of Common Stock of the Company or Holdings and with
respect to an initial public offering by Holdings, the net proceeds of such
Equity Offering are contributed to the Company as common equity. After an
initial public offering of Qualified Capital Stock of the Company or Holdings,
Equity Offering means any offering by Holdings or the Company of Qualified
Capital Stock (however designated and whether voting or non-voting) and any and
all rights, warrants or options to acquire such Qualified Capital Stock and with
respect to any offering by Holdings, the net proceeds of such Equity Offering
are contributed to the Company as common equity.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a resolution of the Board of
Directors of the Company delivered to the Trustee.
"FOREIGN RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of a Person
other than a Domestic Restricted Subsidiary.
"GAAP" means generally accepted accounting principles as in effect in the
United States as of the Issue Date.
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"GUARANTEE" means the Guarantee relating to the Notes, the Exchange Notes
and the Private Exchange Notes.
"HOLDINGS" means Radio Unica Holdings Corp., a Delaware corporation and the
Company's sole stockholder as of the Issue Date.
"INCUR" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurrable," and "incurring" shall have meanings
correlative to the foregoing); PROVIDED that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"INDEBTEDNESS" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables or liabilities arising from distribution guarantees
entered into by the Company or any Restricted Subsidiary in the ordinary course
of business, and other accrued liabilities arising in the ordinary course of
business) if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations of such Person, (ii) obligations secured by a lien
to which the property or assets owned or held by such Person is subject, whether
or not the obligation or obligations secured thereby shall have been assumed
(PROVIDED, that if such obligation or obligations shall not have been assumed,
the amount of such Indebtedness shall be deemed to be the lesser of the
principal amount of the obligation or the fair market value of the pledged
property or assets), (iii) guarantees of items of other Persons which would be
included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) Disqualified Capital
Stock of such Person or any Restricted Subsidiary thereof, and (vi) obligations
of any such Person under any currency agreement or any Interest Rate Agreement
applicable to any of the foregoing (if and to the extent such currency agreement
or Interest Rate Agreement obligations would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations described above, the maximum liability upon the
occurrence of the contingency giving rise to the obligation; PROVIDED that (i)
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the principal amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP and (ii) Indebtedness shall not
include any liability for federal, state, local or other taxes. Notwithstanding
any other provision of the foregoing definition, (i) any trade payable arising
from the purchase of goods or materials or for services obtained and (ii)
ordinary recurring radio programming obligations entered into in the ordinary
course of business shall not be deemed to be "Indebtedness" of the Company or
any of its Restricted Subsidiaries for purposes of this definition. Furthermore,
guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall not
also be included.
"INDEPENDENT FINANCIAL ADVISOR" means an investment banking firm of national
reputation in the United States (i) which does not, and whose directors and
officers or Affiliates do not, have a direct or indirect financial interest in
the Company and (ii) which, in the judgment of the Board of Directors of the
Company, is otherwise independent and qualified to perform the task for which it
is to be engaged.
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"INTEREST RATE AGREEMENT" means, with respect to any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"INVESTMENTS" means, with respect of any Person, directly or indirectly, any
advance, account receivable (other than an account receivable arising in the
ordinary course of business of such Person), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any Capital Stock,
bonds, notes, debentures, partnership or joint venture interests or other
securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments shall exclude (i) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices of such Person, (ii)
the making of distribution guarantees in the ordinary course of business and
(iii) the repurchase of securities of any Person by such Person. For the
purposes of the "Limitation on Restricted Payments" covenant, (i) "Investment"
shall include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Subsidiaries, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment, reduced by the payment of dividends
or distributions in connection with such Investment or any other amounts
received in respect of such Investment; PROVIDED that no such payment of
dividends or distributions or receipt of any such other amounts shall reduce the
amount of any Investment if such payment of dividends or distributions or
receipt of any such amounts would be included in Consolidated Net Income. If the
Company or any Restricted Subsidiary of the Company sells or otherwise disposes
of any Common Stock of any direct or indirect Restricted Subsidiary of the
Company such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, greater than 50% of the
outstanding Common Stock of such Restricted Subsidiary, the Company will be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such Restricted Subsidiary
not sold or disposed of.
"ISSUE DATE" means July 27, 1998.
"LIEN" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"NET INCOME" means, with respect to any Person, for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"NET INVESTMENT" means, with respect to any Person, the excess of (i) the
aggregate amount of all Investments in Unrestricted Subsidiaries or joint
ventures made by such Person on or after the Issue Date (in the case of an
Investment made other than in cash, the amount shall be the fair market value of
such Investment as determined in good faith by the Board of Directors of such
Person) over (ii) the sum of (A) the aggregate amount returned in cash on such
Investments whether through interest payments, principal payments, dividends or
other distributions and (B) the Net Proceeds received by such Person from the
disposition of all or any portion of such Investments (other than to a
Subsidiary of such Person); PROVIDED, that with respect to all Investments made
in an Unrestricted Subsidiary the sum of clauses (A) and (B) above with respect
to such Investments shall not exceed the aggregate amount of all such
Investments made in such Unrestricted Subsidiary.
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"NET PROCEEDS" means (a) in the case of any sale or issuance of Capital
Stock by or equity contribution to any Person, the aggregate net proceeds
received by such Person, after payment of expenses, commissions and the like
incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors of such Person, at the time of receipt) and (b) in the
case of any exchange, exercise, conversion or surrender of outstanding
securities of any kind for or into shares of Capital Stock of the Company which
is not Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid by the holder to such Person upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by such Person in connection therewith).
"NOTES" means the Old Notes, the New Notes and the Private Exchange Notes.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of the Indenture.
"PERMITTED ASSET SWAP" means any transfer of properties or assets by the
Company or any of its Subsidiaries in which at least 90% of the consideration
received by the transferor consists of properties or assets (other than cash)
that will be used in the business of the transferor; PROVIDED, that (i) the
aggregate fair market value (as determined in good faith by the Board of
Directors) of the property or assets being transferred by the Company or such
Subsidiary is not greater than the aggregate fair market value (as determined in
good faith by the Board of Directors) of the property or assets received by the
Company or such Subsidiary in such exchange and (ii) the aggregate fair market
value (as determined in good faith by the Board of Directors) of all property or
assets transferred by the Company and any of its Subsidiaries in connection with
exchanges in any period of twelve consecutive months shall not exceed 15% of the
total assets of the Company on the last day of the preceding fiscal year.
"PERMITTED HOLDERS" means (a) Warburg, Pincus Ventures, L.P. and any
successor funds, (b) Joaquin F. Blaya, Herbert M. Levin and Steven E. Dawson and
(c) any spouse and any trust, holding company, or similar entity established by
and controlled by any of (b) for the principal benefit of any of them or their
spouses, lineal descendents or other family members.
"PERMITTED INDEBTEDNESS" means:
(i) Indebtedness of the Company or any Restricted Subsidiary arising under
or in connection with the Senior Credit Facility in an aggregate principal
amount not to exceed $20.0 million outstanding at any time;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness of the Company or any Restricted Subsidiary outstanding
on the Issue Date;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another Restricted
Subsidiary; PROVIDED that (A) if the Company is the obligor on such
Indebtedness, such Indebtedness (x) does not mature prior to the Stated Maturity
of the Notes and has an Average Life longer than the Notes and (y) is unsecured
and expressly subordinated to the payment in full in cash of all obligations in
respect of the Notes and (B)(I) any subsequent issuance or transfer of equity
interests that results in any such Indebtedness being held by a Person other
than the Company or a Restricted Subsidiary of the Company and (II) any sale or
transfer of any such Indebtedness to a Person other than the Company or a
Restricted Subsidiary of the Company will be deemed to constitute an incurrence
of Indebtedness by the Company or such Restricted Subsidiary not permitted by
this clause (iv);
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(v) Purchase Money Indebtedness and Capitalized Lease Obligations of the
Company or any of its Restricted Subsidiaries incurred to acquire property in
the ordinary course of business which Purchase Money Indebtedness and
Capitalized Lease Obligations do not in the aggregate exceed $5.0 million
outstanding at any time;
(vi) Interest Rate Agreements;
(vii) Refinancing Indebtedness;
(viii) fidelity, performance, appeal, surety or similar bonds incurred or
provided in the ordinary course of business;
(ix) any guarantee of Indebtedness of the Company or any Restricted
Subsidiary which Indebtedness is otherwise permitted to be incurred in
accordance with the Indenture;
(x) Contingent obligations of the Company or its Restricted Subsidiaries in
respect of customary indemnification and purchase price adjustment obligations
incurred in connection with an Asset Sale including transactions excluded from
clause (b)(i) of the definition of "Asset Sale"; PROVIDED, that the maximum
assumable liability in respect of all such obligations shall at no time exceed
the gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such Asset Sale; and
(xi) additional Indebtedness of the Company not to exceed $10.0 million in
aggregate principal amount at any one time outstanding.
For purposes of determining compliance with the covenant "Limitation on
Additional Indebtedness", in the event that an item of Indebtedness meets the
criteria of more than one of the categories of this definition described in
clauses (i) through (xi) above or is permitted to be incurred pursuant to the
first paragraph of the covenant "Limitation on Additional Indebtedness" and also
meets the criteria of one or more of the categories of this definition described
in clauses (i) through (xi) above, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this
covenant and may from time to time reclassify such item of Indebtedness in any
manner in which such item could be incurred at the time of such
reclassification.
"PERMITTED INVESTMENTS" means Investments made on or after the Issue Date
consisting of
(i) Investments by the Company, or by a Restricted Subsidiary thereof, in
the Company or a Restricted Subsidiary of the Company;
(ii) Investments by the Company, or by a Subsidiary thereof, in a Person, if
as a result of such Investment (a) such Person becomes a Restricted Subsidiary
of the Company or (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary thereof;
(iii) Investments in cash and Cash Equivalents;
(iv) reasonable and customary advances made to employees in connection with
their relocation or for travel or other expenses and loans to employees not to
exceed $1,500,000 in the aggregate at any one time outstanding;
(v) an Investment that is made by the Company or a Restricted Subsidiary
thereof in the form of any Capital Stock, bonds, notes, debentures, partnership
or joint venture interests or other securities that are issued by a third party
to the Company or such Restricted Subsidiary solely as partial consideration for
the consummation of an Asset Sale that is otherwise permitted under "--Certain
Covenants -- Limitation on Certain Asset Sales" above;
(vi) Interest Rate Agreements entered into in the ordinary course of the
Company's or its Restricted Subsidiaries' business;
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(vii) deposits made pursuant to agreements to acquire, or pursuant to
agreements with options to acquire, radio station licenses and related assets
(or Capital Stock of Persons owning such assets), in an amount not to exceed 10%
of the purchase price; provided that the station to be acquired will be owned by
the Company or a Restricted Subsidiary upon consummation of the contemplated
acquisition and provided, further, that deposits made under this clause shall
cease to be treated as Permitted Investments upon forfeit of such deposit for
any reason; and
(viii) additional Investments not to exceed $6.0 million at any one time
outstanding.
"PERMITTED LIENS" means (i) Liens on property or assets of, or any shares of
Capital Stock of or secured indebtedness of, any corporation existing at the
time such corporation becomes a Restricted Subsidiary of the Company or at the
time such corporation is merged into the Company or any of its Restricted
Subsidiaries; PROVIDED that such Liens are not incurred in connection with, or
in contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; PROVIDED that any such Lien does not
extend to or cover any Property, Capital Stock or Indebtedness other than the
Property, shares or debt securing the Indebtedness so refunded, refinanced or
extended, (iii) Liens in favor of the Company or any of its Restricted
Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens to secure
Purchase Money Indebtedness; PROVIDED that (a) any such Lien is created solely
for the purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes, installation
and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of such Property,
(b) the principal amount of the Indebtedness secured by such Lien does not
exceed 100% of such costs and (c) such Lien does not extend to or cover any
Property other than such item of Property and any improvements on such item,
(vi) Liens securing Capitalized Lease Obligations; PROVIDED that such Lien does
not extend to any property other than that subject to the underlying lease,
(vii) statutory liens or landlords', carriers', warehousemens', mechanics',
suppliers', materialmens', repairmens' or other like Liens arising in the
ordinary course of business with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, (viii) Liens for taxes, assessments or
governmental charges that are not delinquent or that are being contested in good
faith by appropriate proceedings, (ix) Liens incurred or deposits made in the
ordinary course of business in connection with workers-compensation,
unemployment insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business consistent
with past practice in connection therewith, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money), (x)
judgment Liens not giving rise to an Event of Default; (xi) easements,
rights-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries, (xii) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof, (xiii)
Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Company or any of its
Subsidiaries, including rights of offset and set-off, (xiv) Liens securing
Interest Rate Agreements which Interest Rate Agreements relate to Indebtedness
that it otherwise permitted under this Indenture, (xv) Liens not covered by any
other clause of this definition which are existing on the Issue Date and (xvi)
Liens securing Indebtedness under the Senior Credit Facility.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
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"PREFERRED STOCK" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness incurred by a Person to
finance the cost (including the cost of construction) of an item of Property
purchased in the ordinary course of business, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified
Capital Stock.
"REDEEMABLE DIVIDEND" means, for any dividend or distribution with regard to
Disqualified Capital Stock, the quotient of the dividend or distribution divided
by the difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Disqualified Capital Stock.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company outstanding on the Issue Date
(including, without limitation, the Notes) or other Indebtedness permitted to be
incurred by the Company pursuant to the first paragraph of the covenant
described under "Certain Covenants -- Limitation on Additional Indebtedness" or
by the Company or its Restricted Subsidiaries pursuant to the definition of
"Permitted Indebtedness", but only to the extent that (i) the Refinancing
Indebtedness is subordinated to the Notes to at least the same extent as the
Indebtedness being refunded, refinanced or extended, if at all, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Stated Maturity of the Indebtedness being refunded, refinanced or extended, or
(b) after the Stated Maturity of the Notes, (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the Stated
Maturity of the Notes has an Average Life at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Average Life of
the portion of the Indebtedness being refunded, refinanced or extended that is
scheduled to mature on or prior to the Stated Maturity of the Notes, (iv) such
Refinancing Indebtedness is in an aggregate principal amount that is equal to or
less than the sum of (a) the aggregate principal amount then outstanding under
the Indebtedness being refunded, refinanced or extended, (b) the amount of
accrued and unpaid interest, if any, and premiums owed, if any, not in excess of
preexisting prepayment provisions on such Indebtedness being refunded,
refinanced or extended and (c) the amount of customary fees, expenses and costs
related to the incurrence of such Refinancing Indebtedness and (v) such
Refinancing Indebtedness is incurred by the same Person that initially incurred
the Indebtedness being refunded, refinanced or extended except that the Company
may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness
of any Wholly Owned Subsidiary of the Company.
"RESTRICTED PAYMENT" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
such Capital Stock (other than Disqualified Capital Stock) and (y) in the case
of Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly Owned Subsidiary of the Company, excluding
Disqualified Capital Stock) or any option, warrants or other rights to purchase
such Capital Stock, (iii) the making of any principal payment on, or the
purchase, defeasance, repurchase, redemption or other
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acquisition or retirement for value, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, of any Indebtedness which is
subordinated in right of payment to the Notes (other than subordinated
Indebtedness acquired in anticipation of satisfying a scheduled sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition), (iv) the making of any Investment (other than
a Permitted Investment) or guarantee of any Investment (other than a Permitted
Investment) in any Person, (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (vi) forgiveness of any Indebtedness of an Affiliate
of the Company to the Company or a Restricted Subsidiary of the Company. For
purposes of determining the amount expended for Restricted Payments, cash
distributed or invested shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the direct or indirect Subsidiaries
of the Company existing as of the Issue Date. The Board of Directors of the
Company may designate any Unrestricted Subsidiary or any Person to be acquired
that is to become a Subsidiary as a Restricted Subsidiary if immediately after
giving pro forma effect to such action (and treating any Acquired Indebtedness
as having been incurred at the time of such action), (i) no Default or Event of
Default shall have occurred and be continuing (or would result therefrom) and
(ii) in the case of the designation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the Company could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under "-- Certain Covenants --
Limitation on Additional Indebtedness" above. Any such designation by the Board
of Directors 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.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal property, which property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"SENIOR CREDIT FACILITY" means the Credit Agreement, dated as of July 8,
1998, among the Company, the guarantors party thereto, Canadian Imperial Bank of
Commerce, as agent and fronting lender, and the financial institutions party
thereto, as lenders, as amended as of the Issue Date, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding Restricted Subsidiaries of the Company
as additional borrowers or guarantors thereunder (PROVIDED that such increase in
borrowings or adding Subsidiaries as additional borrowers or guarantors is
permitted by the applicable covenants under the Indenture) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means a Restricted Subsidiary that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act and the Exchange Act.
"STATED MATURITY" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"SUBSIDIARY" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which more
than 50% of the total voting power of the Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof
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is held by such first-named Person or any of its Subsidiaries; or (ii) in the
case of a partnership, joint venture, association or other business entity, with
respect to which such first-named Person or any of its Subsidiaries has the
power to direct or cause the direction of the management and policies of such
entity by contract or otherwise or if in accordance with GAAP such entity is
consolidated with the first-named Person for financial statement purposes.
"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 in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Company or any Restricted Subsidiary; PROVIDED, that neither the Company
nor its Restricted Subsidiaries has any Guarantee of any Indebtedness of such
Subsidiary outstanding at the time of such designation and such designation
would be permitted under the covenant described under "-- Limitation on
Restricted Payments." Any such designation by the Board of Directors 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.
"WHOLLY OWNED SUBSIDIARY" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were offered and sold to qualified institutional buyers
("QIBs") in reliance on Rule 144A of the Securities Act" ("Rule 144A Notes"). In
addition, Old Notes may subsequently be transferred to institutional "accredited
investors" ("Other Notes") within the meaning of subparagraph (a)(1), (2), (3)
or (7) of Rule 501 of Regulation D of the Securities Act ("Institutional
Accredited Investors") in transactions exempt from registration under the
Securities Act or pursuant to Regulation S of the Securities Act ("Regulation
S").
New Notes initially will be represented by one or more Notes in registered,
global form without coupons (collectively, the "Global Note") and will be
deposited upon issuance with the Trustee as custodian for The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC, in each case for
credit to an account of a direct or indirect participant as described below.
Beneficial interests in the Global Note will be shown on, and transfers thereof
will be effected through, records maintained by DTC and its participants.
Except as set forth below, the Global Note may be transferred, in whole but
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Notes for Certificated Notes." In addition, transfer
of beneficial interests in the Global Note will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants (including,
if applicable, those of Euroclear System ("Euroclear") and Cedel Bank, S.A.
("CEDEL"), which may change from time to time.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITORY PROCEDURES. DTC has advised the Company that DTC is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between the Participants
through electronic book-entry changes in accounts of the Participants. The
Participants include securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers,
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dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and the Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global Note, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Note and (ii) ownership of such interests in the Global
Note will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Note).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of the Participants, which in
turn act on behalf of the Indirect Participants and certain banks, the ability
of a person having beneficial interests in the Global Note to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Notes, see "--Exchange of Book-Entry
Notes for Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of (and premium, if any) and interest
on a Global Note registered in the name of DTC or its nominee will be payable to
DTC or its nominee in its capacity as the registered holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Notes, including the Global Note, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, none of the Company, the Trustee
nor any agent of the Company or the Trustee has or will have any responsibility
or liability for (i) any aspect or accuracy of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership or (ii) any other matter relating to the actions and practices of DTC
or any of the Participants or the Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount at maturity of beneficial interests in the relevant
security as shown on the records of DTC. Payments by the Participants and the
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practices and will not be the responsibility
of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be
liable for any delay by DTC or any of the Participants in identifying the
beneficial owners of the Notes, and the Company and the Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
as the registered owner of the Global Note for all purposes.
Except for trades involving only Euroclear and CEDEL participants, interests
in the Global Notes will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in such interests will therefore settle in
immediately available funds, subject in all cases to the rules and procedures of
DTC and the Participants.
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Transfers between Participants in DTC will be effected in accordance with
DTC's procedures and will be settled in same-day funds. Transfers between
accountholders in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between the accountholders in DTC, on the one hand,
and directly or indirectly through Euroclear or CEDEL accountholders, on the
other hand, will be effected through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective depository;
however, such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depository to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear and CEDEL accountholders may not deliver
instructions directly to the depositories for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL accountholder purchasing an interest in the Global Note from an
accountholder in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear or CEDEL) immediately
following the settlement date of DTC. Cash received in Euroclear or CEDEL as a
result of sales of interests in a Global Note by or through a Euroclear or CEDEL
accountholder to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or CEDEL
cash account only as of the business day for Euroclear or CEDEL following DTC's
settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Global Note are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-Exchange of Book-Entry Notes for
Certificated Notes" occurs, DTC reserves the right to exchange the Global Note
for Notes in certificated form and to distribute such Notes to its Participants.
The information in this Section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Note among accountholders in DTC
and accountholders of Euroclear and CEDEL, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee nor any agent of
the Company or the Trustee will have any responsibility for the performance by
DTC, Euroclear or CEDEL or their respective participants, indirect participants
or accountholders of their respective obligations under the rules and procedures
governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES. The Global Note is
exchangeable for definitive Notes in registered certificated form only if (i)
DTC (x) notifies the Company that it is unwilling or unable to continue as
depository for the Global Note and the Company thereupon fails to appoint a
successor depository or (y) has ceased to be a clearing agency registered under
the Exchange Act, (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of the Notes in certificated form
or (iii) there shall have occurred and be continuing a Default or an Event of
Default with respect to the Notes. In all cases, certificated Notes delivered in
exchange for any Global Note or beneficial interests therein will be registered
in the names, and issued in any approved denominations, requested by or on
behalf of DTC (in accordance with its customary procedures).
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CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS
The following discussion is a general summary of certain United States
Federal income tax considerations associated with the exchange of Old Notes for
New Notes and the ownership and disposition of the Notes. This discussion is
based upon existing United States Federal income tax law, which is subject to
change, possibly retroactively. This discussion does not describe all relevant
aspects of United States Federal income taxation that may be important to
particular Holders in light of their individual investment circumstances or
certain types of Holders subject to special tax rules (E.G., financial
institutions, insurance companies, broker-dealers, tax-exempt organizations or,
except to the extent discussed below, Non-U.S. Holders (as defined below) or to
persons that hold or will hold the Notes as part of a straddle, hedging, or
synthetic security transaction, all of whom may be subject to tax rules that
differ significantly from those described below. In addition, this discussion
does not describe any foreign, state or local tax considerations. This summary
addresses tax consequences only to current Holders of the Notes and assumes that
such Holders hold their Notes as "capital assets" (generally, property held for
investment) for United States Federal income tax purposes. PROSPECTIVE HOLDERS
OF THE NEW NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE
PARTICULAR TAX CONSEQUENCES OF EXCHANGING SUCH HOLDER'S OLD NOTES FOR THE NEW
NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
INCOME AND OTHER TAX LAWS.
For purposes of this discussion, a "U.S. Holder" means (i) an individual
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate that is subject to United States
Federal income taxation without regard to the source of its income, or (iv) a
trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the trust. For
purposes of this discussion, a "Non-U.S. Holder" means any holder who is not a
U.S. Holder.
EXCHANGE OFFER
There will be no United States Federal income tax consequences to a U.S.
Holder or Non-U.S. Holder exchanging an Old Note for a New Note pursuant to the
Exchange Offer and such holder will have the same adjusted basis and holding
period in the New Note as it had in the Old Note immediately before the
exchange.
U.S. HOLDERS
STATED INTEREST
Payments of stated interest on the Notes will not be separately taxable to
U.S. Holders, but, instead, will be includible in income as original issue
discount ("OID") on an accrual basis, as described below.
ORIGINAL ISSUE DISCOUNT
The Notes will be treated as issued with OID. For United States Federal
income tax purposes, U.S. Holders generally must accrue OID in gross income over
the term of the Notes on a constant yield basis, regardless of their regular
method of tax accounting. As a result, U.S. Holders will recognize taxable
income in respect of the Notes in advance of the receipt of cash attributable to
such income.
The amount of OID on a Note will equal the excess of the stated redemption
price at maturity over the issue price. For this purpose, the "issue price" of a
Note is the first price at which a substantial amount of Notes is sold for cash
(other than to bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers). Additionally,
the "stated redemption price at maturity" of a Note is the sum of all payments
due under the Note, other than payments of qualified
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stated interest. "Qualified stated interest" is any interest that is
unconditionally payable in cash or in property at least annually at a single
fixed rate.
Prior to August 1, 2002, there will not be any cash payments of interest on
the Notes. Accordingly, none of the payments of interest on a Note will be
considered "unconditionally payable at least annually at a single fixed rate"
under applicable Treasury Regulations and thus none of such payments will be
characterized as interest for U.S. Federal income tax purposes that is taxable
to cash and accrual basis taxpayers when received or accrued, respectively.
Instead, all such payments must be included in the calculations of the Notes'
stated redemption price at maturity and thus will be characterized as OID
taxable under the rules described below.
For each taxable year of a U.S. Holder, the amount of OID that must be
included in gross income in respect of a Note will be the sum of the daily
portions of OID for each day during such taxable year or portion thereof in
which such U.S. Holder held the Note. Such daily portions are determined by
allocating to each day in an accrual period a pro rata portion of the OID
allocable to that accrual period. Accrual periods may be of any length and may
vary in length over the term of the Note, provided that each accrual period is
not longer than one year and each scheduled payment of principal or interest
occurs on the first day or the final day of such period. The amount of OID
allocable to any accrual period generally will equal the product of the Note's
adjusted issue price at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period). The adjusted
issue price of a Note at the beginning of any accrual period will equal the
issue price of the Note, as defined above, increased by previously accrued OID
from prior accrual periods, and reduced by any payments made on such a Note
(e.g., the cash payments commencing on August 1, 2002) on or before the first
day of the accrual period.
The Company does not intend to treat the possibility of an optional
redemption or repurchase of the Notes as giving rise to any additional accrual
of OID, or recognition of ordinary income upon redemption, sale or exchange of
the Notes. U.S. Holders may wish to consult with their tax advisors regarding
the Treasury Regulations dealing with the treatment of certain contingencies.
DISPOSITION OF NOTES
In general, a U.S. Holder will have an adjusted tax basis for a Note equal
to the Note's purchase price, increased by the amount of OID previously included
in gross income by the U.S. Holder and reduced by prior payments made to the
U.S. Holder in respect of such Note. Upon the redemption, sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize capital gain or
loss equal to the difference between the amount realized upon the redemption,
sale, exchange or retirement and the adjusted tax basis of the Note. Any such
capital gain or loss will be long-term capital gain or loss if the holding
period of the Note exceeds one year at the time of the disposition. Under
recently adopted amendments to the Internal Revenue Code, net capital gain
recognized by an individual investor upon a disposition of property that has
been held for more than 12 months will generally be subject to a maximum tax
rate of 20% or, in the case of property that has been held for 12 months or
less, will generally be subject to tax at ordinary income tax rates. Capital
losses are subject to limitations on deductibility for U.S. Federal income tax
purposes.
MARKET DISCOUNT AND ACQUISITION PREMIUM
U.S. Holders, other than original purchasers of the Old Notes in the
original offering, should be aware that the sale of the New Notes may be
affected by the market discount and acquisition premium provisions of the Code.
MARKET DISCOUNT RULES. The market discount rules generally provide that if
a U.S. Holder of a Note purchased the Note, subsequent to the original offering,
at a "market discount" (I.E., at an amount less than the adjusted issue price of
the Note as determined on the date of such purchase) in excess of a
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statutorily-defined DE MINIMIS amount, and thereafter recognizes gain upon a
disposition (including a partial redemption) of the New Note received in
exchange for an Old Note, the lesser of such gain or the portion of the market
discount that accrued while the Old Note and New Note were held by such U.S.
Holder will be treated as ordinary interest income at the time of disposition.
The rules also provide that a U.S. Holder who acquires a Note at a market
discount may be required to defer a portion of any interest expense that may
otherwise be deductible on any indebtedness incurred or maintained to purchase
or carry such Note until the U.S. Holder disposes of such Note in a taxable
transaction. If a holder of such Note elects to include market discount in
income currently, both of the foregoing rules would not apply.
ACQUISITION PREMIUM RULES. The acquisition premium rules generally provide
that if a U.S. Holder of a Note purchased the Note, subsequent to the original
offering, at an acquisition premium (I.E., at an amount greater than the
adjusted issue price of the Note as determined on the date of such purchase),
the amount of original issue discount that the U.S. Holder includes in gross
income is reduced to reflect such acquisition premium. Acquisition premium is
allocated on a pro rata basis to each accrual of original issue discount
reducing original issue discount by a constant fraction, the numerator of which
is the excess of the adjusted basis of the Note over its adjusted issue price
and the denominator of which is the excess of the sum of all amounts payable on
the Note after the purchase date over its adjusted issue price.
NON-U.S. HOLDERS
Under present United States Federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest to, and accruals of OID by, any Non-U.S. Holder
generally will not be subject to United States Federal income or
withholding tax, provided that (1) the Non-U.S. Holder does not actually
or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote, (2) the Non-U.S.
Holder is not a controlled foreign corporation that is related to the
Company through stock ownership, and (3) such interest payments are not
effectively connected with the conduct of a United States trade or
business of the Non-U.S. Holder;
(b) a Non-U.S. Holder generally will not be subject to the United States
Federal income tax on gain realized on the sale, exchange or other
disposition of the Note, unless (1) such Non-U.S. Holder is an individual
who is present in the United States for 183 days or more during the
taxable year and certain other requirements are met or (2) the gain is
effectively connected with the conduct of a United States trade or
business of the Non-U.S. Holder or (3) the Non-U.S. Holder is subject to
certain provisions applicable to certain U.S. expatriated persons; and
(c) if interest on the Notes is exempt from withholding of United States
Federal income tax under the rules described in clause (a) above, the
Notes will not be included in the estate of a deceased Non-U.S. Holder
for United States Federal estate tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or substantially similar substitute form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
principal and interest on a Note, and the proceeds of the sale of a Note before
maturity within the United States (and, under certain circumstances, outside of
the United States) to, and to the accrual of original issue discount with
respect to, non-corporate Holders. A Holder of a Note may be subject to backup
withholding at the rate of 31% with respect to interest paid on the Note and
proceeds from the sale, exchange, redemption or retirement of the Note, unless
such Holder (a) is a corporation or comes within certain other exempt
categories, and,
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when required, demonstrates such fact, (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding rules or (c) in the case of a Non-U.S. Holder, such holder certifies
as to its status as a Non-U.S. Holder on an Internal Revenue Service Form W-8 or
substantially similar substitute form. A U.S. Holder who does not provide the
Company with the Holder's correct taxpayer identification number may be subject
to penalties imposed by the Internal Revenue Service.
Amounts withheld under the backup withholding rules may be credited against
a Holder's tax liability, and a Holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the Internal Revenue Service.
RECENTLY ISSUED TREASURY REGULATIONS
The U.S. Treasury Department recently issued final Treasury Regulations
governing information reporting and the certification procedures regarding
withholding and backup withholding on certain amounts paid to Non-U.S. Holders
after December 31, 1999. The new Treasury Regulations generally would not alter
the treatment of Non-U.S. Holders described above. The new Treasury Regulations
would alter the procedures for claiming the benefits of an income tax treaty and
may change the certification procedures relating to the receipt by
intermediaries of payments on behalf of a beneficial owner of a Note.
Prospective investors should consult their tax advisors concerning the effect,
if any, of such new Treasury Regulations on an investment in the Notes.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by any person subject to
the prospectus delivery requirements of the Securities Act, including any
participating broker-dealer, in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that it will use its reasonable best efforts to make this Prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
such resale for such period of time as such broker-dealer must comply with the
requirements of the Securities Act (which period shall not exceed 180 days from
the date the Registration Statement becomes effective).
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any 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, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Starting on the Expiration Date the Company 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 has agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the validity of the New Notes will
be passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1997
and December 31, 1996 and for the period from September 12, 1996 (inception)
through December 31, 1996, the year ended December 31, 1997 and for the
cumulative period from September 12, 1996 (inception) through December 31, 1997
appearing in this Prospectus and Registration Statement, have been audited by
Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
99
<PAGE>
The financial statements of 13 Radio Corporation as of December 31, 1997 and
December 31, 1996 and for each of the two years in the period ended December 31,
1997 appearing in this Prospectus and Registration Statement, have been audited
by Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The financial statements of Oro Spanish Broadcasting, Inc. as of August 31,
1997 and August 31, 1996 and for each of the two years in the period ended
August 31, 1997 appearing in this Prospectus and Registration Statement, have
been audited by Miller, Kaplan, Arase & Co., LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
100
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
RADIO UNICA CORP.
Report of Independent Certified Public Accountants....................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................. F-3
Consolidated Statements of Operations for the period from September 12, 1996 through December 31, 1996,
for the year ended December 31, 1997, and cumulative from September 12, 1996 through December 31,
1997................................................................................................... F-4
Consolidated Statements of Changes in Series A Redeemable Cumulative Preferred Stock and Stockholders'
Equity (Deficit)....................................................................................... F-5
Consolidated Statements of Cash Flows for the period from September 12, 1996 through December 31, 1996,
for the year ended December 31, 1997, and Cumulative from September 12, 1996 through December 31,
1997................................................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-7
Consolidated Balance Sheet (Unaudited) as of June 30, 1998............................................... F-18
Consolidated Statement of Operations (Unaudited) for the six months ended June 30, 1997 and 1998......... F-19
Consolidated Statement of Cash Flows (Unaudited) for the six months ended June 30, 1997 and 1998......... F-20
Notes to Consolidated Financial Statements (Unaudited)................................................... F-21
13 RADIO CORPORATION
Report of Independent Certified Public Accountants....................................................... F-27
Balance Sheets as of December 31, 1996 and 1997.......................................................... F-28
Statements of Operations and Accumulated Deficit for the Pre-Acquisition year ended December 31, 1996 and
the Post-Acquisition year ended December 31, 1997...................................................... F-29
Statements of Cash Flows for the Pre-Acquisition year ended December 31, 1996 and the Post-Acquisition
year ended December 31, 1997........................................................................... F-30
Notes to Consolidated Financial Statements............................................................... F-31
ORO SPANISH BROADCASTING, INC.
Independent Auditors' Report............................................................................. F-36
Independent Accountants' Report.......................................................................... F-37
Balance Sheets as of August 31, 1996 and 1997 and February 28, 1998...................................... F-38
Statements of Operations and Accumulated Deficit for the year ended August 31, 1996 and 1997 and for the
six months ended February 28, 1997 and 1998............................................................ F-39
Statements of Cash Flows for the years ended August 31, 1996 and 1997 and for the six months ended
February 28, 1997 and 1998............................................................................. F-40
Notes to Financial Statements............................................................................ F-41
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Radio Unica Corp.
We have audited the accompanying consolidated balance sheets of Radio Unica
Corp. and subsidiaries (a development stage company) as of December 31, 1996 and
1997, and the related consolidated statements of operations, changes in Series A
redeemable cumulative preferred stock and stockholders' equity (deficit) and
cash flows for the period from September 12, 1996 (inception) through December
31, 1996, the year ended December 31, 1997, and for the cumulative period from
September 12, 1996 (inception) through December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly in all material respects, the financial position of Radio Unica
Corp. and subsidiaries (a development stage company) as of December 31, 1996 and
1997, and the results of their operations and their cash flows for the period
from September 12, 1996 (inception) through December 31, 1996, the year ended
December 31, 1997 and for the cumulative period from September 12, 1996
(inception) through December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Miami, Florida
June 5, 1998
F-2
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
<S> <C> <C>
1996 1997
---------- -------------
ASSETS
Current assets:
Cash and cash equivalents............................................................ $ 5,000 $ 1,126,862
Prepaid expenses..................................................................... -- 554,000
Radio broadcasting rights............................................................ -- 2,650,000
---------- -------------
Total current assets................................................................... 5,000 4,330,862
Property and equipment................................................................. -- 1,221,995
Advances to equity investee............................................................ -- 1,016,590
Other assets........................................................................... -- 108,641
---------- -------------
$ 5,000 $ 6,678,088
---------- -------------
---------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable..................................................................... $ -- $ 354,120
Accrued expenses..................................................................... -- 179,549
Radio broadcasting rights obligation................................................. -- 2,385,000
Notes payable to stockholders........................................................ -- 365,000
---------- -------------
Total current liabilities.............................................................. -- 3,283,669
Commitments and contingencies
Series A redeemable cumulative preferred stock, $.01 par value, 450,000 shares
authorized; none and 51,975 shares issued and outstanding in 1996 and 1997,
respectively......................................................................... -- 5,316,990
Stockholders' equity (deficit):
Common stock $.10 and $.01 par value in 1996 and 1997, respectively; 100,000 shares
authorized; 3,000 and 5,250 shares issued and outstanding in 1996 and 1997,
respectively....................................................................... 300 53
Additional paid-in capital (deficiency).............................................. 44,700 (67,043)
Deficit accumulated during the development stage..................................... (40,000) (1,855,581)
---------- -------------
Total stockholders' equity (deficit)................................................... 5,000 (1,922,571)
---------- -------------
$ 5,000 $ 6,678,088
---------- -------------
---------- -------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE CUMULATIVE
PERIOD FROM FROM
SEPTEMBER 12, SEPTEMBER 12,
1996 1996
(INCEPTION) FOR THE YEAR (INCEPTION)
THROUGH ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1997
------------- ------------- -------------
<S> <C> <C> <C>
Operating expenses:
Selling, general and administrative expenses...................... $ -- $ 31,124 $ 31,124
Network expenses.................................................. -- 812,654 812,654
Corporate expenses................................................ 40,000 959,038 999,038
------------- ------------- -------------
40,000 1,802,816 1,842,816
------------- ------------- -------------
Loss from operations................................................ (40,000) (1,802,816) (1,842,816)
Interest expense, net............................................... -- 12,765 12,765
------------- ------------- -------------
Net loss............................................................ (40,000) (1,815,581) (1,855,581)
Accrued dividends on Series A redeemable cumulative preferred
stock............................................................. -- 119,490 119,490
------------- ------------- -------------
Net loss applicable to common shareholders.......................... $ (40,000) $ (1,935,071) $(1,975,071)
------------- ------------- -------------
------------- ------------- -------------
Net loss per common share applicable to common shareholders--basic
and diluted....................................................... $ (13.33) $ (356.10)
------------- -------------
------------- -------------
Weighted average common shares outstanding--basic and diluted....... 3,000 5,434
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CUMULATIVE PREFERRED
STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY (DEFICIT)
SERIES A -----------------------------------------------------------------
REDEEMABLE CUMULATIVE DEFICIT
ADDITIONAL ACCUMULATED
PREFERRED STOCK COMMON STOCK PAID-IN DURING THE
----------------------- ---------------------- CAPITAL DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT (DEFICIENCY) STAGE TOTAL
--------- ------------ --------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 12, 1996......... -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock............ 3,000 300 44,700 45,000
Net loss............................ (40,000) (40,000)
--------- ------------ --------- ----------- ----------- ------------- -------------
Balance at December 31, 1996.......... -- -- 3,000 300 44,700 (40,000) 5,000
Issuance of common stock............ -- -- 7,000 700 454,300 -- 455,000
Conversion of Predecessor Company
common stock to Radio Unica Corp.
Series A redeemable cumulative
preferred stock and common
stock............................. 4,950 495,000 (9,500) (995) (494,005) -- (495,000)
Issuance of Series A redeemable
cumulative preferred stock and
common stock...................... 47,025 4,702,500 4,750 48 47,452 -- 47,500
Accrued dividends in arrears on
Series A redeemable cumulative
preferred stock................... 119,490 (119,490) (119,490)
Net loss............................ -- -- -- -- -- (1,815,581) (1,815,581)
--------- ------------ --------- ----------- ----------- ------------- -------------
Balance at December 31, 1997.......... 51,975 $ 5,316,990 5,250 $ 53 $ (67,043) $ (1,855,581) $ (1,922,571)
--------- ------------ --------- ----------- ----------- ------------- -------------
--------- ------------ --------- ----------- ----------- ------------- -------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD CUMULATIVE
FROM FROM
SEPTEMBER 12, SEPTEMBER 12,
1996 1996
(INCEPTION) FOR THE YEAR (INCEPTION)
THROUGH ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1997
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................................................ $ (40,000) $ (1,815,581) $(1,855,581)
Adjustments to reconcile net loss to net cash used in operating
activities:
Change in assets and liabilities:
Prepaid expenses................................................ -- (554,000) (554,000)
Radio broadcasting rights....................................... -- (2,650,000) (2,650,000)
Other assets.................................................... -- (108,641) (108,641)
Accounts payable................................................ -- 354,120 354,120
Accrued expenses................................................ -- 179,549 179,549
Radio broadcasting rights obligation............................ -- 2,385,000 2,385,000
------------- ------------- -------------
Net cash used in operating activities............................... (40,000) (2,209,553) (2,249,553)
------------- ------------- -------------
INVESTING ACTIVITIES
Advances to equity investee......................................... -- (1,016,590) (1,016,590)
Acquisition of property and equipment............................... -- (1,221,995) (1,221,995)
------------- ------------- -------------
Net cash used in investing activities............................... -- (2,238,585) (2,238,585)
------------- ------------- -------------
FINANCING ACTIVITIES
Proceeds from notes payable to stockholders......................... -- 365,000 365,000
Proceeds from issuance of Series A redeemable cumulative preferred
stock and common stock............................................ 45,000 5,205,000 5,250,000
------------- ------------- -------------
Net cash provided by financing activities........................... 45,000 5,570,000 5,615,000
------------- ------------- -------------
Increase in cash and cash equivalents............................... 5,000 1,121,862 1,126,862
Cash and cash equivalents at beginning of year...................... -- 5,000 --
------------- ------------- -------------
Cash and cash equivalents at end of year............................ $ 5,000 $ 1,126,862 $ 1,126,862
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
F-6
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRESENTATION
Radio Unica Corp., a Florida corporation incorporated on September 12, 1996
(Old Radio Unica), was merged into Radio Unica Corp. (Radio Unica), a Delaware
corporation, on August 7, 1997. As a result of the merger, the investors of Old
Radio Unica exchanged all of their common shares in Old Radio Unica for 500
shares of common stock and 4,950 shares of preferred stock of Radio Unica, the
surviving corporation. The merger was accounted for as a combination of entities
under common control in a manner similar to a pooling. Radio Unica, together
with its subsidiaries (collectively, the Company), is a development stage
company organized for the purpose of producing, broadcasting and distributing
Spanish-language radio programming in the United States.
On August 11, 1997, Warburg, Pincus Ventures, L.P. (WPV) entered into a
Securities Purchase Agreement with Radio Unica for the purchase of common and
Series A redeemable cumulative preferred stock of Radio Unica. At December 31,
1997, WPV had acquired a 90.5% ownership interest in the Company's common and
Series A redeemable cumulative preferred stock in exchange for $4,750,000.
The Company launched its network on January 5, 1998 and began broadcasting
programming to radio broadcast stations that it operates and to affiliated
stations in the United States; and subsequently, the Company was no longer in
the development stage.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Radio Unica
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation. The Company accounts for investments in
20% to 50% owned companies and for investments in over 50% owned companies over
which the Company does not have control under the equity method of accounting.
CASH EQUIVALENTS
The Company defines as cash equivalents all highly liquid temporary
investments with a maturity of three months or less at the time of purchase.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the related assets, which
range from 3 to 10 years. Leasehold improvements are capitalized and amortized
over their estimated useful lives or the remaining life of the lease, whichever
is shorter. The Company placed a majority of its property and equipment into
service on or about December 31, 1997; therefore, there was no depreciation
expense recorded for the period from September 12, 1996 (inception) through
December 31, 1996 and for the year ended December 31, 1997.
ACCOUNTING FOR THE IMPAIRMENT OF LONG LIVED ASSETS
The Company accounts for the impairment of long lived assets under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG LIVED ASSETS. SFAS No. 121 requires
impairment losses to be recorded on long-lived assets when indications of
impairment are
F-7
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. The Company has not recorded
any impairment losses.
INCOME TAXES
The Company accounts for income taxes under the provisions of SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. Prior to August 7, 1997, the Company, with the
consent of its shareholders, elected S Corporation treatment for the Company. As
a result, the shareholders of the Company were taxed on their proportionate
share of the Company's taxable income. Accordingly, no provision or credit for
federal income tax amounts has been included in the consolidated financial
statements for the period prior to August 7, 1997. On August 7, 1997, upon the
merger of Old Radio Unica into Radio Unica, the Company became a C Corporation.
Deferred income tax assets and liabilities are determined based upon
differences between the financial statements and income tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion of the tax assets will not be realized.
ACCOUNTING FOR STOCK OPTIONS
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, became effective
January 1, 1996. The new standard defines a fair value method of accounting for
issuance of stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period. Pursuant to SFAS No. 123, companies are encouraged, but are not
required, to adopt the fair value method of accounting for employee stock-based
transactions.
Companies are also permitted to continue to account for such transactions
under Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES (APB Opinion No. 25), but are required to disclose in a note to the
consolidated financial statements pro forma net income (loss) as if the Company
had applied the new method of accounting.
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its employee stock-based transactions and has complied with the
disclosure requirements of SFAS No. 123.
ADVERTISING EXPENSE
The Company expenses advertising costs as incurred. Advertising expense for
the period ended December 31, 1996 and the year ended December 31, 1997 amounted
to approximately $1,500 and $82,000, respectively.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses approximate fair value because of their
short duration to maturity. The carrying amounts of the
F-8
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
notes payable to stockholders approximate fair value because the interest rates
approximate the Applicable Federal Rate.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.
LOSS PER SHARE
In 1997, the Company retroactively adopted SFAS No. 128, EARNINGS PER SHARE.
SFAS No. 128 replaced the calculation of primary and fully diluted earnings per
share (EPS) with basic and diluted EPS. For the period from September 12, 1996
(inception) through December 31, 1996 and for the year ended December 31, 1997,
there is no difference between the basic and diluted EPS calculation.
Net income per common share is calculated using the weighted average number
of common shares for the basic EPS presentation, and the weighted average number
of common and common equivalent shares for the diluted EPS presentation,
outstanding during the respective periods. For the period from September 12,
1996 (inception) through December 31, 1996 and for the year ended December 31,
1997, no incremental shares related to the Series A redeemable cumulative
preferred stock or stock options are included because the effect would be
antidilutive.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997. Reclassification of financial statements for earlier periods provided
for comparative purposes is required. The Company is in the process of
evaluating the disclosure requirements of SFAS No. 130. The adoption of SFAS No.
130 is not expected to have an impact on the Company's consolidated statement of
operations, financial condition or cash flows.
3. RADIO BROADCASTING RIGHTS AGREEMENT
On July 30, 1997, the Company entered into a Radio Broadcasting Rights
Agreement (Rights Agreement) with Univision Network Limited Partnership
(Univision) for the 1998 World Cup Soccer Championship (1998 World Cup). This
agreement grants the Company exclusive Spanish-language radio broadcast rights
in the United States for the 1998 World Cup. The purchase price for these rights
is $2,650,000, of which $265,000 was paid in advance as a deposit to Univision.
The Company will amortize the cost of the Rights Agreement as revenue for the
1998 World Cup is earned. WPV arranged for the issuance of a letter of credit in
the amount of $2,385,000 to Univision on behalf of the Company to secure the
payments under the agreement. In the event that this letter of credit is
exercised, the amounts drawn will be treated as capital contributions.
F-9
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. RADIO BROADCASTING RIGHTS AGREEMENT (CONTINUED)
At December 31, 1997, payment obligations under the Rights Agreement are as
follows:
<TABLE>
<S> <C>
May 11, 1998.................................................... $ 795,000
June 30, 1998................................................... 795,000
August 11, 1998................................................. 795,000
---------
$2,385,000
---------
---------
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
USEFUL DECEMBER 31,
LIVES -----------------------
(YEARS) 1996 1997
----------- --------- ------------
<S> <C> <C> <C>
Broadcast equipment............................................ 7 $ -- $ 867,735
Leasehold improvements......................................... 10 -- 147,759
Office equipment, computers & software......................... 3-5 -- 146,804
Furniture & fixtures........................................... 5 -- 59,697
--------- ------------
$ -- $ 1,221,995
--------- ------------
--------- ------------
</TABLE>
5. ADVANCES TO EQUITY INVESTEE
On October 27, 1997, the Company obtained 49.9% (499 common shares) of the
ownership and voting rights of Blaya, Inc., a newly formed company, for $0.01
per share. The remaining ownership interest was held by one of the stockholders
of the Company. The Company accounts for this investment under the equity
method.
On December 24, 1997, Blaya, Inc. entered into an asset purchase agreement
with 13 Radio Corporation (13 Radio), a CBS Broadcasting (CBS) subsidiary, to
acquire Houston radio station KXYZ -- AM, for a cash purchase price of $6.4
million (the Acquisition). In connection with this Acquisition, the Company
advanced $1,016,590 to Blaya, Inc., which is reflected as advances to equity
investee at December 31, 1997. Also on December 24, 1997, Blaya, Inc. entered
into a Time Brokerage Agreement (TBA) with 13 Radio effective as of January 5,
1998. The TBA made available to Blaya, Inc. substantially all of the
broadcasting time of the station, pending the completion of the Acquisition,
which was subject to Federal Communication Commission (FCC) consent. The fee for
this broadcasting time is $165,000 per quarter. The Company began operating the
station under its TBA on January 5, 1998. Blaya, Inc. did not have any
operations during 1997.
On March 6, 1998, the Company acquired 800 shares of Blaya, Inc.'s Class B
common stock, representing 49.9% of the voting rights and 80% of the economic
ownership rights in Blaya, Inc., in exchange for its 499 shares of common stock
in Blaya, Inc. and $640,000. On the same day, the Company loaned the majority
voting stockholder of Blaya, Inc. $160,000 in exchange for a 10 year 9%
promissory note. These proceeds were used by the majority voting stockholder
(together with the surrender of the shares of Blaya, Inc's common shares then
held by him) to purchase 200 shares of Blaya, Inc.'s Class A common stock
representing 50.1% of the voting rights and 20% of the ownership rights in
Blaya, Inc. In
F-10
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ADVANCES TO EQUITY INVESTEE (CONTINUED)
connection with this equity investment, the stockholders of Blaya, Inc. entered
into a stockholders agreement which provides the Company the first right of
refusal if the majority voting stockholder decides to sell any interest in
Blaya, Inc.
On March 10, 1998, the Company entered into a promissory note payable of
$5.7 million with Blaya, Inc. On March 11, 1998, the proceeds were used to
complete the Acquisition with 13 Radio and to pay related closing costs. The
promissory note payable bears interest at 9% compounded quarterly and payable
annually. The entire principal amount outstanding under the promissory note
payable shall be due and payable in full on the earliest to occur of (i) the
termination of the TBA, (ii) fifteen days following the date when 50% of the
voting stock is transferred to any party or substantially all the assets of
Blaya, Inc. are sold, or (iii) March 10, 2008. The promissory note payable is
secured by substantially all of the assets of Blaya, Inc.
Summary financial information for Blaya, Inc., which is accounted for under
the equity method, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Current assets.................................................................. $1,000,000
Total assets.................................................................... 1,016,590
Current liabilities............................................................. 1,016,580
Stockholders' equity............................................................ 10
</TABLE>
Blaya, Inc. had no operations for the year ended December 31, 1997.
6. NOTES PAYABLE TO STOCKHOLDERS
On July 15, 1997, the Company entered into promissory notes payable with
several stockholders amounting to $100,000. The promissory notes payable are due
on demand and bear interest at 9%.
On July 24, 1997, the Company entered into a promissory note payable with
WPV amounting to $265,000. The promissory note payable is due on demand and
bears interest at 8%. The funds provided by this promissory note payable were
applied as a deposit on the Rights Agreement.
7. INCOME TAXES
Concurrent with the August 7, 1997 merger of Old Radio Unica with and into
the Company, Old Radio Unica's S corporation election was terminated.
Thereafter, the Company became subject to corporate income taxes. The Company
had no income tax expense or benefit for the period from September 12, 1996
through December 31, 1996 and for the year ended December 31, 1997.
F-11
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES (CONTINUED)
HISTORICAL
The difference between the federal statutory income tax rate of 34% and the
effective income tax rate are summarized below:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
Tax benefit at federal statutory rate................................ $ (493,823) $ --
State income tax benefit, net of federal benefit..................... (52,375) --
Permanent differences................................................ 3,259 --
Other................................................................ (7,924) --
Valuation allowance.................................................. 550,863 --
----------- ----------
$ -- $ --
----------- ----------
----------- ----------
</TABLE>
Significant components of the Company's net deferred income taxes are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
Deferred tax assets:
Depreciation......................................................... $ 7,924 $ --
Net operating loss carryforward...................................... 542,939 --
----------- ----------
Total deferred tax asset............................................. 550,863 --
Valuation allowance.................................................. (550,863) --
----------- ----------
Net deferred tax asset............................................... $ -- $ --
----------- ----------
----------- ----------
</TABLE>
PRO FORMA
The difference between the federal statutory income tax rate of 34% and the
effective income tax rate are summarized below assuming the Company was a C
corporation for the periods presented:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
Tax benefit at federal statutory rate................................ $ (617,298) $ (13,600)
State income taxes, net of federal benefit........................... (65,392) (1,422)
Permanent differences................................................ 4,810 280
Valuation allowance.................................................. 677,880 14,742
----------- ----------
$ -- $ --
----------- ----------
----------- ----------
</TABLE>
SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a $550,863 valuation allowance at December 31, 1997 is
necessary to reduce the deferred tax assets to the amount that will more likely
than not be realized. The net carrying value of the deferred
F-12
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES (CONTINUED)
tax assets at December 31, 1997 is zero. The change in the valuation allowance
for the year ended December 31, 1997 is $550,863. At December 31, 1997, the
Company has available net operating loss carryforwards of $1,442,836, which
expire in the year 2012. Had the Company not been taxed as an S Corporation, it
would have had available net operating loss carryforwards of $39,175 and
$1,819,554 at December 31, 1996 and 1997, respectively, expiring in years 2011
and 2012, respectively. The related deferred tax assets of approximately $15,000
and $690,000 at December 31, 1996 and 1997, respectively, would have been
entirely offset by valuation allowances reducing the carrying values of such
deferred tax assets to zero, since it is more likely than not that they will not
be realized.
8. SERIES A REDEEMABLE CUMULATIVE PREFERRED STOCK
The Company has 450,000 authorized shares of redeemable, 10% cumulative,
nonconvertible, voting, Series A Preferred Stock (the Preferred Stock), $.01 par
value, of which none and 51,975 shares were issued and outstanding at December
31, 1996 and 1997, respectively. If and when dividends are declared by the Board
of Directors, holders of the Preferred Stock shall be entitled to receive
cumulative dividends at the rate of 10% per annum. Each share of Preferred Stock
shall be entitled to ten votes per share on all matters upon which common
stockholders are entitled to vote (one vote per common share) and have a
redemption price of $100 per share, together with accrued and unpaid dividends
thereon. Redemption of the Preferred Stock is at the option of the holders for
any or all the outstanding shares upon the occurrence of (i) a change in
control, (ii) an initial public offering or (iii) on August 6, 2007. In the
event of any liquidation, dissolution or winding up of the affairs of the
Company, holders of Preferred Stock shall be paid the redemption price plus all
accrued dividends to the date of liquidation, dissolution or wind up of affairs
before any payment to other stockholders. Accrued dividends in arrears of
$119,490, as of December 31, 1997, are included in the redemption value of the
Preferred Stock.
9. STOCK OPTION PLAN
On August 8, 1997, the Company adopted the 1997 Stock Option Plan (the Plan)
which provides for the granting of incentive stock options to purchase shares of
the Company's common stock to officers, directors and key employees responsible
for the direction and management of the Company and to non-employee consultants
and independent contractors. At December 31, 1997, the Company reserved 20,000
shares of its common stock for issuance under the Plan. The vesting period and
the terms of the incentive stock options granted are established by a Committee
of the Board of Directors (the Committee). The incentive stock options expire no
later than ten years from the date of grant. Upon the adoption of the Plan, the
Company granted options to its employees to purchase 7,700 shares of its common
stock. Of the 7,700 options granted, 1,800 vested immediately, 1,200 vest
ratably over a five year period and 1,700 vest upon the attainment of certain
performance goals as determined by the Committee. The exercise price of these
incentive stock options is $10 per share which was determined by the Committee
to be the fair value at the date of grant. As a result, no compensation cost has
been recognized under the provisions of APB Opinion No. 25. The remaining 3,000
incentive stock options vest upon the attainment of specified return on equity
targets and have a variable exercise price per share based on a formula which is
triggered upon the occurrence of certain events. There were no options granted
by the Company prior to the adoption of this plan.
F-13
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has adopted the disclosure-only provisions of SFAS No. 123.
Accordingly, no compensation cost has been recognized for the Plan. Had
compensation cost for the Plan been determined based on the fair value of the
stock options on the grant date for the award issued in 1997 consistent with the
provisions of SFAS No. 123, the Company's net loss and EPS would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
-------------
<S> <C>
Net loss applicable to common shareholders--pro forma.......................... $ (1,938,551)
Basic and diluted loss per share applicable to common shareholders-- pro
forma........................................................................ $ (356.74)
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the minimum value fair value model with the following weighted-average
assumptions used for grants in 1997: dividend yield of 0.0%; risk-free interest
rate of 6.00% and average expected life of five years.
At December 31, 1997, the weighted average exercise price of the options
outstanding is $10.00, the weighted average fair value of the options granted
during 1997 is $2.59 and the weighted average remaining contractual life of
those options is four years. No options were exercised, forfeited or expired
during the year ended December 31, 1997.
10. COMMITMENTS
LOTUS OXNARD CORP. TIME BROKERAGE AGREEMENTS
On October 31, 1997, the Company entered into a TBA with Lotus Oxnard Corp.
(Lotus) to operate Simi Valley, CA radio station KVCA, effective January 5,
1998. Simultaneous with the TBA, the Company entered into an escrow agreement
whereby the Company provided a $2.5 million escrow account deposit on January 5,
1998 to secure compliance with the TBA terms. In addition to the TBA and escrow
agreement, the Company entered into an asset purchase option agreement with
Lotus which provides an option to purchase the assets of KVCA, including its
broadcasting license, from Lotus. This purchase option is exercisable at any
time from June 24, 2001 through and including September 30, 2001. The TBA shall
end upon the earliest to occur of (i) the closing or termination as defined in
the asset purchase option agreement or (ii) December 31, 2001.
On October 31, 1997, the Company entered into a TBA with Lotus to operate
San Antonio radio station KZDC, effective January 5, 1998. Simultaneous with the
TBA, the Company entered into an asset purchase option agreement with Lotus
which provides an option to purchase the assets of KZDC, including its
broadcastxing license, from Lotus, which is exercisable at any time from June
24, 2001 through and including September 30, 2001.
F-14
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMITMENTS (CONTINUED)
The future minimum payments under the Lotus TBAs are as follows:
<TABLE>
<S> <C>
1998............................................................ $1,650,000
1999............................................................ 2,425,000
2000............................................................ 2,650,000
2001............................................................ 2,875,000
---------
$9,600,000
---------
---------
</TABLE>
The Company leases office space, broadcasting studios and certain equipment
under operating leases, which expire at various dates through September 2007.
Certain leases contain renewal options and provide for base rental payments plus
escalation charges for real estate taxes and operating expenses.
At December 31, 1997, future minimum lease payments under such leases are as
follows:
<TABLE>
<S> <C>
1998............................................................ $ 432,000
1999............................................................ 445,000
2000............................................................ 458,000
2001............................................................ 392,000
2002............................................................ 400,000
Thereafter...................................................... 458,000
---------
$2,585,000
---------
---------
</TABLE>
Total rent expense for the year ended December 31, 1997 amounted to
$109,000. There was no rent expense for the period ended December 31, 1996.
11. SUMMARIZED FINANCIAL INFORMATION
The securities that may be issued under a debt offering contemplated by the
Company will be guaranteed by all of the Company's Domestic Restricted
Subsidiaries on a full, unconditional, joint and several basis. The financial
statements of the subsidiary guarantors are omitted as management has determined
that separate financial statements and other disclosures concerning the
subsidiaries are not material to investors.
Summarized financial information of guarantor subsidiaries are as follows:
<TABLE>
<CAPTION>
AS OF OR FOR THE
YEAR ENDED DECEMBER 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
Total assets................................................. $ 6,678,088 --
Total liabilities (including due to parent of $514,730)...... 3,798,399 --
Net revenues................................................. -- --
Operating expenses........................................... 1,641,592 --
Net loss..................................................... (1,654,357) --
</TABLE>
F-15
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SUBSEQUENT EVENTS
ISSUANCE OF CAPITAL STOCK
On January 5, 1998, WPV purchased an additional 148,500 shares of preferred
stock and 15,000 shares of common stock in exchange for $15,000,000. This
transaction increased WPV's ownership interest in the Company to 97.5%.
TIME BROKERAGE AGREEMENT AND PURCHASE OF WNMA--AM AND WCMQ--AM MIAMI
On January 26, 1998, the Company entered into an asset purchase agreement
with One-on-One Sports License of Florida L.L.C. and One-on-One Sports Radio of
Florida L.L.C to acquire Miami radio stations WNMA--AM and WCMQ--AM for a cash
purchase price of $9.0 million. The Company funded a $1.0 million escrow account
in conjunction with this transaction. The Company operated the stations under a
TBA for a monthly fee of $72,500 until May 13, 1998.
On May 13, 1998, upon receiving the FCC's consent to transfer the
broadcasting licenses, the Company completed the acquisition of certain assets
of One-on-One Sports License of Florida L.L.C. and One-on-One Sports Radio of
Florida L.L.C. for $9 million pursuant to the asset purchase agreement dated
January 26, 1998.
TIME BROKERAGE AGREEMENT AND PURCHASE OF KIQI--AM SAN FRANCISCO
On February 20, 1998, the Company entered into a stock purchase agreement
with Oro Spanish Broadcasting, Inc. to acquire San Francisco radio station
KIQI--AM for $12 million. The purchase price is comprised of a $6 million cash
payment and a $6 million promissory note payable. The promissory note payable
bears interest at 8% and is payable monthly. The entire principal amount
outstanding under the promissory note payable, shall be due and payable in full
on the earliest to occur of (i) the fifth anniversary of the closing date or
(ii) fifteen days following the date on which all of the issued and outstanding
stock of the Company, or substantially all the assets of the Company, are sold
to a nonaffiliate. The Company funded a $1 million escrow account in conjunction
with this transaction. The Company operated the station under a TBA for a
monthly fee of $58,000 from March 2, 1998 to April 30, 1998.
On April 30, 1998, upon receiving the FCC's consent to transfer the
broadcasting license, the Company completed the acquisition of all the common
stock of Oro Spanish Broadcasting, Inc. for $11.5 million. In connection with
this acquisition, the Company entered into a five year non-compete agreement
with the seller for $500,000.
TIME BROKERAGE AGREEMENT FOR KDFT--AM DALLAS
On April 27, 1998, the Company entered into a TBA with The Freedom Network,
Inc. to operate the Dallas radio station KDFT-AM through May 18, 2000 for a
monthly fee of $44,786 and $56,546 through May 18, 1999 and 2000, respectively.
An advance payment of $146,903 was made to The Freedom Network, Inc. in
connection with the execution of the TBA.
ASSET PURCHASE AGREEMENT FOR KBLA--AM LOS ANGELES
On May 20, 1998, the Company entered into an asset purchase agreement with
Sinclair Radio of Los Angeles, Inc. and Sinclair Radio of Los Angeles Licensee,
Inc. to acquire certain assets of the Los Angeles radio station KBLA-AM for $21
million. The transaction is expected to be finalized and the transfer of the
broadcasting license is expected to be completed once the FCC's consent to
transfer the broadcasting license is received.
F-16
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SUBSEQUENT EVENTS (CONTINUED)
PROMISSORY NOTES
In April and May 1998, the Company entered into promissory notes payable to
WPV in the aggregate amount of $21 million. Such notes bear interest at 10% per
annum and are due on demand.
CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS
On April 17, 1998 the Company converted $365,000 in notes payable to
stockholders plus accrued interest of $22,323 into 3,835 shares of Series A
redeemable cumulative preferred stock and 387 shares of common stock valued at
$383,450 and $3,873, respectively.
TIME BROKERAGE AGREEMENT FOR WBAH--AM NEW YORK
On June 1, 1998, the Company entered into a TBA with Children's Radio of New
York, Inc. for substantially all of the broadcast time on the New York radio
station WBAH -AM through August 31, 1998 in exchange for a fee in the amount of
$175,000.
F-17
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 692,315
Restricted cash............................................................ 4,600,000
Accounts receivable, net................................................... 1,957,539
Prepaid expenses........................................................... 143,094
Radio broadcasting rights.................................................. 897,812
----------
Total current assets......................................................... 8,290,760
Property and equipment, net.................................................. 4,342,651
Covenant not to compete...................................................... 483,334
Goodwill..................................................................... 4,066,019
Broadcast licenses........................................................... 20,175,092
Investments and advances to equity investee.................................. 6,467,847
Other assets................................................................. 688,384
----------
$44,514,087
----------
----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable........................................................... $1,250,187
Accrued expenses........................................................... 1,679,078
Radio broadcasting rights obligation....................................... 795,000
Deferred revenue........................................................... 369,000
Note payable to stockholders............................................... 6,795,000
----------
Total current liabilities.................................................... 10,888,265
Note payable................................................................. 6,000,000
Deferred tax liability....................................................... 4,088,735
Commitments and contingencies
Series A redeemable cumulative preferred stock, $.01 par value, 450,000
shares authorized; 355,175 issued and oustanding........................... 36,639,969
Stockholders' deficit:
Common stock $.01 par value; 100,000 shares authorized; 35,876
issued and outstanding................................................... 359
Capital deficiency......................................................... (764,101)
Accumulated deficit........................................................ (12,339,140)
----------
Total stockholders' deficit.................................................. (13,102,882)
----------
$44,514,087
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1998 1997
-------------- -----------
<S> <C> <C>
Net revenue..................................................................... $ 3,463,962
Operating expenses:
Direct operating expenses..................................................... 888,374 --
Selling, general and administrative expenses.................................. 4,347,004 --
Network expenses.............................................................. 6,883,006 --
Corporate expenses............................................................ 1,306,525 440,338
Depreciation and amortization................................................. 372,144 --
-------------- -----------
13,797,053 440,338
-------------- -----------
Loss from operations............................................................ (10,333,091) (440,338)
Other income (expense):
Interest expense.............................................................. (465,402) --
Interest income............................................................... 312,052 --
Equity in earnings of equity investee......................................... 2,882 --
-------------- -----------
(150,468) --
-------------- -----------
Net loss........................................................................ (10,483,559) (440,338)
Accrued dividends on Series A redeemable cumulative preferred stock............. 1,003,014 --
-------------- -----------
Net loss applicable to common shareholders...................................... $ (11,486,573) $ (440,338)
-------------- -----------
-------------- -----------
Net loss per common share applicable to common shareholders--basic and
diluted....................................................................... $ (569.71) $ (67.94)
-------------- -----------
-------------- -----------
Weighted average common shares outstanding--basic and diluted................... 20,162 6,481
-------------- -----------
-------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1998 1997
-------------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss............................................................................. $ (10,483,559) $ (440,338)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization...................................................... 372,144 --
Equity in loss of equity investee.................................................. (2,882) --
Interest on notes payable paid with the issuance of capital stock.................. 261,227 --
Change in assets and liabilities:
Accounts receivable.............................................................. (1,861,490) --
Prepaid expenses................................................................. 435,331 --
Radio broadcasting rights........................................................ 1,752,188 --
Other assets..................................................................... (416,143) (19,400)
Accounts payable................................................................. 879,169 --
Accrued expenses................................................................. 1,390,057 --
Radio broadcasting rights obligation............................................. (1,590,000) --
Deferred revenue................................................................. 369,000 --
-------------- -----------
Net cash used in operating activities................................................ (8,894,958) (459,738)
-------------- -----------
INVESTING ACTIVITIES
Acquisition of property and equipment................................................ (2,594,093) --
Restricted cash-escrow account....................................................... (4,600,000) --
Investments and advances to equity investee.......................................... (5,448,375) --
Note receivable from stockholder..................................................... (163,600) --
Investment in WNMA-AM Miami.......................................................... (9,317,000) --
Investment in KIQI-AM San Francisco.................................................. (6,211,521) --
-------------- -----------
Net cash used in investing activities................................................ (28,334,589) --
-------------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of Series A redeemable cumulative preferred stock and common
stock.............................................................................. 15,000,000 455,000
Proceeds from issuance of note payable to stockholder................................ 21,795,000
-------------- -----------
Net cash provided by financing activities............................................ 36,795,000 455,000
-------------- -----------
Net decrease in cash and cash equivalents............................................ (434,547) (4,738)
Cash and cash equivalants at beginning of period..................................... 1,126,862 5,000
-------------- -----------
Cash and cash equivalents at end of period........................................... $ 692,315 $ 262
-------------- -----------
-------------- -----------
Supplemental disclosures of cash flow information:
Note payable issued in connection with the acquisition of KIQI-AM in
San Francisco.................................................................... $ 6,000,000 $ --
-------------- -----------
-------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of
Radio Unica Corp. and subsidiaries (the "Company") for the periods indicated
herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission and in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the six months ended June 30, 1998 and 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1998. The consolidated financial statements include the accounts of the Company
and all majority owned subsidiaries over which the Company has control. All
significant intercompany accounts and transactions have been eliminated. For
further information, refer to the Company's 1997 consolidated financial
statements and notes thereto.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 requires disclosure of comprehensive income in interim periods and
additional disclosures of the components of comprehensive income on an annual
basis. Comprehensive income includes all changes in equity during a period
except those resulting from investments by and distributions to the Company's
stockholders. For the six month period ended June 30, 1998, there was no
difference between comprehensive loss and net loss.
2. ACQUISITIONS
On January 26, 1998, the Company entered into an asset purchase agreement
with One-on-One Sports License of Florida, L.L.C. and One-on-One Sports Radio of
Florida, L.L.C. to acquire Miami radio stations WNMA-AM and WCMQ-AM for a cash
purchase price of $9.0 million. On May 13, 1998, upon receiving the FCC's
consent to transfer the broadcasting licenses, the Company completed the
acquisitions. The Company operated the stations under a Time Brokerage Agreement
("TBA") for a monthly fee of $72,500 from February 1, 1998 to May 13, 1998.
On February 20, 1998, the Company entered into a stock purchase agreement
with Oro Spanish Broadcasting, Inc. to acquire San Francisco radio station
KIQI-AM for $12 million. On April 30, 1998, upon receiving the consent of the
FCC to transfer the broadcasting license, the Company completed the acquisition
of all of the common stock of Oro Spanish Broadcasting, Inc. The purchase price
was comprised of a $6 million cash payment and a $6 million promissory note
payable. The promissory note payable bears interest at 8% and is payable
monthly. On July 2, 1998, the Company revised certain terms and paid down $5.25
million against the promissory note payable. The remaining $750,000 is due on or
before October 31, 1999. In connection with this acquisition, the Company
entered into a five-year non-compete agreement with the seller. The Company
operated the station under a TBA for a monthly fee of $58,000 from March 2, 1998
to April 30, 1998.
On May 20, 1998, the Company entered into an asset purchase agreement to
acquire the assets of Los Angeles radio station KBLA-AM with Sinclair Radio of
Los Angeles, Inc. and Sinclair Radio of Los Angeles Licensee, Inc. for $21
million in cash. On July 30, 1998, upon receiving the FCC's consent to transfer
the broadcasting licenses, the Company completed the acquisition.
F-21
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. ACQUISITIONS (CONTINUED)
The pro forma unaudited results of operations of the Company for the six
months ended June 30, 1998 and 1997 assuming the Oro Spanish Broadcasting, Inc.
acquisition and the TBA and equity investment in Blaya, Inc. (see Note 3) had
been consummated as of January 1, 1997 and assuming Blaya, Inc. had acquired 13
Radio as of January 1, 1997 are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------------
<S> <C> <C>
1998 1997
-------------- -------------
Net revenue.................................................... $ 3,463,962 $ 1,924,366
-------------- -------------
Net loss applicable to common shareholders..................... $ (11,792,398) $ (1,126,215)
-------------- -------------
Net loss per common share applicable to common
shareholders--basic and diluted.............................. $ (584.88) $ (173.77)
-------------- -------------
-------------- -------------
</TABLE>
3. INVESTMENTS AND ADVANCES TO EQUITY INVESTEE
On October 27, 1997, the Company obtained 49.9% (499 common shares) of the
ownership and voting rights of Blaya, Inc., a newly formed company, for $0.01
per share. The remaining ownership interest was held by one of the stockholders
of the Company.
On December 24, 1997, Blaya, Inc. entered into an asset purchase agreement
with 13 Radio Corporation (13 Radio), a CBS Broadcasting (CBS) subsidiary, to
acquire Houston radio station KXYZ-AM, for a cash purchase price of $6.4 million
(the Acquisition). In connection with this Acquisition, the Company advanced
$1,016,590 to Blaya, Inc., which is reflected in investments and advances to
equity investee. Also on December 24, 1997, Blaya, Inc. entered into a TBA with
13 Radio effective as of January 5, 1998. The TBA made available to Blaya, Inc.
substantially all of the broadcasting time of the station, pending the
completion of the acquisition, which was subject to FCC consent. The Company
entered into a TBA with Blaya, Inc. for substantially all of the broadcasting
time of the station for a fee of $165,000 per quarter. The Company began
operating the station under its TBA on January 5, 1998. Blaya, Inc. did not have
any operations during 1997.
On March 6, 1998, the Company acquired 800 shares of Blaya, Inc.'s Class B
common stock, representing 49.9% of the voting rights and 80% of the economic
ownership rights in Blaya, Inc., in exchange for its 499 shares of common stock
in Blaya, Inc. and $640,000. On the same day, the Company loaned the majority
voting stockholder of Blaya, Inc. $160,000 in exchange for a 10 year 9%
promissory note. These proceeds were used by the majority voting stockholder
(together with the surrender of the shares of Blaya, Inc.'s common shares then
held by him) to purchase 200 shares of Blaya, Inc.'s Class A common stock
representing 50.1% of the voting rights and 20% of the ownership rights in
Blaya, Inc. In connection with this equity investment, the stockholders of
Blaya, Inc. entered into a stockholders agreement that provides the Company the
first right of refusal if the majority voting stockholder decides to sell any
interest in Blaya, Inc. The Company accounts for its investment in Blaya, Inc.
under the equity method of accounting since the minority owner of Blaya, Inc.
has operating control of Blaya, Inc.
On March 10, 1998, the Company entered into a promissory note payable of
$5.7 million with Blaya, Inc. The proceeds were used to complete the asset
purchase agreement with 13 Radio and to pay related closing costs. The
promissory note payable bears interest at 9% compounded quarterly and payable
F-22
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. INVESTMENTS AND ADVANCES TO EQUITY INVESTEE (CONTINUED)
annually. The entire principal amount outstanding under the promissory note
payable shall be due and payable in full on the earliest to occur of (i) the
termination of the TBA, (ii) fifteen days following the date when 50% of the
voting stock is transferred to any party or substantially all the assets of
Blaya, Inc. are sold, or (iii) March 10, 2008. The promissory note payable is
secured by substantially all of the assets of Blaya, Inc.
On March 11, 1998, Blaya, Inc. completed the Acquisition of certain assets
of 13 Radio for $6.4 million pursuant to the Asset Purchase Agreement dated
December 24, 1997. The purchase price allocated to the Broadcast License as a
result of the transaction (approximately $5.8 million) is being amortized over a
30 year period on a straight line basis.
On June 9, 1998, the Company entered into a stock purchase agreement with
the majority voting stockholder of Blaya, Inc. to purchase his remaining 50.1%
voting rights and 20% ownership interest in Blaya, Inc. The transaction closed
on September 11, 1998.
Summary financial information for Blaya, Inc. which is accounted for under
the equity method is as follows:
<TABLE>
<CAPTION>
JUNE 30,
1998
------------
<S> <C>
Current assets.................................................................. $ 352,027
Total assets.................................................................... 6,910,174
Current liabilities............................................................. 406,008
Total liabilities............................................................... 6,106,008
Stockholders' equity............................................................ 804,166
Net revenue..................................................................... 330,000
Gross Profit.................................................................... 230,000
Net income...................................................................... 4,166
Company's share of:
Net assets.................................................................... 643,333
Net income.................................................................... 2,882
</TABLE>
4. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY
SENIOR DISCOUNT NOTES
On July 27, 1998, the Company sold in an unregistered offering to qualified
institutional buyers and accredited institutional investors $158,088,000
aggregate principal amount at maturity of the Company's 11 3/4% Senior Discount
Notes due August 1, 2006 (the "Notes"). Cash interest on the Notes will not
accrue or be payable prior to August 1, 2002. Thereafter, cash interest will
accrue at a rate of 11 3/4% per annum on the principal amount at maturity of the
Notes through and including the maturity date and will be payable semi-annually
on August 1 and February 1 of each year. In connection with this transaction,
the Company received net proceeds of approximately $95 million after issuance
expenses of approximately $5 million. The net proceeds will be used to fund
existing and future acquisitions of radio stations, repay amounts borrowed under
the Company's Revolving Credit Facility and for general working capital
purposes.
The Notes will be general senior unsecured obligations of the Company and
will rank PARI PASSU in right of payment with all existing and future unsecured
and unsubordinated indebtedness of the Company
F-23
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY
(CONTINUED)
and senior in right of payment to any subordinated indebtedness of the Company.
The Notes are, unconditionally guaranteed, on a senior unsecured basis as to
payment of principal, premium if any, and interest, jointly and severally by the
Guarantors which consist of the Company's Domestic Restricted Subsidiaries, as
defined. The Notes will be redeemable at any time and from time to time at the
option of the Company, in whole or in part on or after August 1, 2002, plus
accrued and unpaid interest thereon to the date of redemption. In addition, on
or prior to August 1, 2001, the Company may redeem, at its option, up to 35% of
the aggregate principal amount at maturity of the Notes with the net proceeds of
one or more Equity Offerings, as defined, at 111.75% of the Accreted Value
thereof, as defined, as long as Notes representing at least $65.0 million of the
aggregate initial Accreted Value of the Notes originally issued remains
outstanding after each such redemption and that such redemption occurs within 90
days of the closing of any such Equity Offering.
Upon A Change of Control, as defined, the Company will be required to offer
to repurchase the Notes at a purchase price equal to (i) 101% of the Accreted
Value thereof, if the purchase date is on or prior to August 1, 2002, or (ii)
101% of the principal amount at maturity thereof, plus accrued and unpaid
interest thereon, if any, to the purchase date, if such date is after August 1,
2002.
The Notes restrict, among other things, the Company's ability to incur
additional indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, create liens on assets, enter into
transactions with affiliates, make investments, loans or advances, consolidate
or merge with or into any other person or convey, transfer or lease all or
substantially all of its assets or change the business conducted by the Company.
SENIOR SECURED REVOLVING CREDIT FACILITY
On July 8, 1998, the Company entered into a credit agreement for a senior
secured revolving credit facility (the "Revolving Credit Facility") providing
for up to $20.0 million of availability with Canadian Imperial Bank of Commerce
("CIBC"). The Revolving Credit Facility will mature on the earlier of 91 days
before the first cash interest is due on the Notes or June 30, 2002. Amounts
outstanding under the Revolving Credit Facility bear interest at a rate of
either (i) the higher of CIBC's prime rate plus 1.25% or (ii) LIBOR plus 2.50%.
The obligations under the Revolving Credit Facility are guaranteed by the
Company and secured by substantially all of the assets of the Company. The
Company will pay certain fees in connection with the Revolving Credit Facility,
including a commitment fee of 0.50% per annum on the aggregate unused portion of
the Revolving Credit Facility.
The Revolving Credit Facility contains certain financial and operational
covenants and customary events of default, including, among others, payment
defaults and default in the performance of other covenants, breach of
representations or warranties, cross-default to other indebtedness, certain
bankruptcy or ERISA defaults, the entry of certain judgments against the Company
or any subsidiary, and any security interest or guarantee that ceases to be in
effect. The Revolving Credit Facility also provides that an event of default
will occur upon the occurrence of a "change of control", as defined.
5. PROMISSORY NOTES PAYABLE
In April, May and June 1998, the Company entered into four promissory notes
payable to Warburg Pincus Ventures L.P. ("WPV") in the aggregate amount of
approximately $21.8 million. Such notes bear interest at 10% per annum and are
due on demand. On June 30, 1998, the Company converted $15 million
F-24
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. PROMISSORY NOTES PAYABLE (CONTINUED)
of the promissory notes payable to preferred stock (see Note 6). The Company
paid the remaining $6.8 million on July 15, 1998.
6. PREFERRED AND COMMON STOCK
On January 5, 1998, WPV purchased 148,500 shares of preferred stock and
15,000 shares of common stock in exchange for $15,000,000.
On April 17, 1998, the Company converted $365,000 in notes payable to
stockholders plus accrued interest of $22,323 into 3,835 shares of Series A
redeemable cumulative preferred stock and 387 shares of common stock valued at
$383,450 and $3,873, respectively.
On June 30, 1998, the Company converted $15 million in promissory notes
payable to WPV plus $238,904 in accrued interest into 150,865 shares of Series A
redeemable cumulative preferred stock and 15,239 shares of common stock valued
at $15,086,515 and $152,389, respectively.
7. COMMITMENTS
TIME BROKERAGE AGREEMENT FOR KDFT-AM DALLAS
On April 27, 1998, the Company entered into a TBA with The Freedom Network,
Inc. to operate the Dallas radio station KDFT-AM through May 18, 2000 for a
monthly fee of $44,786 and $56,546 through May 18, 1999 and 2000, respectively.
An advance payment of $146,903 was made to The Freedom Network, Inc. in
connection with the execution of the TBA.
TIME BROKERAGE AGREEMENT FOR WBAH-AM NEW YORK
On June 1, 1998, the Company entered into a TBA with Children's Radio of New
York, Inc. for substantially all of the broadcast time on the New York radio
station WBAH-AM through August 31, 1998 in exchange for a fee in the amount of
$175,000.
TIME BROKERAGE AGREEMENT AND OPTION TO PURCHASE OF WYPA-AM CHICAGO
On June 9, 1998, the Company entered into a TBA with Achievement Radio
Holdings, Inc. for substantially all of the broadcast time on the Chicago radio
station WYPA-AM for a monthly fee of $118,000 through June 8, 1999. The term of
the TBA may be extended at the Company's option through June 9, 2000 (Renewal
Term). In addition to the TBA, the Company has an option to purchase the assets
of WYPA-AM, which is exercisable from June 9, 1998 through June 9, 1999 and will
be exercisable for the Renewal Term if the TBA is extended.
8. SUMMARIZED FINANCIAL INFORMATION
The securities that may be issued under a debt offering contemplated by the
Company will be guaranteed by all of the Company's Domestic Restricted
Subsidiaries on a full, unconditional, joint and several basis. The financial
statements of the subsidiary guarantors are omitted as management has determined
that separate financial statements and other disclosures concerning the
subsidiaries are not material to investors.
F-25
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
8. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
Summarized financial information of guarantor subsidiaries are as follows:
<TABLE>
<CAPTION>
AS OF OR FOR THE
SIX MONTHS ENDED JUNE 30,
----------------------------
1998 1997
------------- -------------
<S> <C> <C>
Total assets................................................ $ 44,514,087 --
Total liabilities (including due to parent of $10,477,092).. 31,454,092 --
Net revenues................................................ 3,463,962 --
Operating expenses.......................................... 11,169,407 --
Net loss.................................................... (7,855,913) --
</TABLE>
9. SUBSEQUENT EVENTS
See Note 2 in connection with the $5.25 million payment made towards the $6
million promissory note
payable issued in connection with the acquisition of KIQI-AM San Francisco and
the acquisition of KBLA-AM Los Angeles on July 30, 1998.
See Note 4 in connection with the issuance of the Notes on July 27, 1998 and
Note 5 in connection with conversion and payments towards the promissory notes
payable on July 15, 1998.
F-26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholder
13 Radio Corporation
We have audited the accompanying balance sheets of 13 Radio Corporation as
of December 31, 1996 and 1997, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of 13 Radio Corporation at
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Miami, Florida
June 12, 1998
F-27
<PAGE>
13 RADIO CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................................ $ 109,824 $ 203,759
Accounts receivable, net of allowance for doubtful accounts of $63,755 in 1996 and
$138,953 in 1997.................................................................. 241,531 195,167
Other current assets................................................................ 3,954 2,909
------------ ------------
Total current assets................................................................ 355,309 401,835
Property and equipment, net........................................................... 868,582 846,403
Other assets.......................................................................... 38,717 32,330
Broadcast license, net of accumulated amortization of $-0- in 1996 and $37,797 in
1997................................................................................ 1,511,888 1,474,091
Goodwill, net of accumulated amortization of $-0- in 1996
and $7,573 in 1997.................................................................. 302,938 295,365
------------ ------------
Total assets.......................................................................... $ 3,077,434 $ 3,050,024
------------ ------------
------------ ------------
LIABILITIES AND PARENT'S EQUITY
Current liabilities:
Accounts payable.................................................................... $ 9,198 $ 12,264
Accrued expenses.................................................................... 78,950 118,635
------------ ------------
Total current liabilities............................................................. 88,148 130,899
Deferred tax liability................................................................ 302,938 290,820
Commitments and contingencies
Parent's equity....................................................................... 2,686,348 2,628,305
------------ ------------
Total liabilities and Parent's equity................................................. $ 3,077,434 $ 3,050,024
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
F-28
<PAGE>
13 RADIO CORPORATION
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
POST
PRE-ACQUISITION ACQUISITION
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
-------------- ------------
<S> <C> <C>
Net revenue........................................................................ $ 1,610,764 $1,606,201
Operating expenses:
Direct expenses.................................................................. 784,118 844,108
Selling, general and administrative expenses..................................... 1,095,456 1,089,792
Depreciation and amortization.................................................... 81,020 105,088
-------------- ------------
1,960,594 2,038,988
-------------- ------------
Loss before income taxes........................................................... (349,830) (432,787)
Deferred income tax benefit........................................................ -- (12,118)
-------------- ------------
Net loss........................................................................... (349,830) (420,669)
Accumulated deficit at beginning of year........................................... (3,902,056) --
-------------- ------------
Accumulated deficit at end of year................................................. $ (4,251,886) $ (420,669)
-------------- ------------
-------------- ------------
</TABLE>
See accompanying notes.
F-29
<PAGE>
13 RADIO CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
POST
PRE-ACQUISITION ACQUISITION
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
-------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss......................................................................... $ (349,830) $ (420,669)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization.................................................. 81,020 105,088
Provision for bad debts........................................................ 2,473 69,654
Deferred income taxes.......................................................... -- (12,118)
Changes in operating assets and liabilities:
Accounts receivable.......................................................... (387) (23,290)
Other current assets......................................................... 65,447 1,045
Other assets................................................................. (37,501) 6,387
Accounts payable............................................................. (2,934) 3,066
Accrued expenses............................................................. (109,966) 39,685
-------------- ------------
Cash used by operating activities.................................................. (351,678) (231,152)
INVESTING ACTIVITY
Purchases of property and equipment................................................ (11,993) (37,539)
-------------- ------------
Cash used by investing activity.................................................... (11,993) (37,539)
FINANCING ACTIVITY
Net advances from Parent........................................................... 363,677 362,626
-------------- ------------
Cash provided by financing activity................................................ 363,677 362,626
-------------- ------------
Increase in cash................................................................... 6 93,935
Cash at beginning of period........................................................ 109,818 109,824
-------------- ------------
Cash at end of period.............................................................. $ 109,824 $ 203,759
-------------- ------------
-------------- ------------
</TABLE>
See accompanying notes.
F-30
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS
13 Radio Corporation (13 Radio or the Company), a Delaware corporation and
subsidiary of CBS Radio Group (CBS), operates Houston radio station KXYZ-AM. 13
Radio, produces, broadcasts and distributes Spanish-language radio programming
in the Houston area.
On December 24, 1997, 13 Radio entered into an asset purchase agreement with
Blaya, Inc. whereby Blaya, Inc. acquired certain assets of 13 Radio for a cash
purchase price of $6.4 million. On March 11, 1998, this transaction was
completed upon receipt of the Federal Communication Commission's (FCC) consent
to transfer the broadcast license from 13 Radio to Blaya, Inc.
ORGANIZATION AND BASIS OF PRESENTATION
For the year ended December 31, 1996, the accounts of 13 Radio were included
in the consolidated accounts of Infinity Broadcasting Corporation (Infinity) and
were not presented as a separate reporting entity. Accordingly, the accounts
included in the accompanying financial statements were carved out of Infinity's
historical accounting records.
On December 31, 1996, CBS completed its acquisition of all of the
outstanding common stock of Infinity. The fair value of net assets acquired
applicable to 13 Radio, including approximately $1.5 million allocated to 13
Radio's broadcast license, was $2.6 million. The fair value of the broadcast
license is being amortized on a straight line basis over forty years. The
acquisition was accounted for using the purchase method of accounting.
For the year ended December 31, 1997, the accounts of 13 Radio were included
in the consolidated accounts of CBS and were not presented as a separate
reporting entity. Accordingly, the accounts included in the accompanying
financial statements were carved out of CBS's historical accounting records.
The accompanying statements of operations and accumulated deficit and cash
flows for the year ended December 31, 1996 represents the results of 13 Radio
when it was owned by Infinity, while the accompanying statements of operation
and accumulated deficit and cash flows for the year ended December 31, 1997
represents the results of 13 Radio after it was acquired by CBS.
The accompanying balance sheets at December 31, 1996 and 1997 represent the
financial position of 13 Radio after it was acquired by CBS.
The accompanying financial statements include costs allocated to 13 Radio by
Infinity and CBS for certain functions and services they performed centrally.
All allocations and estimates were based on assumptions Infinity's and CBS'
management believed were reasonable in the circumstances. These allocations and
estimates are not necessarily indicative of the costs and expenses that would
have resulted if 13 Radio had been operated as a separate entity. See Note 3 for
a description of the functions and services and the amounts allocated.
F-31
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES
CONCENTRATIONS OF CREDIT RISK
The Company's trade receivables result from advertising sales for
commercials aired. The majority of the Company's trade receivables are due from
local and national advertising agencies and are not collateralized.
Consideration is given to the nature of these receivables and the financial
position of customers in determining the appropriate allowance for doubtful
accounts. Credit losses are provided for in the financial statements and have
been within management's expectations.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the related assets, which
range from 2 to 10 years.
INTANGIBLE ASSETS
The broadcast license represents the fair value allocated to the FCC license
held by 13 Radio upon the acquisition of 13 Radio by CBS, which is being
amortized on a straight-line basis over forty years. Goodwill represents the
excess of purchase price of certain assets of 13 Radio over the fair value of
net assets acquired. Goodwill is being amortized on a straight-line basis over
forty years.
ACCOUNTING FOR THE IMPAIRMENT OF LONG LIVED ASSETS
The Company accounts for the impairment of long lived assets and certain
intangible assets under the provisions of FASB Statement of Financial Accounting
Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG LIVED ASSETS.
SFAS No. 121 requires impairment losses to be recorded on long-lived assets when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. Based
on current circumstances, the Company does not believe that any impairment
indicators are present.
INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, ACCOUNTING FOR
INCOME TAXES. Deferred income tax assets and liabilities are determined based
upon differences between the financial statements and income tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion of the tax assets will not be realized.
REVENUE RECOGNITION
Advertising revenues are recognized as income when commercials are aired.
Included in revenues are certain barter transactions which represent commercials
aired in exchange for products or services to be provided to the Company. Barter
transactions are recorded at the estimated fair market value of the merchandise
or services received in exchange for the commercial broadcast. If the
merchandise or services are received prior to the broadcast of the commercial, a
liability is recorded. Likewise, if the commercial is broadcast first, a
receivable is recorded. At December 31, 1996 and 1997, accounts receivable and
liabilities remaining from barter transactions were insignificant.
F-32
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING EXPENSE
The Company expenses advertising costs as incurred. Advertising expense for
the years ended December 31, 1996 and 1997 amounted to approximately $13,000 and
$18,000, respectively.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
accrued expenses approximate fair value because of their short duration to
maturity.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and 1997, consists of the
following:
<TABLE>
<CAPTION>
USEFUL LIVES
(YEARS) 1996 1997
--------------- ---------- ----------
<S> <C> <C> <C>
Land.................................................... $ 670,000 $ 670,000
Buildings............................................... 2 37,253 37,253
Broadcast equipment..................................... 1-5 120,003 141,599
Office equipment........................................ 2-10 27,852 39,586
Automobiles............................................. 1-3 13,474 18,630
---------- ----------
868,582 907,068
Less accumulated depreciation........................... -- (60,665)
---------- ----------
$ 868,582 $ 846,403
---------- ----------
---------- ----------
</TABLE>
Depreciation expense for the year ended December 31, 1996 amounted to
$62,320.
4. INCOME TAXES
The Company is a member of a group which files consolidated federal and
state income tax returns. The Company recorded income taxes as if the Company
was filing unconsolidated income tax returns.
The components of the benefit for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31
---------------------
<S> <C> <C>
1996 1997
--------- ----------
Current.............................................................. $ -- $ --
Deferred............................................................. -- (12,118)
--------- ----------
$ -- $ (12,118)
--------- ----------
--------- ----------
</TABLE>
F-33
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
4. INCOME TAXES (CONTINUED)
The differences between the reported benefit from income taxes and income
taxes computed at the U.S. statutory federal income tax rate are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------
<S> <C> <C>
1996 1997
----------- -----------
Income tax benefit computed at the U.S.
statutory rate of 34%............................................. $ (118,942) $ (147,148)
State taxes, net of federal benefit................................. (10,390) (12,291)
Non-deductible items................................................ 1,530 4,731
Change in deferred tax valuation allowance.......................... 127,802 142,590
----------- -----------
Total............................................................. $ -- $ (12,118)
----------- -----------
----------- -----------
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
<S> <C> <C>
1996 1997
----------- -----------
Deferred tax assets:
Net operating loss carryforward................................... $ 664,683 $ 777,616
Allowance for bad debts........................................... 23,570 51,371
----------- -----------
Total deferred tax asset............................................ 688,253 828,987
Deferred tax liability:
Amortization of broadcast license................................. (558,945) (544,971)
----------- -----------
Net deferred tax asset.............................................. 129,308 284,016
Less: Valuation allowance........................................... (432,246) (574,836)
----------- -----------
Net deferred tax liability.......................................... $ 302,938 $ 290,820
----------- -----------
----------- -----------
</TABLE>
SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a valuation allowance of $432,246 and $574,836 at December
31, 1996 and 1997, respectively, is necessary to reduce the deferred tax assets
to the amount that will more likely than not be realized. At December 31, 1997,
the Company has available net operating loss carryforwards of $2,090,000 (of
which $1,798,000 would be subject to an IRC section 382 annual limitation) which
expire in the years 2001 through 2012.
5. RELATED PARTY TRANSACTIONS
The 1996 financial statements include significant allocations from Infinity
for the cost of functions and services it performed centrally which are included
in selling, general and administrative expenses. Included in this caption are
allocated costs for general liability, workers' compensation and auto insurance,
and certain corporate salaries. The Company's employees also participated in
certain Infinity sponsored savings plans. Total allocated costs amounted to
approximately $50,000 for the year ended December 31, 1996.
F-34
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
5. RELATED PARTY TRANSACTIONS (CONTINUED)
The 1997 financial statements include significant allocations from CBS for
the cost of functions and services it performed centrally which are included in
selling, general and administrative expenses. Included in this caption are
allocated costs for general liability, workers' compensation and auto insurance,
and certain corporate salaries. The Company's employees also participated in
certain CBS sponsored savings plans. Total allocated costs amounted to
approximately $82,000 for the year ended December 31, 1997.
6. PARENT'S EQUITY
Parent's equity at December 31, 1996 and 1997 represents CBS's ownership
interest in the recorded net assests of the Company. All cash transactions and
intercompany transactions flow through the equity account. A summary of the
activity is as follows:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Balance at beginning of period................................................. $ 5,265,466 $ 2,686,348
Net loss....................................................................... (349,830) (420,669)
Purchase price adjustment...................................................... (2,592,965)
Net intercompany activity...................................................... 363,677 362,626
------------- -------------
Balance at end of period....................................................... $ 2,686,348 $ 2,628,305
------------- -------------
------------- -------------
</TABLE>
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Oro Spanish Broadcasting, Inc.
2601 Mission Street
San Francisco, California 94110
We have audited the accompanying balance sheets of Oro Spanish Broadcasting,
Inc. as of August 31, 1996 and 1997 and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Oro Spanish Broadcasting,
Inc., as of August 31, 1996 and 1997 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company has suffered recurring net losses and has an
accumulated deficit. In addition, the Company's current liabilities exceed its
current assets and the Company has experienced some difficulty meeting
obligations as they become due. Those conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 9. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ MILLER, KAPLAN, ARASE & CO., LLP
North Hollywood, California
November 18, 1997
F-36
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Oro Spanish Broadcasting, Inc.
2601 Mission Street
San Francisco, California 94110
We have reviewed the accompanying balance sheet of Oro Spanish Broadcasting,
Inc. as of February 28, 1998 and the statements of operations and accumulated
deficit and cash flows for the six months ended February 28, 1997 and 1998, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Oro Spanish Broadcasting, Inc.
A review consists principally of inquiries of management personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the February 28, 1997 and 1998 financial statements in order
for them to be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company has suffered recurring net losses and has an
accumulated deficit. In addition, the Company's current liabilities exceed its
current assets and the Company has experienced some difficulty meeting
obligations as they become due. Those conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 9. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
MILLER, KAPLAN, ARASE & CO., LLP
North Hollywood, California
June 6, 1998
F-37
<PAGE>
ORO SPANISH BROADCASTING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
-------------------- FEBRUARY 28,
1996 1997 1998
--------- --------- ------------
<S> <C> <C> <C>
(REVIEWED)
ASSETS
CURRENT ASSETS
Cash...................................................................... $ 30,448 $ 49,928 $ 2,135
Accounts Receivable, Net of Allowance for Doubtful
Accounts of $18,506, $50,000 and $62,000................................ 371,678 431,099 400,887
Prepaid Expenses and Other Current Assets................................. 21,144 19,529 50,067
--------- --------- ------------
TOTAL CURRENT ASSETS.................................................... 423,270 500,556 453,089
--------- --------- ------------
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $1,164,277,
$1,203,748 AND $1,224,177 (NOTE 2)........................................ 132,650 133,098 140,273
--------- --------- ------------
GOODWILL, NET OF ACCUMULATED AMORTIZATION OF $800,800, $850,800 AND
$875,800.................................................................. 1,199,200 1,149,200 1,124,200
--------- --------- ------------
OTHER ASSETS
Accounts Receivable--Stockholder (Note 7)................................. 284,335 317,957 325,937
Other Assets.............................................................. 43,392 39,935 40,935
--------- --------- ------------
TOTAL OTHER ASSETS...................................................... 327,727 357,892 366,872
--------- --------- ------------
TOTAL ASSETS............................................................ $2,082,847 $2,140,746 $2,084,434
--------- --------- ------------
--------- --------- ------------
LIABILITIES
CURRENT LIABILITIES
Accounts Payable.......................................................... $ 122,943 $ 137,871 $ 155,453
Accrued Expenses and Other................................................ 190,930 306,784 357,152
Covenant Not To Compete (Note 3).......................................... 50,000 50,000 50,000
Note Payable--Current (Note 4)............................................ 110,000 240,000 340,000
License Payable--Current (Note 5)......................................... 105,727 230,840 219,341
--------- --------- ------------
TOTAL CURRENT LIABILITIES............................................... 579,600 965,495 1,121,946
--------- --------- ------------
NON-CURRENT LIABILITIES
Interest Payable--Long Term (Note 4)...................................... 1,097,995 1,122,279 1,127,330
Note Payable--Long Term (Note 4).......................................... 3,059,610 2,899,610 2,799,610
License Payable--Long Term (Note 5)....................................... 157,107 -- --
Equipment Lease and Loans Payable (Note 4)................................ 20,675 27,590 16,935
--------- --------- ------------
TOTAL NON-CURRENT LIABILITIES........................................... 4,335,387 4,049,479 3,943,875
--------- --------- ------------
TOTAL LIABILITIES....................................................... 4,914,987 5,014,974 5,065,821
--------- --------- ------------
COMMITMENTS (NOTES 6 AND 8)
STOCKHOLDER'S DEFICIENCY
COMMON STOCK, AUTHORIZED 1,000,000 SHARES
$1 PAR VALUE, ISSUED AND OUTSTANDING
6,000 SHARES.............................................................. 6,000 6,000 6,000
ADDITIONAL PAID-IN CAPITAL.................................................. 994,000 994,000 994,000
ACCUMULATED DEFICIT......................................................... (3,832,140) (3,874,228) (3,981,387)
--------- --------- ------------
TOTAL STOCKHOLDER'S DEFICIENCY.......................................... (2,832,140) (2,874,228) (2,981,387)
--------- --------- ------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY.......................... $2,082,847 $2,140,746 $2,084,434
--------- --------- ------------
--------- --------- ------------
</TABLE>
(Accountants' reports and the attached notes are an integral part of this
statement)
F-38
<PAGE>
ORO SPANISH BROADCASTING, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
----------------------------
<S> <C> <C> <C> <C>
YEAR ENDED AUGUST 31,
----------------------------
1996 1997 1997 1998
------------- ------------- ------------- -------------
<CAPTION>
(REVIEWED) (REVIEWED)
<S> <C> <C> <C> <C>
NET REVENUE........................................... $ 2,294,107 $ 2,274,594 $ 1,025,752 $ 1,093,602
OPERATING EXPENSES
Direct Operating Expenses........................... 301,257 290,492 146,598 147,377
Selling, General and Administrative................. 1,600,611 1,591,888 742,475 840,292
Depreciation and Amortization....................... 98,703 89,471 45,258 45,429
------------- ------------- ------------- -------------
TOTAL OPERATING EXPENSES.......................... 2,000,571 1,971,851 934,331 1,033,098
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS............................ 293,536 302,743 91,421 60,504
OTHER EXPENSES
Interest Expense, Net............................... (333,432) (344,031) (175,996) (166,863)
------------- ------------- ------------- -------------
LOSS BEFORE INCOME TAX................................ (39,896) (41,288) (84,575) (106,359)
INCOME TAXES.......................................... 800 800 800 800
------------- ------------- ------------- -------------
NET LOSS.............................................. (40,696) (42,088) (85,375) (107,159)
ACCUMULATED DEFICIT AT BEGINNING OF PERIOD............ (3,791,444) (3,832,140) (3,832,140) (3,874,228)
------------- ------------- ------------- -------------
ACCUMULATED DEFICIT AT END OF PERIOD.................. $ (3,832,140) $ (3,874,228) $ (3,917,515) $ (3,981,387)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
(Accountants' reports and the attached notes are an integral part of this
statement)
F-39
<PAGE>
ORO SPANISH BROADCASTING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
YEAR ENDED AUGUST 31, ------------------------
------------------------ 1997 1998
1996 1997 ----------- -----------
----------- -----------
(REVIEWED) (REVIEWED)
----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss.................................................... $ (40,696) $ (42,088) $ (85,375) $ (107,159)
Adjustments to Reconcile Net Loss to Net Cash
Provided (Used) in Operating Activities:
Depreciation and Amortization......................... 98,703 89,471 45,258 45,429
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable.......... 23,326 (59,421) 27,748 30,212
(Increase) Decrease Prepaid Expenses and Other
Curret Assets..................................... 22,068 1,615 (23,592) (30,538)
(Increase) Decrease in Other Assets................. (14,733) 3,457 3,457 (1,000)
(Increase) in Advances to Stockholder-- Interest
Receivable Portion................................ (16,097) (17,622) (7,500) (7,980)
Increase in Accounts Payable and Other.............. 28,269 51,483 30,653 134
Increase in Interest Payable........................ 19,927 54,704 30,088 62,052
----------- ----------- ----------- -----------
NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES.... 120,767 81,599 20,737 (8,850)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Property and Equipment..................... (15,731) (14,097) (10,027) (27,604)
Increase in Accounts Receivable--Stockholder.............. -- (16,000) (16,000) --
Proceeds from Sale of Assets.............................. 500 -- -- --
----------- ----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES............. (15,231) (30,097) (26,027) (27,604)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Equipment Lease and Loans Payable... (16,746) (18,022) (7,582) (11,339)
Proceeds from Refinancing of Automobile Loan Payable...... -- 16,000 16,000 --
Principal Payments on Note Payable........................ (80,000) (30,000) (30,000) --
----------- ----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES............. (96,746) (32,022) (21,582) (11,339)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH............................... 8,790 19,480 (26,872) (47,793)
CASH AT BEGINNING OF PERIOD................................... 21,658 30,448 30,448 49,928
----------- ----------- ----------- -----------
CASH AT END OF PERIOD......................................... $ 30,448 $ 49,928 $ 3,576 $ 2,135
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest.................................... $ 326,253 $ 307,837 $ 153,907 $ 112,825
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Cash Paid for Income Taxes................................ $ 800 $ 800 $ 800 $ 800
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
</TABLE>
During November 1996, the Company incurred a note payable of $17,822 for
property and equipment. In addition, the Company acquired property and equipment
with a cost of $8,000 which was included in accounts payable at August 31, 1997.
(Accountants' reports and the attached notes are an integral part of this
statement)
F-40
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF BUSINESS
Oro Spanish Broadcasting, Inc. ("the Company") is a California Corporation,
that has owned and operated radio station KIQI-AM licensed to San Francisco,
California since September 8, 1980.
B. UNAUDITED INTERIM INFORMATION
In the opinion of management, the financial statements for the unaudited
periods ended February 28, 1997 and 1998 include all adjustments necessary for a
fair presentation in accordance with generally accepted accounting principles.
The results of operations and cash flows for the six months ended February 28,
1997 and 1998 are not necessarily indicative of results which would be expected
for a full year.
C. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company uses the straight
line method of depreciating equipment for both book and income tax purposes over
estimated useful lives of 5-12 years. Amounts expended for improvements to
increase the useful lives of property and equipment, or to replace major units
of property and equipment are capitalized. Expenditures for maintenance and
repairs or minor renewals are charged to expense when incurred.
D. GOODWILL
Goodwill is recorded at cost and amortized using the straight line method,
over 40 years.
E. TRADE ACTIVITY
Under trade agreements with certain advertisers, commercial airtime is
exchanged for goods and services. These transactions are recorded at the
estimated fair market value of the merchandise and services rendered. Revenue is
recognized when commercial spot announcements are broadcast and the value of
merchandise and services are expensed when utilized. Included in net revenue was
trade revenue of $245,003, $198,086, $76,584 and $97,075 and included in
selling, general and administrative was trade expense of $231,003, $191,196,
$73,059 and $94,575 for the years ended August 31, 1996 and 1997 and six months
ended February 28, 1997 and 1998, respectively.
F. INVESTMENT TAX CREDITS
As investment tax credits are utilized, they will be accounted for on the
flow through method.
G. REVENUE RECOGNITION
The Company recognizes revenue when the commercial spot announcements are
aired. Payments received in advance of airing are accounted for as deferred
revenue, which will be recognized in a subsequent period.
F-41
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to credit risk
consist of accounts receivable. Concentration of credit risk with respect to
accounts receivable is somewhat limited due to the large number of customers
comprising the Company's customer base and their dispersion across many
different industries. However, there is a geographical risk as the Company
grants credit to many advertisers located in Northern California.
I. INCOME TAXES
The Company recognizes deferred tax assets and liabilities for future tax
consequences of events that have been previously recognized on the Company's
financial statements or tax returns. The measurement of deferred tax assets and
liabilities is based on the provisions of the tax laws in effect as of the date
of these financial statements; the effects of future changes in tax laws or
rates are not anticipated except as otherwise noted.
For the years ended August 31, 1996 and 1997, the Company utilized federal
net operating loss ("NOL") carryforwards of approximately $25,000 and $105,000,
respectively, and California NOL carryforwards of approximately $37,000 and
$117,000, respectively.
The Company has available to offset future federal Corporation taxable
income, NOL carryforwards of approximately $1,576,000, $1,471,000 and $1,537,000
for years ended August 31, 1996 and 1997 and six months ended February 28, 1998,
respectively, expiring in the years 2005 through 2013. In addition, the Company
has available to offset any future federal Corporation income tax liabilities,
investment tax credit carryovers of approximately $22,000 expiring in the years
1998 through 2001.
At August 31, 1996 and 1997 and February 28, 1998, the Company has available
for California income tax purposes, NOL carryforwards of approximately $579,000,
$412,000 and $452,000, respectively, expiring in the years 1998, 1999 and 2003.
The Company's net deferred tax assets (using a federal rate of 34% and an
effective California rate of 9.3%) consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28,
---------------------- ------------
<S> <C> <C> <C>
1996 1997 1998
---------- ---------- ------------
Deferred Tax Asset.......................................................... $ 598,395 $ 574,611 $ 609,380
Deferred Tax Asset Valuation................................................ (598,395) (574,611) (609,380)
Net Deferred Tax Asset...................................................... $ -- $ -- $ --
</TABLE>
The tax benefit computed at the statutory rate is due primarily to temporary
differences in depreciation and amortization calculated for book and tax
purposes and the NOL carryforwards. Management anticipates that there will not
be sufficient taxable income to utilize the NOL carryforward benefits prior to
their expiration, thus a valuation allowance has been established to fully
offset the deferred tax asset.
F-42
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J. ACCOUNTING 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
disclosure 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 may differ from those estimates.
K. IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for the impairment of long lived assets under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long Lived Assets. SFAS No. 121 requires
impairment losses to be recorded on long-lived assets when indications of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. The adoption of SFAS
No. 121 did not have a material impact on the results of operations of the
Company.
L. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practical to estimate
that value
- Cash
The carrying amount is a reasonable estimate of fair value
- Accounts Receivable
The carrying value of accounts receivable approximates the fair value due to
the short-term nature of these instruments
- Accounts Payable and Accrued Liabilities
The carrying value of accounts payable and accrued expenses approximates the
fair value due to the short-term nature of these instruments.
F-43
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 2--PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31,
-------------------------- FEBRUARY 28,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Equipment............................................................... $ 672,127 $ 672,127 $ 672,127
Transmitter............................................................. 372,807 386,957 412,600
Furniture and Fixtures.................................................. 60,935 60,935 61,748
Trucks and Automobiles.................................................. 97,167 116,095 117,025
Computer Equipment...................................................... 43,825 48,455 48,455
Leasehold Improvements.................................................. 34,342 35,722 35,940
Music Library........................................................... 15,724 16,555 16,555
------------ ------------ ------------
1,296,927 1,336,846 1,364,450
Less: Accumulated Depreciation.......................................... 1,164,277 1,203,748 1,224,177
------------ ------------ ------------
$ 132,650 $ 133,098 $ 140,273
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
NOTE 3--COVENANT NOT TO COMPETE
The covenant of $475,000 was amortized over a nine year period, commencing
on the closing date, September 8, 1980 and was to be fully paid, per terms of
the covenant, on September 8, 1989. The current balance in arrears owed is
$50,000.
NOTE 4--LONG TERM DEBT
NOTE PAYABLE
The $3,600,000 note with Bank of America ("the Bank") accrues interest at a
rate per annum equal to the Reference Rate (Bank of America's Prime rate) plus
2%. The agreement provided for the capitalization into principal certain months'
interest totaling $97,995 and allows for $1,000,000 of accrued interest to be
repaid at the loan maturity date. All remaining principal plus any accrued
interest is due and payable on December 31, 1999. Additionally, certain
financial covenants must be met including covenants governing current ratios and
operating profit ratios. Substantially all assets of the Company are pledged as
collateral on the note.
As of August 31, 1996, the Company was in violation of certain covenants and
failed to make required principal and interest payments. The Company entered
into an agreement with the Bank to make weekly payments of interest in the
amount of $10,000, due on Friday of each week, commencing May 9, 1997 and ending
September 26, 1997. Any accrued and unpaid interest as of September 26, 1997 was
due and payable on September 30, 1997. Additionally, principal payments of
$90,000 due through September 10, 1997 were due and payable on September 30,
1997, unless the agreement terminated. As of February 28, 1998, the Company was
five interest payments in arrears totaling approximately $135,000 and was in
violation of some of its loan covenants for which the Bank forbore from pursuing
its remedies with respect to the loan covenant violations.
F-44
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 4--LONG TERM DEBT (CONTINUED)
Aggregate principal payments required on the note payable for each of the
succeeding five years ending February 28 are as follows:
<TABLE>
<S> <C>
1999............................................................ $ 340,000
2000............................................................ 2,799,610
---------
$3,139,610
---------
---------
</TABLE>
The Bank's prime rate on interest at August 31, 1996 and 1997 and February
28, 1998, was 8.50%, 8.25% and 8.50%, respectively.
EQUIPMENT LEASE AND LOANS PAYABLE
The Company has entered into lease and loan agreements for the purchase of
automobiles and office equipment which mature through September 2000. The
agreements call for monthly installments which range from $556 to $1,552 which
includes interest at rates ranging from 8.5% to 15.0%. All agreements are
collateralized by the purchased equipment.
The capitalized cost of the above is $83,958, $68,628 and $68,628 less
accumulated depreciation of $55,841, $35,186 and $42,048 and is included in
property and equipment in the accompanying financial statements for the years
ended August 31, 1996 and 1997 and six months ended February 28, 1998,
respectively. Interest expense related to these loans was $5,283, $5,491, $2,822
and $2,405 for the years ended August 31, 1996 and 1997 and six months ended
February 28, 1997 and 1998, respectively.
Future minimum loan payments for the years ended February 28, are as
follows:
<TABLE>
<S> <C>
1999............................................................... $ 20,716
2000............................................................... 13,951
2001............................................................... 2,984
---------
$ 37,651
---------
---------
</TABLE>
NOTE 5--LICENSE PAYABLE
On April 22, 1993, Broadcast Music, Inc. ("BMI") obtained an arbitration
award of $264,181 against the Company for unpaid license fees.
Effective September, 1995 the Company entered into a Settlement Agreement
and Stipulation of Dismissal with Prejudice ("the Agreement") which superseded
the original award. In this Agreement, the Company is to pay BMI the sum of
$200,000 in monthly payments ranging from $2,500 to $3,200 starting October 1,
1995 and a final balloon payment of $24,800 on October 1, 2000. There is no
interest calculated into the payment schedule. If the Company defaults on the
payment schedule, then the Company will be liable for the original award plus
interest at the California statutory rate, less the total of payments which had
been made to date. As of August 31, 1996, the Company was in compliance with the
payment schedule. As of August 31, 1997 and February 28, 1998, the Company was
four and six payments in arrears, respectively, and as a result, the entire
obligation is presented as a current liability. Under the Agreement, the current
License Agreement dated May, 1994 is excluded from the settlement and the
Company is still
F-45
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 5--LICENSE PAYABLE (CONTINUED)
bound to its obligation. The License Agreement dated May, 1994 is retroactive
and covers the period January 1, 1992 through December 31, 1996. The new
Agreement settlement plus current license fees under the new license agreement
amounted to a total liability of $239,227, $213,233 and $203,234 at August 31,
1996 and 1997 and February 28, 1998, respectively.
In addition, the Company fell into arrears with its 1995/1996 ASCAP music
license fee payments for approximately $11,607 and owed an additional $15,000
due to an audit conducted for the period ending December 31, 1994. On May 9,
1996, the Company entered into an arrangement whereas they agreed to make
monthly payments of at least $750 in addition to the regular monthly billing
until paid in full. The balance remaining at August 31, 1996 and 1997 and
February 28, 1998, was $23,607, $17,607 and $16,107, respectively. As of August
31, 1997 and February 28, 1998, the Company was two and six payments in arrears
under the terms of this arrangement and, as a result, the entire obligation is
presented as a current liability.
NOTE 6--OPERATING LEASES
The Company leases its office space and transmitter location under operating
leases. The office spaced is leased for $5,000 per month for the first year
(renegotiated to $4,000 per month beginning October 1, 1996) and subject to CPI
increases thereafter under an agreement dated March, 1993. The lease expires
July 1, 2000. The transmitter location lease dated October 20, 1987 had a term
of 10 years but was renegotiated in October 1997 and extended for an additional
10 years at $3,750 per month. Total rental expense related to the above leases
for the years ended August 31, 1996 and 1997 and six months ended February 28,
1997 and 1998 was $94,431, $89,325, $44,915 and $46,170, respectively.
The future payments are as follows for the years ended February 28:
<TABLE>
<S> <C>
1999.............................................................. $ 93,000
2000.............................................................. 93,000
2001.............................................................. 61,000
2002.............................................................. 45,000
2003.............................................................. 45,000
Thereafter........................................................ 210,000
---------
$ 547,000
---------
---------
</TABLE>
F-46
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 7--ACCOUNTS RECEIVABLE--STOCKHOLDER
Accounts receivable--stockholder accrues interest at 6% until paid. Accounts
receivable--stockholder consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31,
---------------------- FEBRUARY 28,
1996 1997 1998
---------- ---------- ------------
<S> <C> <C> <C>
Cash Advances for Crosby (Royster) Note Prior to 1982....................... $ 63,298 $ 63,298 $ 63,298
Dividend--Repayment......................................................... (36,650) (36,650) (36,650)
Net Cash Advances........................................................... 91,322 107,322 107,322
Interest.................................................................... 166,365 183,987 191,967
---------- ---------- ------------
$ 284,335 $ 317,957 $ 325,937
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
Interest income related to this note was approximately $16,000, $17,600,
$7,500 and 8,000 for the years ended August 31, 1996 and 1997 and the six months
ended February 28, 1997 and 1998, respectively.
NOTE 8--SIMPLE IRA PLAN
Effective January 1, 1997, the Company established a SIMPLE IRA Plan ("the
Plan") under IRC Section 408(p) covering employees earning over $5,000 during
the calendar year. Under the terms of the Plan, the Company is required to
contribute a matching contribution to each eligible employee's SIMPLE IRA equal
to the employee's salary reduction contributions up to a limit of 3% of the
employee's compensation for the calendar year. The Company may reduce the 3%
limit for the calendar year if: (1) the limit is not reduced below 1%; (2) the
limit is not reduced for more than 2 calendar years during the 5 year period
ending with the calendar year the reduction is effective; and (3) each employee
is notified of the reduced limit within a reasonable period of time before the
employee's 60 day election period for the calendar year. No accrual for the
Company's required contribution for the Plan year ending December 31, 1997 has
been made as of February 28, 1998. Plan expense for the year ended August 31,
1997 and the six months ended February 28, 1997 and 1998 was $-0-.
NOTE 9--GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company has suffered net losses of
$40,696, $42,088, $85,375 and $107,159 during the years ended August 31, 1996
and 1997 and the six months ended February 28, 1997 and 1998, respectively; and
as of February 28, 1998, had a negative net worth of $2,981,387. The Company's
current liabilities as of this date exceeded current assets by $668,857. In
addition, the Company has experienced difficulty meeting obligations as they
become due.
In view of the matters described in the preceding paragraph, future
profitability is dependent upon the success of future operations. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classifications of
liabilities that might be necessary should the Company be unable to continue
normal operations.
However, the Company's management believes it will be able to continue as a
going concern due to the sale of the Company's common stock discussed in Note
10. $4,236,321 from the proceeds of the sale
F-47
<PAGE>
ORO SPANISH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996 AND 1997 AND FEBRUARY 28, 1997 AND 1998
NOTE 9--GOING CONCERN UNCERTAINTY (CONTINUED)
was recognized by the Company as additional paid in capital. This money was used
to retire the debt which contributed to the going concern uncertainty.
NOTE 10--SUBSEQUENT EVENTS (UNAUDITED)
On February 20, 1998, the Company's sole stockholder entered into a Stock
Purchase Agreement to sell all of his common stock interest in the Company to
Radio Unica of San Francisco, Inc. ("Radio Unica") for $12,000,000.
The Company and Radio Unica entered into a Time Brokerage Agreement (the
"LMA") effective March 1, 1998 and expiring on the closing date or termination
of the Stock Purchase Agreement. During this period, the Company is responsible
for all engineering and certain personnel costs and will receive $58,000 per
month from Radio Unica.
On March 2, 1998, the Company and BMI entered into an agreement to settle
the outstanding obligation under the Agreement (Note 5) for $75,000 payable on
or before June 19, 1998, plus interest at 9% per annum accumulating from
February 19, 1998 to the date of payment.
On March 30, 1998, the Company and the Bank entered into an agreement
whereby upon the closing date of the Stock Purchase Agreement, the Company will
pay the Bank $3,800,000, plus interest at prime plus 2% per annum beginning
February 1, 1998, as settlement in full of all principal and accrued interest
owed under the terms of the note (Note 4).
On April 30, 1998, the common stock interest in the Company was sold and the
debt discussed above was retired. At Closing, the receivable from the
stockholder discussed in Note 7 was recognized as a dividend.
F-48
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL
CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF
TRANSMITTAL NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary......................................... 1
Risk Factors.................................... 10
The Transactions................................ 17
Use of Proceeds................................. 18
Capitalization.................................. 19
Unaudited Pro Forma Combined
Financial Data................................ 20
Selected Historical Financial Data.............. 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 28
Business........................................ 33
Management...................................... 48
Principal Stockholders of Holdings.............. 52
Certain Relationships and Related
Transactions.................................. 53
Description of Revolving Credit Facility........ 56
The Exchange Offer.............................. 57
Description of the Notes........................ 66
Certain United States Federal Income
Tax Consequences.............................. 95
Plan of Distribution............................ 99
Legal Matters................................... 99
Experts......................................... 99
Index to Financial Statements................... F-1
</TABLE>
$158,088,000
RADIO UNICA CORP.
OFFER TO EXCHANGE
11 3/4% SENIOR DISCOUNT NOTES
SERIES B DUE 2006
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR DISCOUNT NOTES
DUE 2006
---------------------
PROSPECTUS
---------------------
OCTOBER , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by the Delaware General Corporation Law (the "DGCL"), no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided, that, a director shall be liable to the extent provided by applicable
law (1) for any breach of the directors' duty of loyalty to the Company or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under Section 174 of
the DGCL, or (4) for any transaction from which the director derived any
improper personal benefit.
The Company's Certificate of Incorporation also provides that the Company
shall, to the fullest extent permitted by Section 145 of the DGCL, indemnify any
and all persons whom it shall have power to indemnify under such section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by such section and shall advance expenses to the fullest
extent permitted thereby. Such right to indemnification and advancement of
expenses shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. The indemnification and advancement of expenses
provided for therein shall not be deemed exclusive.
Consistent with Section 145 of the DGCL, the Company's Bylaws provide that
the Company shall indemnify any person, to the fullest extent authorized by the
DGCL who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a director,
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans) against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon
plea of nolo contendere or its equivalent, shall not, in and of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
Consistent with Section 145 of the DGCL, the Company's Bylaws provide that
the Company shall indemnify any person, to the fullest extent authorized by the
DGCL who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Company unless and only to the extent that the court in which such action or
suit was brought shall determine, upon application, that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
II-1
<PAGE>
Consistent with Section 145 of the DGCL, the Company's Bylaws also provide
that: all reasonable expenses incurred by or on behalf of the indemnitee in
connection with any suit, action or proceeding, may be advanced to the
indemnitee by the Company; the rights to indemnification and to advancement of
expenses conferred in therein shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Certificate of
Incorporation, a By-Law of the Company, agreement, vote of stockholders or
disinterested Directors or otherwise; and the indemnification and advancement of
expenses provided therein shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 145 of the DGCL provides that to the extent that a present or former
director or officer of the Company has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue, or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
Any such indemnification (unless ordered by a court) shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent is
proper in such circumstances because such person has met the applicable standard
of conduct set forth in the paragraphs above. Such determination shall be made
(i) by a majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum, (ii) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, (iii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iv) by the stockholders.
Section 145 of the DGCL permits a Delaware business corporation to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify such person against such liability.
The above discussion of Section 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULE TABLES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
3.1* Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
3.3* Certificate of Incorporation of Radio Unica of San Francisco, Inc.
3.4* Bylaws of Radio Unica of San Francisco, Inc.
3.5* Certificate of Incorporation of Oro Spanish Broadcasting, Inc.
3.6* Bylaws of Oro Spanish Broadcasting, Inc.
3.7* Certificate of Incorporation of Radio Unica of San Francisco License Corp.
3.8* Bylaws of Radio Unica of San Francisco License Corp.
3.9* Certificate of Incorporation of Radio Unica of Miami, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
3.10* Bylaws of Radio Unica of Miami, Inc.
3.11* Certificate of Incorporation of Radio Unica of Miami License Corp.
3.12* Bylaws of Radio Unica of Miami License Corp.
3.13* Certificate of Incorporation of Radio Unica of Los Angeles, Inc.
3.14* Bylaws of Radio Unica of Los Angeles, Inc.
3.15* Certificate of Incorporation of Radio Unica of Los Angeles License Corp.
3.16* Bylaws of Radio Unica of Los Angeles License Corp.
3.17* Certificate of Incorporation of Radio Unica of San Antonio, Inc.
3.18* Bylaws of Radio Unica of San Antonio, Inc.
3.19* Certificate of Incorporation of Radio Unica Network, Inc.
3.20* Bylaws of Radio Unica Network, Inc.
3.21* Certificate of Incorporation of Radio Unica Sales Corp.
3.22* Bylaws of Radio Unica Sales Corp.
3.23 Bylaws of Blaya, Inc.
3.24 Certificate of Incorporation of Blaya, Inc.
3.25 Bylaws of Radio Unica of Houston License Corp.
3.26 Certificate of Incorporation of Radio Unica of Houston License Corp.
4.1* Purchase Agreement, dated July 22, 1998, among the Company, each of the Company's subsidiaries set
forth therein, CIBC Oppenheimer Corp. and Bear, Stearns & Co. Inc.
4.2* Indenture dated as of July 27, 1998 between the Company and Wilmington Trust Company, as Trustee.
4.3* Form of New Note (included as Exhibit A to Exhibit 4.2).
4.4* Form of Guarantee (included as Exhibit G to Exhibit 4.2).
4.5* Registration Rights Agreement, dated as of July 22, 1998, between the Company and CIBC Oppenheimer
Corp. and Bear, Stearns & Co. Inc.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 Credit Agreement, dated as of July 8, 1998 among the Company, Holdings, the several banks and other
financial institutions from time to time parties thereto and Canadian Imperial Bank of Commerce, in
its individual capacity and as Agent ("CIBC").
10.2 Form of Guarantee under the Credit Agreement, each dated as of July 8, 1998, by each of the following
subsidiaries of the Company: Radio Unica of San Francisco, Inc., Oro Spanish Broadcasting, Inc., Radio
Unica of San Francisco License Corp., Radio Unica of Miami, Inc., Radio Unica of Miami License Corp.,
Radio Unica of Los Angeles, Inc., Radio Unica of Los Angeles License Corp., Radio Unica of San
Antonio, Inc., Radio Unica Network, Inc. and Radio Unica Sales Corp. in favor of CIBC (included as
Exhibit E to Exhibit 10.1).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.3 Form of Pledge Agreement, each dated as of July 8, 1998, between CIBC and each of Radio Unica of San
Francisco, Inc., Radio Unica of Miami, Radio Unica of Los Angeles, Inc., Oro Spanish Broadcasting,
Inc., Holdings and the Company (included as Exhibits A, C and F to Exhibit 10.1).
10.4 Form of Security Agreement, each dated as of July 8, 1998, between CIBC and each of the following
subsidiaries of the Company: Radio Unica of San Francisco, Inc., Oro Spanish Broadcasting, Inc., Radio
Unica of San Francisco License Corp., Radio Unica of Miami, Inc., Radio Unica of Miami License Corp.,
Radio Unica of Los Ageles, Inc., Radio Unica of Los Angeles License Corp., Radio Unica of San Antonio,
Inc., Radio Unica Network, Inc., and Radio Unica Sales Corp Holdings and the Company (included as
Exhibits B, D and G to Exhibit 10.1).
10.5* Contribution Agreement, dated as of July 8, 1998, among certain of the Company's subsidiaries,
Holdings and CIBC.
10.6* Intellectual Property Security Agreement, dated as of July 8, 1998, between the Company and CIBC.
10.7* Securities Purchase Agreement, dated as of August 11, 1997, by and among the Company, Warburg, Pincus
Ventures, L.P. and the other investors named therein.
10.8* Supplement to Securities Purchase Agreement, dated as of June, 1998, among the Company, Holdings,
Warburg, Pincus Ventures, L.P. and the other investors named therein.
10.9* Stockholders' Agreement, dated as of June 30, 1998, by and among Holdings, Warburg, Pincus Ventures,
L.P., Joaquin Blaya, Herbert Levin and the other persons listed therein.
10.10* Time Brokerage Agreement, dated as of October 31, 1997, by and between the Company and Lotus Oxnard
Corp. relating to KVCA(AM).
10.11* Time Brokerage Agreement, dated as of October 31, 1997, by and between the Company and Texas Lotus
Corp. relating to KZDC(AM).
10.12* Time Brokerage Agreement, dated as of June 9, 1998, by and between Achievement Radio Holdings, Inc.
and the Company relating to WYPA(AM).
10.13 Time Brokerage Agreement, dated as of April 27, 1998, by and between The Freedom Network, Inc. and the
Company relating to KDFT(AM).
10.14* Asset Purchase Agreement, dated as of January 26, 1998, by and among the Company, One-On-One Sports
License of Florida, L.L.C. and One-On-One Sports Radio of Florida, L.L.C.
10.15* Stock Purchase Agreement, dated as of February 20, 1998, by and among the Company, Oro Spanish
Broadcasting, Inc. and Rene De La Rosa.
10.16* Asset Purchase Agreement, dated as of May 20, 1998, by and among the Company, Sinclair Radio of Los
Angeles, Inc. and Sinclair Radio of Los Angeles Licensee, Inc.
10.17* Form of Non Competition and Confidentiality Agreement between each of Joaquin F. Blaya, Herbert M.
Levin and Steven E. Dawson, dated August 13, 1997.
10.18* Agreement, dated as of November 19, 1997, entered into by and between The Miami Herald Publishing
Company and the Company.
10.19* Agreement, dated as of January 15, 1998, entered into by and between Radio Unica Corp. and Jorge
Ramos.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.20* Amended and Restated Artist Agreement, dated as of June 5, 1998, entered into by and between Radio
Unica Network, Inc. and Raque Productions (for services of Pedro Sevcec).
10.21 Independent Contractor Agreement dated as of June 30, 1998 between Radio Unica Network, Inc. and Dra
Isabel, Inc. (for services of Isabel Gomez Bassols)
10.22* 1998 Stock Option Plan of Holdings
10.23* Lease, dated October 21, 1997, between Port of Oakland and Oro Spanish Broadcasting, Inc. (for real
property located in City of Oakland, County of Alameda).
10.24* Lease, dated April 20, 1983, by and between May L. Rotolante and Radio WCMQ, Inc., as assigned to
Radio Unica of Miami, Inc. (for real property in Dade County, Florida).
10.25 Lease, as amended, dated September 19, 1997, by and between KOALA Miami Realty Holding Co., Inc. and
Radio Unica Corp. (for office space located in Dade County, Florida).
10.26 Amendment to Time Brokerage Agreement, dated as of May 20, 1998, by and between The Freedom Network,
Inc. and the Company relating to KDFT(AM).
10.27 Local Programming and Marketing Agreement, dated as of June 1, 1998, by and between Children's Radio
of New York, Inc. and the Company relating to WBAH(AM).
10.28 Stock Purchase Agreement, dated as of June 10, 1998, by and among the Company, Blaya, Inc. and Joaquin
F. Blaya.
10.29** Option Agreement, dated as of October 31, 1997, by and between Lotus Oxnard Corp. and the Company.
10.30 Option Agreement, dated as of October 31, 1997, by and between Texas Lotus Corp. and the Company.
10.31** Option Agreement, dated as of June 9, 1998, by and between Personal Achievement Radio of Illinois,
Inc. and the Company.
10.32 First Supplemental Indenture, dated as of September 11, 1998, among the Company, Blaya, Inc., Radio
Unica of Houston License Corp. and Wilmington Trust Company.
10.33 Guarantee under the Supplemental Indenture, dated as of September 11, 1998, of Blaya, Inc. and Radio
Unica of Houston License Corp.
10.34 Subsidiary Pledge Agreement, dated as of September 11, 1998, between CIBC and Blaya, Inc.
10.35 Subsidiary Security Agreement, dated as of September 11, 1998, between CIBC and Blaya, Inc.
10.36 Subsidiary Security Agreement, dated as of September 11, 1998, between CIBC and Radio Unica of Houston
License Corp.
10.37 Subsidiary Guarantee under the Credit Agreement, dated as of September 11, 1998, of Blaya, Inc.
10.38 Subsidiary Guarantee under the Credit Agreement, dated as of September 11, 1998, of Radio Unica of
Houston License Corp.
10.39** Agreement, dated as of September 28, 1998, between the Company and Inter/Forever Sports, Inc.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.40** Agreement, dated as of September 28, 1998, between the Company and Inter/Forever Sports, Inc.
21.1* Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Miller, Kaplan, Arase & Co., LLP.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in exhibit 5.1).
24.1 Power of Attorney of Messrs. Blaya, Levin, Dawson, Goldman and Santoleri.
24.2 Power of Attorney of Mr. Lapidus.
25.1* Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of Wilmington Trust
Company.
27.1* Financial Data Schedule.
27.2 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Previously filed.
** Portions of this exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities
and Exchange Commission.
(b) Financial Statement Schedules:
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because they are not required, are inapplicable or the required information
has already been provided elsewhere in the registration statement.
ITEM 22. UNDERTAKINGS
INSTRUCTION TO ITEM 511. 1. If the amounts of any items are not known, give
estimates but identify them as such.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) include any additional or changed material information on the plan of
distribution.
II-6
<PAGE>
(2) For determing liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial BONA FIDE
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
<TABLE>
<S> <C> <C>
RADIO UNICA CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
* Executive Vice President,
- ------------------------------ Business Affairs and October 20, 1998
Andrew C. Goldman Director
*
- ------------------------------ Director October 20, 1998
John D. Santoleri
*
- ------------------------------ Director October 20, 1998
Sidney Lapidus
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF SAN FRANCISCO, INC.
By: /s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
ORO SPANISH BROADCASTING, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF SAN FRANCISCO LICENSE CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF MIAMI, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF MIAMI LICENSE CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF LOS ANGELES, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF LOS ANGELES LICENSE CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF SAN ANTONIO, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA NETWORK, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA SALES CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
BLAYA, INC.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on this 20th day of October, 1998.
RADIO UNICA OF HOUSTON LICENSE CORP.
/s/ STEVEN E. DAWSON
-----------------------------------------
Name: Steven E. Dawson
TITLE: CHIEF FINANCIAL OFFICER AND
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 20, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive October 20, 1998
Joaquin F. Blaya Officer)
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and October 20, 1998
Steven E. Dawson Accounting Officer)
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEVEN E. DAWSON
-------------------------
Steven E. Dawson
ATTORNEY-IN-FACT
</TABLE>
II-20
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
3.1* Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
3.3* Certificate of Incorporation of Radio Unica of San Francisco, Inc.
3.4* Bylaws of Radio Unica of San Francisco, Inc.
3.5* Certificate of Incorporation of Oro Spanish Broadcasting, Inc.
3.6* Bylaws of Oro Spanish Broadcasting, Inc.
3.7* Certificate of Incorporation of Radio Unica of San Francisco License Corp.
3.8* Bylaws of Radio Unica of San Francisco License Corp.
3.9* Certificate of Incorporation of Radio Unica of Miami, Inc.
3.10* Bylaws of Radio Unica of Miami, Inc.
3.11* Certificate of Incorporation of Radio Unica of Miami License Corp.
3.12* Bylaws of Radio Unica of Miami License Corp.
3.13* Certificate of Incorporation of Radio Unica of Los Angeles, Inc.
3.14* Bylaws of Radio Unica of Los Angeles, Inc.
3.15* Certificate of Incorporation of Radio Unica of Los Angeles License Corp.
3.16* Bylaws of Radio Unica of Los Angeles License Corp.
3.17* Certificate of Incorporation of Radio Unica of San Antonio, Inc.
3.18* Bylaws of Radio Unica of San Antonio, Inc.
3.19* Certificate of Incorporation of Radio Unica Network, Inc.
3.20* Bylaws of Radio Unica Network, Inc.
3.21* Certificate of Incorporation of Radio Unica Sales Corp.
3.22* Bylaws of Radio Unica Sales Corp.
3.23 Bylaws of Blaya, Inc.
3.24 Certificate of Incorporation of Blaya, Inc.
3.25 Bylaws of Radio Unica of Houston License Corp.
3.26 Certificate of Incorporation of Radio Unica of Houston License Corp.
4.1* Purchase Agreement, dated July 22, 1998, among the Company, each of the Company's subsidiaries set
forth therein, CIBC Oppenheimer Corp. and Bear, Stearns & Co. Inc.
4.2* Indenture dated as of July 27, 1998 between the Company and Wilmington Trust Company, as Trustee.
4.3* Form of New Note (included as Exhibit A to Exhibit 4.2).
4.4* Form of Guarantee (included as Exhibit G to Exhibit 4.2).
4.5* Registration Rights Agreement, dated as of July 22, 1998, between the Company and CIBC Oppenheimer
Corp. and Bear, Stearns & Co. Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 Credit Agreement, dated as of July 8, 1998 among the Company, Holdings, the several banks and other
financial institutions from time to time parties thereto and Canadian Imperial Bank of Commerce, in
its individual capacity and as Agent ("CIBC").
10.2 Form of Guarantee under the Credit Agreement, each dated as of July 8, 1998, by each of the following
subsidiaries of the Company: Radio Unica of San Francisco, Inc., Oro Spanish Broadcasting, Inc., Radio
Unica of San Francisco License Corp., Radio Unica of Miami, Inc., Radio Unica of Miami License Corp.,
Radio Unica of Los Angeles, Inc., Radio Unica of Los Angeles License Corp., Radio Unica of San
Antonio, Inc., Radio Unica Network, Inc. and Radio Unica Sales Corp. in favor of CIBC (included as
Exhibit E to Exhibit 10.1).
10.3 Form of Pledge Agreement, each dated as of July 8, 1998, between CIBC and each of Radio Unica of San
Francisco, Inc., Radio Unica of Miami, Radio Unica of Los Angeles, Inc., Oro Spanish Broadcasting,
Inc., Holdings and the Company (included as Exhibits A, C and F to Exhibit 10.1).
10.4 Form of Security Agreement, each dated as of July 8, 1998, between CIBC and each of the following
subsidiaries of the Company: Radio Unica of San Francisco, Inc., Oro Spanish Broadcasting, Inc., Radio
Unica of San Francisco License Corp., Radio Unica of Miami, Inc., Radio Unica of Miami License Corp.,
Radio Unica of Los Ageles, Inc., Radio Unica of Los Angeles License Corp., Radio Unica of San Antonio,
Inc., Radio Unica Network, Inc., and Radio Unica Sales Corp Holdings and the Company (included as
Exhibits B, D and G to Exhibit 10.1).
10.5* Contribution Agreement, dated as of July 8, 1998, among certain of the Company's subsidiaries,
Holdings and CIBC.
10.6* Intellectual Property Security Agreement, dated as of July 8, 1998, between the Company and CIBC.
10.7* Securities Purchase Agreement, dated as of August 11, 1997, by and among the Company, Warburg, Pincus
Ventures, L.P. and the other investors named therein.
10.8* Supplement to Securities Purchase Agreement, dated as of June, 1998, among the Company, Holdings,
Warburg, Pincus Ventures, L.P. and the other investors named therein.
10.9* Stockholders' Agreement, dated as of June 30, 1998, by and among Holdings, Warburg, Pincus Ventures,
L.P., Joaquin Blaya, Herbert Levin and the other persons listed therein.
10.10* Time Brokerage Agreement, dated as of October 31, 1997, by and between the Company and Lotus Oxnard
Corp. relating to KVCA(AM).
10.11* Time Brokerage Agreement, dated as of October 31, 1997, by and between the Company and Texas Lotus
Corp. relating to KZDC(AM).
10.12* Time Brokerage Agreement, dated as of June 9, 1998, by and between Achievement Radio Holdings, Inc.
and the Company relating to WYPA(AM).
10.13 Time Brokerage Agreement, dated as of April 27, 1998, by and between The Freedom Network, Inc. and the
Company relating to KDFT(AM).
10.14* Asset Purchase Agreement, dated as of January 26, 1998, by and among the Company, One-On-One Sports
License of Florida, L.L.C. and One-On-One Sports Radio of Florida, L.L.C.
10.15* Stock Purchase Agreement, dated as of February 20, 1998, by and among the Company, Oro Spanish
Broadcasting, Inc. and Rene De La Rosa.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.16* Asset Purchase Agreement, dated as of May 20, 1998, by and among the Company, Sinclair Radio of Los
Angeles, Inc. and Sinclair Radio of Los Angeles Licensee, Inc.
10.17* Form of Non Competition and Confidentiality Agreement between each of Joaquin F. Blaya, Herbert M.
Levin and Steven E. Dawson, dated August 13, 1997.
10.18* Agreement, dated as of November 19, 1997, entered into by and between The Miami Herald Publishing
Company and the Company.
10.19* Agreement, dated as of January 15, 1998, entered into by and between Radio Unica Corp. and Jorge
Ramos.
10.20* Amended and Restated Artist Agreement, dated as of June 5, 1998, entered into by and between Radio
Unica Network, Inc. and Raque Productions (for services of Pedro Sevcec).
10.21 Independent Contractor Agreement dated as of June 30, 1998 between Radio Unica Network, Inc. and Dra
Isabel, Inc. (for services of Isabel Gomez Bassols)
10.22* 1998 Stock Option Plan of Holdings
10.23* Lease, dated October 21, 1997, between Port of Oakland and Oro Spanish Broadcasting, Inc. (for real
property located in City of Oakland, County of Alameda).
10.24* Lease, dated April 20, 1983, by and between May L. Rotolante and Radio WCMQ, Inc., as assigned to
Radio Unica of Miami, Inc. (for real property in Dade County, Florida).
10.25 Lease, as amended, dated September 19, 1997, by and between KOALA Miami Realty Holding Co., Inc. and
Radio Unica Corp. (for office space located in Dade County, Florida).
10.26 Amendment to Time Brokerage Agreement, dated as of May 20, 1998, by and between The Freedom Network,
Inc. and the Company relating to KDFT(AM).
10.27 Local Programming and Marketing Agreement, dated as of June 1, 1998, by and between Children's Radio
of New York, Inc. and the Company relating to WBAH(AM).
10.28 Stock Purchase Agreement, dated as of June 10, 1998, by and among the Company, Blaya, Inc. and Joaquin
F. Blaya.
10.29** Option Agreement, dated as of October 31, 1997, by and between Lotus Oxnard Corp. and the Company.
10.30 Option Agreement, dated as of October 31, 1997, by and between Texas Lotus Corp. and the Company.
10.31** Option Agreement, dated as of June 9, 1998, by and between Personal Achievement Radio of Illinois,
Inc. and the Company.
10.32 First Supplemental Indenture, dated as of September 11, 1998, among the Company, Blaya, Inc., Radio
Unica of Houston License Corp. and Wilmington Trust Company.
10.33 Guarantee under the Supplemental Indenture, dated as of September 11, 1998, of Blaya, Inc. and Radio
Unica of Houston License Corp.
10.34 Subsidiary Pledge Agreement, dated as of September 11, 1998, between CIBC and Blaya, Inc.
10.35 Subsidiary Security Agreement, dated as of September 11, 1998, between CIBC and Blaya, Inc.
10.36 Subsidiary Security Agreement, dated as of September 11, 1998, between CIBC and Radio Unica of Houston
License Corp.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.37 Subsidiary Guarantee under the Credit Agreement, dated as of September 11, 1998, of Blaya, Inc.
10.38 Subsidiary Guarantee under the Credit Agreement, dated as of September 11, 1998, of Radio Unica of
Houston License Corp.
10.39** Agreement, dated as of September 28, 1998, between the Company and Inter/Forever Sports, Inc.
10.40** Agreement, dated as of September 28, 1998, between the Company and Inter/Forever Sports, Inc.
21.1* Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Miller, Kaplan, Arase & Co., LLP.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in exhibit 5.1).
24.1 Power of Attorney of Messrs. Blaya, Levin, Dawson, Goldman and Santoleri.
24.2 Power of Attorney of Mr. Lapidus.
25.1* Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of Wilmington Trust
Company.
27.1* Financial Data Schedule.
27.2 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Previously filed.
** Portions of this exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities
and Exchange Commission.
<PAGE>
Exhibit 3.23
BLAWS
OF
BLAYA INC.,
a Delaware corporation
ARTICLE I
---------
STOCKHOLDERS
------------
1. CERTIFICATES REPRESENTING STOCK. Certificates representing
stock in the corporation shall be signed by, or in the name of, the corporation
by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
Delaware Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss,
<PAGE>
theft, or destruction of any such certificate or the issuance of any such new
certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
Delaware Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a
reasonable time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the Delaware Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing full
shares or uncertificated full shares, before a specified date, or subject to the
conditions that the shares for which scrip or warrants are exchangeable may be
sold by the corporation and the proceeds thereof distributed to the holders of
scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
2
<PAGE>
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution date is adopted by the Board of Directors, and which date shall not
be more than ten days after the date upon which the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining the stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by the Delaware Corporation Law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by the Delaware
Corporation Law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action, in order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitles to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
3
<PAGE>
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the Delaware Corporation Law confers such
rights notwithstanding that the certificate of incorporation may provide for
more than one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder; provided, however, that no such right
shall vest in the event of an increase or a decrease in the authorized number of
shares of stock of any class or series which is otherwise denied voting rights
under the provisions of the certificate of incorporation, except as any
provision of law may otherwise require.
7. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city
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or other municipality or community at which the list of stockholders of the
corporation may be examined. The notice of an annual meeting shall state that
the meeting is called for the election of directors and for the transaction of
other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special meeting
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the Delaware
Corporation Law. Except as otherwise provided by the Delaware Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such other address
which he may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
5
<PAGE>
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting the Chairman of the Board, if any, the Vice Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and so such acts as are proper to conduct the election or
vote with faimess to all stockholders. On request of the person presiding at the
meeting, the inspector or inspectors, if any, shall make a report in writing of
any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise
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<PAGE>
required by the Delaware General Corporation Law, the provisions of that Section
shall not apply to the corporation.
QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
VOTING. Each share of stock shall entitle the holders thereof to one
vote. Directors shall be elected by a plurality of the vote of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the Delaware Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
Delaware Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having, not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less that unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of the Delaware General Corporation Law.
ARTICLE II
----------
DIRECTORS
---------
FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
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<PAGE>
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person(s). Thereafter the
number of directors constituting the whole board shall be at least one. Subject
to the foregoing limitation and except for the first Board of Directors, such
number may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be one. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may
resign at any time upon written notice to the corporation. Thereafter, directors
who are elected at an annual meeting of stockholders, and directors who are
elected in the interim to fill vacancies and newly created directorships, shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. Except as the Delaware Corporation Law may otherwise require, in the
interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancy in that connection, newly
created directorships and any vacancies in the Board of Directors, including
unfilled vacancies resulting from the removal of directors for cause or without
cause, may be filled by the vote of a majority of the remaining directors then
in office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
8
<PAGE>
CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or, at the
direction of the Chairman of the Board, if any, the Vice Chairman of the Board,
if any, of the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated there in. Attendance of any such person at a
meeting shall constitute a waiver of, notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need by specified in any
written waiver of notice.
QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the Delaware Corporation Law, the
vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions of the Delaware
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the
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<PAGE>
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
Delaware Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by the Delaware General
Corporation Law, and may authorize the seal of the corporation to be affixed to
all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
-----------
OFFICERS
--------
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and
10
<PAGE>
such other officers with such titles as the resolution of the Board of Directors
choosing them shall designate. Except as may otherwise be provided in the
resolution of the Board of Directors choosing him, no officer other than the
Chairman or Vice-Chairman of the Board, if any, need be a director. Any number
of offices may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties as are
incident to their office except to the extent that such resolutions may be
inconsistent therewith. The Secretary or an Assistant Secretary of the
corporation shall record all of the proceedings of all meetings and actions
in writing of stockholders, directors, and committees of directors, and shall
exercise such additional authority and perform such additional duties as the
Board shall assign to him. Any officer may be removed, with or without cause,
by the Board of Directors. Any vacancy in any office may be filled by the
Board of Directors.
ARTICLE IV
----------
CORPORATE SEAL
--------------
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
---------
FISCAL YEAR
-----------
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
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<PAGE>
ARTICLE VI
----------
CONTROL OVER BYLAWS
-------------------
Subject to the provisions of the certificate of incorporation and the
provisions of the Delaware Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of BLAYA INC., a Delaware corporation, as in effect on the date
hereof.
Dated: October 27, 1997
/s/ Steven E. Dawson
--------------------------
Steven E. Dawson, Secretary
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<PAGE>
Exhibit 3.24
CERTIFICATE OF INCORPORATION
OF
BLAYA INC.
THE UNDERSIGNED, in order to form a Corporation for the purpose
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify, that:
FIRST: The name of the Corporation is BLAYA INC.
SECOND: The registered agent and the address of the Corporation's
registered office in the State of Delaware are Incorporating Services, Ltd., 15
E. North Street, Dover, Delaware, Kent County, 19901.
THIRD: The purpose of the Corporation is to engage in any and all lawful
acts or activities for which Corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have the
authority to issue is 5,000 shares of capital stock. All shares shall have a
par value of $.01 each.
FIFTH: Stockholders may, by simple majority vote, adopt, alter, amend
and/or repeal from time to time the bylaws of the Corporation which shall govern
to the extent not inconsistent with any statute, the Certificate of
Incorporation or any valid agreement among shareholders.
<PAGE>
SIXTH: The directors of the Corporation shall not be personally liable to
the Corporation or to stockholders or any other person for monetary damages for
breach of fiduciary duties as a director, and are fully indemnified and held
harmless by the Corporation to the fullest extent permitted under 8. Del. C 145
of the General Corporation Law of Delaware.
SEVENTH: The incorporator of the corporation is Jorge L. Hernandez-Torano
whose address is 701 Brickell Avenue, Suite 3000, Miami, Florida 33131. The
powers of the incorporator are to terminate upon the nomination by the
incorporator of the Initial Board of Directors, which shall be vested with all
authority and powers authorized under the General Corporate Law of Delaware.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 27th day of
October, 1997.
/s/ Jorge L. Hernandez-Torano
-------------------------------
Jorge L. Hernandez-Torano
Sole Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
BLAYA INC.
Pursuant to Section 241 of the
General Corporation Law of the
State of Delaware
The undersigned, constituting the secretary and a majority of the Board of
Directors of Blaya Inc. (the "Corporation"), hereby certify as follows:
1. The Corporation has not received payment for any of its stock.
2. Article Fourth of the Certificate of Incorporation is amended to
read in its entirety as set forth below:
Fourth: The total number of shares which the Corporation shall
have the authority to issue is Five Thousand (5000) shares of capital stock.
The Corporation, pursuant to a resolution adopted by its Board of Directors, may
issue one or more classes of stock or one or more series of stock within any
class thereof, which classes or series may have such voting powers, full or
limited or no voting powers and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the Board of
Directors' resolution or resolutions for the issue of such stock. All shares
shall have a par value of $.01 each.
<PAGE>
3. The foregoing amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed this 6th day of March, 1998.
/s/ Steven E. Dawson
------------------------
Steven E. Dawson
Secretary
/s/ Herbert M. Levin /s/ Steven E. Dawson
- ---------------------- ------------------------
Herbert M. Levin Steven E. Dawson
Director Director
<PAGE>
Exhibit 3.25
BY-LAWS
-------
OF
--
RADIO UNICA OF HOUSTON LICENSE CORP.
------------------------------------
(A Delaware corporation)
ARTICLE I
---------
STOCKHOLDERS
------------
1. CERTIFICATES REPRESENTING STOCK.
(a) Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of, the Corporation by the Chairman or
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation representing the number of shares
owned by such person in the Corporation. If such certificate is countersigned
by a transfer agent other than the Corporation or its employee or by a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were such officer, transfer agent or registrar at
the date of issue.
(b) Whenever the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
Corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
<PAGE>
(c) The Corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require the owner of any lost, stolen
or destroyed certificate, or such person's legal representative, to give the
Corporation a bond sufficient to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The Corporation may, but shall not be required to, issue fractions of a
share.
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or registration of
transfer of shares of stock, if any, transfers or registration of transfer of
shares of stock of the Corporation shall be made only on the stock ledger of the
Corporation by the registered holder thereof, or by such person's attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than sixty
nor less than ten days before the date of such meeting. If no record date has
been fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; PROVIDED, HOWEVER, that the Board of
Directors may fix a new record date for the adjourned meeting.
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<PAGE>
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be, the term "share"
or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock and to a holder
or holders of record of outstanding shares of stock when the Corporation is
authorized to issue only one class of shares of stock, and said reference is
also intended to include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class upon which or
upon whom the Certificate of Incorporation confers such rights where there are
two or more classes or series of shares of stock or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the Certificate
of Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
PROVIDED, HOWEVER, that no such right shall vest in the event of an increase or
a decrease in the authorized number of shares of stock of any class or series
which is otherwise denied voting rights under the provisions of the Certificate
of Incorporation, including any preferred stock which is denied voting rights
under the provisions of the resolution or resolutions adopted by the Board of
Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
(a) TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the Board of Directors. A special meeting shall be
held on the date and at the time fixed by the Board of Directors.
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<PAGE>
(b) PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the Board of Directors may,
from time to time, fix. Whenever the Board of Directors shall fail to fix such
place, the meeting shall be held at the registered office of the Corporation in
the State of Delaware.
(c) CALL. Annual meetings and special meetings may be called by the Board
of Directors or by any officer instructed by the Board of Directors to call the
meeting.
(d) NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date and hour of the meeting. The notice of an annual
meeting shall state that the meeting is called for the election of Directors and
for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting), state such other action or
actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, and directed to each
stockholder at such person's address as it appears on the records of the
Corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned
to another time, not more than thirty days hence, and/or to another place, and
if an announcement of the adjourned time and place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice before or after the time stated therein. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
4
<PAGE>
(e) STOCKHOLDER LIST. There shall be prepared and made, at least ten days
before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
Corporation, or to vote at any meeting of stockholders.
(f) CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting: the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice President, a chairman for the meeting chosen by
the Board of Directors or, if none of the foregoing is in office and present and
acting, by a chairman to be chosen by the stockholders. The Secretary of the
Corporation or, in such person's absence, an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman for the meeting shall appoint a secretary of
the meeting.
(g) PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
person's attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and, if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
(h) INSPECTORS AND JUDGES. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
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thereof. If an inspector or inspectors or judge or judges are not appointed by
the Board of Directors, the person presiding at the meeting may, but need not,
appoint one or more inspectors or judges. In case any person who may be
appointed as an inspector or judge fails to appear or act, the vacancy may be
filled by appointment made by the person presiding thereat. Each inspector or
judge, if any, before entering upon the discharge of such person's duties, shall
take and sign an oath faithfully to execute the duties of inspector or judge at
such meeting with strict impartiality and according to the best of his ability.
The inspectors or judges, if any, shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum and the validity and effect of proxies,
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such other acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors or
judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by such person or persons and execute a
certificate of any fact so found.
(i) QUORUM. Except as the General Corporation Law or these By-Laws may
otherwise provide, the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
(j) VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and of these By-Laws, or, with respect
to the issuance of preferred stock, in accordance with the terms of a resolution
or resolutions of the Board of Directors, shall be entitled to one vote, in
person or by proxy, for each share of stock entitled to vote held by such
stockholder. In the election of Directors, a plurality of the votes present at
the meeting shall elect. Any other action shall be authorized by a majority of
the votes cast except where the Certificate of Incorporation or the General
Corporation Law prescribes a different percentage of votes and/or a different
exercise of voting power.
Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
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7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be taken, at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of the
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing and shall
be delivered to the Corporation by delivery to its registered office in
Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
ARTICLE II
----------
DIRECTORS
---------
1. FUNCTIONS AND DEFINITION.
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors of the Corporation. The use of the
phrase "whole Board" herein refers to the total number of Directors which the
Corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A Director need not be a stockholder, a citizen of the United States, or a
resident of the State of Delaware. The initial Board of Directors shall consist
of three persons. Thereafter the number of Directors constituting the whole
board shall be at least one. Subject to the foregoing limitation and except for
the first Board of Directors, such number may be fixed from time to time by
action of the stockholders or of the Board of Directors, or, if the number is
not fixed, the number shall be three. The number of Directors may be increased
or decreased by action of the stockholders or of the Board of Directors.
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3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have been
named in the Certificate of Incorporation, shall be elected by the incorporator
or incorporators and shall hold office until the first annual meeting of
stockholders and until their successors have been elected and qualified or until
their earlier resignation or removal. Any Director may resign at any time upon
written notice to the Corporation. Thereafter, Directors who are elected at an
annual meeting of stockholders, and Directors who are elected in the interim to
fill vacancies and newly created Directorships, shall hold office until the next
annual meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. In the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of Directors and/or for the removal of one or more Directors
and for the filling of any vacancies in the Board of Directors, including
vacancies resulting from the removal of Directors for cause or without cause,
any vacancy in the Board of Directors may be filled by the vote of a majority of
the remaining Directors then in office, although less than a quorum, or by the
sole remaining Director.
4. MEETINGS.
(a) TIME. Regular meetings shall be held at such time as the Board shall
fix. Special meetings may be called upon notice.
(b) FIRST MEETING. The first meeting of each newly elected Board may be
held immediately after each annual meeting of the stockholders at the same place
at which the meeting is held, and no notice of such meeting shall be necessary
to call the meeting, provided a quorum shall be present. In the event such
first meeting is not so held immediately after the annual meeting of the
stockholders, it may be held at such time and place as shall be specified in the
notice given as provided for special meetings of the Board of Directors, or at
such time and place as shall be fixed by the consent in writing of all of the
Directors.
(c) PLACE. Meetings, both regular and special, shall be held at such place
within or without the State of Delaware as shall be fixed by the Board.
(d) CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the Directors.
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(e) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written, oral
or any other mode of notice of the time and place shall be given for special
meetings at least twenty-four hours prior to the meeting; notice may be given by
telephone of telefax (in which case it is effective when given) or by mail (in
which case it is effective seventy-two hours after mailing by prepaid first
class mail). The notice of any meeting need not specify the purpose of the
meeting. Any requirement of furnishing a notice shall be waived by any Director
who signs a written waiver of such notice before or after the time stated
therein. Attendance of a Director at a meeting of the Board shall constitute a
waiver of notice of such meeting, except when the Director attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the Directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-third (1/3) of the whole Board. Any
Director may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by means of which all Directors
participating in the meeting can hear each other, and such participation in a
meeting of the Board shall constitute presence in person at such meeting. A
majority of the Directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
act of the Board shall be the act by vote of a majority of the Directors present
at a meeting, a quorum being present. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions of the General
Corporation Law and these By-Laws which govern a meeting of Directors held to
fill vacancies and newly created Directorships in the Board.
(g) CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other Director chosen by the Board, shall preside.
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5. REMOVAL OF DIRECTORS.
Any or all of the Directors may be removed for cause or without cause by
the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the Directors of the Corporation. The Board may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the Board, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it. In the absence or disqualification of any
member of any such committee or committees, the members thereof present at any
meeting and not disqualified from voting, whether or not they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
-----------
OFFICERS
--------
1. EXECUTIVE OFFICERS.
The Board of Directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (which may be denominated
with additional descriptive titles), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers and such other
officers as it may determine. Any number of offices may be held by the same
person.
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2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until such officer's
successor has been elected and qualified or until the earlier resignation or
removal of such officer. The Board of Directors may remove any officer for
cause or without cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By-Laws, or, to the extent not so provided, by the Board of
Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting, shall
preside at all meetings of the Board of Directors, otherwise, the President, if
present, shall preside, or if the President does not so preside, any other
Director chosen by the Board shall preside. The Chairman of the Board shall be
the chief executive officer of the Corporation.
5. THE PRESIDENT.
The President shall be the chief operating officer of the Corporation.
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the powers of
the President, in the order of their seniority, and shall perform such other
duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the Corporation and
affix it to any instrument when authorized by the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors. The
Secretary (or
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in such officer's absence, an Assistant Secretary, but if neither is present
another person selected by the Chairman for the meeting) shall have the duty to
record the proceedings of the meetings of the stockholders and Directors in a
book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate funds, and
other valuable effects, including securities, and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, the Treasurer shall give the Corporation a bond for such
term, in such sum and with such surety or sureties as shall be satisfactory to
the Board for the faithful performance of the duties of such office and for the
restoration to the Corporation, in case of such person's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in such person's possession or under such
person's control belonging to the Corporation.
ARTICLE IV
----------
CORPORATE SEAL
--------------
AND
---
CORPORATE BOOKS
---------------
The corporate seal shall be in such form as the Board of Directors shall
prescribe. The books of the Corporation may be kept within or without the State
of Delaware, at such place or places as the Board of Directors may, from time to
time, determine.
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ARTICLE V
---------
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
----------
INDEMNITY
---------
(a) Any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) (hereinafter an "indemnitee"), shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or proceeding, if the
indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful. The termination of the proceeding, whether by judgment,
order, settlement, conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe such conduct was
unlawful.
(b) Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise (including employee
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benefit plans) shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the extent
that the Court in which such suit or action was brought, shall determine, upon
application, that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) All reasonable expenses incurred by or on behalf of the indemnitee in
connection with any suit, action or proceeding, may be advanced to the
indemnitee by the Corporation.
(d) The rights to indemnification and to advancement of expenses conferred
in this article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, the Certificate of Incorporation, a
By-Law of the Corporation, agreement, vote of stockholders or disinterested
Directors or otherwise.
(e) The indemnification and advancement of expenses provided by this
article shall continue as to a person who has ceased to be a Director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
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Exhibit 3.26
CERTIFICATE OF INCORPORATION
OF
RADIO UNICA OF HOUSTON LICENSE CORP.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter I, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware") hereby
certifies that:
FIRST: The name of this Corporation (hereinafter called the "Corporation")
is Radio Unica of Houston License Corp.
SECOND: The address, including street, number, city and county, of the
registered office of the Corporation in the State of Delaware is Corporation
Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle (zip
code 19801); and the name of the registered agent of the Corporation in the
State of Delaware at such address is The Corporation Trust Company.
THIRD: The nature of the business and of the purposes to be conducted and
promoted by the Corporation are to conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is one thousand (1,000) shares, all of which are of a
par value of one cent ($.01) each, and all of which are of one class and are
designated as Common Stock.
FIFTH: The name and mailing address of the incorporator are as follows:
Martin H. Neidell, c/o Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York,
New York 10038.
<PAGE>
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders, of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders, of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: The original By-Laws of the Corporation shall be adopted by the
incorporator. Thereafter, the power to make, alter, or repeal the By-Laws, and
to adopt any new By-Law, shall be vested in the Board of Directors.
EIGHTH: To the fullest extent that the General Corporation Law of the
State of Delaware, as it exists on the date hereof or as it may hereafter be
amended, permits the limitation or elimination of the liability of directors, no
director of this Corporation shall be personally liable to this Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Notwithstanding the foregoing, a director shall be liable to the
extent provided by applicable law (l) for any breach of the directors' duty of
loyalty to the Corporation or its stockholders, (2) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 174 of the General Corporation Law of the State of
Delaware, or (4) for any transaction from which the director derived any
improper personal benefit. Neither the amendment or repeal of this Article, nor
the adoption of any provision of this Certificate of Incorporation inconsistent
with this Article shall adversely affect any right or protection of a director
of the Corporation existing at the time of such amendment or repeal.
2
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NINTH: The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, or by any successor thereto, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section. The Corporation shall advance expenses to the
fullest extent permitted by said section. Such right to indemnification and
advancement of expenses shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
Executed at New York, New York on July l, 1998.
/s/ Martin H. Neidell
----------------------------------
Martin H. Neidell, Incorporator
3
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EXHIBIT 5.1
[SASM&F Letterhead]
October 20, 1998
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Re: Radio Unica Corp. Registration
Statement on Form S-4
(File No.333-61211)
------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Radio Unica Corp., a Delaware
corporation (the "Company"), and each of the Company's wholly-owned subsidiaries
set forth in Schedule A hereto (the "Guarantors"), in connection with the public
offering by the Company of $158,088,000 aggregate principal amount at maturity
of the Company's 11 3/4% Senior Discount Notes Series B due 2006 (the
"Notes"), which are to be fully and unconditionally guaranteed on a senior
unsecured basis pursuant to the guarantees (the "Guarantees") by each of the
Guarantors. The Notes are to be issued pursuant to an exchange offer (the
"Exchange Offer") in exchange for a like principal amount at maturity of the
issued and outstanding 11 3/4% Senior Discount Notes due 2006 of the Company
(the "Old Notes") under the Indenture, dated as of July 27, 1998, as
supplemented as of September 11, 1998 (the "Indenture"), by and among the
Company, the Guarantors named therein and Wilmington Trust Company, as Trustee
(the "Trustee"), as contemplated by the Registration Rights Agreement, dated as
of July 22, 1998 (the "Registration Rights Agreement"), by and among the
Company, the Guaran-
<PAGE>
tors party thereto, CIBC Oppenheimer Corp. and Bear, Stearns & Co. Inc.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-B under the Securities Act of 1933, as amended
(the "Act").
In connection with rendering this opinion, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-4 (File No. 33-61211) as filed with the
Securities and Exchange Commission (the "Commission") on August 11, 1998 under
the Act, Amendment No. 1 thereto as filed with the Commission on September 4,
1998 and Amendment No. 2 thereto to be filed with the Commission on the date
hereof (such Registration Statement, as so amended, being hereafter referred to
as the "Registration Statement"); (ii) an executed copy of the Registration
Rights Agreement; (iii) an executed copy of the Indenture; (iv) specimens of the
certificates representing the Notes and the Guarantees included as exhibits to
the Indenture; (v) the Certificate of Incorporation of the Company and each of
the Guarantors (other than Sales (as hereinafter defined)), as in effect on the
date hereof; (vi) the By-Laws of the Company and each of the Guarantors (other
than Sales), as in effect on the date hereof;(vii) certain resolutions adopted
by the Board of Directors of the Company and each of the Guarantors (other than
Sales) relating to the Exchange Offer, the issuance of the Old Notes and the
Notes, the Indenture, the Guarantees, and related matters; and (viii) the Form
T-1 of the Trustee filed as an exhibit to the Registration Statement. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representatives of the
Company and others, and such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company or the Guarantors, we have assumed that
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such parties had or will have the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to
any facts material to the opinions expressed herein which we have not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company, the
Guarantors and others.
We have also assumed that the execution, authentication and delivery
by the Company and the Guarantors of the Notes or the Guarantees, as the case
may be, and the Indenture and the performance of their respective obligations
thereunder do not and will not violate, conflict with or constitute a breach or
default under (i) any agreement or instrument to which any of the Company or the
Guarantors is a party or by which any of them may be bound, or to which any of
their respective properties or assets is subject, (ii) any statute, law, rule,
or regulation to which any of the Company, the Guarantors or any of their
respective properties may be subject, (iii) any judicial or regulatory order or
decree of any governmental authority to which any of the Company or the
Guarantors may be subject or (iv) any consent, approval, license, authorization
or validation of, or filing, recording or registration with any governmental
authority.
We have further assumed that (i) Radio Unica Sales Corp., a Florida
corporation ("Sales"), (a) is validly existing and in good standing under the
laws of the State of Florida and (b) has the corporate power and authority to
execute, deliver and perform its obligations under the Notes and its Guarantee;
and (ii) the execution, delivery and performance of the Notes and its Guarantee
have been duly authorized by all requisite action on the part of Sales.
Members of our firm are admitted to the bar in the States of
California, New York and Delaware, and we do not express any opinion as to the
laws of any other jurisdiction other than the federal laws of the United States
of America to the extent specifically referred to herein.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions
3
<PAGE>
set forth herein, we are of the opinion that when (i) the Registration Statement
becomes effective and the Indenture is qualified under the Trust Indenture Act
of 1939, as amended; (ii) the Notes have been duly executed and authenticated in
accordance with the terms of the Indenture and have been delivered upon
consummation of the Exchange Offer against receipt of Old Notes surrendered in
exchange therefor in accordance with the terms of the Exchange Offer; and (iii)
the Guarantees by each of the Guarantors have been duly executed by the
respective Guarantors and have been delivered upon consummation of the Exchange
Offer in accordance with the terms of the Exchange Offer, the Notes and the
Guarantees will constitute valid and binding obligations of the Company and the
Guarantors, respectively, enforceable against the Company and the Guarantors in
accordance with their respective terms, except to the extent that enforcement
thereof may be limited by (1) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and (2) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
4
<PAGE>
SCHEDULE A
- ----------
Oro Spanish Broadcasting, Inc.
Radio Unica of San Francisco, Inc.
Radio Unica of San Francisco License Corp.
Radio Unica of Miami, Inc.
Radio Unica of Miami License Corp.
Radio Unica of Los Angeles, Inc.
Radio Unica of Los Angeles License Corp.
Radio Unica of San Antonio, Inc.
Radio Unica Network, Inc.
Radio Unica Sales Corp.
Blaya, Inc.
Radio Unica of Houston License Corp.
5
<PAGE>
Exhibit 10.1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
RADIO UNICA HOLDINGS CORP.,
RADIO UNICA CORP.,
The Several Lenders
from Time to Time Parties Hereto
and
CANADIAN IMPERIAL BANK OF COMMERCE
as Agent
Dated as of July 8, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................2
1.1. Defined Terms...............................................2
1.2. Other Definitional Provisions..............................24
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS.............................2
2.1. Commitments................................................25
2.2. Notes......................................................25
2.3. Procedure for Borrowing....................................25
2.4. Commitment Fee.............................................26
2.5. Reductions and Prepayments.................................26
2.6. Conversion and Continuation Options........................28
2.7. Maximum Amounts of Tranches................................28
2.8. Interest Rates and Payment Dates...........................29
2.9. Computation of Interest and Fees...........................29
2.10. Inability to Determine Interest Rate.......................30
2.11. Pro Rata Treatment and Payments; Funding Reliance..........30
2.12. Illegality.................................................31
2.13. Requirements of Law........................................32
2.14. Taxes......................................................33
2.15. Indemnity..................................................36
2.16. Discretion of Lender as to Manner of Funding...............36
2.17 Letter of Credit...........................................37
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................39
3.1. Financial Condition........................................40
3.2. No Change..................................................41
3.3. Corporate Existence; Compliance with Law...................41
3.4. Corporate Power; Authorization; Enforceable Obligations....42
3.5. No Legal Bar...............................................42
3.6. No Material Litigation.....................................42
3.7. No Default.................................................42
3.8. Ownership of Property; Liens...............................43
3.9. Intellectual Property......................................43
3.10. No Burdensome Restrictions.................................43
3.11. Taxes......................................................43
3.12. Federal Regulations........................................43
3.13. ERISA......................................................43
3.14. Holding Company; Investment Company Act;
Other Regulations........................................45
3.15. Purpose of Loans...........................................45
i
<PAGE>
3.16. Environmental Matters......................................45
3.17. Capitalization of Parent...................................46
3.18. Capitalization of Borrower.................................46
3.19. Capitalization of Subsidiaries.............................47
3.20. Labor Matters..............................................47
3.21. Insurance..................................................47
3.22. Security Documents.........................................47
3.23. Accuracy and Completeness of Information...................48
3.24. Leaseholds, Permits, etc...................................48
3.25. Solvency...................................................49
3.26. FCC Matters................................................49
3.28. Senior Debt................................................49
3.29. Year 2000..................................................50
ARTICLE IV CONDITIONS PRECEDENT.......................................50
4.1. Conditions to Initial Loans................................50
4.2. Conditions to Each Loan....................................53
ARTICLE V AFFIRMATIVE COVENANTS......................................54
5.1. Financial Statements.......................................54
5.2. Certificates; Other Information............................55
5.3. Payment of Obligations.....................................57
5.4. Maintenance of Existence...................................57
5.5. Maintenance of Property; Insurance.........................57
5.6. Inspection of Property; Books and Records; Discussions.....57
5.7. Notices....................................................58
5.8. Environmental Laws.........................................58
5.9. ERISA......................................................59
5.10. Assignments of Leases......................................60
5.11. Further Assurances.........................................60
5.12. Designation of Unrestricted Subsidiaries...................61
5.13. Post Closing...............................................61
ARTICLE VI NEGATIVE COVENANTS.........................................61
6.1. Financial Condition Covenants..............................62
6.2. Limitation on Indebtedness.................................62
6.3. Limitation on Liens........................................63
6.4. Limitation on Guarantee Obligations........................64
6.5. Limitation on Fundamental Changes..........................64
6.6. Limitation on Sale of Assets...............................64
6.7. Limitation on Dividends....................................65
6.8. Limitation on Investments, Loans and Advances..............66
6.9. Limitation on Transactions with Affiliates.................67
ii
<PAGE>
6.10. Limitation on Sales and Leasebacks.........................67
6.11. Limitation on Changes in Fiscal Year.......................67
6.12. Limitation on Negative Pledge Clauses......................67
6.13. Limitation on Payments and Modifications of
Debt Instruments or Agreements.............................67
6.14. Limitation on Lines of Business............................68
6.15. Amendments to Material Agreements..........................68
6.16. Restrictions on License Subsidiaries.......................68
ARTICLE VII EVENTS OF DEFAULT..........................................69
7.1. ...........................................................69
ARTICLE VIII GUARANTEE..................................................72
8.1. Parent Guarantee...........................................72
8.2. Continuing Guarantee.......................................72
8.3. Reinstatement..............................................73
ARTICLE IX THE AGENT..................................................74
9.1. Appointment................................................74
9.2. Delegation of Duties.......................................75
9.3. Exculpatory Provisions.....................................75
9.4. Reliance by Agent..........................................75
9.5. Notice of Default..........................................76
9.6. Non-Reliance on Agent and Other Lenders....................76
9.7. Indemnification............................................76
9.8. Agent in Its Individual Capacity...........................77
9.9. Successor Agent............................................77
ARTICLE X MISCELLANEOUS..............................................77
10.1. Amendments and Waivers.....................................77
10.2. Notices....................................................78
10.3. No Waiver; Cumulative Remedies.............................79
10.4. Survival of Representations and Warranties.................79
10.5. Payment of Expenses and Taxes; Indemnification.............79
10.6. Successors and Assigns; Participations and Assignments.....80
10.7. Adjustments; Setoff........................................83
10.8. Confidentiality............................................83
10.9. Counterparts...............................................84
10.10. Severability...............................................84
10.11. Integration................................................84
10.12. Governing Law..............................................84
10.13. FCC Approvals..............................................84
10.14. Submission To Jurisdiction; Waivers........................85
iii
<PAGE>
10.15. Acknowledgments............................................86
10.16. Waivers of Jury Trial......................................86
ARTICLE I DEFINITIONS.................................................2
1.1. Defined Terms...............................................2
1.2. Other Definitional Provisions..............................24
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS............................24
2.1. Commitments................................................24
2.2. Notes......................................................24
2.3. Procedure for Borrowing....................................25
2.4. Commitment Fee.............................................25
2.5. Reductions and Prepayments.................................26
2.6. Conversion and Continuation Options........................27
2.7. Maximum Amounts of Tranches................................28
2.8. Interest Rates and Payment Dates...........................28
2.9. Computation of Interest and Fees...........................28
2.10. Inability to Determine Interest Rate.......................29
2.11. Pro Rata Treatment and Payments; Funding Reliance..........29
2.12. Illegality.................................................30
2.13. Requirements of Law........................................31
2.14. Taxes......................................................32
2.15. Indemnity..................................................34
2.16. Discretion of Lender as to Manner of Funding...............35
2.17 Letter of Credit...........................................35
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................38
3.1. Financial Condition........................................38
3.2. No Change..................................................39
3.3. Corporate Existence; Compliance with Law...................39
3.4. Corporate Power; Authorization; Enforceable Obligations....40
3.5. No Legal Bar...............................................40
3.6. No Material Litigation.....................................40
3.7. No Default.................................................40
3.8. Ownership of Property; Liens...............................41
3.9. Intellectual Property......................................41
3.10. No Burdensome Restrictions.................................41
3.11. Taxes......................................................41
3.12. Federal Regulations........................................41
3.13. ERISA......................................................41
3.14. Holding Company; Investment Company Act; Other Regulations.43
3.15. Purpose of Loans...........................................43
3.16. Environmental Matters'.....................................43
iv
<PAGE>
3.17. Capitalization of Parent...................................44
3.18. Capitalization of Borrower.................................44
3.19. Capitalization of Subsidiaries.............................45
3.20. Labor Matters..............................................45
3.21. Insurance..................................................45
3.22. Security Documents.........................................45
3.23. Accuracy and Completeness of Information...................46
3.24. Leaseholds, Permits, etc...................................46
3.25. Solvency...................................................47
3.26. FCC Matters................................................47
3.28. Senior Debt................................................47
3.29. Year 2000..................................................48
ARTICLE IV CONDITIONS PRECEDENT.......................................48
4.1. Conditions to Initial Loans................................48
4.2. Conditions to Each Loan....................................51
ARTICLE V AFFIRMATIVE COVENANTS......................................52
5.1. Financial Statements.......................................52
5.2. Certificates; Other Information............................53
5.3. Payment of Obligations.....................................55
5.4. Maintenance of Existence...................................55
5.5. Maintenance of Property; Insurance.........................55
5.6. Inspection of Property; Books and Records; Discussions.....55
5.7. Notices....................................................56
5.8. Environmental Laws.........................................56
5.9. ERISA......................................................57
5.10. Assignments of Leases......................................58
5.11. Further Assurances.........................................58
5.12. Unrestricted Designation of Subsidiaries...................59
5.13. Post Closing...............................................59
ARTICLE VI NEGATIVE COVENANTS.........................................59
6.1. Financial Condition Covenants..............................60
6.2. Limitation on Indebtedness.................................60
6.3. Limitation on Liens........................................61
6.4. Limitation on Guarantee Obligations........................62
6.5. Limitation on Fundamental Changes..........................62
6.6. Limitation on Sale of Assets...............................62
6.7. Limitation on Dividends....................................63
6.8. Limitation on Investments, Loans and Advances..............63
6.9. Limitation on Transactions with Affiliates.................64
6.10. Limitation on Sales and Leasebacks.........................64
v
<PAGE>
6.11. Limitation on Changes in Fiscal Year.......................65
6.12. Limitation on Negative Pledge Clauses......................65
6.13. Limitation on Payments and Modifications of
Debt Instruments or Agreements.............................65
6.14. Limitation on Lines of Business............................65
6.15. Amendments to Material Agreements..........................65
6.16. Restrictions on License Subsidiaries.......................66
ARTICLE VII EVENTS OF DEFAULT..........................................66
7.1. ...........................................................66
ARTICLE VIII GUARANTEE..................................................69
8.1. Parent Guarantee...........................................70
8.2. Continuing Guarantee.......................................70
8.3. Reinstatement..............................................71
ARTICLE IX THE AGENT..................................................72
9.1. Appointment................................................72
9.2. Delegation of Duties.......................................72
9.3. Exculpatory Provisions.....................................73
9.4. Reliance by Agent..........................................73
9.5. Notice of Default..........................................73
9.6. Non-Reliance on Agent and Other Lenders....................74
9.7. Indemnification............................................74
9.8. Agent in Its Individual Capacity...........................75
9.9. Successor Agent............................................75
ARTICLE X MISCELLANEOUS..............................................75
10.1. Amendments and Waivers.....................................75
10.2. Notices....................................................76
10.3. No Waiver; Cumulative Remedies.............................77
10.4. Survival of Representations and Warranties.................77
10.5. Payment of Expenses and Taxes; Indemnification.............77
10.6. Successors and Assigns; Participations and Assignments.....78
10.7. Adjustments; Setoff........................................80
10.8. Confidentiality............................................81
10.9. Counterparts...............................................81
10.10. Severability...............................................82
10.11. Integration................................................82
10.12. Governing Law..............................................82
10.13. FCC Approvals..............................................82
10.14. Submission To Jurisdiction; Waivers........................83
vi
<PAGE>
10.15. Acknowledgments............................................83
10.16. Waivers of Jury Trial......................................84
vii
<PAGE>
EXHIBITS
Exhibit A -- Borrower Pledge Agreement
Exhibit B -- Borrower Security Agreement
Exhibit C -- Parent Pledge Agreement
Exhibit D -- Parent Security Agreement
Exhibit E -- Subsidiary Guarantees
Exhibit F -- Subsidiary Pledge Agreements
Exhibit G -- Subsidiary Security Agreements
Exhibit H -- Form of Note
Exhibit I -- Form of Notice of Borrowing
Exhibit J -- Form of Notice of Continuation/Conversion
Exhibit K -- Form of Closing Certificate
Exhibit L -- Form of Compliance Certificate
SCHEDULES
Schedule I Lenders, Addresses and Commitments
Schedule 1.1(A) Leases
Schedule 1.1(B) Restricted Subsidiaries
Schedule 1.1(C) Existing Seller Note
Schedule 3.1(a) Financial Condition
Schedule 3.1(c) Guarantee Obligations, Liabilities, Transfers and
Dispositions
Schedule 3.2 Material Adverse Event
Schedule 3.4 Consents, Authorizations and Filings
Schedule 3.6 Litigation
Schedule 3.8 Ownership of Property and Liens
Schedule 3.11 Tax Liens and Claims
Schedule 3.13 Employee Benefit Plans
Schedule 3.16 Environmental Matters
Schedule 3.17 Capitalization of Parent
Schedule 3.19 Subsidiaries
Schedule 3.20 Collective Bargaining Agreements
Schedule 3.23 UCC Filings
Schedule 3.25 FCC Matters
Schedule 3.26 FCC Licenses
Schedule 4.1(l) Filings, Registrations and Recordings
Schedule 5.13 Post-Closing Matters
viii
<PAGE>
CREDIT AGREEMENT, dated as of July 8, 1998 among Radio Unica Holdings
Corp., a Delaware corporation (the "Parent"), Radio Unica Corp., a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
from time to time parties to this Agreement (the "Lenders"), CANADIAN IMPERIAL
BANK OF COMMERCE ("CIBC"), as Issuer, and CIBC, as agent for the Lenders and the
Issuer hereunder (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Parent owns all the issued and outstanding shares of
Capital Stock of the Borrower;
WHEREAS the Borrower (a) owns and operates radio stations in Miami and
San Francisco which provide Spanish language programming and (b) provides such
programming to radio stations owned by third parties that are operated by the
Borrower through time brokerage agreements and to radio stations owned and
operated by third parties under affiliation agreements;
WHEREAS the Borrower is acquiring, subject to FCC approval, all the
capital stock of Blaya Inc. which owns and operates a radio station in Houston,
Texas;
WHEREAS, the Borrower desires that the Lenders provide Loans (i) to
refinance existing Indebtedness, (b) for Permitted Acquisitions (including
escrow deposits for the acquisition of broadcast properties), (c) to refinance
up to $6,795,000 of Indebtedness in favor of Warburg, (d) to pay fees and
expenses in connection with the transactions contemplated by this Agreement, (e)
to finance the working capital and capital expenditures requirements of the
Borrower and its Restricted Subsidiaries and (f) for general corporate purposes;
WHEREAS, the Lenders desire to provide such Loans and other financial
accommodations on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1
<PAGE>
ARTICLE I
DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person shall mean the power, directly or indirectly, either (a) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person or (b) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agent" shall have the meaning ascribed thereto in the heading hereto
and shall include such other Lender or financial institution as shall have
subsequently been appointed as the successor agent pursuant to Section 9.9.
"Agreement" shall mean this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Alternate Base Rate" shall mean, on any particular date, a rate of
interest per annum equal to the higher of:
(a) the rate of interest most recently announced by CIBC-Bank at its
Domestic Lending Office as its prime rate (which rate is not necessarily
intended to be the lowest rate of interest charged by CIBC-Bank in
connection with extensions of credit); and
(b) the Federal Funds Rate for such date plus 0.50%.
"Alternate Base Rate Loans" shall mean Loans the rate of interest
applicable to which is based upon the Alternate Base Rate.
"Applicable Margin" for each Type of Loan, shall mean (a) 1.25% in the
case of Alternate Base Rate Loans and (b) 2.50% in the case of Eurodollar Rate
Loans; provided that (i) if the Offering Memorandum has not been distributed to
Qualified Institutional Buyers (as such term is defined in Rule 144A) on or
prior to the three-month anniversary of the Closing Date, the Applicable Margin
shall be 2.00% in the case of Alternate Base Rate Loans and 3.25% in the case of
Eurodollar Loans and (ii) if the Issuance Date does not occur on or prior to the
six-month anniversary of the Closing Date, the Applicable Margin shall be 2.75%
in the case of Alternate Base Rate Loans and 4.00% in the case of Eurodollar
Rate Loans (it being understood that each such amount shall constitute the
Applicable Margin until the Issuance Date at which time the Applicable Margin
shall revert to the amount set forth in (a) and (b) above).
2
<PAGE>
"Assignee" shall have the meaning ascribed thereto in Section 10.6(c).
"Assignment of Leases" shall mean assignment of the leases set forth
on Schedule 1.1(A).
"Available Commitment" shall mean, as to any Lender at any time, an
amount equal to the excess, if any, of the amount of such Lender's Commitment
over the sum of the aggregate principal amount of all Loans made by such Lender
which are then outstanding and such Lender's pro rata portion of the sum of the
Reimbursement Obligations and the aggregate Stated Amount of all outstanding
Letters of Credit minus, until such time as the Existing Seller Note has been
paid in full, such Lender's pro rata portion of $825,000.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower or any Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"BIA" shall mean BIA Consulting.
"BIA Appraisal" shall mean the appraisals conducted by BIA and
delivered to the Agent with respect to the going concern values of the radio
stations owned by the Borrower located in Miami, Florida and San Francisco,
California and the going concern value of the radio station to be acquired by
the Borrower located in Houston, Texas and any future appraisal conducted by BIA
and delivered to the Agent of radio stations owned and operated by the Borrower
or any of its Restricted Subsidiaries.
"Blaya" shall mean Blaya Inc., a Delaware corporation.
"Borrower" shall have the meaning ascribed thereto in the heading
hereto.
"Borrower Pledge Agreement" shall mean the Pledge Agreement of the
Borrower in favor of the Agent, for the benefit of the Lenders, substantially in
the form of Exhibit A as the same may be amended, supplemented or otherwise
modified from time to time.
"Borrower Security Agreement" shall mean the Security Agreement
between the Borrower and the Agent, for the benefit of the Lenders,
substantially in the form of Exhibit B as the same may be amended, supplemented
or otherwise modified from time to time.
3
<PAGE>
"Borrowing Date" shall mean any Business Day specified in a notice
pursuant to Section 2.3 as a date on which the Borrower requests that (i) the
Lenders make Loans hereunder or (ii) the Issuer issues a Letter of Credit
hereunder.
"Business" shall have the meaning ascribed thereto in Section 3.16(b).
"Business Day" shall mean (a) 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 and (b) with respect to the date of
(i) making or continuing any Loans as, or converting any Loans from or
into, Eurodollar Loans,
(ii) making any payment or prepayment or principal of or payment of
interest on any portion of the principal amount of any Loans being
maintained as Eurodollar Loans, or
(iii) the Borrower giving any notice (or the number of Business Days
to elapse prior to the effectiveness thereof) in connection with any
matter referred to in the immediately preceding clause (b)(i) or
(b)(ii),
any such day on which dealings in Dollars are also carried on in the interbank
market in London, England.
"Capital Stock" shall mean 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" shall mean (a) 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 twelve months from
the date of acquisition, (b) securities issued or directly and fully guaranteed
or insured by any state of the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve months from
the date of acquisition and, at the time of acquisition, having the highest
rating generally obtainable from either S&P or Moody's, (c) time deposits and
certificates of deposit of any Lender or any domestic commercial bank having
capital and surplus in excess of $500,000,000, in each case, having maturities
of not more than twelve months from the date of acquisition, (d) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (a), (b) and (c) above entered into with any
Lender or any domestic commercial bank meeting the qualifications specified in
clause (c) above and (e) commercial paper rated at least A-1 or the equivalent
thereof by S&P or P-1 or the equivalent thereof by Moody's.
4
<PAGE>
"Change of Control" shall mean the occurrence of any of the following:
(i) the adoption of a plan relating to the liquidation or dissolution of the
Borrower, (ii) prior to the consummation of a Public Equity Offering, the
Permitted Holders cease to be the beneficial owners (as defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of at
least 50% of the total voting power (including with respect to the election of
directors) of the common stock of the Borrower or Parent entitled to elect the
board of directors of the Borrower or Parent, (iii) prior to the consummation of
a Public Equity Offering, the Permitted Holders shall cease collectively to
control at least a majority of the voting power of the board of directors of the
Borrower or Parent, (iv) in connection with or after a Public Equity Offering,
any Person (including a Person's Affiliates and associates), other than a
Permitted Holder, becomes the beneficial owner of more than 20% of the total
voting power of the common stock of the Borrower or Parent, and the Permitted
Holders beneficially own, in the aggregate, less than 30% of the total voting
power of the Borrower or Parent, as the case may be, (v) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the board of directors or whose nomination for election by the
shareholders of the Borrower or Parent (together with any new directors whose
election by such board of directors or whose nomination for election by the
shareholders of the Borrower or Parent has been approved by 66 2/3% of the
directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease to constitute a majority of the board of directors of the
Borrower or Parent, (vi) the Parent shall fail to own directly at all times 100%
of the Capital Stock of the Borrower and the Borrower shall fail to own, at all
times, directly or indirectly, 100% of the Capital Stock of its Restricted
Subsidiaries, in each case, free and clear of all Liens (other than Liens in
favor of the Agent), or (vii) Warburg shall fail to own at all times, directly
or indirectly at least 51% of the Fully Diluted Outstanding Capital Stock of the
Parent.
"CIBC-Bank" shall mean Canadian Imperial Bank of Commerce, a Canadian
chartered bank, or one or more of its agencies, branches or affiliates in its or
their respective capacity or capacities, as the case may be, as a Lender or
Lenders hereunder.
"Closing Date" shall mean the date on which the conditions precedent
set forth in Section 4.1 shall be satisfied or waived.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
5
<PAGE>
"Collateral" shall mean all assets of any of the Loan Parties, now
owned or hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment" shall mean, as to any Lender, the obligation of such
Lender to make Loans to the Borrower in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth under the heading
"Commitments" opposite such Lender's name on Schedule I, as such amount may be
reduced from time to time pursuant to this Agreement. At the date of this
Agreement, the aggregate amount of the Commitment shall be equal to $20,000,000;
provided that until the Issuance Date the aggregate amount of the Commitment
which the Borrower shall be permitted to borrow shall not exceed $18,500,000.
"Commitment Percentage" shall mean, as to any Lender, at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments.
"Commitment Period" shall mean the period from and including the date
hereof to, but not including, the Termination Date or such earlier date on which
the Commitments shall terminate as provided herein.
"Commitment Transfer Supplement" shall have the meaning ascribed
thereto in Section 10.6(c).
"Commonly Controlled Entity" shall mean an entity, 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.
"Common Stock" of any Person shall mean all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Communications Act" shall mean the Communications Act of 1934, as
amended.
"Compliance Certificate" shall have the meaning ascribed thereto in
Section 5.2(c).
"Contractual Obligation" shall mean as to the Parent, the Borrower or
any Subsidiary, any provision of any security issued by the Parent, the Borrower
or any Subsidiary or of any agreement, instrument or other undertaking to which
the Parent, the Borrower or any Subsidiary is a party or by which it or any of
its property is bound.
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"Contribution Agreement" shall mean the Contribution Agreement among
the Restricted Subsidiaries dated the Closing Date, which agreement shall be
acceptable to the Agent and the Lenders, as the same may be amended, modified or
supplemented from time to time.
"Default" shall mean any of the events specified in Section 7.1,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Disqualified Capital Stock" shall mean any Capital Stock of a Person
or a Subsidiary thereof which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable at the option of
the holder), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Permitted Senior Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include any Preferred Stock of a Person or a Subsidiary of
such Person, with respect to either of which, under the terms of such Preferred
Stock, by agreement or otherwise, such Person or Subsidiary is obligated to pay
current dividends or distributions in cash during the period prior to the
maturity date of the Permitted Senior Notes; provided that Preferred Stock of a
Person or any Subsidiary thereof that is issued with the benefit of provisions
requiring a change of control offer to be made for such Preferred Stock in the
event of a change of control of such Person or Subsidiary which provisions have
substantially the same effect as the provisions of the definition of "Change of
Control," shall not be deemed to be Disqualified Capital Stock solely by virtue
of such provisions.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office" shall mean, initially, the office of each
Lender designated as such in Schedule I (or designated pursuant to a Commitment
Transfer Supplement), and thereafter, such other office of such Lender, if any,
which shall be making or maintaining Alternate Base Rate Loans as may be
designated from time to time by notice from such Lender to the Borrower and the
Agent.
"Environmental Laws" shall mean 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 public health, public and workplace safety or
protection of the environment, as now or may at any time hereafter be in effect.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Base Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period and
appearing on Page 3750 of the Telerate screen at or about 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period or, if
such rate does not appear on such page or otherwise on such service, such rate
shall be determined by reference to such other publicly available service for
displaying Eurodollar rates as may be agreed between the Agent and the Borrower
or, in the absence of such agreement, the "Eurodollar Base Rate" shall be the
rate of interest per annum equal to the average (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered by CIBC-Bank to prime international
banks in the offshore dollar market at or about 11:00 a.m., New York time, two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately equal to the
amount of CIBC-Bank's Eurodollar Loan and for a period approximately equal to
such Interest Period.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Office" shall mean, initially, the office of each Lender
designated as such in Schedule I (or designated pursuant to a Commitment
Transfer Supplement), and thereafter, such other office of such Lender, if any,
which shall be making or maintaining Eurodollar Loans as may be designated from
time to time by notice from such Lender to the Borrower and the Agent.
"Eurodollar Rate" shall mean 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 - Eurodollar Reserve Requirements
"Eurodollar Reserve Requirements" shall mean, for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves) under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto
dealing with reserve requirements prescribed for the 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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"Event of Default" shall mean any of the events specified in Section
7.1; provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Seller Note" shall mean the Note dated April 30, 1998 of the
Borrower in favor of Rene De La Rosa in the original principal amount of
$6,000,000, as such Note is amended, in a manner satisfactory to the Agent,
subordinating the Indebtedness that remains outstanding under such Note on the
terms and conditions set forth on Schedule 1.1(C) and extending the maturity
date to a date no earlier than October 31, 1999.
"Expiry Date" as to any Letter of Credit, shall mean the earlier of
(i) the one year anniversary of the issuance of such Letter of Credit and (ii)
the Termination Date.
"FCC" shall mean the Federal Communications Commission or any
successor to the functions and powers thereof.
"FCC Licenses" shall mean with respect to any radio station owned or
operated by the Borrower or any Restricted Subsidiary, all FCC licenses, permits
and approvals necessary for the lawful construction of facilities for, and
operation of, such radio station.
"FCC Rules" shall have the meaning ascribed thereto in Section 3.22.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Rate" shall mean for any particular date, an interest
rate per annum equal to the interest rate (rounded upward to the nearest 1/16th
of 1%) offered in the interbank market to the Agent as the overnight Federal
Funds Rate at or about 10:00 a.m., New York City time, on such day (or, if such
day is not a Business Day, on the next preceding Business Day).
"Financing Lease" shall mean 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.
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"Fully Diluted Outstanding" shall mean with respect to the
determination of the number of shares of Voting Securities outstanding on any
date, the sum of (a) all shares of Voting Securities outstanding on such date
and (b) all shares of Voting Securities that would be outstanding if all
outstanding rights, warrants or options that may be exercised, exchanged or
converted into Voting Securities were exercised, exchanged or converted on such
date.
"Funded Debt" shall mean, as of any date of determination, the sum of
all Indebtedness of the Parent, the Borrower and its Restricted Subsidiaries
other than (a) Indebtedness of the type described in clause (f) and clause (h)
of the definition thereof and (b) solely for purposes of calculating the
Leverage Ratio and the Loan-to-Value Ratio, the Permitted Senior Notes and the
Warburg Subordinated Debt.
"GAAP" shall mean generally accepted accounting principles in the
United States of America consistent with those utilized in preparing the audited
financial statements referred to in Section 3.1 except insofar as (a) the Parent
and the Borrower shall have elected (which election shall continue to be
effective for subsequent years) with the concurrence of their independent public
accountant, to adopt more recently promulgated generally accepted accounting
principles; and (b) the Required Lenders shall have consented to such election
(it being understood that such consent may be conditioned upon negotiation of
such changes to this Agreement, including Section 6.1, as the Required Lenders
may in their sole discretion deem appropriate).
"Governmental Authority" shall mean any national government (United
States or foreign), 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" shall mean as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person to
induce the creation of which the guaranteeing person has issued a reimbursement,
counter-indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, lease, dividend or other obligation (the
"primary obligation") 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 (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth,
liquidity 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 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
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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.
"Guarantees" shall mean the collective reference to the Parent
Guarantee and any Subsidiary Guarantee.
"Guarantors" shall mean the collective reference to the Parent and
each Restricted Subsidiary of the Borrower.
"Hedging Agreements" shall mean (a) any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which the
Borrower is a party or a beneficiary and (b) any other agreement or arrangement
designed to limit or eliminate the risk and/or exposure of the Borrower to
fluctuations in currency exchange rates.
"Indebtedness" of any Person at any date shall mean, (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 within 90 days after the invoice
thereof) (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 outstanding
letters of credit, acceptances and similar obligations issued or created for the
account of such Person, (e) 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, (f) liabilities arising under Hedging Agreements
(other than interest rate caps) of such Person, (g) all Guarantee Obligations of
such Person and (h) any asserted withdrawal liability of such Person or a
Commonly Controlled Entity to a Plan.
"Initial Lender" means any Lender listed on the signature pages
hereto.
"Insolvency" shall mean with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent" shall mean pertaining to a condition of Insolvency.
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<PAGE>
"Intellectual Property" shall have the meaning set ascribed thereto in
Section 3.9.
"Interest Expense" shall mean, for any period, the sum of (a) all
interest in respect of all Funded Debt of the Parent, the Borrower and its
Restricted Subsidiaries accrued or capitalized during such period (whether or
not actually paid during such period), plus (b) the net amounts payable (or
minus the net amounts receivable) under Hedging Agreements accrued during such
period, plus (c) all financing or commitment fees in respect of Indebtedness of
the Parent, the Borrower and its Restricted Subsidiaries accrued or capitalized
during such period (whether or not actually paid during such period) but shall
exclude (i) any arrangement or financing fees paid on the Closing Date in
respect of the Indebtedness created under this Agreement and (ii) any
transaction or "up front" fees incurred in establishing or entering into any
such Hedging Agreement, and (iii) any closing costs incurred in connection with
the issuance of the Permitted Senior Notes, minus (d) all interest income earned
during such period.
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate
Loan, the last day of each March, June, September and December to occur while
such Loan is outstanding, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period, and (c) as
to any Eurodollar Loan having an Interest Period longer than three months, each
day which is three months, or a whole multiple thereof, after the first day of
such Interest Period and the last day of such Interest Period.
"Interest Period" with respect to any Eurodollar Loan shall mean:
(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 or six 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, two, three or six 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, the foregoing provisions relating to Interest Periods are subject
to the following:
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(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;
(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; and
(iv) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period
for such Loan.
"Issuance Date" shall mean the date on which the Borrower issues
Permitted Senior Notes in an aggregate principal amount of not greater than
$159,000,000.
"IRS" means the Internal Revenue Service or any successor agency
thereto.
"Issuer" shall mean CIBC or any other Lender which shall be the issuer
of Letters of Credit hereunder.
"L.A." shall mean Radio Unica of Los Angeles, a Delaware corporation.
"Landlord's Consent" shall mean an agreement of a landlord, in form
and substance satisfactory to the Agent.
"Letter Agreement" shall mean the Commitment Letter dated June 22,
1998 between the Borrower and CIBC, as the same may be amended, modified or
supplemented from time to time.
"Letters of Credit" shall mean the collective reference to the
irrevocable standby letters of credit opened by the Issuer for the account of
the Borrower from time to time.
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"Leverage Ratio" shall mean, as of any date of determination, the
ratio of (a) Funded Debt of the Loan Parties outstanding on such date to (b)
Operating Cash Flow of the Loan Parties for the twelve months then most recently
ended.
"License" shall have the meaning ascribed thereto in Section 3.22.
"License Subsidiary" shall mean each of the Restricted Subsidiaries
listed on Schedule 1.1(B).
"Lien" shall mean (a) any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction) or (b) the sale, assignment, pledge
or transfer for security of any accounts, general intangibles or chattel paper
of any Loan Party with or without recourse.
"Loan" shall have the meaning ascribed thereto in Section 2.1.
"Loan Documents" shall mean this Agreement and each other agreement,
instrument or certificate executed and delivered to the Agent or any Lender
pursuant hereto including, without limitation, the Notes, the Guarantees, the
Security Documents and the Contribution Agreement.
"Loan Parties" shall mean the Parent, the Borrower and each Restricted
Subsidiary.
"Loan-to-Value Ratio" shall mean, as of any date of determination, the
ratio of (a) Funded Debt outstanding on such date to (b) Total Value.
"Local Marketing and Sales Agreement" as to any Person, shall mean 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 such radio station (and related FCC
License).
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property or, condition (financial or otherwise) of the
Loan Parties, taken as a whole, or (b) the validity or enforceability of this
Agreement, any of the Notes or any of the other Loan Documents, the Liens
created hereunder or thereunder or the rights or remedies of the Agent or the
Lenders hereunder or thereunder.
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<PAGE>
"Material Agreement" shall mean each Local Marketing and Sales
Agreement and each other agreement to which the Parent, the Borrower or any
Restricted Subsidiary is a party to or have obligations under which either (a)
require annual payments in excess of $1,000,000 or (b) require annual payments
in excess of $500,000 and have a term greater than one year.
"Materials of Environmental Concern" shall mean 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.
"Miami" shall mean Radio Unica of Miami, Inc., a Delaware corporation.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Disposition Proceeds" shall mean the gross cash proceeds
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when received)
received by the Parent, the Borrower or any Restricted Subsidiary from the sale,
lease (other than a lease in the ordinary course of business), transfer or other
disposition of any of its assets less the sum of (a) reasonable selling expenses
paid to non-affiliated third parties and (b) income taxes reasonably estimated
to be actually payable by the Parent, the Borrower and/or such Restricted
Subsidiary with respect to any gain realized as a result of such sale, lease,
transfer or other disposition and which taxes are payable by the Parent, the
Borrower or such Restricted Subsidiary within two years of the date of such
sale, lease, transfer or other disposition or within two years of any
installment payment with respect thereto.
"Net Income" for any period shall mean, net income (or deficit) of the
Parent, the Borrower and its Restricted Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP.
"Net Insurance Proceeds" means any amounts received by the Parent, the
Borrower or any Restricted Subsidiary in connection with an insurance policy
maintained by the Borrower and/or any Restricted Subsidiary in accordance with
Section 5.5 as a result of casualties and contingencies occurring with respect
to property of the Borrower and/or any Restricted Subsidiary, net of (a) all
reasonable, out-of-pocket expenses incurred in connection with the recovery of
such proceeds and (b) contractually required repayments of Indebtedness to the
extent secured by a Lien on such property.
"Network" shall mean Radio Unica Network, Inc., a Delaware
corporation.
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"Non-Excluded Taxes" shall have the meaning ascribed thereto in
Section 2.14.
"Note" shall have the meaning ascribed thereto in Section 2.2.
"Notice of Borrowing" shall have the meaning ascribed thereto in
Section 2.3.
"Obligations" shall mean the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to any Loan Party, as applicable, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and whether the Agent, for
the benefit of the Lenders, is oversecured or undersecured with respect to such
Loans) the Notes, the Reimbursement Obligations and all other obligations and
liabilities of any Loan Party, as applicable, to the Agent and the Lenders or
any of their respective Affiliates, including any obligations of the Borrower
under any Hedging Agreement entered into with the Agent, any Lender or any of
the respective Affiliates, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, the Notes, the other Loan
Documents or any Hedging Agreement with the Agent, any Lender or any of their
respective Affiliates or 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 fees and disbursements of counsel to the Agent or to the
Lenders that are required to be paid by any Loan Party, as applicable, pursuant
to the terms of the Credit Agreement, any other Loan Document or any Hedging
Agreement with the Agent, any Lender or any of their respective Affiliates) or
otherwise.
"Offering Memorandum" shall mean a private placement memorandum with
respect to the Permitted Senior Notes which satisfies the information
requirements under applicable federal and state securities laws and the rules
thereunder (including without limitation Rule 144A).
"Operating Cash Flow" shall mean, for any period of determination, an
amount equal to the sum of (without duplication) (a) Net Income for such period,
after deduction of (i) all items which should be classified as extraordinary,
all determined in accordance with GAAP; (ii) all insurance proceeds received
during such period to the extent, if any, included in Net Income and (iii) tax
adjusted gains (or inclusion of tax adjusted losses) incurred in connection with
the disposition of capital assets, plus (b) all amounts deducted in computing
such Net Income in respect of (i) Interest Expense (after giving effect to all
Hedging Agreements and payments and receipts thereunder), (ii) noncash
amortization expense (including amortization of financing costs, noncurrent
assets and non-cash charges), (iii) depreciation, (iv) income taxes and (v) all
other non-cash expenses.
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"Parent Guarantee" shall have the meaning ascribed thereto in Section
8.1.
"Parent Pledge Agreement" shall mean the Pledge Agreement of the
Parent in favor of the Agent, for the benefit of the Lenders, substantially in
the form of Exhibit C, as the same may be amended, modified or supplemented from
time to time.
"Parent Security Agreement" shall mean the Security Agreement between
the Parent and the Agent, substantially in the form of Exhibit D, as the same
may be amended, modified or supplemented from time to time.
"Participant" shall have the meaning ascribed thereto in Section
10.6(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Permitted Acquisitions" shall mean the acquisition by the Borrower or
any Restricted Subsidiary of assets constituting a business unit or all the
Capital Stock of any person that is engaged in the ownership and operation of
radio stations; provided, that with respect to any such acquisition, the
Borrower shall have complied with the following conditions:
(a) Financial Condition. In the case of any such acquisition the
aggregate consideration of which equals or exceeds $5,000,000, the Borrower
shall have delivered to the Agent and the Lenders financial projections
based upon assumptions reasonably acceptable to the Agent demonstrating
that immediately prior to and after giving effect to the consummation of
such acquisition and the incurrence of the Indebtedness hereunder, the
Borrower will be in compliance with all covenants contained in this
Agreement, until all the Obligations have been repaid in full.
(b) Security Interests, UCC Searches and Filings. The Agent shall have
received satisfactory evidence that the Agent (for the benefit of itself
and the Lenders) has a valid and perfected first priority security interest
in the Collateral (including any assets acquired pursuant to such
acquisition), subject only to Liens permitted to exist under Section 6.3.
The Borrower shall have delivered to or caused to be delivered to the Agent
executed documents (including mortgages, financing statements under the
UCC, pledge agreements with respect to Capital Stock (whether or not
certificated) and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as the Agent may deem
necessary to perfect its security interests in the Collateral. The Agent
shall have received certified copies of UCC search reports listing all
effective financing statements that name each seller under such transaction
documents or (to the extent any assets to be acquired or leased are located
in jurisdictions in which the Lenders have not theretofore filed UCC
financing statements listing the Borrower as debtor) the Borrower, as
debtor, together with copies of such financing statements (none of which
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shall cover the Collateral except to the extent evidencing Liens permitted
to exist under Section 6.3 or Liens terminated on such closing date).
(c) Documents of the Borrower and other Loan Parties. On or before the
closing date for such acquisition, the Borrower shall deliver or cause to
be delivered to the Agent the documents listed below, each, unless
otherwise noted, dated such closing date, duly executed, in form and
substance satisfactory to the Agent and in quantities designated by the
Agent:
(i) Officers' Certificate. A certificate executed by a Responsible
Officer of the Borrower, stating that on such closing date, after
giving effect to such acquisition, the Loans outstanding and any Loans
to be advanced on such closing date and the consummation of the
transactions contemplated by such transaction documents: (A) no
Default or Event of Default has occurred and is continuing; (B) no
Material Adverse Effect has occurred since the date of the then most
recent audited financial statements of the Borrower delivered to the
Agent pursuant to Section 5.1; (C) the representations and warranties
set forth in Article 3 are true and correct in all material respects
on and as of such date with the same effect as though made on and as
of such date; and (D) the Borrower is in compliance with all the terms
and provisions set forth in this Agreement on its part to be observed
and performed. Each of the foregoing statements shall be true on such
closing date before and after giving effect to such acquisition.
(ii) Mortgages. If required by the Agent, mortgages, deeds of trust or
assignment of lease (together with lessor's consents) in form and
substance acceptable to the Agent covering the Borrower's interest in
real property, if any, acquired by it pursuant to such acquisition
together with: (x) evidence that counterparts of such mortgages or
deeds of trust have been recorded in all places to the extent
necessary or desirable, in the judgment of the Agent, to create a
valid and enforceable first priority lien on each property covered
thereby in favor of the Agent for the benefit of the Lenders (or in
favor of such other trustee as may be required or desired under local
law); (y) Lender's title insurance issued by such title insurer, on
such form, in such amounts and with such exceptions and exclusions as
may be approved by the Agent; and (z) an opinion of counsel in the
state in which the property is located in form and substance and from
counsel satisfactory to the Agent.
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(iii) UCC Financing Statements. All Uniform Commercial Code financing
statements and other documents of record required to be filed or
recorded in order to perfect the Liens of the Agent and the Lenders on
the assets to be acquired by the Borrower pursuant to such
acquisition.
"Permitted Holders" mean (a) Warburg, Pincus Ventures, L.P. and any
successor funds, (b) Joaquin F. Blaya, Herbert M. Levin and Steven E. Dawson and
(c) any spouse and any trust, holding company or similar entity established by
and controlled by any of the individuals described in clause (b) for the
principal benefit of any of them or their spouses, lineal descendants or other
family members.
"Permitted Seller Notes" shall mean indebtedness in an aggregate
principal amount not to exceed $10,000,000 issued by the Borrower in favor of
any seller of Capital Stock or assets in connection with a Permitted
Acquisition; provided that such Notes (a) shall not be secured by any Lien, (b)
shall bear interest at a rate acceptable to the Required Lenders, (c) shall not
permit payments of principal prior to the 91st day after the Termination Date,
(d) shall contain subordination provisions acceptable to the Required Lenders,
and (e) contain such other terms and conditions as are acceptable to the Agent
and the Required Lenders.
"Permitted Senior Notes" shall mean Indebtedness issued by the
Borrower in an aggregate principal amount not to exceed $159,000,000; which
Indebtedness (a) shall be unsecured, (b) shall not permit payment of cash
interest prior to the fourth annual anniversary of the issuance thereof, (c)
shall not permit any payment of principal or any sinking fund payments prior
to the 91st day after the Termination Date and (d) shall contain such other
terms and conditions as are set forth in the Offering Memorandum dated July
2, 1998 and otherwise reasonably acceptable to the Lenders.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" shall mean at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Parent, the Borrower or
any Subsidiary is, an "employer" as defined in Section 3(5) of ERISA, other than
a Multiemployer Plan.
"Pledge Agreements" shall mean the collective reference to the
Borrower Pledge Agreement, Parent Pledge Agreement and any Subsidiary Pledge
Agreement.
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"Pledged Stock" shall have the meaning ascribed thereto in each Pledge
Agreement.
"Preferred Stock" shall mean any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Properties" shall have the meaning ascribed thereto in Section
3.16(a).
"Public Equity Offering" shall mean an initial public offering by the
Borrower or the Parent of shares of its Qualified Capital Stock (however
designated and whether voting or non-voting) and any and all rights, warrants or
options to acquire such Qualified Capital Stock, provided that such an initial
public offering includes shares of Common Stock of the Borrower or the Parent
and with respect to an initial public offering by the Parent, the net proceeds
of such Public Equity Offering are contributed to the Borrower as common equity.
After an initial public offering by the Parent or the Borrower of Qualified
Capital Stock (however designated and whether voting or non-voting) and any and
all rights, warrants or options to acquire such Qualified Capital Stock and with
respect to any offering by the Parent, the net proceeds of such Public Equity
Offering are contributed to the Borrower as common equity.
"QFL Note" shall have the meaning ascribed thereto in Section 2.14(c).
"Qualified Capital Stock" shall mean any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Foreign Lender" shall have the meaning ascribed thereto in
Section 2.14(c).
"Register" shall have the meaning ascribed thereto in Section 10.6(d).
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as in effect from time to time.
"Reimbursement Obligations" shall mean the obligations of the Borrower
to reimburse the Issuer and the Lenders for all amounts drawn under the Letters
of Credit and all other amounts under Section 2.17.
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"Reorganization" shall mean with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replaced Note" shall have the meaning ascribed thereto in Section
2.14(c).
"Replacement Assets" shall mean equipment, facilities, intellectual
property and other assets that, in the ordinary course of business, are used and
useful in operating or providing programming for radio stations.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA other than those events for which the notice requirement has
been waived under applicable regulations.
"Required Lenders" shall mean (a) so long as there are two or fewer
Lenders, Lenders whose Commitment Percentages aggregate 100% and (b) so long as
there are more than two Lenders, Lenders whose Commitment Percentages aggregate
at least 51%.
"Requirement of Law" as to any Person shall mean 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" shall mean, with respect to any Person, the
chief executive officer or the chief financial officer of such Person.
"Restricted Subsidiary" shall mean each Subsidiary other than those
Subsidiaries designated as Unrestricted Subsidiaries in accordance with Section
5.12.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act
of 1933 or any successor rule.
"S&P" shall mean Standard & Poor's Rating Group, a division of McGraw
Hill, Inc.
"San Antonio" shall mean Radio Unica of San Antonio, a Delaware
corporation.
"San Francisco" shall mean Radio Unica of San Francisco, Inc., a
Delaware corporation.
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"Sales Corp." shall mean Radio Unica Sales Corp., a Florida
corporation.
"Security Agreements" shall mean the collective reference to the
Borrower Security Agreement, Parent Security Agreement and any Subsidiary
Security Agreement.
"Security Documents" shall mean the collective reference to the Pledge
Agreements, the Security Agreements and all other security documents hereafter
delivered to the Agent granting a Lien on any asset or assets of any Loan Party
to secure the obligations and liabilities of the Borrower under the Notes and/or
under any of the other Loan Documents or to secure any guarantee by any
Guarantor of any such obligations and liabilities.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" shall mean, as of any date, with respect to any Loan Party
(a) the property of such Loan Party, at fair valuation, will exceed its debts,
(b) the Loan Party will be able to pay its debts as such debts become absolute
and matured, and (c) the Loan Party will have, as of such date, sufficient
capital with which to conduct its business. For purposes of this definition,
"debt" means "liability on a claim" and "claim" means (i) any right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (ii) any right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
"Stated Amount" of a Letter of Credit shall mean the total amount
available to be drawn under such Letter of Credit.
"Stations" shall mean the collective reference to any radio station
owned and operated by the Borrower or any Restricted Subsidiary, which on the
date hereof shall be radio stations WNMA and WCMQ, licensed Miami, Florida, and
radio station KIQI, licensed San Francisco, California.
"Subsidiary" shall mean a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the occurrence of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise expressly stated herein all references to any Subsidiary are to
direct or indirect subsidiaries of the Parent and the Borrower.
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"Subsidiary Guarantees" shall mean the collective reference to the
Guarantees to be duly executed and delivered by certain of the Guarantors and by
each future Restricted Subsidiary, substantially in the form of Exhibit E
hereto, as amended, modified or supplemented from time to time.
"Subsidiary Pledge Agreements" shall mean the collective reference to
the Pledge Agreements to be duly executed and delivered by each of the
Guarantors and by each future Restricted Subsidiary, substantially in the form
of Exhibit F hereto, as amended, modified or supplemented from time to time
"Subsidiary Security Agreements" shall mean the collective reference
to the Security Agreements to be duly executed and delivered by each of the
Guarantors and by each future Restricted Subsidiary, substantially in the form
of Exhibit G hereto, as amended, modified or supplemented from time to time.
"Termination Date" shall mean (a) if the Issuance Date occurs on or
prior to the sixth month anniversary of the Closing Date, the earlier of (i) 91
days prior to the first scheduled cash interest payment date with respect to the
Permitted Senior Notes and (ii) September 30, 2002 and (b) if the Issuance Date
occurs after the six-month anniversary of the Closing Date or does not occur by
the first annual anniversary of the Closing Date, the earlier of (i) the first
annual anniversary of the Closing Date and (ii) September 30, 1999.
"Total Value" shall mean the total value of the stations owned by the
Loan Parties as set forth in the BIA Appraisals.
"Tranche" shall mean the collective reference to Eurodollar Loans, the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"Transferee" shall have the meaning ascribed thereto in Section
10.6(f).
"Type" shall mean as to any Loan, its nature as an Alternate Base Rate
Loan or a Eurodollar Loan.
"Unrestricted Subsidiary" shall mean any Subsidiary so designated in
accordance with Section 5.12.
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"Voting Securities" shall mean any class of Capital Stock of the
Parent, the Borrower or any Restricted Subsidiary, as applicable, pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to vote for the election of directors (irrespective of whether or
not at the time any other class will have or might have voting power by reason
of the occurrence of any contingency).
"Warburg" shall mean Warburg, Pincus Ventures, L.P., a Delaware
limited partnership, and its successors (including any successor fund) and
assigns, in each case so long as such successor or assign is controlled by E. M.
Warburg, Pincus & Co., LLC.
"Warburg Subordinated Debt" shall mean Indebtedness of the Parent in
favor of Warburg which Indebtedness (a) shall not permit the holder thereof to
exercise any rights or remedies against the Borrower (including, without
limitation, for failure to pay such Indebtedness at the maturity date thereof)
so long as any of the Obligations have not been indefeasibly repaid in full in
cash, (b) shall not permit payment of interest (other than pay-in-kind
interest), (c) shall mature not less than 6 months after the Termination Date
and (d) shall have such other terms (including terms of subordination) as are
acceptable to the Agent and the Lenders.
"Year 2000 Problem" shall mean any significant risk that computer
hardware or software used in the Parent's, the Borrower's or any Restricted
Subsidiaries' businesses or operations will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively as
in the case of dates or time periods occurring prior to January 1, 2000.
1.2. Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have their respective defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein, in the Notes and in any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Parent, the Borrower or any Restricted Subsidiary not defined in Section 1.1 and
accounting terms partly defined in Section 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 Article, Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
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(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENTS
2.1. Commitments. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make loans (the "Loans") to the Borrower from time to
time during the Commitment Period in an aggregate principal amount at any one
time outstanding not to exceed such Lender's Available Commitment. 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) Subject to the last sentence of Section 2.3, the Loans may from
time to time be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a
combination thereof, as determined by the Borrower and notified to the Agent in
accordance with Section 2.3 and Section 2.6; provided that no Loan shall be made
as a Eurodollar Loan after the day that is one month prior to the Termination
Date.
2.2. Notes. The Loans made by each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit H, with
appropriate insertions as to payee, date and principal amount (a "Note"),
payable to the order of such Lender and in a principal amount equal to the
lesser of (a) the amount of the initial Commitment of such Lender and (b) the
aggregate unpaid principal amount of all Loans made by such Lender. Each Lender
is hereby authorized to record the date, Type and amount of each Loan made by
such Lender, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto, on the schedule annexed to and
constituting a part of its Note, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded absent manifest
error. Each Note shall (i) be dated the Closing Date, (ii) be stated to mature
on the Termination Date and (iii) provide for the payment of interest in
accordance with Section 2.9.
2.3. Procedure for Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day; provided that the
Borrower shall give the Agent an irrevocable notice substantially in the form of
Exhibit I (a "Notice of Borrowing") (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
Eurodollar Loans initially, 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, Alternate Base Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of
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Eurodollar Loans, the amounts of such Eurodollar Loans and the lengths of the
initial Interest Periods therefor. Each borrowing under the Commitments shall be
in an amount equal to (x) in the case of Alternate Base Rate Loans, $250,000 or
a whole multiple of $100,000 in excess thereof (or, if the then Available
Commitments are less than $500,000, 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 Commitment
Percentage of each borrowing available to the Agent for the account of the
Borrower at the office of the Agent specified in Section 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 in the manner specified by the Borrower
in such Notice of Borrowing in the aggregate of the amounts made available to
the Agent by the Lenders and in like funds as received by the Agent.
2.4. Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Lender who is providing Loans a commitment fee for the period
from and including the first day of the Commitment Period to the Termination
Date, computed at the rate of 0.50% per annum on the unused portion of the
Commitment of such Lender, 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.
2.5. Reductions and Prepayments. (a) Optional Prepayments. Subject to
Section 2.15, the Borrower may, at any time, prepay the Loans on any Business
Day upon irrevocable written notice to the Agent, specifying the date and the
amount of the prepayment and whether the prepayment is of Eurodollar Loans,
Alternate Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice, the
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to Section 2.15,
accrued interest to such date on the amount prepaid and any outstanding fees and
expenses then due and owing. Partial prepayments of the Loans shall be applied
to the Loans but shall not reduce the Commitments unless the Borrower so
specifies in its written notice to the Agent in which case the Commitment shall
be reduced in the manner set forth in Section 2.5(b).
(b) Optional Reductions. The Borrower may terminate the Commitments or
from time to time reduce the amount of the Commitments , upon at least three
Business Days' irrevocable written notice to the Agent specifying the date and
amount of such reduction. Any reduction of the Commitments shall be in an amount
equal to $1,000,000 or a whole multiple thereof and shall reduce permanently the
Commitments then in effect; provided that no such termination or reduction shall
be permitted if, after giving effect thereto and to any prepayments of the Loans
made on the effective date thereof, the aggregate principal amount of the Loans
then outstanding would exceed the Commitments then in effect. Any reduction of
the Commitments
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shall be accompanied by payment in full of all accrued commitment fees on the
amount so reduced to and including the date of such reduction and, to the extent
any Loans are prepaid in connection with such reduction, shall be accompanied by
payment in full of all accrued interest thereon, to and including the date of
such prepayment, together with any additional amounts owing pursuant to Section
2.15 and any outstanding fees and expenses due and owing. The Agent agrees to
promptly notify the Lenders of any notice of reduction or termination received
by the Agent.
(c) Mandatory Reduction. The Commitments shall be reduced to zero on
the Termination Date.
(d) Mandatory Prepayments (Net Insurance Proceeds). The Borrower shall
deliver to the Agent any Net Insurance Proceeds in excess of $100,000 in the
aggregate within three Business Days of the receipt thereof for application to
the Loans (with a concomitant reduction in the Commitments); provided that the
Borrower, by written notice to the Agent delivered within such three Business
Day period (together with a certificate in reasonable detail setting forth the
calculation of such Net Insurance Proceeds), may elect to defer applying such
proceeds in such manner if and only if (i) concurrent with such notice such
deferred proceeds are applied to repay the Loan (with a concomitant temporary
reduction in the Commitments) and (ii) within 365 days after receipt by the
Borrower (or if such Proceeds are delivered directly to the Agent, by the
Agent), the Borrower, subject to Section 2.5 (a), (b) and (c), shall obtain
Loans for the purpose of repairing or acquiring Replacement Assets (it being
understood that (A) upon expiration of such 365 day period, any portion of such
deferred proceeds that has not been utilized by the Borrower as a Loan to repair
or acquire Replacement Assets shall be applied to the Loans (and the
Commitments), and (B) subject to Section 2.5(a), (b) and (c), the Commitments,
upon each disbursement of such deferred proceeds as a Loan for purposes of
repairing or acquiring Replacement Assets, shall be restored by the amount of
such disbursement.
(e) Mandatory Prepayment (Overadvance). If, after giving effect to any
reduction of the Commitments required under Section 2.5, (i) the sum of the
outstanding aggregate principal amount of the Loans plus the outstanding amount
of the Reimbursement Obligations plus the aggregate Stated Amounts of the
outstanding Letters of Credit exceeds (ii) the aggregate amount of the
Commitments (as so reduced), on the date of such reduction, the Borrower shall
prepay an aggregate principal amount of the Loans, in an aggregate amount equal
to such excess.
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(f) Accrued Interest and Fees. Each prepayment of the Loans pursuant
to this Section 2.5 shall be accompanied by payment in full of all accrued
interest thereon, to and including the date of such prepayment, together with
any additional amounts owing pursuant to Section 2.15 and any outstanding fees
and expenses due and owing.
2.6. Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Alternate Base Rate Loans by
giving the Agent prior irrevocable notice of such election substantially in the
form of Exhibit J (a "Notice of Conversion") (which notice must be received by
the Agent by at least 11:00 a.m., New York City time, three Business Days prior
to such election); provided that any such conversion of Eurodollar Loans may be
made only on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Alternate Base Rate Loans to
Eurodollar Loans by giving the Agent prior irrevocable notice of such election
(which notice must be received by the Agent by at least 11:00 a.m., New York
City time, three Business Days prior to 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 the outstanding
Eurodollar Loans and Alternate Base Rate Loans may be converted as provided
herein; provided that (i) no Loan may be converted into a Eurodollar Loan when
any Default has occurred and is continuing and (ii) no Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Commitment
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 Section 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 Default has occurred and is continuing or (ii)
after the date that is one month prior to the Termination Date and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph, or if such continuation is not permitted
pursuant to the preceding proviso, such Loans shall be automatically converted
to Alternate Base Rate Loans on the last day of such then expiring Interest
Period. The Agent agrees to notify the Lenders of any notice of continuation
referred to herein received by the Agent.
2.7. Maximum Amounts of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and shall be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of the
Loans comprising each Tranche shall be equal to $500,000 or a whole multiple of
$100,000 in excess thereof. There shall never be more than ten Tranches at any
one time outstanding.
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2.8. 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 the first day of such
Interest Period (subject to daily adjustments, if any, required by changes in
the Eurodollar Reserve Requirements) plus the Applicable Margin.
(b) Each Alternate Base Rate Loan shall bear interest at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin.
(c) If an Event of Default has occurred and is continuing, the Loans
shall bear interest at a rate per annum equal to the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this Section plus
2%, in each case, from the date of occurrence of such Event of Default until the
date such Event of Default is cured or waived (after as well as before
judgement). In addition, should any interest on such Loans or any commitment fee
or other amount (other than principal) payable hereunder not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest (to the extent permitted by law in the case of
interest on interest) at a rate per annum which is the rate described in Section
2.8(b) plus 2%, in each case, from the date of such non-payment until such
amount is paid in full (after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to Section 2.8(c) shall be
payable from time to time on demand.
(e) Notwithstanding the foregoing interest rate provisions, the
interest that accrues on the Loans shall in no event exceed the maximum amount
permitted by applicable law.
2.9. Computation of Interest and Fees. (a) Commitment fees and
Alternate Base Rate interest shall be calculated on the basis of a 365/366 day
year and Eurodollar Rate 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 Alternate
Base Rate or the Eurodollar 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.
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(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, at the request of
the Borrower, shall deliver to the Borrower a statement showing the quotations
used by the Agent in determining any interest rate pursuant to Section 2.8(a).
2.10. Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the 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 Alternate Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Alternate Base
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower have
the right to convert Alternate Base Rate Loans to Eurodollar Loans.
2.11. Pro Rata Treatment and Payments; Funding Reliance. (a) Each
borrowing by the Borrower of Loans 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
(except as may be required as a result of Section 2.12) be made pro rata
according to the respective outstanding principal amounts of the Commitment
Percentages. All payments (including prepayments) to be made by the Borrower
hereunder and under the Notes, whether on account of principal, interest, fees
or otherwise, shall be made without setoff 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 Section 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 the Eurodollar Loans) becomes due and
payable on a day
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other than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal and 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 and interest thereon,
shall be payable at the then applicable rate during such extension) unless the
result of such extension would be to extend such payment into another calendar
month, in which event such payment shall be made on the immediately preceding
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 available to the Agent the
amount that would constitute its applicable Commitment Percentage of such
borrowing, 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 Rate 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
Section shall be conclusive in the absence of manifest error. If such Lender's
applicable 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 shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to Alternate Base Rate Loans hereunder, on demand,
from the Borrower.
2.12. Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
canceled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Alternate Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.15.
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2.13. Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 2.14, net income taxes,
branch profits taxes and, to the extent such taxes are imposed in lieu of
net income taxes, franchise taxes and taxes on doing business or taxes
measured by or in respect of capital or net worth of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower, through the Agent, of the event
by reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Agent, to the Borrower shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Obligations hereunder.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof has or shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Agent) of a written request therefor, the Borrower, shall pay to
such Lender such
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additional amount or amounts as will compensate such Lender for such reduction.
This covenant shall survive the termination of this Agreement and the payment of
the Obligations hereunder.
2.14. Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding branch profits taxes, net income taxes and, to
the extent such taxes are imposed in lieu of net income taxes, franchise taxes
and taxes on doing business or taxes measured by or in respect of capital or net
worth 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 the Notes). If the
Borrower shall be required by law to deduct or withhold any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") from any amounts payable to the Agent or any Lender
hereunder or under the Notes, (i) the Borrower shall make such deductions or
witholdings and (ii) 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 such Agent or Lender would have
received no such deductions or withholdings been made; provided 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 if such Lender
fails to comply with the requirements of paragraph (b) of this Section. 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 covenants in this
Section shall survive the termination of this Agreement and the payment of the
Notes and payment of the Obligations hereunder.
(b) Each Lender shall:
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(i) on or prior to the date of its execution and delivery of this
Agreement, in the case of each Initial Lender, and on or prior to the date
on which it becomes a party to this Agreement pursuant to Section 10.6(c)
in the case of each other Lender, deliver to the Borrower and the Agent (A)
in the case of a Lender that is not organized under the laws of the United
States or any state thereof, (I) two original and duly completed IRS Forms
1001 or 4224, or successor applicable form, as the case may be, and a
properly completed and duly executed IRS Form W-8 or IRS Form W-9, or any
subsequent versions thereof or successor forms thereto, as appropriate) or,
(II) if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and intends to claim exemption from U.S. Federal
withholding tax under Section 871(h) or Section 881(c) of the Code with
respect to payments of "portfolio interest", a properly completed and duly
executed IRS Form W-8, or any subsequent versions thereof or successor form
thereto together with a certification executed by such Lender representing
that such Lender (1) is not a "bank" for purposes of Section 881(c) of the
Code is not a 10 percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower; (3) is not a controlled foreign
corporation receiving interest from a related person (within the meaning of
Section 864(d)(4) of the Code) and (4) has received in replacement of any
Note held by or assigned to it, a QFL Note (as defined below) in accordance
with this Section 2.14, and (B) in the case of any other Lender, two
original and duty completed IRS Forms 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;
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.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, each Lender on or prior to the date of its execution and delivery of
this Agreement shall (x) deliver to the Borrower and Agent the requisite number
of property completed and duly executed Forms 1001 or 4224 as described in
Section 2.14(b)(i)(A)(I) or the certification described in section
2.14(b)(i)(A)(II) and (y) 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 Participant pursuant to Section
10.6 shall, upon the effectiveness of the related transfer, be required to
provide all the forms and statements required pursuant to this Section;
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provided that, such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.
(c) Any Lender that is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and satisfies the requirements of Section
2.14(b)(i)(A)(II), (a "Qualified Foreign Lender") shall upon receipt of the
written request of the Agent or the Borrower and may, upon its own written
request to the Agent, exchange any Note held by or assigned to it for a
qualified foreign lender Note ( a "QFL Note"). A QFL Note shall be in the form
of the Note, but shall contain the following legend,"This Note is a QFL Note,
and as such, ownership of the obligation represented by such QFL Note may be
transferred only in accordance with Section 2.14 of the Credit Agreement." Any
QFL Note issued in replacement of any existing Note pursuant to this Section
shall be (i) dated the Closing Date, (ii) issued in the name of the entity in
whose name such existing Note was issued and (iii) issued in the same principal
amount as such existing Note. Any Note replaced pursuant to this Section is
sometimes referred to herein as a "Replaced Note".
(d) The Borrower agrees that, upon the request of or delivery of a
request to a Qualified Foreign Lender pursuant to paragraph (c) of this Section,
it shall execute and deliver a QFL Note to the Agent in replacement of the
Replaced Note surrendered in connection with such request conforming to the
requirements of this paragraph. Each Qualified Foreign Lender shall surrender
its Note in connection with any replacement pursuant to this Section 2.14. Upon
receipt by the Agent, in connection with any replacement, of a QFL Note and the
existing Note to be replaced by such QFL Note in accordance with this paragraph,
the Agent shall forward the QFL Note to the Lender which has surrendered its
Note for replacement by such QFL Note and shall forward the surrendered Note to
the Borrower marked "canceled". Once issued, QFL Notes (i) shall be deemed to
and shall be "Notes" for all purposes under the Loan Documents, (ii) may not be
exchanged for Notes which are not QFL Notes, notwithstanding anything to the
contrary in the Loan Documents and (iii) shall at all times thereafter be QFL
Notes, including, without limitation, following any transfer or assignment
thereof.
(e) Notwithstanding anything to the contrary in the Loan Documents,
the QFL Notes are registered obligations as to both principal and interest with
the Borrower and transfer of the obligations underlying such QFL Note may be
effected only by surrender of the QFL Note to the Borrower and either reissuance
by the Borrower of such QFL Note to the transferee or issuance by the Borrower
of a new QFL Note to the transferee. A QFL Note shall only evidence the Lender's
or an assignee's right, title and interest in and to the related obligation, and
in no event is a QFL Note to be considered a bearer instrument or obligation.
This Section 2.14 shall be construed so that the obligations underlying the QFL
Notes are at all times maintained in "registered form" within the meaning of
Sections 871(h)(2) and 881(c)(3) of the Code.
(f) Upon the occurrence of any event giving rise to the operation of
Section 2.13 or 2.14 with respect to any Lender which results in such Lender
charging to the Borrower increased costs in excess of those being charged
generally by the Lenders, the Borrower shall
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have the right, if no Event of Default then exists, to replace such Lender (the
"Replaced Lender") with one or more other Assignees (the "Replacement Lender")
reasonably acceptable to the Agent, provided that (i) at the time of any
replacement pursuant to this Section 2.14, the Replacement Lender shall enter
into one or more Commitment Transfer Supplement pursuant to Section 10.6
pursuant to which the Replacement Lender shall acquire all of the Commitments
and outstanding Loans of the Replaced Lender and, in connection therewith, shall
pay to the Replaced Lender in respect thereof an amount equal to the sum of (A)
an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Lender, (B) an amount equal to all accrued,
but theretofore unpaid, fees owing to the Replaced Lender under this Agreement
and (C) an amount equal to all other outstanding Obligations owing to the
Replaced Lender, and (ii) all obligations of the Borrower owing to the Replaced
Lender (other than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective Commitment Transfer
Supplement, the payment of amounts referred to in clauses (i) and (ii) above
and, if so requested by the Replacement Lender, delivery to the Replacement
Lender of the appropriate instruments otherwise required by this Agreement
executed by the Borrower, the Replacement Lender shall become a Lender hereunder
and the Replaced Lender shall cease to constitute a Lender hereunder, except
with respect to indemnification provisions applicable to the Replaced Lender
under this Agreement, which shall survive as to such Replaced Lender.
2.15. Indemnity. The Parent and the Borrower agree to indemnify,
jointly and severally, 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 payment when due of the principal amount of or
interest on any Eurodollar Loan, (b) 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, (c) default by the Borrower in
making any prepayment after the Borrower has given a notice thereof or (d) the
making of a prepayment or conversion of Eurodollar Loans on a day which is not
the last day of an Interest Period with respect thereto including, without
limitation, in each case, any such loss or expense arising from the redeployment
of funds obtained by it or from fees payable to terminate the deposits from
which such funds were obtained. This covenant shall survive the termination of
this Agreement and the payment of the Obligations hereunder.
2.16. Discretion of Lender as to Manner of Funding. Notwithstanding
any other provisions of this Agreement, each Lender shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood that for the purposes of this Agreement all
determinations hereunder shall be made assuming each Lender had actually funded
and maintained each Eurodollar Loan through the purchase of deposits of Dollars
in the eurocurrency interbank market having a maturity corresponding to each
Loan's Interest Period and bearing an interest rate equal to the Eurodollar Rate
for such Interest Period.
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2.17 Letter of Credit. (a) Subject to the terms and conditions hereof,
and in reliance on the agreements set forth in clauses (c) and (e) hereof, from
time to time, on any Business Day, the Issuer agrees to issue Letters of Credit
for the account of the Borrower in such form as may be approved from time to
time by the Issuer; provided that (i) the sum of the aggregate face amount of
all Letters of Credit outstanding and the aggregate amount drawn under all
Letters of Credit for which the Issuer has not been reimbursed at any time shall
not exceed $3,000,000 and (ii) the sum of the Loans, the aggregate face amount
of all Letters of Credit outstanding and the aggregate amount drawn under all
Letters of Credit for which the Issuer has not been reimbursed shall not, at any
time, exceed the Commitment minus, until such time as the Existing Seller Note
has been paid in full, $825,000.
(b) Each Letter of Credit (i) shall be opened pursuant to a written
request from the Borrower on the Issuer's then current form of application for
letter of credit which application shall be completed to the satisfaction of the
Issuer and shall be delivered to the Issuer together with such other
certificates, documents and other instruments and information as the Issuer may
reasonably request, (ii) shall be denominated in U.S. dollars and (iii) shall
expire on the Expiry Date. The Issuer shall not at any time be obligated to
issue any Letter of Credit if such issuance would conflict with, or cause the
Issuer or any Lender to exceed any limits imposed by an applicable Requirement
of Laws.
(c) The Issuer agrees to allot and does allot, to itself and each
Lender and, to induce the Issuer to issue the Letter of Credit, each Lender
severally and irrevocably agrees to take and does hereby take for its own
account and risk an undivided participating interest in the Issuer's Obligations
equal to a percentage obtained by dividing such Lender's Commitment at the time
by the aggregate amount of all Commitments at such time.
(d) The Borrower agrees (i) to reimburse the Issuer forthwith upon its
demand for any payment made by the Issuer under a Letter of Credit and (ii) to
pay interest on any unreimbursed portion of any such payment from the date of
such payment until reimbursement in full thereof at a rate per annum equal to
(A) prior to the date which is one Business Day after the day on which
reimbursement from the Borrower for such payment is due, the rate which would
then be payable on any outstanding Alternate Base Rate Loans which are not
overdue and (B) thereafter, the rate which would then be payable on any
outstanding Alternate Base Rate Loans which are overdue. In addition to the
foregoing, the Borrower shall reimburse the Issuer for any taxes, fees, charges
or other costs or expenses incurred by the Issuer in connection with such
payment. All payments hereunder shall be made to the Issuer at its address for
notices specified herein in Dollars in immediately available funds.
(e) (i) In the event that the Issuer makes a payment under a Letter of
Credit and is not reimbursed in full therefor forthwith, upon demand of the
Issuer referred to in Section 2.17(d), the Issuer shall promptly make demand for
any such amount for which it has not received reimbursement upon each Lender.
Each Lender unconditionally and irrevocably agrees that forthwith upon its
receipt of any such demand for reimbursement, such Lender shall transfer
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to the Issuer, in immediately available funds, an amount equal to such Lender's
pro rata share of the unreimbursed portion of such payment; provided that, if
such demand is made prior to 12:00 noon, New York City time, on a Business Day,
such Lender shall make such payment to the Issuer prior to the end of such
Business Day and otherwise such Lender shall make such payment on the next
succeeding Business Day. Whenever, at any time after the Issuer has made a
payment under a Letter of Credit and has received from any Lender such Lender's
pro rata share of the unreimbursed portion of such payment, the Issuer receives
any reimbursement on account of such unreimbursed portion or any payment of
interest on account thereof, the Issuer shall distribute to such Lender its pro
rata share thereof; provided that in the event that the receipt by the Issuer of
such reimbursement or such payment of interest (as the case may be) is required
to be returned, such Lender will return to the Issuer any portion thereof
previously distributed by the Issuer to such Lender.
(ii) Upon the occurrence and during the continuation of any Event of
Default under Section 7.1(g) or, with notice from the Agent, upon the occurrence
of any other Event of Default that is continuing (x) an amount equal to the
outstanding Letters of Credit shall, without demand upon or notice to the
Borrower, be deemed to have been paid or disbursed by the Issuer upon such
Letters of Credit (notwithstanding that such amount may not in fact have been
paid or disbursed); and (y) without further notice in the case of an Event of
Default under Section 7.1(g) or, in the case of any other Event of Default that
has occurred and is continuing, upon notice by the Agent to the Borrower of its
Obligations hereunder, the Borrower shall be immediately obligated to reimburse
the Issuer for the amount deemed to have been paid or disbursed by the Issuer.
Any amount so payable by the Borrower shall be deposited by the Borrower in cash
with the Agent and held as collateral security for the Obligations in connection
with any Letter of Credit issued by the Issuer. The Borrower hereby grants to
the Agent, for the benefit of the Issuer and the Lenders, 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 payments of drafts drawn under any
Letter of Credit, and the unused portion thereof after all Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to repay
other Obligations. After all Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been fully satisfied and
all other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower. The Borrower shall
execute and deliver to the Agent, for the account of the Issuer, 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.
(f) The Borrower shall pay to the Agent for the pro rata account of
the Issuer and the Lenders in respect of each Letter of Credit a fee in an
amount equal to the Applicable Margin then in effect for Eurodollar Loans
(calculated on the basis of the actual number of days elapsed over a 360-day
year) multiplied by the Stated Amount of the Letter of Credit, such fee to be
payable (i) on the date of issuance of such Letter of Credit (for the period
from the date of issuance to the earlier of the Expiry Date of such Letter of
Credit and the immediately
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succeeding Interest Payment Date), (ii) thereafter, quarterly in arrears on each
Interest Payment Date for each quarter prior to such Expiry Date.
(g) The Borrower agrees to pay to the Issuer, for its own account, for
services rendered by the Issuer, a fee equal to 0.25% on the Stated Amount each
Letter of Credit, payable on the date such Letter of Credit is issued. The
Borrower shall also pay or reimburse the Issuer for such normal and customary
costs and expenses as are incurred or charged by the Issuer on issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(h) The Reimbursement Obligations of the Borrower with respect to the
Letter of Credit related thereto shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following: (i) the existence
of any claim, set-off, defense or other right which the Borrower may have at any
time against any beneficiary, or any transferee, of such Letter of Credit (or
any Persons for whom any such beneficiary or any such transferee may be acting),
the Agent, the Issuer, any Lender or any other Person, whether in connection
with this Agreement or the transactions contemplated herein, or any unrelated
transaction; (ii) any statement or any other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iii) payment by the Issuer under such Letter of Credit against presentation of
a draft or certificate which does not comply with the terms of such Letter of
Credit or any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing (provided, as to each of the foregoing, that
such payment by the Issuer or such circumstance or happening does not constitute
gross negligence or willful misconduct of the Issuer).
(i) To the extent that any provisions of any application for the
opening of a Letter of Credit is inconsistent with the provisions of this
Section 2.17, the provisions in this Section shall apply.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans, the Parent and the Borrower hereby represent and warrant to
the Agent and each Lender:
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3.1. Financial Condition. (a) Except as set forth in Schedule 3.1(a),
the consolidated balance sheets, of the Borrower and the Subsidiaries as of
December 31, 1997 and the related statements of income, shareholders' equity and
cash flows for the fiscal year ended on such date, reported on by Ernst & Young,
copies of which have heretofore been furnished to each Lender, are complete and
correct in all material respects and present fairly the financial condition of
the Borrower and its Subsidiaries as at such date, and the results of their
operations and their shareholders' equity and cash flows for each of the fiscal
years then ended. The unaudited consolidated balance sheet of the Parent, the
Borrower and the Subsidiaries as at April 30, 1998 and the related unaudited
statements of income, shareholders equity and cash flows for the 5- month period
ended on such date, certified by a Responsible Officer of each company, copies
of which have heretofore been furnished to each Lender, are complete and correct
in all material respects and present fairly the financial condition of the
Parent, the Borrower and the Subsidiaries as at such date, and the results of
their operations and shareholders' equity and cash flows for the 5-month period
then ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto relating to the
audited financials, 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).
(b) The pro forma balance sheet of the Borrower (the "Pro Forma
Balance Sheet") is the balance sheet of the Borrower as at the Closing Date
adjusted to give effect to the Loans expected to be made by the Lenders on the
Closing Date. The Pro Forma Balance Sheet, together with the notes thereto,
presents fairly on a pro forma basis the financial position of the Borrower as
at the Closing Date assuming that the events and the assumptions specified in
the preceding sentence had actually occurred on such date.
(c) Except as set forth in Schedule 3.1(c), each of the Parent, the
Borrower and any Subsidiary does not have, at the date of the Pro Forma Balance
Sheet referred to above, any material Guarantee Obligation, contingent liability
or liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. Except as set forth in Schedule 3.1(c), during the
period from December 31, 1997 to and including the date hereof there has been no
sale, transfer or other disposition by the Parent, the Borrower or any such
Subsidiary 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 Parent,
the Borrower or any such Subsidiary at December 31, 1997.
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(d) All balance sheets, all statements of income and shareholders'
equity and of cash flows and all other financial information which shall
hereafter be furnished by or on behalf of the Parent, the Borrower, or any
Subsidiary to the Agent or any Lender for the purposes of, or in connection
with, this Agreement or any transaction contemplated hereby have been or will be
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and do or will present fairly (subject to
normal year-end adjustment in the case of financial statements for any fiscal
quarter) the financial condition of the Parent, the Borrower or any Subsidiary,
as the case may be, as at the dates thereof and the results of their operations
and their shareholders equity and cash flows for the periods then ended.
(e) The operating forecast and cash flow projections of the Parent,
the Borrower and the Subsidiaries calculated for the fiscal year ending December
31, 1998 and the business forecast of the Parent, the Borrower, and the
Subsidiaries for the period from January 1, 1998 through the Termination Date,
each prepared by or under the direct supervision of a Responsible Officer of
each company, have each been prepared in good faith and utilizing reasonable
assumptions. None of the Parent, the Borrower or any of its Subsidiaries has any
reason to believe such operating forecast and projections are materially
incorrect or misleading in any material respect.
3.2. No Change. Except as set forth in Schedule 3.2, since December
31, 1997, there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
3.3. Corporate Existence; Compliance with Law. Each of the Loan
Parties (a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has the corporate power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (d) is
in compliance with all Requirements of Law (other than any Requirements of Law
relating to environmental matters which are the subject of and addressed by the
representations and warranties set forth in Section 3.16) except to the extent
that the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
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3.4. Corporate Power; Authorization; Enforceable Obligations. Each of
the Loan Parties has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. The Borrower has appropriate power and authority to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions set forth in this Agreement and in the
Notes. Except as set forth in Schedule 3.4, 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 any of the foregoing that, if not obtained, could not reasonably be
expected to have a Material Adverse Effect. On the Closing Date, each Lender and
the Agent shall have received complete and current copies of all consents,
authorizations and filings listed on Schedule 3.4. This Agreement has been, and
each other Loan Document to which it is a party will be, duly executed and
delivered on behalf of the Loan Parties. 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 the Loan Party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5. No Legal Bar. The execution, delivery and performance of the Loan
Documents to which any Loan Party is a party, the borrowings by the Borrower
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of the Borrower or any other Loan Party, will
not accelerate or result in the acceleration of any payment obligations of the
Borrower or any other Loan Party, and will not result in, or require, the
creation or imposition of any Lien on any of the respective properties or
revenues of the Borrower or any other Loan Party, pursuant to any such
Requirement of Law or Contractual Obligation other than as contemplated by the
Security Documents.
3.6. No Material Litigation. Except as set forth in Schedule 3.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Loan Parties
threatened by or against the Loan Parties or against any of the respective
properties or revenues of the Loan Parties (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.
3.7. No Default. None of the Loan Parties 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.
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3.8. Ownership of Property; Liens. Except as set forth in Schedule
3.8, each of the Loan Parties has good record and marketable title in fee simple
to, or a valid leasehold interest in, all its real property, and good title to,
or a valid leasehold interest in, all its other property. None of such property
is subject to any Lien except as permitted by Section 6.3, except for minor
defects in title that do not interfere with the ability of such Loan Party to
conduct its business as currently contemplated to be conducted in the
projections delivered to the Agent.
3.9. Intellectual Property. Each of the Loan Parties owns, or is
licensed to use, all trademarks, tradenames, copyrights, technology, know-how,
processes, logos and insignia necessary for the conduct of their respective
businesses as currently conducted except for those which the failure to own or
license could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Loan Party know of any valid basis for any such claim. The use of such
Intellectual Property by the Loan Parties does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
3.10. No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of any Loan Party could reasonably be expected to have a Material
Adverse Effect.
3.11. Taxes. Each of the Loan Parties has filed or caused to be filed
all tax returns which, to their knowledge are required to be filed and have paid
all taxes shown to be due and payable on said returns or on any assessments made
against or any of their property and all other taxes, fees or other charges
imposed on them or any of their property as the case may be, by any Governmental
Authority (other than any tax, fee or other charge the amount or validity of
which is 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 such Loan Party); and no tax Lien has been filed, and, to the knowledge
of the Borrower or Parent, except as set forth in Schedule 3.11, no claim is
being asserted, with respect to any such tax, fee or other charge.
3.12. Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulations T, U or X of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. 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.
3.13. ERISA. (a) None of the Loan Parties maintains or contributes to
any Plan other than those listed on Schedule 3.13. Except as disclosed in
Schedule 3.13, none of the
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Loan Parties maintains, contributes to or has any material obligation with
respect to, any welfare plan (as defined in Section(3)(1) of ERISA) which
provides benefits to employees after termination of employment other than as
required by Part 6 of Title I of ERISA or similar state laws regarding
continuation of benefits. Except as disclosed on Schedule 3.13, each Plan has
complied and is in compliance in all material respects with the applicable
provisions of ERISA and the Code. None of the Loan Parties have breached any of
the responsibilities, obligations or duties imposed on it by ERISA, the Code, or
regulations promulgated thereunder with respect to any Plan, which breach could
reasonably be expected to have a Material Adverse Effect. None of the Loan
Parties nor any fiduciary of any Plan who is an officer or an employee of any
such Loan Party has engaged in a nonexempt prohibited transaction described in
Section 406 of ERISA or 4975 of the Code with respect to a Plan which could have
a Material Adverse Effect. With respect to any employee benefit plan (as defined
in Section 3(3) of ERISA) currently or formerly maintained or contributed to by
any Commonly Controlled Entity, no liability exists and no event has occurred
which could subject any Loan Party to any liability. Except as disclosed on
Schedule 3.13, none of the Loan Parties have maintained, contributed to, or had
an obligation to contribute to any Multiemployer Plan or any Single Employer
Plan, at any time during the six years prior to the date on which this
representation is made or deemed made.
(b) Except as disclosed on Schedule 3.13, none of the Loan Parties has
any material obligation to make any payment to any employee pursuant to any
existing employment contract or arrangement. The Parent and the Borrower have
given or caused to be given to the Agent copies of all the following: each
Single Employer Plan and related trust agreement (including all amendments to
such Plan and trust) in existence or committed to as of the Closing Date and the
most recent summary plan description, actuarial report, determination letter
issued by the IRS and Form 5500 (including all schedules thereto) filed in
respect of each existing Single Employer Plan; a listing of all the
Multiemployer Plans with the aggregate amount of the most recent annual
contributions required to be made by the Parent, the Borrower or any Subsidiary
to each such Multiemployer Plan, the most recent information which has been
provided to the Parent, the Borrower or any Subsidiary regarding withdrawal
liability under any Multiemployer Plan and the collective bargaining agreement
pursuant to which such contribution is required to be made. Except as disclosed
in Schedule 3.13, neither the Parent, the Borrower nor any Subsidiary has any
liability, direct or indirect, contingent or otherwise, under Section 4201 or
4204 or 4212(c) of ERISA. Neither the Parent, the Borrower, or any Subsidiary
has any outstanding liability in respect of (i) a failure to make a required
contribution or payment to a Multiemployer Plan or (ii) a complete or partial
withdrawal under Section 4203 or 4205 of ERISA from such a plan.
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3.14. Holding Company; Investment Company Act; Other Regulations. None
of the Loan Parties is a "holding company", a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended. None of the Loan
Parties is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
None of the Loan Parties is subject to regulation under any Federal or state
statute, regulation, decree or order which limits its ability to incur this
Indebtedness or conditions such ability upon any act, approval or consent of any
Governmental Authority.
3.15. Purpose of Loans. The proceeds of the Loans shall be used (a)
for Permitted Acquisitions (including escrow deposits for the acquisition of
broadcast properties); (b) to refinance all or a portion of the Existing Seller
Note; (c) to refinance up to $6,795,000 of Indebtedness of the Borrower in favor
of Warburg; (d) to pay fees and expenses in connection with the transactions
contemplated by this Agreement, (e) to finance the working capital and capital
expenditure requirements of the Borrower and its Restricted Subsidiaries and (f)
for general corporate purposes.
3.16. Environmental Matters. Except as set forth on Schedule 3.16:
(a) The facilities and properties owned, leased or operated by the
Loan Parties (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, which
violations or liabilities could reasonably be expected to result in a Material
Adverse Effect or have a material adverse impact on the value of any of the
Properties.
(b) The Properties and all operations at the Properties are in
compliance in all material respects with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by any
Loan Party (the "Business") which could materially interfere with the continued
operation of any of the Properties or have a material adverse impact on the
value of any of the Properties.
(c) None of the Loan Parties have 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 any Loan Party have knowledge or
reason to believe that any such notice will be received or is being threatened.
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(d) Materials of Environmental Concern have not been transported or
disposed of from any of 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, which violations or liabilities could reasonably be expected
to result in a Material Adverse Effects; 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, which
violations or liabilities could reasonably be expected to result in a Material
Adverse Effect or have a material adverse impact on the value of any of the
Properties.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of any Loan Party, threatened, under any
Environmental Law to which any of the Loan Parties is or will be named as a
party with respect to any of 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 any of the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from any of the Properties, or arising from or
related to the operations of any Loan Party in connection with any of the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws, which release or threatened release could reasonably be
expected to result in a Material Adverse Effect or have a material adverse
impact on the value of any of the Properties.
3.17. Capitalization of Parent. As of the Closing Date, (a) the
authorized Capital Stock of the Parent consists of 450,000 shares of Series A
Preferred Stock and 100,000 shares of common stock, each .01 par value per
share, (b) all the issued and outstanding shares of the Parent are owned
beneficially and of record by the Persons listed on Schedule 3.17 in the
respective amounts set forth therein in each case free and clear of liens,
options, warrants, calls or rights of others, (c) except as set forth in
Schedule 3.17, there are no outstanding subscriptions, options, warrants, calls,
puts, rights (including preemptive rights) or any other agreements or
commitments of any nature with respect to such Capital Stock of the Parent and
(d) no Person has or will have any preemptive rights to subscribe for any
additional Capital Stock of the Parent.
3.18. Capitalization of Borrower. The authorized Capital Stock of the
Borrower consists of 1000 shares of common stock, $.01 par value per share, of
which 100 are issued and outstanding. All the issued and outstanding shares of
Capital Stock of the Borrower are owned beneficially and of record by the Parent
free and clear of Liens, options or rights of others except as provided in the
Parent Pledge Agreement. There are no outstanding subscriptions, options,
warrants, calls, puts, rights (including preemptive rights) or any other
agreements or commitments of any nature with respect to such Capital Stock of
the Borrower.
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No Person has or will have any preemptive rights to subscribe for any additional
Capital Stock of the Borrower.
3.19. Capitalization of Subsidiaries. Except as set forth on Schedule
3.19, the Parent is not a Subsidiary of any Person. The Borrower is the sole
Subsidiary of the Parent. The Borrower's only direct or indirect Subsidiaries
are listed on Schedule 3.19. All the issued and outstanding Capital Stock of
each Subsidiary of the Borrower is owned beneficially by the Borrower and of
record by the Borrower, in each case, free and clear of liens, options or rights
of others except as provided in the Pledge Agreement. There are no outstanding
subscriptions, options, warrants, calls, put rights (including preemptive
rights) or any other agreements of commitments or any nature with resect to the
Capital Stock of any Subsidiary. No Person has or will have any preemptive
rights to subscribe for any additional Capital Stock of any Subsidiary.
3.20. Labor Matters. Except as set forth in Schedule 3.20, none of the
Loan Parties is a party to any collective bargaining agreements. There are no
strikes, lockouts or other labor disputes pending or, to the knowledge of the
Loan Parties, threatened against any of them which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. The
hours worked and payments made to employees of the Loan Parties have not been in
violation of the Fair Labor Standards Act of 1938, as amended, or any other
applicable Requirement of Law, except to the extent such violations could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. All material payments due from the Loan Parties on account of
wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of such Loan Party.
3.21. Insurance. All policies of insurance of any kind or nature
maintained by or issued to any Loan Party, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, worker's compensation, employee
health and welfare, title, property and liability insurance, are in full force
and effect in all material respects and are of a nature and provide such
coverage as is sufficient and as is customarily carried by companies of similar
size and character.
3.22. Security Documents. (a) Each Security Agreement is effective to
create in favor of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in all right, title and interest of the Loan Party
which is party thereto in the Collateral described therein except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). When financing
statements have been filed in the offices in the jurisdictions listed in
Schedule 3.23, each such Security Agreement shall constitute a fully perfected
first Lien on, and security interest in, all right, title and interest of such
Loan Party in the collateral described therein as to which a security interest
may be perfected by filing a financing statement.
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(b) Except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law), each Pledge Agreement
is effective to create in favor of the Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Stock described
therein and the proceeds thereof and, when stock certificates representing such
Pledged Stock have been delivered to the Agent, such Pledge Agreement shall
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of the Loan Party thereto in the pledged securities and the
proceeds thereof described therein subject to continuous possession of the
pledged securities by the Agent.
3.23. Accuracy and Completeness of Information. All information,
reports and other papers and data (other than projections) with respect to the
Parent, the Borrower or any Subsidiary furnished to the Lenders by or on behalf
of the Parent, the Borrower or any Subsidiary, or on their behalf, were, at the
time furnished, complete and correct in all material respects, or have been
subsequently supplemented by other information, reports or other papers or data,
to the extent necessary to give the Lenders a true and accurate knowledge of the
subject matter in all material respects. All projections with respect to the
Parent, the Borrower or any Subsidiary, furnished to the Lenders by or on behalf
of the Parent, the Borrower or any Subsidiary were prepared and presented in
good faith by Parent, the Borrower or any Subsidiary based upon facts and
assumptions that the Parent, the Borrower or any Subsidiary, as the case may be,
believed to be reasonable in light of current and foreseeable conditions, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results. No
document furnished or statement made in writing to the Lenders by or on behalf
of Parent, the Borrower or any Subsidiary in connection with the negotiation,
preparation or execution of this Agreement contains any untrue statement of a
material fact to the best of the Borrower's knowledge, or omits to state any
such material fact necessary in order to make the statements contained therein
not misleading, in either case, which has not been corrected, supplemented or
remedied by subsequent documents furnished or statements made in writing to the
Lenders. There is no fact known to the Parent, the Borrower or any Subsidiary
which has, or could reasonably be expected to have, a Material Adverse Effect.
3.24. Leaseholds, Permits, etc.. Each of the Loan Parties possesses or
has the right to use, all leaseholds, easements, franchises and permits and all
authorizations and other rights which are material to and necessary for the
conduct of their businesses. Except for such noncompliance with the foregoing
which could not reasonably be expected to have a Material Adverse Effect, all
the foregoing are in full force and effect, and each of the Loan Parties is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
leasehold, easement, franchise, license or other right, which termination or
revocation, considered as a whole, could reasonably be expected to have a
Material Adverse Effect.
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3.25. Solvency. On the Closing Date, each of the Loan Parties is
Solvent. Neither the Borrower nor any other Loan Party has incurred any
obligations or liabilities (contingent or otherwise) under this Agreement or any
other Loan Document, nor has the Borrower or any other Loan Party made any
conveyance pursuant to or in connection therewith, with actual intent to hinder,
delay or defraud either present or future creditors of the Borrower or any of
its Subsidiaries.
3.26. 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 3.25. 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 3.26 lists all 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 authorizations, licenses and permits
necessary for the conduct of the businesses of the Loan Parties as of the date
hereof. All such Licenses are issued in the name of, or have been validly
assigned to, a License Subsidiary and are validly issued and in full force and
effect, and the Loan Parties have fulfilled and performed all 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.
3.27. License Subsidiaries. All Licenses relating to the Stations
other than Stations located in Houston and Los Angeles are held by a License
Subsidiary. No License Subsidiary (a) owns or holds any assets (including the
ownership of stock or any other interest in any Person) other than the Licenses
relating to the Stations, (b) is engaged in any business other than the holding,
acquisition and maintenance of the Licenses, (c) has any investments in any
other Person other than the Borrower, (d) owes any Indebtedness (other than the
Guarantee Obligation to the Lenders in connection with this Agreement) to any
Person other than the Borrower, or (e) is an Unrestricted Subsidiary.
3.28. Senior Debt. All the Obligations whether now in effect or
hereafter created or incurred constitute "Senior Debt" under the Permitted
Seller Notes and the Warburg Subordinated Debt and are entitled to the benefits
of the subordination provisions contained therein.
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3.29. Year 2000. The Parent and the Borrower (a) have reviewed their
operations and those of the Subsidiaries with a view to assessing whether each
of their or the Subsidiaries' respective businesses will, in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data be vulnerable to a Year 2000 Problem; (b) have taken
into account the costs to be incurred by the Parent, the Borrower and the
Subsidiaries to address any Year 2000 Problem in the preparation of all
projections provided to the Lenders with respect to the Parent, the Borrower and
any Subsidiary; and (c) provided the Agent assurance of the Parent's, the
Borrower's and any Subsidiary's year 2000 capability.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Conditions to Initial Loans. The agreement of each Lender to make
the initial Loans requested to be made by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such Loan on the Closing
Date, of the following conditions precedent (unless waived in writing by the
Lenders):
(a) Loan Documents. The Agent shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of each of the Loan Parties,
with a counterpart for each Lender, (ii) for the account of each Lender, a Note
conforming to the requirements hereof and executed by a duly authorized officer
of the Borrower, (iii) the Pledge Agreements, each executed and delivered by an
authorized officer of the Loan Party thereto, with a counterpart or a conformed
copy for each Lender, (iv) the Security Agreements, each executed and delivered
by a duly authorized officer of the Loan Party thereto, with a counterpart or a
conformed copy for each Lender, (v) the Guarantees, each executed by a duly
authorized officer of the Guarantor party thereto and (vi) the Contribution
Agreement, executed by a duly authorized officer of each Guarantor (other than
the Parent).
(b) Corporate Proceedings of the Loan Parties. The Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in form
and substance satisfactory to the Agent, of the Board of Directors of each of
the Loan Parties authorizing (i) the execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which each is a party, and
(ii) the borrowings or guarantees, as applicable, contemplated hereunder
certified by the Secretary or an Assistant Secretary of each of the Loan Parties
as of the Effective Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded and
shall be in form and substance satisfactory to the Agent.
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(c) Incumbency Certificates. The Agent shall have received, with a
counterpart for each Lender, a certificate of each of the Loan Parties, dated
the Closing Date, as to the incumbency and signature of the officers of the Loan
Parties executing any Loan Document and any related documents, satisfactory in
form and substance to the Agent, executed by the Chief Executive Officer or any
Vice President and the Secretary or any Assistant Secretary of each such Loan
Party.
(d) Corporate Documents. The Agent shall have received, with a
counterpart for each Lender, true and complete copies of the incorporation
documents and any amendments thereto of the Loan Parties, certified as of the
Closing Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of each such Loan Party.
(e) Consents, Licenses and Approvals. The Agent shall have received,
with a counterpart for each Lender, a certificate of a Responsible Officer of
each of the Loan Parties (i) attaching copies of all consents, authorizations
and filings referred to in Schedule 3.4, 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.
(f) Closing Fees and Expenses. The Agent shall have received the fees
to be received on the Closing Date referred to in the Letter Agreement and the
reimbursement of all costs and expenses (including the fees and expenses of
counsel to the Agent) to the extent invoiced.
(g) Legal Opinions. The Agent shall have received, with a counterpart
for each Lender, the executed legal opinions of counsel to the Parent, the
Borrower and its Restricted Subsidiaries, in form and substance satisfactory to
the Agent, and covering such other matters incident to the transactions
contemplated by this Agreement as the Agent may reasonably require.
(h) Closing Certificate. The Agent shall have received, with a
counterpart for each Lender, a closing certificate of each of the Loan Parties
substantially in the form of Exhibit K, dated the Closing Date.
(i) Corporate Structure. The Agent and the Lenders shall be satisfied
with the legal arrangements among the Loan Parties, including the corporate
structure of any License Subsidiary and any tax and cost sharing agreements and
arrangements among the Parent, the Borrower and its Subsidiaries.
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(j) Financial Information; Projections. The Agent shall have received,
with copies for each Lender, (i) each of the financial statements referred to in
Section 3.1, and (ii) the seven-year business forecast of the Loan Parties
(including estimated quarterly projections for the first two years after the
Closing Date) in form of substance satisfactory to the Agent and the Lenders.
(k) Pledged Stock; Stock Powers. The Agent shall have received
certificates representing the Pledged Stock pursuant to the Pledge Agreements,
together with an undated stock power executed in blank for each such certificate
and an acknowledgment of and consent to each such Pledge Agreement by or each
Loan Party, as applicable.
(l) Filings, Registrations and Recordings. Any documents (including,
without limitation, financing statements) required to be filed under any of the
Security Documents in order to create, in favor of the Agent, a perfected
security interest in the collateral thereunder shall have been properly prepared
and when filed in each of the offices in each of the jurisdictions listed on
Schedule 4.1(l) will create in favor of the Agent, for the benefit of the
Lenders, a perfected Lien on the collateral described therein.
(m) Insurance. The Agent shall have received evidence satisfactory to
it of the existence of the insurance required hereunder and pursuant to the
Security Documents and the Agent, for the benefit of the Lenders, shall have
been named as loss payee under each insurance policy maintained by the Parent,
the Borrower or any Restricted Subsidiary to the extent of its interest (other
than, in each case, worker's compensation, public liability, employee benefits
and welfare insurance).
(n) Lien Searches. The Agent shall have received (i) lien searches
with respect to the assets of each of the Loan Party under such names and in
such jurisdictions as the Agent shall have requested and the results of such
lien searches shall be satisfactory to the Agent and (ii) without limiting the
foregoing, evidence satisfactory to the Agent of the filing of duly executed
financing statements on form UCC-3, and the taking by each of the Loan Parties
of any other actions necessary or, in the opinion of the Agent, desirable to
terminate any existing liens.
(o) Environmental Survey. The Agent shall have received, with a
counterpart for each Lender, the results of the environmental surveys performed
by the environmental consultants on the Properties of the Borrower and its
Restricted Subsidiaries and the Lenders shall be satisfied with the results of
each such survey.
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(p) Solvency Certificate. The Agent shall have received, with a
counterpart for each Lender, a solvency certificate from a Responsible Officer
in form and substance satisfactory to the Agent.
(q) No Material Adverse Effect. Since December 31, 1997, no Material
Adverse Effect shall have occurred.
(s) Appraisals. The Agent shall have received, with a copy for each
Lender, a copy of the BIA Appraisal with respect to each of the Stations owned
and operated by any Loan Party which Appraisal shall be satisfactory to the
Agent.
(t) Repayment of Existing Seller Note. Indebtedness evidenced by the
Existing Seller Note shall have been repaid in an amount equal to $5,250,000;
all liens securing such Indebtedness shall have been terminated; and the
Existing Seller Note shall have been amended, in a manner satisfactory to the
Agent, subordinating the Indebtedness that remains outstanding under the
Existing Seller Note on the terms and conditions set forth on Schedule 1.1(C)
and extending the maturity date to a date no earlier than October 31, 1999. The
Agent shall have received evidence satisfactory to it of such repayment,
termination and amendment.
(u) Warburg Investment. All loans made by Warburg or any of its
Affiliates that are outstanding shall have been converted into equity and the
Agent shall have received evidence satisfactory to it of such conversion.
(v) Year 2000. The Parent and the Borrower shall have completed CIBC's
Year 2000 form and delivered it to the Agent.
4.2. Conditions to Each Loan. The agreement of each Lender to make any
Loan requested to be made by it or of the Issuer to issue any Letter of Credit
requested to be issued by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by each Loan Party 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 except to the extent such representations and warranties are
given as of a different date, in which case they shall be true and correct as of
such different date.
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(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loan requested to be
made on such date.
(c) 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, instruments and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
Each borrowing by the Borrower hereunder and each issuance of a Letter of Credit
hereunder shall constitute a representation and warranty by each Loan Party as
of the date of such Loan or Letter of Credit that the conditions contained in
clauses (a) and (b) of this Section 4.2 have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
The Parent and the Borrower hereby agree that, so long as the
Commitments remain in effect, any Note remains outstanding and unpaid or any
Obligation is owing to any Lender or the Agent hereunder, the Parent and the
Borrower shall and shall cause each Restricted Subsidiary to:
5.1. Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 105 days after the
end of each fiscal year of the Loan Parties, a copy of the consolidated balance
sheet of the Loan Parties as at the end of such year and the related statements
of income, stockholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures as of the end of and for the previous
year, reported on without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by Ernst & Young or
another "big six" firm of independent certified public accountants, together
with a consolidating balance sheet and consolidating statements of income and
cash flows of the Loan Parties (consolidated by radio station and network),
reviewed by Ernst & Young or such other independent certified public
accountants;
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(b) as soon as available, but in any event not later than 60 days
after the end of each quarterly period for each fiscal quarter of each fiscal
year of the Loan Parties, the unaudited consolidated and consolidating balance
sheet of the Loan Parties as at the end of such quarter and the related
unaudited statements of income, stockholders equity and cash flows of the Loan
Parties for such quarter and the portion of the fiscal year through the end of
such quarter and setting forth in each case in comparative form the figures from
the budget for such fiscal year furnished to the Lenders pursuant to Section
5.2(d) and the actual figures for the corresponding date or period in the
previous year, together with a consolidating balance sheet and consolidated
statements of income and cash flows of the Loan Parties (consolidating by radio
station and by network) certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit adjustments);
and
(c) as soon as available, but in any event not later than 45 days
after the end of each calendar month of each Loan Parties, the regularly
prepared unaudited income statements of the Loan Parties as at the end of such
month and the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the comparable period
from the budget for such fiscal year furnished to the Lenders pursuant to
Section 5.2(d) and the actual figures for the corresponding date or period in
the previous year, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments) together
with a consolidating balance sheet and consolidated statements of income and
cash flows of the Loan Parties (consolidating by radio station and by network);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2. Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that, in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), Section 5.1(b) and Section 5.1(c), a certificate
of a Responsible Officer of each Loan Party, stating that, to the best knowledge
of such Responsible Officer, during the period covered by such financial
statements, such Loan Party during the period has observed or performed all its
covenants and other agreements, and satisfied every condition, contained in this
Agreement and in each other Loan Document to which it is a party to be observed,
performed or satisfied by it, and that such Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate;
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(c) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) and Section 5.1(b), a certificate of a Responsible
Officer each Loan Party, substantially in the form of Exhibit L hereto (the
"Compliance Certificate"), showing (i) compliance by such Loan Party with the
covenants contained in Section 6.1, (ii) to the extent not otherwise required to
be delivered pursuant to Section 5.1 and Section 5.2, statements of Operating
Cash Flow for the periods covered by such covenants with respect to which
compliance is to be demonstrated in such Compliance Certificate;
(d) not later than 60 days after the end of each fiscal year of the
Loan Party, a copy of the projections by each Loan Party of its operating budget
and cash flow budget for the succeeding fiscal year set forth on a quarterly
basis, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis of
sound financial planning practices and that such Responsible Officer has no
reason to believe that such projections are incorrect or misleading in any
material respect;
(e) within five days after the same are sent, copies of all financial
statements and reports which any Loan Party generally sends to its stockholders,
and within ten days after the same are filed, copies of all material financial
statements and reports made to, or filed with any Governmental Authority;
(f) promptly upon receipt thereof, copies of all substantive
management letters and other substantive material reports which are submitted to
any Loan Party by its independent accountants in connection with any annual or
interim audit of the books of the Loan Party made by such accountants; and
(g) within five days after the same are sent to any potential
investors, copies of any Offering Memorandum and any amendments thereto;
(h) within five days after the same are sent, copies of any
registration statement (including, if requested by the Agent, all exhibits
thereto) and any amendments thereto filed with the Securities and Exchange
Commission; and
(i) promptly after such information becomes available, the audience
share and rank in audience share data with respect to each Station and measured
by The Arbitron Company (or another company reasonably acceptable to the Agent
or which is generally accepted by the radio industry for providing such service)
(j) promptly upon the execution and delivery thereof, copies of any
agreement entered into by any Loan Party with any holder of its Capital Stock or
by any holder of its Capital Stock with any other Person relating to such
Capital Stock (including any agreements relating to the voting of such stock) or
the management or operations of the Loan Party.
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5.3. 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 in an aggregate amount of $1,000,000 or more,
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 Loan Party.
5.4. Maintenance of Existence. Renew and keep in full force and effect
its corporate existence, take all reasonable action to maintain all rights,
privileges, franchises and licenses necessary or desirable in the normal conduct
of its business except to the extent such failure to maintain could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and 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.
5.5. Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition, 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 name the Agent, for the benefit of the Lenders, as loss
payee under each such policy to the extent of its interest (other than worker's
compensation, public liability, employee benefits and welfare insurance), and
furnish to each Lender, upon request, full information as to the insurance
carried including certified copies of policies and certificates of insurance
from each Loan Party's insurance broker, Frank Crystal & Company or such other
recognized insurance broker reasonably acceptable to the Required Lenders. If
the Borrower or any Restricted Subsidiary receives any Net Insurance Proceeds
(other than workmen's compensation, public liability, employee benefits and
welfare insurance) the Borrower shall promptly, and, in any event, within three
Business Days after receipt thereof, deliver such Net Insurance Proceeds to the
Agent for application in accordance with Section 2.5(c).
5.6. 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 after
reasonable notice 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 and as often as may reasonably be desired, and to discuss
the business, operations, properties and financial and other condition of the
Loan Party with its officers and employees and with its independent certified
public accountants. Each such visitation and inspection (a) by or on behalf of
any Lender shall be at such Lender's expense and (b) by or on behalf of the
Agent following the occurrence and during the continuance of any Default or
Event of Default shall be at the Borrower's expense.
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5.7. Notices. Promptly after the Parent or the Borrower as the case
may be, knows or has reason to know thereof, and, in any event, within 5 days
thereof with respect to any notice under clause (a) or 10 days with respect to
any other notice under this Section, 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 or (ii) litigation, investigation or proceeding which may exist at
any time between the Parent, the Borrower or any such Restricted 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 Parent, the Borrower or
any such Restricted Subsidiary in which the amount involved is $1,000,000 or
more and is not covered by insurance or in which injunctive or similar relief is
sought;
(d) any material labor dispute to which the Parent, the Borrower or
any Restricted Subsidiary may become a party and which involves any group of
employees, any strikes or walkouts relating to any of its plants or facilities
and the expiration or termination of any labor contract to which the Parent, the
Borrower or such Restricted Subsidiary is a party or by which the Parent, the
Borrower or such Restricted Subsidiary is bound;
(e) 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 Restricted Subsidiary, or the qualification of the licensee
under such FCC License; and
(f) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Parent or the Borrower as the case may be proposes
to take with respect thereto.
5.8. Environmental Laws. (a) Comply in all material respects, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects 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.
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(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects 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.
(c) Defend, indemnify and hold harmless the Agent and the Lenders, and
their respective parents, subsidiaries, affiliates, employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations of the Parent, the Borrower, any
Restricted Subsidiary or the Properties, or any orders, requirements or demands
of Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. This indemnity shall continue in
full force and effect regardless of the termination of this Agreement.
5.9. ERISA. (a) Establish, maintain and operate all Plans to comply in
all material respects with the applicable provisions of ERISA, the Code, and all
other applicable laws, and the regulations and interpretations thereunder and
the respective requirements of the governing documents for such Plans;
(b) Within ten days after receipt by the Parent, the Borrower or any
Subsidiary of any unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code, and promptly following
the request of the Agent for any favorable determination letters, provide the
Agent and the Lenders with copies of each such letter;
(c) Within ten days after the filing thereof, provide Agent and the
Lenders with copies of any annual report (IRS Form 5500 series) with respect to
a Single Employer Plan, including Schedule B thereto;
(d) Within ten days after the Parent, the Borrower or any Subsidiary
knows or has reason to know that a non-exempted prohibited transaction (defined
in Sections 406 of ERISA and 4975 of the Code) has occurred, a statement of the
chief financial officer of the Borrower or such Subsidiary describing such
transaction and the action which the Parent, the Borrower or such Subsidiary, as
applicable, has taken, is taking or proposes to take with respect thereto;
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(e) Within ten days after the filing thereof, provide the Agent and
the Lender with copies of each actuarial report for any Single Employer Plan and
each actuarial report and annual report received from any Multiemployer Plan;
(f) Within ten days after the occurrence thereof, notification of any
material increase in the benefits of any existing Single Employer Plan or the
establishment by the Parent, the Borrower or any of its Subsidiaries of any new
Single Employer Plan or the commencement of contributions to any Single Employer
Plan to which the Parent, the Borrower or such Subsidiary was not previously
contributing;
(g) Within ten days after the Parent, the Borrower, any Subsidiary or
any Commonly Controlled Entity knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, a failure to make any required contribution to a Benefit
Plan or Multiemployer Plan, the creation of any Lien in favor of the PBGC or a
Benefit Plan or Multiemployer Plan or any withdrawal from, or the receipt of
notice with respect to the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the receipt of
notice from the PBGC or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Benefit Plan or
Multiemployer Plan; and
5.10. Assignments of Leases. Use all commercially reasonable efforts
(other than the payment of money to any landlord under a lease) to effectuate
the due execution and delivery of Assignments of Leases in respect of any real
property leased by the Borrower or any Restricted Subsidiary and used in the
transmission or broadcasting of radio signals by any of the Stations and related
Landlord's Consent within 90 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) Landlord's Consents, executed and
delivered by duly authorized representatives of the parties thereto to the
Agent, with a conformed copy for each Lender provided, that so long as the
Parent, the Borrower or any Restricted Subsidiary, as applicable, continue to
use commercially reasonable efforts to obtain such consents and assignments, no
Event of Default shall exist under this Agreement based upon the failure to
obtain such consents or assignments.
5.11. Further Assurances. (a) From time to time hereafter, execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the Agent or the
Lenders may reasonably request, for the purposes of implementing or effectuating
the Loan Documents, or of more fully perfecting, preserving or renewing the
rights of the Lenders with respect to the Collateral (or with respect to any
additions thereto or replacements or proceeds thereby or with respect to any
other property or assets hereafter acquired by the Parent, the Borrower or any
Restricted Subsidiary which may be deemed to be part of the Collateral) pursuant
hereto or thereto.
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(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Restricted 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 Pledge Agreements 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 Restricted Subsidiary which is owned by the
Borrower or any of its Restricted Subsidiaries, (ii) deliver to the Agent
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 Restricted Subsidiary, as the case may be, (iii) cause such new
Restricted Subsidiary (A) to become a Guarantor of the Obligation pursuant to a
Guarantee in form and substance satisfactory to the Agent, (B) to execute party
to a security agreement in form and substance satisfactory to the Agent, (C) to
take all actions necessary or advisable to cause the Lien created by such
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, (D) if such
new Restricted Subsidiary has any Subsidiaries (each a "Second-Tier Subsidiary")
to execute a pledge agreement in form and substance satisfactory to the Agent
and deliver to the Agent certificates, if any, representing the Capital Stock of
each such Second Tier Subsidiary together with undated stock powers executed and
delivered in blank by a duly authorized officer of such new Restricted
Subsidiary 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.
5.12. Designation of Unrestricted Subsidiaries. The Borrower will be
permitted to designate a Subsidiary (other than a wholly-owned Subsidiary) as an
Unrestricted Subsidiary by the delivery to the Agent of a written notice
certifying that it is, and will be after giving effect to such designation, in
compliance with Section 6.8(e), which certification shall state the effective
date of such designation, shall set forth the computations and information as
may be required to demonstrate that the Borrower is in compliance therewith and
shall be signed by a Responsible Officer of the Borrower. Promptly after
receiving any written notice from the Borrower regarding the designation thereby
of an Unrestricted Subsidiary, the Agent will provide notice thereof to the
Lenders.
5.13. Post Closing. The Loan Parties shall cause each of the
requirements set forth on Schedule 5.13 to be satisfied on or before the date
set forth opposite such requirement.
ARTICLE VI
NEGATIVE COVENANTS
Each of the Parent and the Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note remains outstanding and unpaid or any
Obligation is owing to any Lender or the Agent hereunder, the Parent and
Borrower shall not and shall not permit any of the Restricted Subsidiaries to:
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6.1. Financial Condition Covenants.
(a) Loan-to-Value Ratio. At any time prior to the issuance of the
Permitted Senior Notes, permit the Loan-to-Value Ratio to exceed 60%.
(b) Leverage Ratio. Permit the Leverage Ratio to exceed the ratio set
forth opposite such period below at the end of any fiscal quarter of the
Borrower and at the time the Borrower makes any request for Loans hereunder:
Period Leverage Ratio
------ --------------
6/30/00-9/30/00 3.75 to 1.00
10/1/00 - 6/30/01 3.50 to 1.00
07/01/01-thereafter 3.00 to 1.00
6.2. Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Loan Parties under the Loan Documents or under
any Hedging Agreement;
(b) Indebtedness of the Borrower (including Financing Leases) incurred
to finance the purchase price of equipment, fixtures and other similar property
of the Borrower in an amount not to exceed $2,000,000 outstanding at any time;
(c) Guarantees by the Parent, the Borrower or any Restricted
Subsidiary of Indebtedness permitted under clause (a) or clause (e) of this
Section 6.2;
(d) Indebtedness in respect of loans from the Parent to the Borrower
or any Restricted Subsidiary, by the Borrower to any of its Restricted
Subsidiaries and by any Restricted Subsidiary to the Borrower or any other
Restricted Subsidiary; provided that any such intercompany loans shall be
subordinated on the terms set forth in Schedule 1.1(c);
(e) Permitted Senior Notes;
(f) the Permitted Seller Notes;
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(g) the Warburg Subordinated Debt;
(h) Indebtedness of the Borrower in an amount not to exceed $1,000,000
in the aggregate which is neither secured nor guaranteed; and
(i) Indebtedness of the Parent to the Borrower or any of its
Restricted Subsidiaries as long as Parent uses the proceeds of such Indebtedness
to pay (A) franchise taxes and other fees required to maintain Parent's
corporate existence and (B) federal, state and local income taxes payable by the
Parent.
6.3. Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its properties, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) inchoate Liens for taxes, assessments or governmental charges or
levies or Liens for taxes, assessments, governmental charges or levies not yet
due and payable 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 Parent, the Borrower or the Restricted Subsidiaries, as the
case may be, in conformity with GAAP;
(b) statutory Liens of carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other similar 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; deposits securing
liability to insurance carriers under insurance or self-insurance arrangements;
and deposits to secure true leases in the ordinary course;
(d) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and landlords' Liens
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 Parent,
the Borrower or any Restricted Subsidiary;
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(e) Liens securing Indebtedness permitted under Section 6.2(b)
(including financing statements filed in connection with Financing Leases
permitted under Section 6.2(b); provided that such Liens shall extend only to
the equipment, fixtures and other similar property so financed (and improvements
or attachments thereto) and the proceeds thereof;
(f) any attachment or judgment Lien not constituting an Event of
Default under Section 7.1(i);
(g) Liens created pursuant to the Security Documents; and
(h) Liens created by lease agreements to secure the payment of rental
amounts and other sums not yet due thereunder.
6.4. Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation other than the Guarantees and
guarantees of the Restricted Subsidiaries with respect to the Permitted Senior
Notes.
6.5. 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 its property, business or
assets, or make any material change in its present method of conducting
business; except so long as prior to or after giving effect thereto no Default
or Event of Default shall have occurred and be continuing:
(a) the Permitted Acquisitions;
(b) any Restricted Subsidiary (other than a License Subsidiary) may be
merged or consolidated with or into the Borrower (provided that Borrower shall
be the continuing or surviving corporation) or any Restricted Subsidiary of the
Borrower may be merged or consolidated with or into any other Restricted
Subsidiary of the Borrower (other than a License Subsidiary); and
(c) any Restricted Subsidiary (other than a License Subsidiary) may
sell, lease, transfer or otherwise dispose of any or all its assets (upon
voluntary liquidation or otherwise) to the Borrower or any other Restricted
Subsidiary (other than a License Subsidiary as to which only Licenses may be
transferred) of the Borrower.
6.6. Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, any Capital Stock, receivables and fee or
leasehold interests), whether now owned or hereafter acquired, or issue any
Capital Stock or other securities, in one transaction or a series of
transactions to any Person, except:
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(a) the sale or other disposition of property (including obsolete or
worn our 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) any Loan Party may convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets to any other Loan
Party (other than the Parent); and
(d) any sale of Capital Stock of the Parent to Warburg or to
management of any Loan Party.
6.7. Limitation on Dividends. Declare or pay any dividend 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, (a) the Warburg Subordinated Debt or (b) any shares of any class of Capital
Stock of the Parent or 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, (other than, in the case of the Warburg
Subordinated Debt, pay-in-kind interest thereon) either directly or indirectly,
whether in cash or property or in obligations of the Borrower; provided that so
long no Default or Event of Default shall have occurred and be continuing (both
before and after giving effect to the distribution and repayment contemplated by
this proviso):
(i) with the consent of the Agent and the Lenders, the Borrower may
declare and pay dividends to the Parent and the Parent may repay up to an
aggregate amount of $5,000,000 of the Warburg Subordinated Debt or Capital
Stock held by Warburg, provided that within 45 days thereafter the
Permitted Senior Notes shall be issued or Warburg shall return such funds
to the Parent in return for Warburg Subordinated Debt and the Parent shall
provide such funds as equity capital to the Borrower; and
(ii) at any time after the Issuance Date, the Borrower may purchase,
redeem or otherwise acquire for value shares of Capital Stock (other than
Disqualified Capital Stock) or options on such shares held by the
Borrower's officers or employees or former officers or employees (or their
estates or beneficiaries under their estates) upon the death, disability,
retirement or termination of employment of such current or former officers
or employees pursuant to the terms of an employee benefit plan or any other
agreement pursuant to which such shares of Capital Stock or options were
issued or pursuant to a severance, buy-sale or right of first refusal
agreement with such current or former officer or employee; provided that
the aggregate cash consideration paid, or distributions or payments made
(which may include distributions or dividends to the Parent for such
purpose) pursuant to this clause (ii) shall not exceed $10,000,000 in the
aggregate.
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Notwithstanding the preceding sentence, Borrower may declare and make dividend
payments to Parent as long as Parent uses such amounts to pay (A) franchise
taxes and other fees required to maintain Parent's corporate existence and (B)
federal, state and local income taxes payable by the Parent.
6.8. Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) any extension of trade credit in the ordinary course of business
and investments in customer accounts or notes receivable for inventory sold or
services rendered in the ordinary course of business and consistent with past
practice;
(b) any investment in Cash Equivalents;
(c) any investment by the Parent in the Borrower, by the Borrower in
any Restricted Subsidiary, or by any Restricted Subsidiary in the Borrower or
any other Restricted Subsidiary;
(d) any loans by the Borrower to any Restricted Subsidiary, by the
Parent to the Borrower or any Restricted Subsidiary or by any Restricted
Subsidiary to the Borrower or any other Restricted Subsidiary to the extent
permitted under Section 6.2(d);
(e) after the occurrence of the Issuance Date, any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person (including an Unrestricted
Subsidiary) provided that (i) no Default or Event of Default has occurred and is
continuing and (ii) the aggregate outstanding amount of all such advances,
loans, extensions of credit, capital contributions, purchases and other
investments does not exceed $6,000,000;
(f) Permitted Acquisitions;
(g) Guarantee Obligations permitted by Section 6.4;
(h) loans to directors, officers and employees of any Loan Party
provided that the aggregate amount of all such loans does not exceed $1,500,000
in the aggregate outstanding at any time; and
(i) loans to the Parent by the Borrower as long as Parent uses the
proceeds of such Indebtedness to pay (A) franchise taxes and other fees required
to maintain Parent's corporate existence and (B) federal, state and local income
taxes payable by the Parent.
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6.9. 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 (other
than a Loan Party) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of the Parent's, the Borrower's or a
Restricted Subsidiary's business and (c) upon fair and reasonable terms no less
favorable to the Parent, the Borrower or such Restricted 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.
6.10. Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Restricted
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Parent, the Borrower or such Restricted 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
Parent, the Borrower or such Restricted Subsidiary.
6.11. Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Parent, the Borrower or any Subsidiary to end on a day other than December
31.
6.12. Limitation on Negative Pledge Clauses. (a) Enter into with any
Person any agreement, other than (i) this Agreement, (ii) customary provisions
in true leases that the Parent, the Borrower or any Restricted Subsidiary is
permitted to enter under this Agreement but limiting assignment or subleasing,
(iii) any prohibition or limitation on Liens pursuant to Financing Leases or
other purchase money financings permitted by this Agreement (in which case, any
prohibition or limitation shall be effective only against the assets financed
thereby) or (iv) non-assignment provisions in contracts, which prohibits or
limits the ability of the Parent, the Borrower or any Restricted 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.
(b) Enter into any agreement or arrangement which prohibits, limits or
restricts the rights or ability of any Restricted Subsidiary to declare or pay
any dividends in cash or property or to make loans or advances or other payments
of any nature or to make any distributions or transfers of its assets, in each
case, to the Parent, the Borrower or any other Person as to which such
Restricted Subsidiary is a Subsidiary.
6.13. Limitation on Payments and Modifications of Debt Instruments or
Agreements. (a) Make any payment or prepayment on, set apart assets for a
sinking or analogous fund for the Permitted Senior Notes except that the
Borrower may make any pay-in-kind interest payments thereon when due, (b) make
any optional payment or prepayment on or purchase of any Indebtedness (other
than the Loans), (c) amend, modify or change to any material term of any such
Indebtedness (other than any such amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal therefor
which would reduce the rate or extend the date for the payment of interest
thereon) or (d) make any
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prepayment on the Existing Seller Note except that the Borrower may make a
prepayment with the consent of the Lenders and provided that no Default or Event
of Default then exists.
6.14. Limitation on Lines of Business. Enter into any business, except
for those in which the Borrower or any Restricted Subsidiary is engaged on the
date of this Agreement or which are directly related thereto.
6.15. Amendments to Material Agreements. Enter into or consent to any
amendment of or waive any rights under any Material Agreement, which restricts
or diminishes in any material respects any right or benefit enjoyed with respect
to any of the foregoing by the Parent, the Borrower, any Restricted Subsidiary,
the Agent or the Lenders or which would adversely affect the rights of the Agent
and the Lenders under the Loan Documents or the Liens of the Agent and the
Lenders created thereby.
6.16. Restrictions on 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 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 or (ii) pursuant to the Loan
Documents.
(c) (i) permit any License Subsidiary 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 to be commingled with any bank account of the Borrower or any of its
other Subsidiaries, (iii) any financial statements distributed to any creditors
or the Borrowers or any of its other Subsidiaries to fail to clearly establish
the separateness of the License Subsidiaries from the Borrower and its other
Subsidiaries, and (iv) take, and not permit 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 License Subsidiary being ignored, or in the assets
and liabilities 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.
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ARTICLE VII
EVENTS OF DEFAULT
7.1. If any of the following events shall occur and be continuing:
(a) (i) The Borrower shall fail to pay any principal of any Note when
due in accordance with the terms thereof or hereof; or (ii) the Borrower shall
fail to pay any interest on any Note, 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 Parent,
the Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with 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 agreement contained in Article 6, Section 5.7
or Section 5.9; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of clause (b) or (c) of Section 5 or Section 9 of the
Parent Pledge Agreement or clause (c) or (d) of Section 6 or Section 10 of
either the Borrower Pledge Agreement or the Subsidiary Pledge Agreement or
Section 5 of each Security Agreement; or
(e) 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, and such default shall continue unremedied for a period
of 30 days; or
(f) The Parent, the Borrower or any Restricted Subsidiary shall (i)
default in any payment (regardless of amount) of principal of or interest on any
Indebtedness having an aggregate principal amount in excess of $500,000 (other
than the Notes) beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or (ii)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice, if required, such Indebtedness to become due
prior to its stated maturity; or
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(g) (i) The Parent, the Borrower or any Restricted Subsidiary 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 Parent, the Borrower or any Restricted Subsidiary shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Parent, the Borrower or any Restricted Subsidiary 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 Parent, the Borrower
or any Restricted Subsidiary 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 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 Parent, the Borrower or any Restricted Subsidiary 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
Parent, the Borrower or any Restricted Subsidiary shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(h) (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 Parent, the Borrower, any
Subsidiary 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 Parent, the Borrower, any Subsidiary 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
(i) One or more judgments or decrees shall be entered against the
Parent, the Borrower or any Restricted Subsidiary involving in the aggregate a
liability (to the extent not covered by third-party insurance as to which the
insurer has acknowledged coverage) of
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$1,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or
(j) (x) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Parent, the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert, (y) 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 (z) the Agent
shall not have, for any reason whatsoever, a valid and perfected first security
interest for the benefit of the Lenders in the Collateral, subject only to Liens
permitted under Section 6.3; or
(k) Any Guarantee shall, for any reason other than the satisfaction in
full of all the Obligations and termination of this Agreement, cease to be in
full force and effect or shall be declared to be null and void, or any Guarantor
shall deny that it has any further liability, including with respect to future
advances by the Lenders, under its Guarantee or any Guarantor gives notice to
such effect; or
(l) A Change of Control shall occur; or
(m) The Borrower or any License Subsidiary 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; or
(n) Any of the subordination provisions in the Warburg Subordinated
Debt or the Permitted Seller Notes shall cease for any reason to be in full
force and effect, or the Borrower or the holders of a majority of any 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 (g) above, automatically the Commitments
shall immediately terminate and the Loans hereunder (with accrued interest
thereon), the Reimbursement Obligations and all other amounts owing under this
Agreement and the Notes 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
Parent and 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 Parent and the Borrower, declare the
Loans hereunder (with accrued interest thereon), the Reimbursement Obligations
and all other amounts owing under this Agreement and the Notes to be due and
payable forthwith, whereupon the same shall immediately become due and payable;
provided that the Agent shall not make (and the Required Lenders shall not
request that the Agent make) any declaration under this clause (B) or exercise
any of its other remedies hereunder, under the other Loan Documents or at
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law with respect to any Event of Default that can be cured by the payment of
money if within the applicable grace period set forth in this Section (or, if no
such period is specified herein within two Business Days after such Event of
Default), the Borrower cures such Event of Default with the proceeds from
Warburg Subordinated Debt; provided further that the Borrower shall not be
permitted to utilize proceeds of such Debt to cure Events of Default more than
twice in any twelve-month period and only in non-consecutive quarters. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
ARTICLE VIII
GUARANTEE
8.1. Parent Guarantee. In consideration for the Lenders extending the
Commitments and in order to induce the Lenders to make the Loans to the
Borrower, the Parent hereby unconditionally guarantees (the "Parent Guarantee")
the due and punctual payment of all Obligations of the Borrower or any
Restricted Subsidiary (including with respect to principal, interest, fees,
costs or expenses) when due and at all times thereafter, in cash, whether by
required prepayment, voluntary prepayment, declaration, acceleration, demand or
otherwise, and whether such Obligation is now existing or hereafter arising,
under or in connection with this Agreement, any Note or any other Loan Document.
In addition, the Parent hereby indemnifies and holds harmless the Agent and each
Lender for any and all costs and expenses (including reasonable attorney's fees
and expenses) incurred in enforcing any rights under the Parent Guarantee.
8.2. Continuing Guarantee. The Parent agrees that the Parent Guarantee
is a continuing guaranty and that the Obligations of the Borrower may be
extended, compromised or renewed, in whole or in part, without notice to or
further assent from the Parent, and that the Parent shall remain bound upon the
Parent Guarantee notwithstanding any extension, compromise, renewal or other
alteration of any Obligation. The Parent waives presentation to, demand of,
payment from and protest of any Obligation to the Borrower or any Restricted
Subsidiary and also waives notice of protest for non-payment. The obligations of
the Guarantor under the Parent Guarantee shall not be affected by
(a) the failure of the Agent, any Lender or the holder of any Note:
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower or any Restricted Subsidiary under the
provisions of this Agreement, the Notes, any other Loan Document or
otherwise; or
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(ii) to exercise any right or remedy against any other guarantor
of, or Collateral securing, any Obligation;
(b) any extension, compromise or renewal of any Obligation of the
Borrower;
(c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, any Note or any Loan Document; or
(d) the release of any collateral held by the Agent or any Lender
securing any Obligation.
The Parent further agrees that the Parent Guarantee constitutes a guaranty of
payment when due (upon the earlier of demand by the Agent or any Lender
acceleration (in whole or in part)) and not of collection and waives any right
to require that any resort be had by the Agent, any Lender or the holder of any
Note to the Borrower or any other Person, to any collateral held as security for
the payment of any Obligation or to any balance of any deposit account or credit
on its books in favor of the Borrower or any other Person. The obligations of
the Parent under the Parent Guarantee shall not be discharged or impaired or
otherwise affected (in any way whatsoever) by any reduction, limitation,
impairment or termination of the Obligations of the Borrower for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Parent hereby waives any right to or claim of)
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity, compromise,
or unenforceability of the Obligations of the Borrower or otherwise. Without
limiting the generality of the foregoing, unless otherwise agreed in writing
pursuant to Section 10.1, the obligations of the Parent under the Parent
Guarantee shall not be discharged or impaired or otherwise affected by the
failure of the Agent, any Lender or the holder of any Note to assert any claim
or demand or to enforce any remedy under this Agreement or any other Loan
Document, by any waiver or modification, of any thereof, by any default, failure
or delay, wilful or otherwise, in the performance of any 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 Parent as a
guarantor or would otherwise operate as a discharge of the Parent as a guarantor
as a matter of law or equity.
8.3. Reinstatement. The Parent agrees that the Parent Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time,
all or any portion of any payment (whether in respect of principal, interest,
fees, costs, expenses or other amounts payable under this Agreement, any Note or
any other Loan Document), is rescinded or must otherwise be restored by the
Agent, any Lender or the holder of any Note upon the bankruptcy or
reorganization of the Borrower or otherwise. For so long as any of the
Obligations of the Borrower shall remain outstanding or any Commitments shall
remain in effect:
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(a) all rights of the Parent against the Borrower or any Restricted
Subsidiary, whether arising as a result of rights of subrogation or otherwise,
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full of all the Obligations to the Agent, the Lenders
and other holders of Notes, and, in the event the Parent receives any payment
prior to such indefeasible payment in full, the Parent shall receive such
payment in trust for, and shall immediately turn over all amounts to, the Agent
for application to the payment of such Obligations;
(b) the Parent shall refrain from taking any action or commencing any
proceeding against the Borrower (or its successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under the Parent Guarantee to the Agent, any Lender or
any holder of any Note; and
(c) the Parent hereby waives any claim, right or remedy which the
Parent may now have or may hereafter acquire against the Borrower or any
Subsidiary that arises hereunder and/or from the performance by the Parent
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of the Lenders or the Agent against
the Borrower or any Subsidiary or any security which the Lenders or the Agent
now have or hereafter acquire, whether or not such claim, right or remedy arises
in equity, under contract, by statute, under common law or otherwise.
ARTICLE IX
THE AGENT
9.1. Appointment. Each Lender hereby irrevocably designates and
appoints Canadian Imperial Bank of Commerce as agent of such Lender under this
Agreement and the other Loan Documents. Each such Lender irrevocably authorizes
Canadian Imperial Bank of Commerce, as the agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent.
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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 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 Parent, the Borrower, any other Loan
Party or any officer or any of them contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of the Parent, 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 Parent, the
Borrower or any Subsidiary.
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, 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 Parent or 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 Notes and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes.
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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 unless
the Agent has received notice from a Lender, the Parent 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 hereafter taken, including any
review of the affairs of the Parent, the Borrower or any Subsidiary, 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 Parent, the Borrower and the Subsidiaries
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 Parent, the Borrower
and the Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder or furnished to
the Agent for the account of, or with a counterpart or copy for, each Lender,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the Parent,
the Borrower or any Subsidiary 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 Parent and the Borrower
and without limiting the joint and several obligation of the Parent and the
Borrower to do so), ratably according to their respective Commitment Percentages
in effect on the date on which indemnification is sought under this Section (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
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disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such 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 such Agent's gross negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Obligations 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 Parent, the Borrower and any Subsidiary as though such Agent
were not an Agent hereunder and under the other Loan Documents. With respect to
Loans made or renewed by it and any Note issued to it, each 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 each Agent in its individual capacity.
9.9. Successor Agent. The Agent may resign as Agent upon ten days'
notice to the Lenders. If the Agent shall resign or be terminated, as the case
may be, as Agent under this Agreement and the other Loan Documents, then the
Required Lenders shall appoint a successor agent, whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes. After
any retiring or terminated Agent's resignation or termination, as the case may
be, as Agent, the provisions of this Section 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.
ARTICLE X
MISCELLANEOUS
10.1. Amendments and Waivers. Neither this Agreement, any Note or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. 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 Parent and
the Borrower written amendments, supplements or modifications hereto for the
purpose of adding any provisions to or changing in any manner the rights of the
Lenders, the Parent or the Borrower hereunder; provided that any amendment,
supplement or modification of Article 8 shall not require the approval of the
Borrower; (b) enter into with any other Loan Party
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written amendments, supplements or modifications to the Loan Documents to which
such other Loan Party is a party for the purpose of adding provisions to such
other Loan Documents or changing in any manner the rights of the Lenders or such
other Loan Party thereunder or (c) 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, the Notes or the other
Loan Documents or any Default or Event of Default and its consequences; provided
that no such waiver and no such amendment, supplement or modification (i) shall
reduce the amount or extend the scheduled date of maturity of any Note or of any
installment thereof, or reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender's Commitments, in each case,
without the consent of all the Lenders, or (ii) shall amend, modify or waive any
provision of this Section, Section 2.5(d) (or the definition of Net Disposition
Proceeds), Section 2.5(e) (or the definition of Net Insurance Proceeds) or any
other provision of this Agreement or any other Loan Document which specifically
by its terms requires the approval or consent of all the Lenders or reduce the
percentage specified in the definition of Required Lenders, or consent to the
assignment or transfer by the Parent, the Borrower or any other Loan Party of
any of its rights and obligations under this Agreement, the Notes and the other
Loan Documents or release all or any substantial portion of the Collateral, in
each case, without the written consent of all the Lenders or (iii) amend, modify
or waive any provision of Article 9 without the written consent of any then
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Parent, the
Borrower, all other Loan Parties, the Lenders, the Agent and all future holders
of the Notes. In the case of any waiver, the Parent, the Borrower, all other
Loan Parties, the Lenders and the Agent shall be restored to their former
position and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing, but 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
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of notice
by mail, when received, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Parent, 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 and
any future holders of the Notes:
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The Borrower:
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attention: Steven E. Dawson
Telecopy: (305)
The Parent:
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attention: Steven E. Dawson
Telecopy: (305)
The Agent:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Colleen Risorto
Telecopy: (212) 856-3558
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to Section 2.3, Section 2.5, Section 2.6 or Section 2.11 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.
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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 Notes and the
making of the Loans hereunder.
10.5. Payment of Expenses and Taxes; Indemnification. The Parent and
the Borrower, jointly and severally, agree (a) to pay or reimburse the Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Notes and the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the Agent, (b) to pay or reimburse each Lender and the Agent for all its costs
and expenses incurred in connection with the negotiations of any restructuring
or "work-out", whether or not consummated and the enforcement or preservation of
any rights under this Agreement, the Notes, the other Loan Documents and any
such other documents, including, without limitation, the fees and disbursements
of counsel to the Agent and to each Lender, and (c) to pay (without duplication
of items covered by Section 2.13 and Section 2.14), and indemnify and hold
harmless each Lender and the Agent 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 Notes, the other Loan Documents and any such
other documents, and (d) to pay, and indemnify and hold harmless each Lender and
the Agent (including each of their respective parents, subsidiaries, officers,
directors, employees, and affiliates) from and against, any and all other
claims, demands, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, settlements, expenses or disbursements of whatever kind
or nature arising from, in connection with or with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents, or any other documents or the use of the
proceeds of the Loans in connection with the transactions contemplated by this
Agreement including without limitation, any Permitted Acquisition, or any other
purpose (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"); provided that neither the Parent nor the Borrower shall have any
obligation hereunder to the Agent or any Lender with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the Agent
or such Lender. The agreements in this Section 10.5 shall survive repayment of
the Obligations hereunder.
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10.6. Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Loan Parties,
the Lenders, the Agent, all future holders of the Notes and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
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 Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents; provided that (i) any such sale of participating interests must be in
a minimum amount equal to the lesser of (A) $5,000,000 and (B) the aggregate
Commitments of such Lender then in effect, and (ii) after giving effect to any
such sale, such Lender must have either (x) retained at least $5,000,000 of
Commitments not subject to any participating interests or (y) sold participating
interests to Participants in all its Loans and Commitments. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the Parent,
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. Each of the Parent and the Borrower
agrees that if amounts outstanding under this Agreement and the Notes are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note; provided that, in purchasing such participating interest,
such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Section 2.13, Section 2.14 and Section 2.15 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it were a Lender; provided that, in the case of Section 2.14, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to Section 2.13, Section 2.14 and Section 2.15 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.
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(c) Any Lender may, in the ordinary course of its commercial banking
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
Borrower and the Agent (which in each case shall not be unreasonably withheld
and, in the case of the Borrower shall not be required while any Default or
Event of Default shall have occurred and shall be continuing), to an additional
bank or financial institution (an "Assignee") all or any part of its rights and
obligations under this Agreement and the Notes pursuant to a Commitment Transfer
Supplement, substantially in the form of Exhibit K, (a "Commitment Transfer
Supplement") 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
Borrower and the Agent and delivered to the Agent for its acceptance and
recording in the Register; provided that (i) any such assignment must be in a
minimum amount equal to the lesser of (x) $5,000,000 and (y) the aggregate
Commitments and outstanding Loans of such Lender then in effect, and (ii) after
giving effect to any such assignment, such Lender shall have either (x) sold all
its rights and obligations hereunder and under the Notes or (y) retained at
least $5,000,000 of the aggregate Commitments. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Commitment Transfer Supplement, (1) the Assignee thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein and (2) the assigning Lender thereunder, to the extent provided in
such Commitment Transfer Supplement, shall be released from its obligations
under this Agreement (and, in the case of a Commitment Transfer Supplement
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; provided that the provisions of Section 2.13, Section 2.14,
Section 2.15 and Section 10.5 shall continue to benefit such assigning Lender to
the extent required by such Sections).
(d) The Agent shall maintain, at its address referred to in Section
10.2, a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitments 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 Parent, the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Parent, the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(e) Upon its receipt of a Commitment Transfer Supplement 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 Borrower and the Agent) together
with payment to the Agent of a registration and processing fee of $3,500, the
Agent shall promptly accept such Commitment Transfer Supplement and, on the
effective date determined pursuant thereto, shall record the information
contained therein in the Register and give notice of such acceptance and
recordation to the Lenders and the Borrower. On or prior to such effective date,
the Borrower, at its own expense, shall execute and deliver to the Agent (in
exchange for the Note of the assigning Lender) a new Note, to the order of such
Assignee, in an amount equal to the Commitment assumed by such Assignee pursuant
to such Commitment Transfer Supplement and, if the assigning Lender has retained
a Commitment, a new Note to the order of the assigning Lender in an amount equal
to the Commitment retained by it hereunder. Such new Notes shall be dated the
Closing Date and shall otherwise be in the form of the Notes replaced thereby.
(f) Each of the Parent and the Borrower authorizes each Lender to
disclose, subject to the Section 10.8, to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee, any and all financial information
in such Lender's possession concerning the Parent, the Borrower and any
Subsidiaries which has been delivered to such Lender by or on behalf of the
Parent, the Borrower pursuant or any Subsidiary, as the case may be, to this
Agreement or which has been delivered to such Lender by or on behalf of the
Parent, the Borrower in connection with such Lender's credit evaluation of the
Parent, the Borrower and the Subsidiaries prior to becoming a party to this
Agreement.
(g) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
10.7. Adjustments; Setoff. (a) If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of its Loans or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in Section 7.1(g), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans, or shall provide such other Lenders
with the Benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
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(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower or
the Parent, any such notice being expressly waived by the Borrower and the
Parent to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrower or the Parent hereunder or under the Notes (whether
at the stated maturity, by acceleration or otherwise) to setoff and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower or the Parent, as the case may be. Each Lender agrees
promptly to notify the Borrower or the Parent, as applicable, and the Agent
after any such setoff and application made by such Lender; provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
10.8. Confidentiality. Each Lender agrees to exercise all reasonable
efforts (consistent with its customary methods for keeping information
confidential) to keep any information delivered or made available by the
Borrower or any Restricted Subsidiary confidential from anyone other than
persons employed or retained by such Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
provided, that nothing herein shall prevent any Lender from disclosing such
information (a) to any Affiliate of such Lender or to any other Lender, (b) upon
the order of any court or administrative agency, (c) upon the request or demand
of any regulatory agency or authority having jurisdiction over such Lender, (d)
that has been publicly disclosed, (e) in connection with any litigation relating
to the Loans, this Agreement or any transaction contemplated hereby to which any
Loan Party, any Lender or the Agent may be a party, (f) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (g) to such
Lender's legal counsel and independent auditors, (h) to any actual or proposed
participant or assignee of all or any part of its Loans hereunder, if such other
Person, prior to such disclosure, agrees, in writing, for the benefit of the
Borrower to comply with the provisions of this Section 10.8 and (i) to any
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor, if such contractual
counterparty or professional advisor, prior to disclosure, agrees, in writing,
for the benefit of the Borrower to comply with the provisions of this Section
10.8.
10.9. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all 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 each of the Borrower and the
Agent.
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10.10. 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.
10.11. Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, all other Loan Parties, the Agent and
the Lenders with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by the Agent or any
Lender relative to subject matter hereof or thereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.12. Governing Law. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5- 1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
10.13. FCC Approvals. Notwithstanding anything herein or in any other
Loan Document, but without limiting or waiving in any way the Obligations of the
Parent, the Borrower or any Restricted Subsidiary, as the case may be, hereunder
or thereunder, the Agent's rights hereunder are subject to the Communications
Act and all applicable policies, rules and regulations of the FCC. The Agent (on
behalf of the Lenders) will not take any action pursuant to this Agreement which
would constitute or result in any assignment or transfer control of any FCC
license, whether de jure or de facto, if such assignment or transfer of control
would require under then existing law (including the Communications Act and the
published policies, rules and regulations promulgated by the FCC), the prior
approval of the FCC or any other Governmental Authority, without first obtaining
such approval. Each of the Parent, Borrower and any Restricted Subsidiary, as
the case may be, agrees to take any action which the Agent may reasonably
request in order to cause the Agent (on behalf of the Lenders) to obtain and
enjoy the full rights and benefits granted by this Agreement and the Guarantees,
including specifically, at the cost and expense of the Parent, the Borrower and
any Restricted Subsidiaries, the use of their commercially reasonable best
efforts to assist in obtaining approval of the FCC or Governmental Authority for
an action or transaction contemplated by this Agreement or the Guarantees which
are then required by law, and specifically, without limitation, upon request
upon and during the continuance of an Event of Default, to prepare, sign and
file (or cause to be filed) with the FCC or other Governmental Authority the
assignor's, transferor's or controlling person's portion of any application or
applications for consent to (i) the assignment of any FCC license or transfer or
control thereof, (ii) any sale or sales of property constituting any Collateral
by the Agent or on behalf of the Lenders, or (iii) any assumption by the Agent,
the Lenders or their designees of voting rights or management rights in property
constituting any Collateral effected in accordance with the terms of this
Agreement or any other Loan Document.
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10.14. Submission To Jurisdiction; Waivers. Each of the Parent, the
Borrower and each Restricted Subsidiary 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 judgment 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 Parent, the
Borrower or any Restricted Subsidiary, as the case may be, at its address set
forth in Section 10.2 or at such other address of which the Agent shall have
been notified pursuant thereto;
(d) agrees that nothing contained herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
10.15. Acknowledgments. The Parent and the Borrower hereby acknowledge
that:
(a) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Parent, the Borrower or any Subsidiary arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Agent and the Lenders, on the one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of creditor and debtor; and
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(b) 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 the Parent, the Borrower, any Subsidiary and the Lenders.
10.16. Waivers of Jury Trial. THE PARENT, 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 THE NOTES OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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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.
RADIO UNICA HOLDINGS CORP.
By: /s/ Steve E. Dawson
----------------------------------
Name:
Title:
RADIO UNICA CORP.
By: /s/ Steve E. Dawson
----------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
as Agent
By: /s/ Deborah Strek
----------------------------------
Name:
Title:
LENDER:
CIBC Inc.
By: /s/ Deborah Strek
----------------------------------
Name:
Title:
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EXHIBIT A
TO CREDIT
AGREEMENT
FORM OF BORROWER PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 8, 1998, made by RADIO UNICA CORP.,
a Delaware corporation (the "Pledgor"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as agent (in such capacity, the "Agent") for the several banks and
other financial institutions (the "Lenders") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among RADIO UNICA
HOLDINGS CORP., the Pledgor, the Lenders and Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Pledgor upon the terms and subject to the conditions
set forth therein, to be evidenced by the Notes issued by the Pledgor
thereunder;
WHEREAS, the Pledgor is the legal and beneficial owner of all the
shares of Pledged Stock (as hereinafter defined) issued by each of the Issuers (
as hereinafter defined);
WHEREAS, the Pledgor is, or from time to time may become, the
beneficiary of Pledged Promissory Notes (as hereinafter defined);
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Pledgor under the Credit Agreement that
the Pledgor shall have executed and delivered this Pledge Agreement to the Agent
for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans under the Credit Agreement, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined therein, and the
following terms shall have the following meanings:
"Code" shall mean the Uniform Commercial Code from time to time in
effect in the State of New York.
<PAGE>
"Collateral" shall mean the Pledged Stock, the Pledged Promissory
Notes and all Proceeds (as defined below).
"Issuers" shall mean the collective reference to the Issuers listed on
Schedule I hereto.
"Obligations" shall mean 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 Pledgor or any Subsidiary, as applicable, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding and whether
the Agent, for the benefit of the Lenders, is oversecured or undersecured with
respect to such Loans) the Notes and all other obligations and liabilities of
the Pledgor or any Subsidiary, as applicable, to the Agent and the Lenders or
any of their respective Affiliates, including any obligation of the Pledgor
under any Hedging Agreement entered into with the Agent, any Lender or any of
their respective Affiliates, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, the Notes, the other Loan
Documents, any Hedging Agreement with the Agent, any Lender or any of their
respective Affiliates, this Pledge Agreement or 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 fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the Pledgor or
any Subsidiary, as applicable, pursuant to the terms of the Credit Agreement,
this Pledge Agreement, any other Loan Document or any Hedging Agreement with the
Agent, any Lender or any of their respective Affiliates) or otherwise.
"Pledge Agreement" shall mean this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Promissory Notes" shall mean any now existing or future
promissory note or instrument executed by a Person in favor of the Pledgor other
than any intercompany notes or instrument executed by any Loan Party in favor of
another Loan Party in accordance with Section 6.2(d) of the Credit Agreement.
"Pledged Stock" shall mean the shares of Capital Stock of the Issuers
listed on Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by any Issuer to
the Pledgor while this Pledge Agreement is in effect.
"Proceeds" shall mean all "proceeds" as such term is defined in
Section 9-306(1) of the Code and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock, collections
thereon or distributions with respect thereto.
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<PAGE>
2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Agent, for the ratable benefit of the Lenders, all the Pledged Stock, and
hereby grants to the Agent, for the ratable benefit of the Lenders, a first
priority security interest in the Collateral, as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Pledgor's Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock, the Pledgor shall
deliver an undated stock power covering such certificate, duly executed in blank
by the Pledgor with, if the Agent so requests, signature guaranteed.
4. Endorsement. Concurrently with the delivery of the Pledged
Promissory Notes to the Agent, the Pledgor shall deliver an undated endorsement
carrying such Pledged Promissory Notes, duly executed in blank by the Pledgor.
5. Representations and Warranties. The Pledgor represents and warrants
that:
(a) the shares of Pledged Stock listed on Schedule I constitute all
the issued and outstanding shares of each class of the Capital Stock of each of
the Issuers listed on Schedule I; except that Joaquin F. Blaya owns 200 shares
of Class A common stock of Blaya, Inc.
(b) all the shares of Pledged Stock have been duly and validly issued
and are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has
good and marketable title to, the Pledged Stock listed on Schedule I, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Pledge Agreement;
(d) to the extent in existence on the date hereof, the Pledgor is the
sole legal and beneficial holder of the Pledged Promissory Notes free and clear
of any and all Liens or options in favor of, or claims of, any other person,
except the Lien created by this Pledge Agreement;
(e) upon delivery to the Agent of the stock certificates evidencing
the Pledged Stock, the Lien granted pursuant to this Pledge Agreement will
constitute a valid, perfected first priority Lien on the Collateral, enforceable
as such against all creditors of the Pledgor and any Persons purporting to
purchase any Collateral from the Pledgor, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
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<PAGE>
(f) The chief executive office of the Pledgor and the office where the
Pledgor keeps its records concerning the Pledged Promissory Notes and all
contracts relating thereto is located at 8400 N.W. 52nd Street, Suite 101,
Miami, Florida 33176. The Pledgor shall not establish a new location for its
chief executive office or change its name until (i) it has given to the Agent
not less than 30 days' prior written notice of its intention to do so, clearly
describing such new location or specifying such new name, as the case may be,
and (ii) with respect to such new location or such new name, as the case may be,
it shall have taken all action, satisfactory to the Agent, to maintain the
security interest of the Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
6. Covenants. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
the Pledgor shall accept the same as the agent of the Agent and the Lenders,
hold the same in trust for the Agent and the Lenders and deliver the same
forthwith to the Agent in the exact form received, duly endorsed by the Pledgor
to the Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor to be held by the Agent,
subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid upon or in respect of the Pledged Stock upon the
liquidation or dissolution of any Issuer shall be paid over to the Agent to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to the
Pledged Stock pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be
received by the Pledgor, the Pledgor shall, until such money or property is paid
or delivered to the Agent, hold such money or property in trust for the Lenders,
segregated from other funds of the Pledgor, as additional collateral security
for the Obligations.
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<PAGE>
(b) If the Pledgor shall become entitled to receive or shall have
received any Pledged Promissory Notes, the Pledgor shall accept the same as the
agent of the Agent and the Lenders, hold the same in trust for the Agent and the
Lenders and deliver the same forthwith to the Agent in the exact form received,
together with an undated endorsement covering such Promissory Note duly executed
in blank by the Pledgor to be held by the Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of any Pledged Promissory Note upon the bankruptcy, liquidation or
dissolution of any of the makers of any such Pledged Promissory Notes shall be
paid over to the Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid in
respect of any such Pledged Promissory Notes shall be received by the Pledgor,
the Pledgor shall, until such money or property is paid or delivered to the
Agent, hold such money or property in trust for the Agent and Lenders,
segregated from other funds of the Pledgor, as additional collateral security
for the Obligations.
(c) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, any Issuer to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, or (iii) create, incur or permit to exist any other
Lien or option in favor of, or any claim of any Person with respect to, any of
the Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend and will indemnify and hold
harmless the Agent and the Lenders against the claims and demands of all Persons
whomsoever with respect to any claim arising from or in connection with the
right, title and interest of the Agent and the Lenders in and to the Collateral.
(d) At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge Agreement.
(e) The Pledgor agrees to pay, and to save the Agent and the Lenders
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamps, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement.
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<PAGE>
(f) The Pledgor agrees that, within 30 days of any corporation
becoming a Subsidiary (as defined in the Credit Agreement), in the case of
shares of stock of such Subsidiary, it shall (i) upon the request of the Agent,
deliver to the Agent all such shares owned by the Pledgor, together with
appropriate undated stock powers duly executed in blank and (ii) execute and
deliver a new pledge agreement (or a supplement to this Pledge Agreement)
covering such shares. Upon such delivery, such shares shall constitute a
representation and warranty as of the date of such delivery that the
representations and warranties contained in Section 5 above are true and correct
on such date after giving effect to such delivery. The Pledgor shall also
furnish to the Lenders such legal opinions confirming such representations and
warranties as the Agent or any Lender may reasonably request.
7. Cash Dividends; Voting Rights. Unless a Default shall have occurred
and be continuing, the Pledgor shall be permitted to receive all cash dividends
paid in respect of the Pledged Stock to the extent permitted in the Credit
Agreement; provided that any such cash dividends received by the Pledgor during
the pendency of any Default or Event of Default, as applicable, shall be
promptly returned to the Issuer of such cash dividends, respectively, and any
such cash dividends received during the pendency of any Event of Default or
during the pendency of a Default but not returned prior to such Event of Default
shall be promptly delivered to the Agent. Unless an Event of Default shall have
occurred and be continuing, the Pledgor shall be permitted to exercise all
voting and corporate rights with respect to the Pledged Stock; provided that no
vote shall be cast or corporate right exercised or other action taken which, in
the Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, the Notes, the other Loan Documents or this Pledge Agreement.
8. Rights of the Lenders and the Agent. (a) If an Event of Default
shall occur and be continuing and the Agent shall give notice of its intent to
exercise such rights to the Pledgor, (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock, and to
make application thereof to the Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares of
the Pledged Stock at any meetings of shareholders of any Issuer or otherwise,
and (B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options, pertaining to any of such shares of the Pledged
Stock as if it were the absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any of Issuer, or upon the exercise by the
Pledgor or the Agent of any right, privilege or option pertaining to any of such
shares of the Pledged Stock, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability to the Agent except to
account for property actually received by it, but the
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<PAGE>
Agent shall have no duty to the Pledgor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(b) The rights of the Agent and the Lenders hereunder shall not be
conditioned or contingent upon the pursuit by the Agent or any Lender of any
right or remedy against the Pledgor, any Issuer, any guarantor or against any
other Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee therefor or
right of offset with respect thereto. Neither the Agent nor any Lender shall be
liable for any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Agent be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.
9. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted in this Pledge Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgor, any Issuer, any
guarantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Agent or any Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold free of any right or
equity of redemption in the Pledgor, which right or equity is hereby waived or
released. The Agent shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Agent and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Agent, to the payment in
whole or in part of the Obligations, in such order as the Agent may elect, and
only after such application and after the payment by the Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against the Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by
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law, such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. The Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Lender to collect such deficiency.
10. Private Sales. (a) The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Promissory Notes, by reason of certain prohibitions contained in the Securities
Act of 1933 (the "Securities Act") and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Agent shall be under no obligation
to delay a sale of any of the Pledged Stock or the Pledged Promissory Notes for
the period of time necessary to permit any Issuer or the Pledgor to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if such Issuer or the Pledgor would agree to do so.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock or the Pledged Promissory
Notes pursuant to this Section 10 valid and binding and in compliance with any
and all other applicable Requirements of Law. The Pledgor further agrees that a
breach of any of the covenants contained in this Section 10 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the Lenders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 10 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred under the Credit
Agreement.
11. Limitation on Duties Regarding Collateral. The Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. None of the Agent, the Lenders or
any of their respective directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or otherwise.
12. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Pledgor's obligations hereunder, the Lenders'
remedies hereunder are
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subject to the Communications Act of 1934, as amended, and all applicable rules,
regulations and policies of the FCC ("FCC Law"), and the Agent and the lenders
will not take any action pursuant to this Agreement that would constitute or
result in any assignment or transfer of control of any FCC authorization held by
Pledgor if such assignment or transfer of control would require under then
existing FCC Law the prior approval of the FCC, without first obtaining such
approval of the FCC. Pledgor agrees to take any action which the Agent may
reasonably request in order to cause the Agent (on behalf of the Lenders) to
obtain and enjoy the full rights and benefits granted by this Agreement,
including specifically, at the cost and expense of Pledgor, the use of its
commercially reasonable best efforts to assist in obtaining approval of the FCC
or Governmental Authority for an action or transaction contemplated by this
Agreement which are then required by law, and specifically, without limitation,
upon request upon and during the continuance of an Event of Default, to prepare,
sign and file (or cause to be filed) with the FCC or other Governmental
Authority the assignor's, transferor's or controlling person's portion of any
application or applications for consent to (i) the assignment of any FCC license
or transfer or control thereof, (ii) any sale or sales of property constituting
any Collateral by the Agent or on behalf of the Lenders, or (iii) any assumption
by the Agent, the Lenders or their designees of voting rights or management
rights in property constituting any Collateral effected in accordance with the
terms of this Agreement or any other Loan Document.
13. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
14. Severability. Any provision of this Pledge 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.
15. Section Headings. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 17) be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Agent or such Lender would otherwise have
on any future occasion. The rights and remedies herein provided
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are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Agent; provided that any provision of this Pledge Agreement
may be waived by the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Pledge Agreement shall
inure to the benefit of the Agent and the Lenders and their respective
successors and assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
18. Notices. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, first class postage pre-paid, and (b) in the case
of telex or facsimile notices, when sent. The Pledgor and the Issuer may change
their respective addresses and transmission numbers by written notice to the
Agent.
19. Irrevocable Authorization and Instruction to Issuers. The Pledgor
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Pledge Agreement, without any other or further instructions from the Pledgor,
and the Pledgor agrees that the Issuers shall be fully protected in so
complying.
20. Authority of Agent. The Pledgor acknowledges that the rights and
responsibilities of the Agent under this Pledge Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Pledgor, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and neither the Pledgor nor any Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
10
<PAGE>
21. Termination; Release. Upon the repayment of all the Obligations in
full and the termination of the Commitment, this Pledge Agreement shall
terminate, and the Agent, at the request of and expense of the Pledgor, will
promptly execute and deliver to the Pledgor the proper instruments (including
Uniform Commercial Code termination statements on form UCC-2) acknowledging the
termination of this Pledge Agreement, and will duly assign, transfer and deliver
to the Pledgor (without recourse and without any representation or warranty of
any kind) such of the Collateral as may be in the possession of the Agent and
has not theretofore been disposed of or otherwise applied or released. In
addition, upon payment in full of a Pledged Promissory Note by the maker
thereof, upon request of the Pledgor and after receipt by the Agent in its sole
discretion, the Agent will return such Pledged Promissory Note to the Pledgor
for further delivery to such maker.
22. Counterparts. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
RADIO UNICA CORP.
By
------------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By:
------------------------------------------
Name:
Title: Executive Director
CIBC Oppenheimer Corp., as Agent
12
<PAGE>
FORM OF
ACKNOWLEDGMENT AND CONSENT
[______________], a [______________] corporation ("[______________]"),
one of the Issuers referred to in the foregoing Pledge Agreement, hereby
acknowledges receipt of a copy thereof, agrees to be bound thereby and to comply
with the terms thereof insofar as such terms are applicable to it. [____________
___________] agrees to notify the Agent promptly in writing of the occurrence of
any of the events described in Section 6(a) of the Pledge Agreement. [__________
_______________] further agrees that the terms of Section 10(b) of the Pledge
Agreement shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it under or pursuant to or arising out of Section 10 of the
Pledge Agreement.
[NAME OF ISSUER]
By
----------------------------
Title:
13
<PAGE>
SCHEDULE I
TO BORROWER
PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Stock
Class of Certificate No. of
Issuer of Pledged Stock Stock* No. Shares
- ----------------------- -------- ----------- ------
<S> <C> <C> <C>
Radio Unica of San
Francisco, Inc.
Blaya, Inc.
Radio Unica of Miami,
Inc.
Radio Unica of Los
Angeles, Inc.
Radio Unica of San
Antonio, Inc.
Radio Unica Network,
Inc.
Radio Unica Sales
Corp.
</TABLE>
- ----------
* Common unless otherwise indicated.
14
<PAGE>
EXHIBIT B
TO CREDIT
AGREEMENT
FORM OF
BORROWER SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 8, 1998, made by RADIO UNICA
CORP., a Delaware corporation (the "Borrower"), in favor of CANADIAN IMPERIAL
BANK OF COMMERCE, as Agent (in such capacity, the "Agent") for the several banks
and other financial institutions (the "Lenders") from time to time parties to
the Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among RADIO UNICA
HOLDINGS CORP., the Borrower, the Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, the Borrower
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
<PAGE>
"Code" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2.
"Contracts" shall mean all contracts executed from time to time by the
Borrower, including, without limitation, (A) any Hedging Agreement to which the
Borrower is a party and (B) any Account, as each Account may from time to time
be amended, supplemented or otherwise modified, including, without limitation,
(i) all rights of the Borrower to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of the Borrower to
damages arising out of, or for, breach or default in respect thereof and (iii)
all rights of the Borrower to perform and to exercise all remedies thereunder.
"Obligations" shall mean 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 or any Subsidiary, as applicable, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding and whether
the Agent, for the benefit of the Lenders, is oversecured or undersecured with
respect to such Loans) the Notes and all other obligations and liabilities of
the Borrower or any Subsidiary, as applicable, to any of the Agents or the
Lenders or any of their respective Affiliates, including any Reimbursement
Obligations and any obligation of the Borrower under any Hedging Agreement
entered into with any Agent, any Lender or any of their respective Affiliates,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the Notes, the other Loan Documents, any Hedging
Agreement with any Agent, any Lender or any of their respective Affiliates or
this Security Agreement or 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 fees and disbursements of counsel to the Agent or to the
Lenders that are required to be paid by the Borrower or any Subsidiary, as
applicable, pursuant to the terms of the Credit Agreement, any other Loan
Document, any Hedging Agreement with any Agent, any Lender or any of their
respective Affiliates or this Security Agreement) or otherwise.
"Security Agreement" shall mean this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2
<PAGE>
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations of the Borrower, the Borrower
hereby grants to the Agent for the ratable benefit of the Lenders a security
interest in all the following property now owned or at any time hereafter
acquired by the Borrower or in which the Borrower now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"):
i. all Accounts;
ii. all Chattel Paper;
iii. all Contracts;
iv. all Documents;
v. all Equipment;
vi. all General Intangibles;
vii. all Instruments;
viii. all Inventory;
ix. all Investment Property; and
x. to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
provided that nothing contained herein shall create a collateral assignment with
respect to or a security interest in (A) any Contract if the grant of such
collateral is (or is determined by non-appealable adjudication of a court or
other dispute resolution tribunal to be) expressly prohibited by the terms of
such Contract, (B) with respect to any other Collateral which is subject to a
Lien permitted under Section 6.3 of the Credit Agreement or (C) any license,
permit or other governmental authorization which by its terms is not assignable.
3. Rights of Agent and Lenders; Limitations on Agent's and Lenders'
Obligations.
3
<PAGE>
(a) Borrower Remains Liable under Accounts and Contracts. Anything
herein to the contrary notwithstanding, the Borrower shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) or under any Contract by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any such Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Borrower under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto) or under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties. At any time
after the occurrence and during the continuance of an Event of Default, the
Agent shall have the right upon written notice to the Borrower of its intention
to do so, to notify account debtors or obligors on the Accounts and parties to
the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the ratable benefit of the Lenders and that payments due or to become
due to the Borrower in respect thereof shall be made directly to the Agent and,
upon such notification, and at the expense of the Borrower, to enforce
collection of any such Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Agent may, at any time, in its own name
or in the name of the Lenders or the Borrower communicate with account debtors
on the Accounts and parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Accounts or Contracts.
(c) Collections on Accounts. The Agent hereby authorizes the Borrower
to collect the Accounts and the Agent may curtail or terminate said authority at
any time upon the occurrence and during the continuance of an Event of Default.
If required by the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts, when collected by
the Borrower, shall be forthwith (and, in any event, within two Business Days)
deposited by the Borrower in the exact form received, duly endorsed by the
Borrower to the Agent if required, in a special collateral account maintained by
the Agent, subject to withdrawal by the Agent for the account of the Lenders
only, as hereinafter provided, and, until so turned over, shall be held by the
Borrower in trust for the Agent and the Lenders, segregated from other funds of
the Borrower. Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit. All Proceeds constituting collections of Accounts while held by
the Agent (or by the Borrower in trust for the Agent and the Lenders) shall
continue to be collateral security for all the Obligations and shall not
constitute payment thereof until applied as
4
<PAGE>
hereinafter provided. At such intervals as may be agreed upon by the Borrower
and the Agent, or, if an Event of Default shall have occurred and be continuing,
at any time at the Agent's election, the Agent shall apply all or any part of
the funds on deposit in said special collateral account on account of the
Obligations in such order as the Agent may elect, and any part of such funds
which the Agent elects not so to apply and deems not required as collateral
security for the obligations shall be paid over from time to time by the Agent
to the Borrower or to whomsoever may lawfully be entitled to receive the same.
Upon the occurrence of an Event of Default that is continuing, at the Agent's
request, the Borrower shall deliver to the Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
(d) Analysis of Accounts. The Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Borrower shall furnish all such
assistance and information as the Agent may require in connection therewith;
provided that the Agent shall use its reasonable efforts to minimize any
disruption of the Borrower's business resulting from such verifications. At any
time and from time to time if the Agent concludes in its reasonable judgment,
based upon its evaluation of the general creditworthiness of the Borrower, that
such examination is required, and so requests, the Borrower shall, at the
Borrower's expense if at any time after the occurrence and during the
continuance of an Event of Default, and otherwise at the Agent's expense, cause
independent public accountants or other parties that are not Affiliates of the
Borrower and are satisfactory to the Agent to furnish to the Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Accounts.
4. Representations and Warranties. The Borrower hereby represents and
warrants that:
(a) Title; No Other Liens. Except as permitted under Section 6.3 of
the Credit Agreement, the Borrower owns each item of the Collateral free and
clear of any and all Liens or claims of others. Except as permitted under
Section 6.3 of the Credit Agreement, no security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Agent, for the ratable benefit of the Lenders, pursuant to this
Security Agreement.
(b) Perfected First Priority Liens. Except as permitted under Section
6.3 of the Credit Agreement, the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements, constitute
perfected Liens on the Collateral in favor of the Agent, for the ratable benefit
of the Lenders, which are prior to all other Liens on the Collateral created by
the Borrower and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from the Borrower and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's
5
<PAGE>
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
(c) Accounts. The amount represented by the Borrower to the Lenders
from time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually owing
by such account debtor or debtors thereunder. No amount payable to the Borrower
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent. The place where the
Borrower keeps its records concerning the Accounts is 8400 N.W. 52nd Street,
Suite 101, Miami, Florida 33176.
(d) Material Agreement. Except as set forth in Schedule 3.4 to the
Credit Agreement, no consent of any party (other than the Borrower) to any
Material Agreement is required, or purports to be required, in connection with
the execution, delivery and performance of this Security Agreement. Each
Material Agreement is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Agreements by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Agreement to any material adverse limitation, either
specific or general in nature. Neither the Borrower nor to the best of the
Borrower's knowledge any other party to any Material Agreement is in default in
the performance or observance of any of the terms thereof. The Borrower has
fully performed in all material respects all its obligations under each of the
Material Agreements. The right, title and interest of the Borrower in, to and
under each Material Agreement are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of such
Material Agreement as Collateral, nor have any of the foregoing been asserted or
alleged against the Borrower as to any Material Agreement. The Borrower has
delivered to the Agent a complete and correct copy of each Material Agreement,
including all amendments, supplements and other modifications thereto and will
deliver any other Contract which the Agent may request. No amount payable to the
Borrower under or in connection with any Material Agreement is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
(e) Inventory and Equipment. Except as permitted in Section 5(p), the
Inventory and the Equipment are kept at the locations listed on Schedule I
hereto.
(f) Chief Executive Office. Except as permitted in Section 5(p), the
Borrower's chief executive office and chief place of business is located at 8400
N.W. 52nd Street, Suite 101, Miami, Florida 33176.
6
<PAGE>
(g) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(h) Investment Property. The Investment Property, other than accounts
invested in cash equivalents and other than shares of capital stock of the
Borrower's Subsidiaries, consists of the items set forth on Annex A.
5. Covenants. The Borrower covenants and agrees with the Agent and the
Lenders that, from and after the date of this Security Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the Agent, and at
the sole expense of the Borrower, the Borrower will promptly and duly execute
and deliver such further instruments and documents and take such further action
as the Agent may reasonably request for the purpose of obtaining or preserving
the full benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Borrower also hereby
authorizes the Agent to file any such financing or continuation statement
without the signature of the Borrower to the extent permitted by applicable law.
A carbon, photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(b) Indemnification. The Borrower agrees to pay, and to save the Agent
and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security Agreement,
except resulting from the Agent's or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Agent or any Lender
under any Account or Contract for any sum owing thereunder, or to enforce any
provisions of any Account or Contract, the Borrower will save, indemnify and
keep the Agent and such Lender harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Borrower of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from the Borrower,
except resulting from the Agent's or any Lender's gross negligence or willful
misconduct.
7
<PAGE>
(c) Maintenance of Records. The Borrower will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Borrower will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby in such manner as the Agent may request. For
the Agent's and the Lenders' further security, the Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Borrower's
books and records pertaining to the Collateral, and the Borrower shall, during
the continuance of a Default under Section 7.1(a) or Section 7.1(c) of the
Credit Agreement as it relates to Section 6.1 of the Credit Agreement, turn over
copies of such books and records and during the continuation of an Event of
Default turn over any such books and records, in each case, to the Agent or to
its representatives during normal business hours at the request of the Agent.
(d) Right of Inspection. The Agent and the Lenders shall after
reasonable notice to the Borrower be permitted to visit and inspect any of the
properties of the Borrower and examine and make abstracts from any books and
records of the Borrower at any reasonable time and as often as may reasonably be
desired, and the Borrower agrees to render to the Agent and the Lenders, at the
Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Agent and the Lenders and their
respective representatives shall after reasonable notice to the Borrower be
permitted to visit any of the properties of the Borrower where any of the
Inventory or Equipment is located at any reasonable time and as often as may
reasonably be desired, for the purpose of inspecting the Inventory or Equipment,
observing its use or otherwise protecting its interests therein. Each such
visitation and inspection (a) by or on behalf of any Lender shall be at such
Lender's expense and (b) by or on behalf of the Agent following the occurrence
and during the continuance of any Default or Event of Default shall be at the
Borrower's expense.
(e) Compliance with Laws. The Borrower will comply in all material
respects with all Requirements of Law applicable to the Collateral or any part
thereof or to the operation of the Borrower's business except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(f) Compliance with Terms of Contracts. The Borrower will perform and
comply in all material respects with all its obligations under the Contracts and
all its other Contractual Obligations relating to the Collateral except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(g) Payment of Obligations. The Borrower will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in good faith
by appropriate proceedings, (ii) such proceedings do not involve any material
danger of the sale, forfeiture or
8
<PAGE>
loss of any of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Borrower's books in accordance with GAAP.
(h) Limitation on Liens on Collateral. The Borrower will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(i) Limitations on Dispositions of Collateral. The Borrower will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except as permitted pursuant to Section 6.6 of the
Credit Agreement.
(j) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of business, the Borrower will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(k) Maintenance of Equipment. The Borrower will maintain each item of
Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(l) Further Identification of Collateral. The Borrower will furnish to
the Agent and the Lenders from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may request, all in reasonable detail.
(m) Notices. The Borrower will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the Collateral
and (ii) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the Liens created hereunder.
(n) Changes in Locations, Name, etc. Unless the Borrower gives 30
days' prior written notice to the Agent, the Borrower will not (i) change the
location of its chief executive office/chief place of business from that
specified in Section 4(f) or remove its books and records from the location
specified in Section 4(c), (ii) permit any of the Inventory or Equipment to be
kept at a location other than those listed on Schedule I hereto or (iii) change
its
9
<PAGE>
name, identity or corporate structure to such an extent that any financing
statement filed by the Agent in connection with this Security Agreement would
become seriously misleading.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Borrower hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the Borrower
hereby gives the Agent the power and right, on behalf of the Borrower, without
notice to or assent by the Borrower, to do the following:
(i) in the case of any Account, at any time when the authority of the
Borrower to collect the Accounts has been curtailed or terminated pursuant
to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to
10
<PAGE>
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
generally, to sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and to
do, at the Agent's option and the Borrower's expense, at any time, or from
time to time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the Agent's and the
Lenders' Liens thereon and to effect the intent of this Security Agreement,
all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. The Borrower also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in this Section 6 or in Section 9 below, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred on the
Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Agent of Borrower's Obligations. If the Borrower
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Security Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum 2%
above the Alternate Base Rate, shall be payable by the Borrower to the Agent on
demand and shall constitute Obligations secured hereby.
8. Proceeds. In addition to the rights of the Agent and the Lenders
specified in Section 3(c) with respect to payments of Accounts, it is agreed
that if an Event of Default shall occur and be continuing (a) upon written
notice by the Agent to the Borrower, all Proceeds received by the Borrower
consisting of cash, checks and other near-cash items shall be held by the
Borrower in trust for the Agent and the Lenders, segregated from other funds of
the Borrower, and, forthwith upon receipt by the Borrower, shall be turned over
to the Agent in the
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exact form received by the Borrower (duly endorsed by the Borrower to the Agent,
if required), and (b) any and all such Proceeds received by the Agent (whether
from the Borrower or otherwise) may, in the sole discretion of the Agent, be
held by the Agent for the ratable benefit of the Lenders as collateral security
for, and/or then or at any time thereafter may be applied by the Agent against,
the Obligations (whether matured or unmatured), such application to be in such
order as the Agent shall elect. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full and the Commitments shall have been
terminated shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted to them in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Borrower, any
guarantor, or any other Person (all and each of which demands, defenses,
advertisements and notices being hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Agent or any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived or released.
The Borrower further agrees, at the Agent's request, to assemble the Collateral
and make it available to the Agent at such places as the Agent shall reasonably
select, whether at the Borrower's premises or elsewhere. The Agent shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Agent
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Agent may elect, and only after such application and after
the payment by the Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(i)(c) of the Code, need the Agent
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Agent or any Lender arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. The
Borrower shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are
12
<PAGE>
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Lender to collect such deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. The
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any Lender,
nor any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
11. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Borrower's obligations hereunder, the Lenders'
remedies hereunder are subject to the Communications Act of 1934, as amended,
and all applicable rules, regulations and policies of the FCC ("FCC Law"), and
the Agent and the lenders will not take any action pursuant to this Agreement
that would constitute or result in any assignment or transfer of control of any
FCC authorization held by Borrower if such assignment or transfer of control
would require under then existing FCC Law the prior approval of the FCC, without
first obtaining such approval of the FCC. Borrower agrees to take any action
which the Agent may reasonably request in order to cause the Agent (on behalf of
the Lenders) to obtain and enjoy the full rights and benefits granted by this
Agreement, including specifically, at the cost and expense of Borrower, the use
of its commercially reasonable best efforts to assist in obtaining approval of
the FCC or Governmental Authority for an action or transaction contemplated by
this Agreement which are then required by law, and specifically, without
limitation, upon request upon and during the continuance of an Event of Default,
to prepare, sign and file (or cause to be filed) with the FCC or other
Governmental Authority the assignor's, transferor's or controlling person's
portion of any application or applications for consent to (i) the assignment of
any FCC license or transfer or control thereof, (ii) any sale or sales of
property constituting any Collateral by the Agent or on behalf of the Lenders,
or (iii) any assumption by the Agent, the Lenders or their designees of voting
rights or management rights in property constituting any Collateral effected in
accordance with the terms of this Agreement or any other Loan Document.
12. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
13. Limitation on Lines of Business. Nothing in this Security
Agreement shall be deemed or construed as modifying in any way the restrictions
on the Borrower's activities as set forth in Section 6.14 of the Credit
Agreement.
14. Severability. Any provision of this Security 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
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<PAGE>
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
15. Section Headings. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 17), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Borrower and
the Agent; provided that any provision of this Security Agreement may be waived
by the Agent in a written letter or agreement executed by the Agent or by telex
or facsimile transmission from the Agent. This Security Agreement shall be
binding upon the successors and assigns of the Borrower and shall inure to the
benefit of the Agent and the Lenders and their respective successors and
assigns.
18. Governing Law. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
19. Notices. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement and shall be effective (a) in the case of mail, three days
after deposit in the postal system, first class postage pre-paid and (b) in the
case of telex or facsimile notices, when sent. The Borrower may change its
address and
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<PAGE>
transmission number by written notice to the Agent, and the Agent or any Lender
may change its address and transmission number by written notice to the Borrower
and, in the case of any Lender, to the Agent.
20. Authority of Agent. The Borrower acknowledges that the rights and
responsibilities of the Agent under this Security Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Borrower, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Borrower shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
21. Counterparts. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Borrower and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
RADIO UNICA CORP.
By:
-------------------------------
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By:
-------------------------------
Title: Executive Director
CIBC Oppenheimer Corp., as Agent
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<PAGE>
SCHEDULE I
TO BORROWER
SECURITY AGREEMENT
RADIO UNICA CORP.
8400 N.W. 52nd Street,
Suite 101, Miami, Florida 33176
LOCATION OF INVENTORY
None.
LOCATION OF EQUIPMENT
8400 N.W. 52nd Street, Suite 101
Miami, Florida 33176
501 W. 28th Street
Hialeah, Florida 33010
51 East 25th Street
New York, New York
<PAGE>
ANNEX A
TO BORROWER
SECURITY AGREEMENT
RADIO UNICA CORP.
LIST OF INVESTMENT PROPERTY
---------------------------
NONE
<PAGE>
FORM OF PARENT PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 8, 1998, made by RADIO UNICA
HOLDINGS CORP., a Delaware corporation (the "Pledgor"), in favor of CANADIAN
IMPERIAL BANK OF COMMERCE, as agent (in such capacity, the "Agent") for the
several banks and other financial institutions (the "Lenders") from time to time
parties to the Credit Agreement, dated as of July 8, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Pledgor, RADIO UNICA CORP., a Delaware corporation (the "Borrower"),
the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder and the Pledgor has agreed to guarantee the repayment of the
Loans; and
WHEREAS, the Pledgor is the legal and beneficial owner of all the
shares of Pledged Stock (as hereinafter defined) issued by the Borrower; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Pledgor shall have executed and delivered this Pledge Agreement to the Agent
for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans under the Credit Agreement, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined therein, and the
following terms shall have the following meanings:
<PAGE>
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Collateral" means the Pledged Stock and all Proceeds.
"Obligations" means 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 Pledgor, the Borrower or any Subsidiary, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding and whether
the Agent, for the benefit of the Lenders, is oversecured or undersecured with
respect to such Loans), the Notes and all other obligations and liabilities of
the Pledgor, the Borrower or any Subsidiary, as applicable, to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, the other Loan Documents, any
Hedging Agreement with the Agent or any Lender or this Pledge Agreement or 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 fees and
disbursements of counsel to the Agent or to the Lenders that are required to be
paid by the Pledgor, the Borrower or any Subsidiary, as applicable, pursuant to
the terms of the Credit Agreement, this Pledge Agreement, any other Loan
Document or any Hedging Agreement with the Agent or any Lender) or otherwise.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock of the Borrower
listed on Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by the Borrower to
the Pledgor while this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Agent, for the ratable benefit of the Lenders, all the Pledged Stock and
hereby grants to the Agent, for the ratable benefit of the Lenders, a first
priority security interest in the Collateral, as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
2
<PAGE>
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock to the Agent, the
Pledgor shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor.
4. Representations and Warranties. The Pledgor represents and warrants
that:
(a) the shares of Pledged Stock listed on Schedule I constitute all
the issued and outstanding shares of each class of the Capital Stock of the
Borrower;
(b) all the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has
good and marketable title to, the Pledged Stock listed on Schedule I, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Pledge Agreement; and
(d) upon delivery to the Agent of the stock certificates evidencing
the Pledged Stock, the Lien granted pursuant to this Pledge Agreement will
constitute a valid, perfected first priority Lien on the Collateral, enforceable
as such against all creditors of the Pledgor and any Persons purporting to
purchase any Collateral from the Pledgor, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
5. Covenants. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) If the Pledgor shall, as a result of his ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
the Pledgor shall accept the same as the agent of the Agent and the Lenders,
hold the same in trust for the Agent and the Lenders and deliver the same
forthwith to the Agent in the exact form received, duly endorsed by the Pledgor
to the Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with, if the Agent so
requests, signature guaranteed, to be held by the Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Stock upon the liquidation or dissolution of
the Borrower shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of
3
<PAGE>
capital shall be made on or in respect of the Pledged Stock or any property
shall be distributed upon or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital of the Borrower or pursuant
to the reorganization thereof, the property so distributed shall be delivered to
the Agent to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in respect
of the Pledged Stock shall be received by the Pledgor, the Pledgor shall, until
such money or property is paid or delivered to the Agent, hold such money or
property in trust for the Lenders, segregated from other funds of the Pledgor,
as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, the Borrower to
issue any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of the Borrower, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, or (iii) create, incur or permit to exist any other
Lien or option in favor of, or any claim of any Person with respect to, any of
the Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend and will indemnify and hold
harmless the Agent and the Lenders against the claims and demands of all Persons
whomsoever with respect to any claim arising from or in connection with the
right, title and interest of the Agent and the Lenders in and to the Collateral.
(c) At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the Lenders
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamps, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement.
4
<PAGE>
(e) The Pledgor agrees that within 30 days of any corporation becoming
a Subsidiary (as defined in the Credit Agreement) in the case of shares of stock
of such Subsidiary, it shall (i) upon the request of the Agent, deliver to the
Agent all such shares owned by the Pledgor, together with appropriate undated
stock powers duly executed in blank and (ii) execute and deliver a new pledge
agreement (or a supplement to this Pledge Agreement) covering such shares. Upon
such delivery, such shares shall constitute a representation and warranty as of
the date of such delivery that the representations and warranties contained in
Section 4 above are true and correct on such date after giving effect to such
delivery. The Pledgor shall also furnish to the Lenders such legal opinions
confirming such representations and warranties as the Agent or any Lender may
reasonably request, which opinions shall not be broader in scope than those with
respect to this Agreement delivered to the Lenders on the Closing Date (as
defined in the Credit Agreement).
6. Cash Dividends; Voting Rights. Unless a Default shall have occurred
and be continuing (or, solely with respect to dividends permitted under Section
6.7 of the Credit Agreement, an Event of Default), the Pledgor shall be
permitted to receive all cash dividends paid to the extent permitted in the
Credit Agreement, in respect of the Pledged Stock; provided that any cash
dividends received by the Pledgor during the pendency of any Default or Event of
Default, as applicable, shall be promptly returned to the Borrower and any cash
dividends received during the pendency of any Event of Default or during the
pendency of a Default but not returned prior to such Event of Default shall be
promptly delivered to the Agent. Unless an Event of Default shall have occurred
and be continuing, the Pledgor shall be permitted to exercise all voting and
corporate rights with respect to the Pledged Stock; provided that no vote shall
be cast or corporate right exercised or other action taken which, in the Agent's
reasonable judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement, the
Notes, the other Loan Documents or this Pledge Agreement.
7. Rights of the Lenders and the Agent. (a) If an Event of Default
shall occur and be continuing and the Agent shall give notice of its intent to
exercise such rights to the Pledgor, (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and make
application thereof to the Obligations in such order as the Agent may determine
and (ii) all shares of the Pledged Stock shall be registered in the name of the
Agent or its nominee, and the Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of the Borrower or otherwise and (B) any
and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such shares of the Pledged Stock as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Borrower, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver any
and all the Pledged Stock with any committee, depositary, transfer agent,
5
<PAGE>
registrar or other designated agency upon such terms and conditions as it may
determine), all without liability to the Agent except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall not be
conditioned or contingent upon the pursuit by the Agent or any Lender of any
right or remedy against the Borrower, any Subsidiary, any Guarantor or against
any other Person which may be or become liable in respect of all or any part of
the Obligations or against any collateral security therefor, guarantee therefor
or right of offset with respect thereto. Neither the Agent nor any Lender shall
be liable for any failure to demand, collect or realize upon all or any part of
the Collateral or for any delay in doing so, nor shall the Agent be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted in this Pledge Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgor, the Borrower, any
Subsidiary or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Agent or any Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold free of any right or
equity of redemption in the Pledgor, which right or equity is hereby waived or
released. The Agent shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Agent and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Agent, to the payment in
whole or in part of the Obligations, in such order as the Agent may elect, and
only after such application and after the payment by the Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands
6
<PAGE>
it may acquire against the Agent or any Lender arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. The Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Agent or any Lender to collect such deficiency.
9. Private Sales. (a) The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act of 1933 (the "Securities
Act") and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Borrower to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Borrower would agree to do so.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the Agent
and the Lenders, that the Agent and the Lenders have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
10. Limitation on Duties Regarding Collateral. The Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. None of the Agent, the Lenders or
any of their respective directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or otherwise.
11. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Pledgor's obligations hereunder, the Lenders'
remedies hereunder are
7
<PAGE>
subject to the Communications Act of 1934, as amended, and all applicable rules,
regulations and policies of the FCC ("FCC Law"), and the Agent and the lenders
will not take any action pursuant to this Agreement that would constitute or
result in any assignment or transfer of control of any FCC authorization held by
Pledgor if such assignment or transfer of control would require under then
existing FCC Law the prior approval of the FCC, without first obtaining such
approval of the FCC. Pledgor agrees to take any action which the Agent may
reasonably request in order to cause the Agent (on behalf of the Lenders) to
obtain and enjoy the full rights and benefits granted by this Agreement,
including specifically, at the cost and expense of Pledgor, the use of its
commercially reasonable best efforts to assist in obtaining approval of the FCC
or Governmental Authority for an action or transaction contemplated by this
Agreement which are then required by law, and specifically, without limitation,
upon request upon and during the continuance of an Event of Default, to prepare,
sign and file (or cause to be filed) with the FCC or other Governmental
Authority the assignor's, transferor's or controlling person's portion of any
application or applications for consent to (i) the assignment of any FCC license
or transfer or control thereof, (ii) any sale or sales of property constituting
any Collateral by the Agent or on behalf of the Lenders, or (iii) any assumption
by the Agent, the Lenders or their designees of voting rights or management
rights in property constituting any Collateral effected in accordance with the
terms of this Agreement or any other Loan Document.
12. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
13. Severability. Any provision of this Pledge 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.
14. Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
15. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 16 hereof)
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Agent or any Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such Lender would
otherwise have on any future occasion. The rights and remedies
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<PAGE>
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
16. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Agent; provided that any provision of this Pledge Agreement
may be waived by the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Pledge Agreement shall
inure to the benefit of the Agent and the Lenders and their respective
successors and assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
17. Notices. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, first class postage pre-paid, and (b) in the case
of telex or facsimile notices, when sent. The Pledgor and the Borrower may
change their respective addresses and transmission numbers by written notice to
the Agent and the Agent or any Lender may change its address and transmission
number by written notice to the Pledgor and, in the case of a Lender, to the
Agent.
18. Irrevocable Authorization and Instruction to Borrower. The Pledgor
hereby authorizes and instructs the Borrower to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Pledge Agreement, without any other or further instructions from the Pledgor,
and the Pledgor agrees that the Borrower shall be fully protected in so
complying.
19. Authority of Agent. The Pledgor acknowledges that the rights and
responsibilities of the Agent under this Pledge Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Pledgor, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and neither the Pledgor nor the Borrower shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
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<PAGE>
20. Counterparts. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
[ ]
By
--------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By
--------------------------------
Name:
Title:
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<PAGE>
ACKNOWLEDGMENT AND CONSENT
RADIO UNICA CORP. (the "Company"), the Borrower referred to in the
foregoing Pledge Agreement, hereby acknowledges receipt of a copy thereof,
agrees to be bound thereby and to comply with the terms thereof insofar as such
terms are applicable to it. The Company agrees to notify the Agent promptly in
writing of the occurrence of any of the events described in Section 5(a) of the
Pledge Agreement. The Company further agrees that the terms of Section 9(b) of
the Pledge Agreement shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it under or pursuant to or arising out of
Section 9 of the Pledge Agreement.
RADIO UNICA CORP.
By
--------------------------------
Title:
<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Class of Stock No. of
Stock Certificate No. Shares
-------- --------------- ------
<S> <C> <C> <C>
1. Radio Unica Corp.
</TABLE>
<PAGE>
EXHIBIT D
TO CREDIT
AGREEMENT
FORM OF PARENT SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 8, 1998, made by RADIO UNICA
HOLDINGS CORP., a Delaware corporation (the "Grantor"), in favor of CANADIAN
IMPERIAL BANK OF COMMERCE, as agent (in such capacity, the "Agent") for the
several banks and other financial institutions (the "Lenders") from time to time
parties to the Credit Agreement, dated as of July 8, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Grantor, RADIO UNICA CORP. (the "Borrower"), the Lenders and the
Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder and the Grantor has agreed to guarantee the repayment of the
Loans; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of all the Obligations, the Agent and the Lenders
have required as a condition, among others, to entering into the Credit
Agreement that the Grantor execute and deliver this Agreement for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, the Grantor
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
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<PAGE>
"Code" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2.
"Contracts" means all contracts executed from time to time by the
Grantor, including, without limitation, with respect to an Account, in each
case, as the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (i) all rights of the Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Grantor to damages arising out of, or for,
breach or default in respect thereof and (iii) all rights of the Grantor to
perform and to exercise all remedies thereunder.
"Obligations" means 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 Grantor, the Borrower or any Subsidiary, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding and whether
the Agent, for the benefit of the Lenders, is oversecured or undersecured with
respect to such Loans), the Notes and all other obligations and liabilities of
the Grantor, the Borrower or any Subsidiary, as applicable, to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, the other Loan Documents, any
Hedging Agreement with the Agent or any Lender or this Security Agreement or 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 fees and
disbursements of counsel to the Agent or to the Lenders that are required to be
paid by the Grantor, the Borrower or any Subsidiary, as applicable, pursuant to
the terms of the Credit Agreement, any other loan Document, any Hedging
Agreement with the Agent or any Lender or this Security Agreement) or otherwise.
"Security Agreement" means this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations of the Grantor, the Grantor
hereby grants to the Agent for the ratable benefit of the Lenders a security
interest in all the following property now owned or at any time hereafter
acquired by the Grantor or in which the Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"):
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<PAGE>
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property; and
(x) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing;
provided that nothing contained herein shall create a collateral assignment with
respect to or a security interest in (A) any Contract if the grant of such
collateral is (or is determined by non-appealable adjudication of a court or
other dispute resolution tribunal to be) expressly prohibited by the terms of
such Contract, (B) with respect to any other Collateral which is subject to a
Lien permitted under Section 6.3 of the Credit Agreement or (C) any license,
permit or other governmental authorization which by its terms is not assignable.
3. Rights of Agent and Lenders; Limitations on Agent's and Lenders'
Obligations.
(a) Grantor Remains Liable under Accounts and Contracts. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) or under any Contract by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any such Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Grantor under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by
4
<PAGE>
it or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto) or under any Contract, to present or file
any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties. At any time
after the occurrence and during the continuance of an Event of Default, the
Agent shall have the right upon written notice to the Grantor of its intention
to do so, to notify account debtors or obligors on the Accounts and parties to
the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the ratable benefit of the Lenders and that payments due or to become
due to the Grantor in respect thereof shall be made directly to the Agent and,
upon such notification, and at the expense of the Grantor, to enforce collection
of any such Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Agent may, at any time, in its own name
or in the name of the Lenders or the Grantor communicate with account debtors on
the Accounts and parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Accounts or Contracts.
(c) Collections on Accounts. The Agent hereby authorizes the Grantor
to collect the Accounts and the Agent may curtail or terminate said authority at
any time upon the occurrence and during the continuance of an Event of Default.
If required by the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts, when collected by
the Grantor, shall be forthwith (and, in any event, within two Business Days)
deposited by the Grantor in the exact form received, duly endorsed by the
Grantor to the Agent if required, in a special collateral account maintained by
the Agent, subject to withdrawal by the Agent for the account of the Lenders
only, as hereinafter provided, and, until so turned over, shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor. Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit. All Proceeds constituting collections of Accounts while held by
the Agent (or by the Grantor in trust for the Agent and the Lenders) shall
continue to be collateral security for all the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by the Grantor and the Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Agent's
election, the Agent shall apply all or any part of the funds on deposit in said
special collateral account on account of the Obligations in such order as the
Agent may elect, and any part of such funds which the Agent elects not so to
apply and deems not required as collateral security for the Obligations shall be
paid over from time to time by the Agent to the Grantor or to whomsoever may
lawfully be entitled to receive the same. Upon the occurrence of an Event of
Default that is continuing, at the Agent's request, the Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts, including, without
limitation, all original orders, invoices and shipping receipts.
5
<PAGE>
(d) Analysis of Accounts. The Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection therewith;
provided, that the Agent shall use its reasonable efforts to minimize any
disruption of the Grantor's business resulting from such verifications. At any
time and from time to time, if the Agent concludes in its reasonable judgment,
based upon its evaluation of the general creditworthiness of the Grantor, that
such examination is required, and so requests, the Grantor shall, at the
Grantor's expense if at any time after the occurrence and during the continuance
of an Event of Default, and otherwise at the Agent's expense, cause independent
public accountants or other parties that are not Affiliates of the Grantor and
are satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
4. Representations and Warranties. The Grantor hereby represents and
warrants that:
(a) Title; No Other Liens. Except as permitted under Section 6.3 of
the Credit Agreement, the Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. Except as permitted under
Section 6.3 of the Credit Agreement no security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Agent, for the ratable benefit of the Lenders, pursuant to this
Security Agreement.
(b) Perfected First Priority Liens. Except as permitted under Section
6.3 of the Credit Agreement the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements, constitute
perfected Liens on the Collateral in favor of the Agent, for the ratable benefit
of the Lenders, which are prior to all other Liens on the Collateral created by
the Grantor and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from the Grantor and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(c) Accounts. The amount represented by the Grantor to the Lenders
from time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually owing
by such account debtor or debtors thereunder. No amount payable to the Grantor
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent. The place where the
Grantor keeps its records concerning the Accounts is 8400 N.W. 52nd Street,
Suite 101, Miami, Florida 33176.
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<PAGE>
(d) Material Agreements. Except as set forth in Schedule 3.4 to the
Credit Agreement, no consent of any party (other than the Grantor) to any
Material Agreement is required, or purports to be required, in connection with
the execution, delivery and performance of this Security Agreement. Each
Material Agreement is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Agreements by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Agreement to any material adverse limitation, either
specific or general in nature. Neither the Grantor nor to the best of the
Grantor's knowledge any other party to any Material Agreement is in default in
the performance or observance of any of the terms thereof. The Grantor has fully
performed in all material respects all its obligations under each of the
Material Agreements. The right, title and interest of the Grantor in, to and
under each Material Agreement are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of such
Material Agreement as Collateral, nor have any of the foregoing been asserted or
alleged against the Grantor as to any Material Agreement. The Grantor has
delivered to the Agent a complete and correct copy of each Material Agreement,
including all amendments, supplements and other modifications thereto and will
deliver any other Contract which the Agent may request. No amount payable to the
Grantor under or in connection with any Material Agreement is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
(e) Inventory and Equipment. Except as permitted in Section 5(p), the
Inventory and the Equipment are kept at the locations listed on Schedule I
hereto.
(f) Chief Executive Office. Except as permitted in Section 5(p), the
Grantor's chief executive office and chief place of business is located at 8400
N.W. 52nd Street, Suite 101, Miami, Florida 33176.
(g) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(h) Investment Property. The Investment Property, other than accounts
invested in cash equivalents and other than shares of capital stock of the
Grantor's Subsidiaries, consists of the items set forth as Annex A.
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<PAGE>
5. Covenants. The Grantor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Security Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the Agent, and at
the sole expense of the Grantor, the Grantor will promptly and duly execute and
deliver such further instruments and documents and take such further action as
the Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Grantor also hereby
authorizes the Agent to file any such financing or continuation statement
without the signature of the Grantor to the extent Permitted by applicable law.
A carbon, photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(b) Indemnification. The Grantor agrees to pay, and to save the Agent
and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security Agreement,
except resulting from the Agent or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Agent or any Lender
under any Account or Contract for any sum owing thereunder, or to enforce any
provisions of any Account or Contract, the Grantor will save, indemnify and keep
the Agent and such Lender harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the account debtor or obligor thereunder, arising out
of a breach by the Grantor of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the Grantor, except
resulting from the Agent or any Lender's gross negligence or willful misconduct.
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<PAGE>
(c) Maintenance of Records. The Grantor will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Grantor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby in such manner as the Agent may request. For
the Agent's and the Lenders' further security, the Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Grantor's
books and records pertaining to the Collateral, and the Grantor shall during the
continuance of a Default under Section 7.1(a) or Section 7.1(c) of the Credit
Agreement as it relates to Section 6.1 therein, turn over copies of such books
and records and during the continuation of an Event of Default turn over any
such books and records, in each case, to the Agent or to its representatives
during normal business hours at the request of the Agent.
(d) Right of Inspection. The Agent and the Lenders shall after
reasonable notice to the Grantor be permitted to visit and inspect any of the
properties of the Grantor and examine and make abstracts from any books and
records of the Grantor at any reasonable time and as often as may reasonably be
desired, and the Grantor agrees to render to the Agent and the Lenders, at the
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Agent and the Lenders and their
respective representatives shall after reasonable notice to the Grantor be
permitted to visit any of the properties of the Grantor where any of the
Inventory or Equipment is located at any reasonable time and as often as may
reasonably be desired, for the purpose of inspecting the Inventory or Equipment,
observing its use or otherwise protecting its interests therein. Each such
visitation and inspection (a) by or on behalf of any Lender shall be at such
Lender's expense and (b) by or on behalf of the Agent following the occurrence
and during the continuance of any Default or Event of Default shall be at the
Grantor's expense.
(e) Compliance with Laws. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any part
thereof or to the operation of the Grantor's business; except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(f) Compliance with Terms of Contracts. The Grantor will perform and
comply in all material respects with all its obligations under the Contracts and
all its other Contractual Obligations relating to the Collateral except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(g) Payment of Obligations. The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in good faith
by appropriate proceedings, (ii) such proceedings do not involve any material
danger of the sale, forfeiture or
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loss of any of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Grantor's books in accordance with GAAP.
(h) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(i) Limitations on Dispositions of Collateral. The Grantor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except as permitted pursuant to Section 6.6 of the
Credit Agreement.
(j) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of business, the Grantor will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(k) Maintenance of Equipment. The Grantor will maintain each item of
Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(l) Further Identification of Collateral. The Grantor will furnish to
the Agent and the Lenders from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may request, all in reasonable detail.
(m) Notices. The Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the Collateral
and (ii) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the Liens created hereunder.
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(n) Changes in Locations, Name, etc. Unless the Grantor gives 30 day's
prior written notice to the Agent, the Grantor will not (i) change the location
of its chief executive office/chief place of business from that specified in
Section 4(f) or remove its books and records from the location specified in
Section 4(c), (ii) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule I hereto or (iii) change its name,
identity or corporate structure to such an extent that any financing statement
filed by the Agent in connection with this Security Agreement would become
seriously misleading.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Grantor and in the name of the Grantor or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do the following:
(i) in the case of any Account, at any time when the authority of the
Grantor to collect the Accounts has been curtailed or terminated pursuant
to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
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(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against the Grantor with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
generally, to sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and to
do, at the Agent's option and the Grantor's expense, at any time, or from
time to time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the Agent's and the
Lenders' Liens thereon and to effect the intent of this Security Agreement,
all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. The Grantor also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in this Section 6 or Section 9 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred on the
Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
12
<PAGE>
7. Performance by Agent of Grantor's Obligations. If the Grantor fails
to perform or comply with any of its agreements contained herein and the Agent,
as provided for by the terms of this Security Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of the Agent incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum 2% above the
Alternate Base Rate, shall be payable by the Grantor to the Agent on demand and
shall constitute Obligations secured hereby.
8. Proceeds. In addition to the rights of the Agent and the Lenders
specified in Section 3(c) with respect to payments of Accounts, it is agreed
that if an Event of Default shall occur and be continuing (a) upon written
notice by the Agent to the Grantor, all Proceeds received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor, and, forthwith upon receipt by the Grantor, shall be turned over to
the Agent in the exact form received by the Grantor (duly endorsed by the
Grantor to the Agent, if required), and (b) any and all such Proceeds received
by the Agent (whether from the Grantor or otherwise) may, in the sole discretion
of the Agent, be held by the Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be applied by
the Agent against, the Obligations (whether matured or unmatured), such
application to be in such order as the Agent shall elect. Any balance of such
Proceeds remaining after the Obligations shall have been paid in full and the
Commitments shall have been terminated shall be paid over to the Grantor or to
whomsoever may be lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted to them in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Grantor, the Borrower,
any Guarantor, or any other Person (all and each of which demands, defenses,
advertisements and notices being hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Agent or any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Grantor, which right or equity is hereby waived or released.
The Grantor further agrees, at the Agent's request, to assemble the Collateral
and make it available to the Agent at places which the Agent shall reasonably
select, whether at
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<PAGE>
the Grantor's premises or elsewhere. The Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the Agent
may elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(i)(c) of the Code, need the Agent account for the
surplus, if any, to the Grantor. To the extent permitted by applicable law, the
Grantor waives all claims, damages and demands it may acquire against the Agent
or any Lender arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Lender to collect
such deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. The
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any Lender,
nor any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Grantor or
otherwise.
11. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Grantor's obligations hereunder, the Lenders'
remedies hereunder are subject to the Communications Act of 1934, as amended,
and all applicable rules, regulations and policies of the FCC ("FCC Law"), and
the Agent and the lenders will not take any action pursuant to this Agreement
that would constitute or result in any assignment or transfer of control of any
FCC authorization held by Grantor if such assignment or transfer of control
would require under then existing FCC Law the prior approval of the FCC, without
first obtaining such approval of the FCC. Grantor agrees to take any action
which the Agent may reasonably request in order to cause the Agent (on behalf of
the Lenders) to obtain and enjoy the full rights and benefits granted by this
Agreement, including specifically, at the cost and expense of Grantor, the use
of its commercially reasonable best efforts to assist in obtaining approval of
the FCC or Governmental Authority for an action or transaction contemplated by
this Agreement which are then required by law, and specifically, without
limitation, upon request upon and during the continuance of an Event of Default,
to prepare, sign and file (or cause to be filed) with the FCC or other
Governmental Authority the assignor's, transferor's or controlling person's
portion of any application or applications for consent to (i) the assignment of
any FCC license or transfer or control thereof, (ii) any sale or sales of
property constituting any Collateral by the Agent or on
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<PAGE>
behalf of the Lenders, or (iii) any assumption by the Agent, the Lenders or
their designees of voting rights or management rights in property constituting
any Collateral effected in accordance with the terms of this Agreement or any
other Loan Document.
12. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
13. No Limitation on Lines of Business. Nothing contained in this
Security Agreement shall be deemed or construed as limiting in any way the
restrictions on Grantor's activities as set forth in Section 6.14 of the Credit
Agreement.
14. Severability. Any provision of this Security 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.
15. Section Headings. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 17), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Grantor and the Agent; provided that any provision of this
Security Agreement may be waived by the Agent in a written letter or agreement
executed by the Agent or by telex or facsimile transmission from the Agent. This
Security Agreement shall be binding upon the successors and assigns of the
Grantor and shall inure to the benefit of the Agent and the Lenders and their
respective successors and assigns.
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18. Governing Law. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
19. Notices. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement and shall be effective (a) in the case of mail, three days
after deposit in the postal system, first class postage pre-paid and (b) in the
case of telex or facsimile notices, when sent. The Grantor may change its
address and transmission number by written notice to the Agent, and the Agent or
any Lender may change its address and transmission number by written notice to
the Grantor and, in the case of a Lender, to the Agent.
20. Authority of Agent. The Grantor acknowledges that the rights and
responsibilities of the Agent under this Security Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Grantor, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Grantor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
21. Counterparts. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
RADIO UNICA HOLDINGS CORP.
By:
-----------------------------------
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By:
-----------------------------------
Title:
17
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SCHEDULE I
INVENTORY AND EQUIPMENT
-----------------------
None
<PAGE>
ANNEX A
INVESTMENT PROPERTY
-------------------
NONE
<PAGE>
EXHIBIT E
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY GUARANTEE
GUARANTEE, dated as of July 8, 1998, made by [ ] a Delaware
corporation (the "Guarantor") in favor of CANADIAN IMPERIAL BANK OF COMMERCE, as
agent (in such capacity, the "Agent") for the several banks and financial
institutions (the "Lenders") from time to time parties to the Credit Agreement,
dated as of July 8, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among RADIO UNICA HOLDINGS CORP., a
Delaware corporation (the "Parent"), RADIO UNICA CORP., a Delaware corporation
(the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
have agreed to make certain Loans to or for the benefit of the Borrower; and
WHEREAS, the Borrower owns directly or indirectly all the issued and
outstanding Capital Stock of the Guarantor; and
WHEREAS, a portion of the proceeds of the Loans will be used in part
to enable the Borrower to make valuable transfers to the Guarantor in connection
with the operation of its business; and
WHEREAS, the Borrower is entering into the Credit Agreement to finance
the operations of the Borrower and its Subsidiaries (including the Guarantor),
and the Guarantor will derive substantial direct and indirect benefit from the
making of the Loans; and
WHEREAS, the obligation of the Lenders to make the Loans is
conditioned upon, among other things, the execution and delivery by the
Guarantor of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to enter into the Credit Agreement and to make the Loans, the Guarantor
hereby agrees with and for the benefit of the Agent and the Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined in the
Credit Agreement are used herein as therein defined, and the following term
shall have the following meanings:
<PAGE>
"Obligations" shall mean 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 Parent, the Borrower or any Subsidiary, as applicable,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding and whether the Agent is oversecured or undersecured
with respect to such Loans), the Notes and all other obligations and
liabilities of the Parent, the Borrower or any Subsidiary, as applicable,
to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, the
Notes, the other Loan Documents or any Hedging Agreement with the Agent or
any Lender 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 fees and disbursements of counsel to the Agent or
to the Lenders that are required to be paid by the Parent, the Borrower or
any Subsidiary, as applicable, pursuant to the terms of the Credit
Agreement, any other Loan Document or any Hedging Agreement with the Agent
or any Lender) or otherwise.
2. Guarantee. (a) The Guarantor hereby unconditionally and irrevocably
guarantees to the Agent and the Lenders and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations, and the Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Agent or any Lender in enforcing, or obtaining advice
of counsel in respect of, any rights with respect to, or collecting, any or all
the Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantor under this Guarantee; provided, that the obligations of
the Guarantor hereunder shall be limited to an aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provisions of any applicable state law.
(b) No payment or payments made by the Parent, the Borrower, any other
guarantor or any other Person or received or collected by the Agent or any
Lender from the Parent, the Borrower, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantor hereunder which shall, notwithstanding any such
payment or payments other than payments made by the Guarantor in respect of the
Obligations or payments received or collected from the Guarantor in respect of
the Obligations, remain liable for the Obligations until the Obligations are
paid in full and the Commitments are terminated.
(c) The Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Agent or any Lender on account of its
liability hereunder,
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<PAGE>
it will notify the Agent in writing that such payment is made under this
Guarantee for such purpose.
3. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default specified in the Credit Agreement, the Guarantor hereby
irrevocably authorizes the Agent and each Lender at any time and from time to
time without notice to the Guarantor or any other guarantor, any such notice
being expressly waived by the Guarantor, to setoff and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Agent and/or such Lender to or for
the credit or the account of the Guarantor, or any part thereof in such amounts
as the Agent or such Lender may elect, against and on account of the obligations
and liabilities of the Guarantor to the Agent or such Lender hereunder and
claims of every nature and description of the Agent or such Lender against the
Guarantor, in any currency, whether arising hereunder, under the Credit
Agreement, the Notes, the Security Documents, any other Loan Document, any
Hedging Agreement with any Lender or otherwise, as the Agent or such Lender may
elect, whether or not the Agent or any Lender has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Agent and each Lender agrees to notify the Guarantor promptly of
any such set-off and the application made by the Agent or such Lender; provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Agent and each Lender under this
paragraph are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agent or such Lender may have.
4. No Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder or any set-off or application of funds of the Guarantor by
the Agent or any Lender, the Guarantor hereby waives any claim, right or remedy
which the Guarantor may now have or may hereafter acquire against the Borrower
that arises hereunder and/or from the performance by the Guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification or participation in
any claim, right or remedy of the Lenders and the Agent against the Borrower or
any security which the Lenders and the Agent now have or hereafter acquire,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all the
Obligations shall not have been paid in full, such amount shall be held by the
Guarantor in trust for the Agent and the Lenders, segregated from other funds of
the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned
over to the Agent in the exact form received by the Guarantor (duly endorsed by
the Guarantor to the Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Agent may determine.
3
<PAGE>
5. Amendments, etc, with respect to the Obligations: Waiver of Rights.
The Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Agent or any Lender may be rescinded by such party and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released, in accordance with the terms of such agreement, by the
Agent or any Lender and the Credit Agreement, the Notes, the Security Documents,
the other Loan Documents, any Hedging Agreement with the Agent or any Lender and
any other collateral security document or other guarantee or document in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, in accordance with the terms of such agreement, as the Agent
and/or any Lender may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Agent or any
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time held as
security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, the Agent or
any Lender may, but shall be under no obligation to, make a similar demand on
the Parent, the Borrower or any other guarantor, and any failure by the Agent or
any Lender to make any such demand or to collect any payments from the Parent,
the Borrower or any such other guarantor or any release of the Parent, the
Borrower or such other guarantor shall not relieve the Guarantor of its
obligations or liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the Agent or any
Lender against the Guarantor. For the purposes hereof, "demand" shall include
the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee, the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Guarantee; and
all dealings between the Parent, the Borrower or the Guarantor and the Agent or
any Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Parent, the Borrower or the Guarantor with respect to the
Obligations. The Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, any of the Security Documents, any other Loan Document,
any of the obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Lender, (b) any defense, set-off or counterclaim (other than
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<PAGE>
a defense of payment or performance) which may at any time be available to or be
asserted by the Parent or the Borrower against the Agent or any Lender, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of the
Parent, the Borrower or the Guarantor) which constitutes, or might be construed
to constitute, an equitable or legal discharge of the Borrower or the Parent for
the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in
any other instance. When pursuing its rights and remedies hereunder against the
Guarantor, the Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any other
Person or against any collateral security or guarantee for the obligations or
any right of offset with respect thereto, and any failure by the Agent or any
Lender to pursue such other rights or remedies or to collect any payments from
the Borrower, the Parent or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, the Parent or any such other Person or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Agent or any Lender against the Guarantor. This Guarantee shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon the Guarantor and the successors and assigns thereof, and shall inure
to the benefit of the Agent and the Lenders, and their respective successors,
endorsees, transferees and assigns, until all the Obligations and the
obligations of the Guarantor under this Guarantee shall have been satisfied by
payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of the Credit Agreement the Borrower and the
Parent may be free from any Obligations.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower, the Parent or the Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower, the Parent or the Guarantor
or any substantial part of its property, or otherwise, all as though such
payments had not been made.
8. Payments. The Guarantor hereby guarantees that payments hereunder
will be paid to the Agent for the benefit of the Lenders without set-off or
counterclaim in U.S. Dollars at the office of the Agent located at 425 Lexington
Avenue, New York, New York 10017 or such other location as the Agent may from
time to time direct the Guarantor.
9. Representations and Warranties. The Guarantor hereby represents and
warrants that:
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(a) the Guarantor has the corporate power and authority, and the legal
right, to execute, deliver and perform its obligations under, this Guarantee and
the other Loan Documents to which the Guarantor is a party, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Guarantee and the other Loan Documents to which the Guarantor is a
party;
(b) this Guarantee and the other Loan Documents to which the Guarantor
is a party each constitute a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors, rights generally or by general
principles of equity (whether enforcement is sought by proceedings in equity or
at law);
(c) the execution, delivery and performance of this Guarantee or any
other Loan Document to which the Guarantor is a party will not violate any
Requirement of Law or Contractual Obligation of the Guarantor and will not
result in, or require, the creation or imposition of any Lien on any of the
properties or revenues of the Guarantor pursuant to any such Requirement of Law
or Contractual Obligation; and
(d) no consent or authorization of, filing with or other act by or in
respect of, any Governmental Authority or any other Person (including, without
limitation, any stockholder or creditor of the Guarantor) is required in
connection with the execution, delivery, performance, validity or enforceability
of this Guarantee or any other Loan Document to which the Guarantor is a party.
The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date of each borrowing
by the Borrower under the Credit Agreement on and as of such date of borrowing
as though made hereunder on and as of such date.
10. Severability. (a) Any provision of this Guarantee 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.
(b) The parties hereto have agreed as provided in Section 13 of this
Guarantee and in the Credit Agreement, that New York law is to govern, among
other matters, the amount of interest that may lawfully be charged, received or
contracted for in connection with the Obligations. If, not withstanding such
agreement, a court of competent jurisdiction applies the law of any other
jurisdiction to such interest, then the following shall apply:
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It is expressly stipulated and agreed to be the intent of the
Guarantor and the Agent at all times to comply with applicable state law
governing the maximum rate or amount of interest payable with respect to the
Obligations (or applicable United States federal law to the extent that it
permits the Agent to contract for, charge, take, reserve or receive a greater
amount of interest than under state law, including, without limitation, 12
U.S.C. Section 85 (1994)). If the applicable law is ever judicially interpreted
so as to render usurious any amount called for under the Obligations or under
this Guarantee, or contracted for, charged, taken, reserved or received with
respect to the Obligations, then it is the Guarantor's and the Agent's express
intent that all excess amounts theretofore collected by the Agent be credited on
the principal balance of the Obligations (or, if the Obligations have been or
would thereby be paid in full, refunded to the Guarantor), and the provisions of
this Guarantee and all other documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder.
11. Section Heading. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
12. No Waiver: Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 13), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
13. Integration; Waivers and Amendments; Successors and Assigns;
Governing Law. This Guarantee represents the agreement of the Guarantor with
respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein. None of the terms or provisions of this Guarantee may be
waived, amended or supplemented or otherwise modified except by a written
instrument executed by the Guarantor and the Agent; provided that any provision
of this Guarantee may be waived by the Agent and the Required Lenders in a
letter or agreement executed by the Agent or by telex or facsimile transmission
from the Agent. This Guarantee shall be binding upon the successors and assigns
of the Guarantor and shall inure to the benefit of the Agent and the Lenders and
their respective successors and assigns. THIS GUARANTEE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTEE
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SHALL BE GOVERNED BY AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS THEREOF OTHER THAN SECTION 5- 1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
14. Notices. All notices, requests and demands to or upon the
Guarantor or the Agent or any Lender to be effective shall be in writing or by
telegraph or telex and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or, in the case
of mail, three days after deposit in the postal system, first class postage
prepaid, or by overnight courier, in each case addressed to a party at the
address provided for such party in the Credit Agreement or set forth under its
signature below, as the case may be.
15. Submission to Jurisdiction: Waivers. (A) The Guarantor hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and any other Loan Document to which it is
party, or for recognition and enforcement of any judgment 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;
(ii) 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 any inconvenient court and agrees not to plead or
claim the same;
(iii) 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 Guarantor at
its address set forth below or at such other address of which the Agent shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(v) 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 Section any special, exemplary, punitive or consequential damage.
(B) THE GUARANTOR, THE LENDERS AND THE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
[ ]
By:
---------------------------------
Title:
Address and transmission number for Notices:
<PAGE>
EXHIBIT F
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 8, 1998, made by [ ], a
Delaware corporation (the "Pledgor"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as agent (in such capacity, the "Agent") for the several banks and
other financial institutions (the "Lenders") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among RADIO
UNICA HOLDINGS, CORP., a Delaware corporation (the "Parent"), RADIO UNICA
CORP. (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, the Pledgor has guaranteed the obligations of the Borrower
described above pursuant to the Guarantee, dated as of July 8, 1998, executed by
the Pledgor (as amended, supplemented or otherwise modified from time to time,
the "Guarantee"); and
WHEREAS, the Pledgor is the legal and beneficial owner of all the
shares of Pledged Stock (as hereinafter defined) issued by each of the Issuers
(as hereinafter defined); and
WHEREAS, Pledgor is, or from time to time may become, the beneficiary
of Pledged Promissory Notes (as hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Pledge Agreement to the
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans under the Credit Agreement, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined therein, and the
following terms shall have the following meanings:
<PAGE>
"Code" shall mean the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" shall mean the Pledged Stock, the Pledged Promissory
Notes and all Proceeds.
"Guarantee Obligations" shall mean all obligations of the Pledgor
under the Guarantee including, without limitation, in respect of the Obligations
(as defined in the Credit Agreement) to the extent set forth in the Guarantee.
"Issuers" shall mean the collective reference to the Issuers listed on
Schedule I hereto.
"Pledge Agreement" shall mean this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Promissory Notes" shall mean any now existing or future
promissory note or instrument executed by a Person in favor of the Pledgor other
than any intercompany notes or instrument executed by any Loan Party in favor of
another Loan Party in accordance with Section 6.2(d) of the Credit Agreement.
"Pledged Stock" shall mean the shares of capital stock of the Issuers
listed on Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by the Issuers to
the Borrower while this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Agent, for the ratable benefit of the Lenders, all the Pledged Stock and the
Pledged Promissory Notes endorsed as described in Section 4 below, and hereby
grants to the Agent, for the ratable benefit of the Lenders, a first priority
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Guarantee Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock to the Agent, the
Pledgor shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor.
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4. Endorsement. Concurrently with the delivery of the Pledged
Promissory Notes to the Agent, the Pledgor shall deliver an undated endorsement
carrying such Pledged Promissory Notes, duly executed in blank by the Pledgor.
5. Representations and Warranties. The Pledgor represents and warrants
that:
(a) the shares of Pledged Stock listed on Schedule I constitute all
the issued and outstanding shares of each class of the Capital Stock of each
Issuer;
(b) all the shares of Pledged Stock have been duly and validly issued
and are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has
good and marketable title to, the Pledged Stock listed on Schedule I, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Pledge Agreement; and
(d) to the extent in existance on the date hereof, the Pledgor is the
sole legal and beneficial holder of the Pledged Promissory Notes free and clear
of any and all Liens or options in favor of, or claims of, any other person,
except the Lien created by this Pledge Agreement;
(e) upon delivery to the Agent of the Pledged Promissory Notes and the
stock certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority Lien on
the Collateral, enforceable as such against all creditors of the Pledgor and any
Persons purporting to purchase any Collateral from the Pledgor, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(f) The chief executive office of the Pledgor and the office where the
Pledgor keeps its records concerning the Pledged Promissory Notes and all
contracts relating thereto is located at [__________]. The Pledgor shall not
establish a new location for its chief executive office or change its name until
(i) it has given to the Agent not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location or specifying such new
name, as the case may be, and (ii) with respect to such new location or such new
name, as the case may be, it shall have all action, satisfactory to the Agent,
to maintain the security interest of the Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
6. Covenants. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Pledge Agreement until the
Guarantee Obligations are paid in full and the Commitments are terminated:
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(a) If the Pledgor shall, as a result of his ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
the Pledgor shall accept the same as the agent of the Agent and the Lenders,
hold the same in trust for the Agent and the Lenders and deliver the same
forthwith to the Agent in the exact form received, duly endorsed by the Pledgor
to the Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with, if the Agent so
requests, signature guaranteed, to be held by the Agent, subject to the terms
hereof, as additional collateral security for the Guarantee Obligations. Any
sums paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer shall be paid over to the Agent to be held by it
hereunder as additional collateral security for the Guarantee Obligations, and
in case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to the
Pledged Stock pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Guarantee Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged Stock shall
be received by the Pledgor, the Pledgor shall, until such money or property is
paid or delivered to the Agent, hold such money or property in trust for the
Lenders, segregated from other funds of the Pledgor, as additional collateral
security for the Guarantee Obligations.
(b) If the Pledgor shall become entitled to receive or shall have
received any Pledged Promissory Notes, the Pledgor shall accept the same as the
agent of the Agent and the Lenders, hold the same in trust for the Agent and the
Lenders and deliver the same forthwith to the Agent in the exact form received,
together with an undated endorsement covering such Promissory Note duly executed
in blank by the Pledgor, to be held by the Agent, subject to the terms hereof,
as additional collateral security for the Guarantee Obligations. Any sums paid
upon or in respect of any Pledged Promissory Note upon the bankruptcy,
liquidation or dissolution of any of the makers of any such Pledged Promissory
Notes shall be paid over to the Agent to be held by it hereunder as additional
collateral security for the Guarantee Obligations. If any sums of money or
property so paid in respect of any such Pledged Promissory Notes shall be
received by the Pledgor, the Pledgor shall, until such money or property is paid
or delivered to the agent, hold such money or property in trust for the agent
and Lenders, segregated from other funds of the Pledgor, as additional
collateral security for the Guarantee Obligations.
(c) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, any Issuer to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the
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Collateral, or (iii) create, incur or permit to exist any other Lien or option
in favor of, or any claim of any Person with respect to, any of the Collateral,
or any interest therein, except for the Lien provided for by this Pledge
Agreement. The Pledgor will defend and will indemnify and hold harmless the
Agent and the Lenders against the claims and demands of all Persons whomsoever
with respect to any claim arising from or in connection with the right, title
and interest of the Agent and the Lenders in and to the Collateral.
(d) At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge Agreement.
(e) The Pledgor agrees to pay, and to save the Agent and the Lenders
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamps, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement.
(f) The Pledgor agrees that within 30 days of any corporation becoming
a Subsidiary (as defined in the Credit Agreement) in the case of shares of stock
of such Subsidiary, it shall (i) upon the request of the Agent, deliver to the
Agent all such shares owned by the Pledgor, together with appropriate undated
stock powers duly executed in blank, and (ii) execute and deliver a new pledge
agreement (or a supplement to this Pledge Agreement) covering such shares. Upon
such delivery, such shares shall constitute a representation and warranty as of
the date of such delivery that the representations and warranties contained in
Section 5 above are true and correct on such date after giving effect to such
delivery. The Pledgor shall also furnish to the Lenders such legal opinions
confirming such representations and warranties as the Agent or any Lender may
reasonably request, which opinions shall not be broader in scope than those with
respect to this Agreement delivered to the Lenders on the Closing Date (as
defined in the Credit Agreement).
7. Cash Dividends; Voting Rights. Unless a Default shall have occurred
and be continuing (or, solely with respect to dividends permitted under Section
6.7 of the Credit Agreement, an Event of Default), the Pledgor shall be
permitted to receive all cash dividends paid to the extent permitted in the
Credit Agreement, in respect of the Pledged Stock; provided that any such cash
dividends received by the Pledgor during the pendency of any Default or Event of
Default, as applicable, shall be promptly returned to the Issuer and any such
cash dividends received during the pendency of any Event of Default or during
the pendency of a
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<PAGE>
Default but not returned prior to such Event of Default shall be promptly
delivered to the Agent. Unless an Event of Default shall have occurred and be
continuing, the Pledgor shall be permitted to exercise all voting and corporate
rights with respect to the Pledged Stock; provided that no vote shall be cast or
corporate right exercised or other action taken which, in the Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, the Notes, the
other Loan Documents or this Pledge Agreement.
8. Rights of the Lenders and the Agent. (a) If an Event of Default
shall occur and be continuing and the Agent shall give notice of its intent to
exercise such rights to the Pledgor, (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and make
application thereof to the Guarantee Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares of
the Pledged Stock at any meeting of shareholders of the Issuer or otherwise and
(B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver any
and all the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine), all without liability to the Agent except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall not be
conditioned or contingent upon the pursuit by the Agent or any Lender of any
right or remedy against the Pledgor, the Parent, the Borrower, any Issuer, any
guarantor or against any other Person which may be or become liable in respect
of all or any part of the Guarantee Obligations or against any collateral
security therefor, guarantee therefor or right of offset with respect thereto.
Neither the Agent nor any Lender shall be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Agent be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof.
9. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted in this Pledge Agreement and in any other instrument or
agreement securing, evidencing or relating to the Guarantee Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Agent, without demand of
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<PAGE>
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Pledgor, the Parent, the Borrower, any Issuer or any other Person (all and each
of which demands, defenses, advertisements and notices are hereby waived), may
in such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign, give
option or options to purchase or otherwise dispose of and deliver the Collateral
or any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market, at
any exchange, broker's board or office of the Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold free
of any right or equity of redemption in the Pledgor, which right or equity is
hereby waived or released. The Agent shall apply any Proceeds from time to time
held by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Agent, to the payment in whole or in part of the Guarantee Obligations, in such
order as the Agent may elect, and only after such application and after the
payment by the Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the Agent
account for the surplus, if any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims, damages and demands it may
acquire against the Agent or any Lender arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. The
Pledgor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Guarantee
Obligations and the fees and disbursements of any attorneys employed by the
Agent or any Lender to collect such deficiency.
10. Private Sales. (a) The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Promissory Notes, by reason of certain prohibitions contained in the Securities
Act of 1933 (the "Securities Act") and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Agent shall be under no obligation
to delay a sale of any of the Pledged Stock or the Pledged Promissory Notes for
the period of time necessary to permit any Issuer or the Pledgor to register
such securities for public sale under the
7
<PAGE>
Securities Act, or under applicable state securities laws, even if such Issuer
or the Pledgor would agree to do so.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock or the Pledged Promissory
Notes pursuant to this Section 10 valid and binding and in compliance with any
and all other applicable Requirements of Law. The Pledgor further agrees that a
breach of any of the covenants contained in this Section 10 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the Lenders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 10 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred under the Credit
Agreement.
11. Limitation on Duties Regarding Collateral. The Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. None of the Agent, the Lenders or
any of their respective directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or otherwise.
12. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Pledgor's obligations hereunder, the Lenders'
remedies hereunder are subject to the Communications Act of 1934, as amended,
and all applicable rules, regulations and policies of the FCC ("FCC Law"), and
the Agent and the lenders will not take any action pursuant to this Agreement
that would constitute or result in any assignment or transfer of control of any
FCC authorization held by Pledgor if such assignment or transfer of control
would require under then existing FCC Law the prior approval of the FCC, without
first obtaining such approval of the FCC. Pledgor agrees to take any action
which the Agent may reasonably request in order to cause the Agent (on behalf of
the Lenders) to obtain and enjoy the full rights and benefits granted by this
Agreement, including specifically, at the cost and expense of Pledgor, the use
of its commercially reasonable best efforts to assist in obtaining approval of
the FCC or Governmental Authority for an action or transaction contemplated by
this Agreement which are then required by law, and specifically, without
limitation, upon request upon and during the continuance of an Event of Default,
to prepare, sign and file (or cause to be filed) with the FCC or other
Governmental Authority the assignor's, transferor's or controlling person's
portion of any application or applications for consent to (i) the assignment of
any FCC license or transfer or control thereof, (ii) any sale or sales of
property constituting any Collateral by the Agent or on behalf of the Lenders,
or (iii) any assumption by the Agent, the Lenders or their designees of
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<PAGE>
voting rights or management rights in property constituting any Collateral
effected in accordance with the terms of this Agreement or any other Loan
Document.
13. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
14. Severability. Any provision of this Pledge 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.
15. Section Headings. The Section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 17 hereof)
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Agent or any Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Agent; provided that any provision of this Pledge Agreement
may be waived by the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Pledge Agreement shall
inure to the benefit of the Agent and the Lenders and their respective
successors and assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
9
<PAGE>
18. Notices. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement or the Guarantee, as the case may be and shall be effective (a) in the
case of mail, three days after deposit in the postal system, first class postage
pre-paid, and (b) in the case of telex or facsimile notices, when sent. The
Pledgor and the Issuers may change their respective addresses and transmission
numbers by written notice to the Agent.
19. Irrevocable Authorization and Instruction to Issuers. The Pledgor
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Pledge Agreement, without any other or further instructions from the Pledgor,
and the Pledgor agrees that the Issuers shall be fully protected in so
complying.
20. Authority of Agent. The Pledgor acknowledges that the rights and
responsibilities of the Agent under this Pledge Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Pledgor, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and neither the Pledgor nor any Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
21. Termination; Release. Upon the repayment of all the Obligations in
full and the termination of the Commitment, this Pledge Agreement shall
terminate, and the Agent, at the request of and expense of the Pledgor, will
promptly execute and deliver to the Pledgor the proper instruments (including
Uniform Commercial Code termination statements on form UCC-2) acknowledging the
termination of this Pledge Agreement, and will duly assign, transfer and deliver
to the Pledgor (without recourse and without any representation or warranty of
any kind) such of the Collateral as may be in the possession of the Agent and
has not theretofore been disposed of or otherwise applied or released. In
addition, upon payment in full of a Pledged Promissory Note by the maker
thereof, upon request of the Pledgor and after receipt by the Agent in its sole
discretion, the Agent will return such Pledged Promissory Note to the Pledgor
for further delivery to such maker.
22. Counterparts. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
[ ]
By
-------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By
-------------------------------
Name:
Title:
11
<PAGE>
ACKNOWLEDGMENT AND CONSENT
[ ], a [ ] corporation (the "Company "), one of the
Issuers referred to in the foregoing Pledge Agreement, hereby acknowledges
receipt of a copy thereof, agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. The Company agrees to
notify the Agent promptly in writing of the occurrence of any of the events
described in Section 6(a) of the Pledge Agreement. The Company further agrees
that the terms of Section 10(b) of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it under
or pursuant to or arising out of Section 10 of the Pledge Agreement.
[ ]
By
--------------------------------
Title:
Address for Notices:
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<PAGE>
SCHEDULE 1
PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Issuer Class of Stock Stock Certificate No. No. of Shares
------ -------------- --------------------- -------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT G
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 8, 1998, made by [ ],
a Delaware corporation (the "Grantor"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as agent (in such capacity, the "Agent") for the several banks and
other financial institutions (the "Lenders") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among RADIO
UNICA HOLDINGS CORP., a Delaware corporation (the "Parent"), RADIO UNICA
CORP., a Delaware corporation (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, the Grantor has guaranteed the obligations of the Borrower
described above pursuant to the Guarantee, dated as of July 8, 1998, 1998
executed by the Grantor (as amended, supplemented or otherwise modified from
time to time, the "Guarantee"); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Grantor shall have executed and delivered this Security Agreement to the
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, the Grantor
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm
<PAGE>
Products, General Intangibles, Instruments, Inventory, Investment Property and
Proceeds. The following terms shall have the following meanings:
"Code" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2.
"Contracts" shall mean all contracts executed from time to time by the
Grantor, including, without limitation, with respect to an Account, in each
case, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of the
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of the Grantor to damages arising
out of, or for, breach or default in respect thereof and (iii) all rights
of the Grantor to perform and to exercise all remedies thereunder.
"Guarantee Obligations" shall mean all obligations of the Grantor
under the Guarantee including, without limitation, in respect of the
Obligations (as defined in the Credit Agreement) to the extent set forth in
the Guarantee.
"Security Agreement" means this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Guarantee Obligations, the Grantor hereby
grants to the Agent for the ratable benefit of the Lenders a security interest
in all the following property now owned or at any time hereafter acquired by the
Grantor or in which the Grantor now has or at any time in the future may acquire
any right, title or interest in (collectively, the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
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<PAGE>
(viii) all Inventory;
(ix) all Investment Property; and
(x) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
provided that nothing contained herein shall create a collateral assignment with
respect to or a security interest in (A) any Contract if the grant of such
collateral is (or is determined by non-appealable adjudication of a court or
other dispute resolution tribunal to be) expressly prohibited by the terms of
such Contract, (B) with respect to any other Collateral which is subject to a
Lien permitted under Section 6.3 of the Credit Agreement or (C) any license,
permit or other governmental authorization which by its terms is not assignable.
3. Rights of Agent and Lenders; Limitations on Agent's and Lenders'
Obligations.
(a) Grantor Remains Liable under Accounts and Contracts. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) or under any Contract by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any such Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Grantor under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto) or under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties. At any time
after the occurrence and during the continuance of an Event of Default, the
Agent shall have the right upon written notice to the Grantor of its intention
to do so, to notify account debtors or obligors on the Accounts and parties to
the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the ratable benefit of the Lenders and that payments due or to become
due to the Grantor in respect thereof shall be made directly to the Agent and,
upon such notification, and at the expense of the Grantor, to enforce collection
of any such Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Agent may, at any time, in its own name
or in the name of the Lenders or the Grantor communicate with
3
<PAGE>
account debtors on the Accounts and parties to the Contracts to verify with them
to its satisfaction the existence, amount and terms of any Accounts or
Contracts.
(c) Collections on Accounts. The Agent hereby authorizes the Grantor
to collect the Accounts and the Agent may curtail or terminate said authority at
any time upon the occurrence and during the continuance of an Event of Default.
If required by the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts, when collected by
the Grantor, shall be forthwith (and, in any event, within two Business Days)
deposited by the Grantor in the exact form received, duly endorsed by the
Grantor to the Agent if required, in a special collateral account maintained by
the Agent, subject to withdrawal by the Agent for the account of the Lenders
only, as hereinafter provided, and, until so turned over, shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor. Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit. All Proceeds constituting collections of Accounts while held by
the Agent (or by the Grantor in trust for the Agent and the Lenders) shall
continue to be collateral security for all the Guarantee Obligations and shall
not constitute payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by the Grantor and the Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Agent's
election, the Agent shall apply all or any part of the funds on deposit in said
special collateral account on account of the Guarantee Obligations in such order
as the Agent may elect, and any part of such funds which the Agent elects not so
to apply and deems not required as collateral security for the obligations shall
be paid over from time to time by the Agent to the Grantor or to whomsoever may
lawfully be entitled to receive the same. Upon the occurrence of an Event of
Default that is continuing, at the Agent's request, the Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts, including, without
limitation, all original orders, invoices and shipping receipts.
(d) Analysis of Accounts. The Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection therewith;
provided that the Agent shall use its reasonable efforts to minimize any
disruption of the Grantor's business resulting from such verifications. At any
time and from time to time if the Agent concludes in its reasonable judgment,
based upon its evaluation of the general creditworthiness of the Grantor, that
such examination is required, and so requests, the Grantor shall, at the
Grantor's expense if at any time after the occurrence and during the continuance
of an Event of Default, and otherwise at the Agent's expense, cause independent
public accountants or other parties that are not Affiliates of the Grantor and
are satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
4
<PAGE>
4. Representations and Warranties. The Grantor hereby represents and
warrants that:
(a) Title; No Other Liens. Except as permitted under Section 6.3 of
the Credit Agreement, the Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. Except as permitted under
Section 6.3 of the Credit Agreement no security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Agent, for the ratable benefit of the Lenders, pursuant to this
Security Agreement.
(b) Perfected First Priority Liens. Except as permitted under Section
6.3 of the Credit Agreement the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements, constitute
perfected Liens on the Collateral in favor of the Agent, for the ratable benefit
of the Lenders, which are prior to all other Liens on the Collateral created by
the Grantor and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from the Grantor and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(c) Accounts. The amount represented by the Grantor to the Lenders
from time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually owing
by such account debtor or debtors thereunder. No amount payable to the Grantor
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent. The place where the
Grantor keeps its records concerning the Accounts is [__________].
(d) Material Agreement. Except as set forth in Schedule 3.4 to the
Credit Agreement, no consent of any party (other than the Grantor) to any
Material Agreement is required, or purports to be required, in connection with
the execution, delivery and performance of this Security Agreement. Each
Material Agreement is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Agreements by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Agreement to any material adverse limitation, either
specific or general in nature. Neither the Grantor nor to the best of the
Grantor's knowledge any other party to any Material Agreement is
5
<PAGE>
in default in the performance or observance of any of the terms thereof. The
Grantor has fully performed in all material respects all its obligations under
each of the Material Agreements. The right, title and interest of the Grantor
in, to and under each Material Agreement are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of such
Material Agreement as Collateral, nor have any of the foregoing been asserted or
alleged against the Grantor as to any Material Agreement. The Grantor has
delivered to the Agent a complete and correct copy of each Material Agreement,
including all amendments, supplements and other modifications thereto and will
deliver any other Contract which the Agent may request. No amount payable to the
Grantor under or in connection with any Material Agreement is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
(e) Inventory and Equipment. Except as permitted in Section 5(p), the
Inventory and the Equipment are kept at the locations listed on Schedule I
hereto.
(f) Chief Executive Office. Except as permitted in Section 5(p), the
Grantor's chief executive office and chief place of business is located at
[__________].
(g) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(i) Investment Property. The Investment Property, other than accounts
invested in cash equivalents and other than shares of capital stock of the
Grantor's Subsidiaries, consists of the items set forth on Annex A.
5. Covenants. The Grantor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Security Agreement until the
Guarantee Obligations are paid in full and the Commitments are terminated:
(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the Agent, and at
the sole expense of the Grantor, the Grantor will promptly and duly execute and
deliver such further instruments and documents and take such further action as
the Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Grantor also hereby
authorizes the Agent to file any such financing or continuation statement
without the signature of the Grantor to the extent permitted by applicable law.
A carbon, photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
6
<PAGE>
(b) Indemnification. The Grantor agrees to pay, and to save the Agent
and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security Agreement,
except resulting from the Agent's or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Agent or any Lender
under any Account or Contract for any sum owing thereunder, or to enforce any
provisions of any Account or Contract, the Grantor will save, indemnify and keep
the Agent and such Lender harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the account debtor or obligor thereunder, arising out
of a breach by the Grantor of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the Grantor, except
resulting from the Agent's or any Lender's gross negligence or willful
misconduct.
(c) Maintenance of Records. The Grantor will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Grantor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby in such manner as the Agent may request. For
the Agent's and the Lenders' further security, the Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Grantor's
books and records pertaining to the Collateral, and the Grantor shall, during
the continuance of a Default under Section 7.1(a) or Section 7.1(c) as it
relates to Section 6.1, turn over copies of such books and records and during
the continuation of an Event of Default turn over any such books and records, in
each case, to the Agent or to its representatives during normal business hours
at the request of the Agent.
(d) Right of Inspection. The Agent and the Lenders shall after
reasonable notice to the Grantor be permitted to visit and inspect any of the
properties of the Grantor and examine and make abstracts from any books and
records of the Grantor at any reasonable time and as often as may reasonably be
desired, and the Grantor agrees to render to the Agent and the Lenders, at the
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Agent and the Lenders and their
respective representatives shall after reasonable notice to the Grantor be
permitted to visit any of the properties of the Grantor where any of the
Inventory or Equipment is located at any reasonable time and as often as may
reasonably be desired, for the purpose of inspecting the Inventory or Equipment,
observing its use or otherwise protecting its interests therein. Each such
visitation and inspection (a) by or on behalf of any Lender shall be at such
Lender's expense and (b) by or on behalf of the Agent following the occurrence
and during the continuance of any Default or Event of Default shall be at the
Grantor's expense.
7
<PAGE>
(e) Compliance with Laws. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any part
thereof or to the operation of the Grantor's business; except to the extent that
failure to do so could not reasonably by expected to have a Material Adverse
Effect.
(f) Compliance with Terms of Contracts. The Grantor will perform and
comply in all material respects with all its obligations under the Contracts and
all its other Contractual Obligations relating to the Collateral except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(g) Payment of Obligations. The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in good faith
by appropriate proceedings, (ii) such proceedings do not involve any material
danger of the sale, forfeiture or loss of any of the Collateral or any interest
therein and (iii) such charge is adequately reserved against on the Grantor's
books in accordance with GAAP.
(h) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(i) Limitations on Dispositions of Collateral. The Grantor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except as permitted pursuant to Section 6.6 of the
Credit Agreement.
(k) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of business, the Grantor will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(l) Maintenance of Equipment. The Grantor will maintain each item of
Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(n) Further Identification of Collateral. The Grantor will furnish to
the Agent and the Lenders from time to time statements and schedules further
identifying and describing
8
<PAGE>
the Collateral and such other reports in connection with the Collateral as the
Agent may request, all in reasonable detail.
(o) Notices. The Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the Collateral
and (ii) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the Liens created hereunder.
(p) Changes in Locations, Name, etc. Unless the Grantor gives 30 days'
prior written notice to the Agent, the Grantor will not (i) change the location
of its chief executive office/chief place of business from that specified in
Section 4(f) or remove its books and records from the location specified in
Section 4(c), (ii) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule I hereto or (iii) change its name,
identity or corporate structure to such an extent that any financing statement
filed by the Agent in connection with this Security Agreement would become
seriously misleading.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Grantor and in the name of the Grantor or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do the following:
(i) in the case of any Account, at any time when the authority of the
Grantor to collect the Accounts has been curtailed or terminated pursuant
to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
9
<PAGE>
(ii) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against the Grantor with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
generally, to sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and to
do, at the Agent's option and the Grantor's expense, at any time, or from
time to time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the Agent's and the
Lenders' Liens thereon and to effect the intent of this Security Agreement,
all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. The Grantor also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in this Section 6 or in Section 9 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred on the
Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
10
<PAGE>
7. Performance by Agent of Grantor's Obligations. If the Grantor fails
to perform or comply with any of its agreements contained herein and the Agent,
as provided for by the terms of this Security Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of the Agent incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum 2% above the
Alternate Base Rate, shall be payable by the Grantor to the Agent on demand and
shall constitute Guarantee Obligations secured hereby.
8. Proceeds. In addition to the rights of the Agent and the Lenders
specified in Section 3(c) with respect to payments of Accounts, it is agreed
that if an Event of Default shall occur and be continuing (a) upon written
notice by the Agent to the Grantor, all Proceeds received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor, and, forthwith upon receipt by the Grantor, shall be turned over to
the Agent in the exact form received by the Grantor (duly endorsed by the
Grantor to the Agent, if required), and (b) any and all such Proceeds received
by the Agent (whether from the Grantor or otherwise) may, in the sole discretion
of the Agent, be held by the Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be applied by
the Agent against, the Guarantee Obligations (whether matured or unmatured),
such application to be in such order as the Agent shall elect. Any balance of
such Proceeds remaining after the Guarantee Obligations shall have been paid in
full and the Commitments shall have been terminated shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted to them in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Guarantee
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Parent, the Borrower, the Grantor, any guarantor, or any other Person (all and
each of which demands, defenses, advertisements and notices being hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Agent or any Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity is
hereby waived or released. The Grantor further agrees, at the Agent's request,
to assemble the Collateral and make it available to the Agent at such places as
the Agent shall reasonably select, whether at
11
<PAGE>
the Grantor's premises or elsewhere. The Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Guarantee Obligations, in such order as
the Agent may elect, and only after such application and after the payment by
the Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(i)(c) of the Code, need the Agent account for
the surplus, if any, to the Grantor. To the extent permitted by applicable law,
the Grantor waives all claims, damages and demands it may acquire against the
Agent or any Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Guarantee Obligations and the fees
and disbursements of any attorneys employed by the Agent or any Lender to
collect such deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. The
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any Lender,
nor any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Grantor or
otherwise.
11. FCC Compliance. Notwithstanding anything herein to the contrary,
but without limiting or waiving Grantor's obligations hereunder, the Lenders'
remedies hereunder are subject to the Communications Act of 1934, as amended,
and all applicable rules, regulations and policies of the FCC ("FCC Law"), and
the Agent and the lenders will not take any action pursuant to this Agreement
that would constitute or result in any assignment or transfer of control of any
FCC authorization held by Grantor if such assignment or transfer of control
would require under then existing FCC Law the prior approval of the FCC, without
first obtaining such approval of the FCC. Grantor agrees to take any action
which the Agent may reasonably request in order to cause the Agent (on behalf of
the Lenders) to obtain and enjoy the full rights and benefits granted by this
Agreement, including specifically, at the cost and expense of Grantor, the use
of its commercially reasonable best efforts to assist in obtaining approval of
the FCC or Governmental Authority for an action or transaction contemplated by
this Agreement which are then required by law, and specifically, without
limitation, upon request upon and during the continuance of an Event of Default,
to prepare, sign and file (or cause to be filed) with the FCC or other
Governmental Authority the assignor's, transferor's or controlling person's
portion of any application or applications for consent to (i) the assignment of
any FCC license or transfer or control thereof, (ii) any sale or sales of
property constituting any Collateral by the Agent or on
12
<PAGE>
behalf of the Lenders, or (iii) any assumption by the Agent, the Lenders or
their designees of voting rights or management rights in property constituting
any Collateral effected in accordance with the terms of this Agreement or any
other Loan Document.
12. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
13. Limitation on Lines of Business. Nothing contained in this
Security Agreement shall be deemed or construed as modifying in any way the
restrictions on Grantor's activities as set forth in Section 6.14 of the Credit
Agreement.
14. Severability. Any provision of this Security 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.
15. Section Headings. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 17), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantor and
the Agent; provided that any provision of this Security Agreement may be waived
by the Agent in a written letter or agreement executed by the Agent or by telex
or facsimile transmission from the Agent. This Security Agreement shall be
binding upon the successors and assigns of the Grantor and shall inure to the
benefit of the Agent and the Lenders and their respective successors and
assigns.
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<PAGE>
18. Governing Law. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
19. Notices. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement or the Guarantee, as the case may be, and shall be effective
(a) in the case of mail, three days after deposit in the postal system, first
class postage pre-paid and (b) in the case of telex or facsimile notices, when
sent. The Grantor may change its address and transmission number by written
notice to the Agent, and the Agent or any Lender may change its address and
transmission number by written notice to the Grantor and, in the case of any
Lender, to the Agent.
20. Authority of Agent. The Grantor acknowledges that the rights and
responsibilities of the Agent under this Security Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Grantor, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Grantor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
21. Counterparts. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
[ ]
By:
--------------------------------
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By:
--------------------------------
Title:
<PAGE>
SCHEDULE 1
TO SUBSIDIARY
SECURITY
AGREEMENT
[ ]
LOCATION OF INVENTORY
---------------------
None.
LOCATION OF EQUIPMENT
---------------------
<PAGE>
ANNEX A
TO SUBSIDIARY
SECURITY
AGREEMENT
[ ]
LIST OF INVESTMENT PROPERTY
---------------------------
NONE
<PAGE>
Exhibit 10.13
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement ("Agreement") is made and entered into as
of April 27, 1998, by and between The Freedom Network, Inc., a Delaware corpora
tion ("Freedom"), and Radio Unica Corp., a Delaware corporation ("Programmer").
W I T N E S S E T H
WHEREAS, an application is pending before the Federal Communications
Commission ("FCC") to assign the license for commercial AM broadcast station
KDFT (AM), licensed to broadcast on frequency 540 kHz at Ferris, Texas (the
"Station"), to Freedom;
WHEREAS, Freedom has entered a Local Marketing Agreement ("LMA") with
the licensee of Station to broker broadcast time on the Station in accordance
with the FCC rules;
WHEREAS, Freedom has such broadcast time available and desires that
Programmer provide radio programming during that time, subject to the terms of
this Agreement and consistent with the LMA;
WHEREAS, Programmer desires to purchase time on the Station to present
its programming and to sell advertising time for inclusion in said programming,
and is willing to purchase that broadcast time, subject to the terms of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
<PAGE>
1. Agreement Subject To LMA. The parties hereby acknowledge that
Freedom is not yet the FCC licensee of the Station, and as such does not
exercise control over the operations of the station or ultimate authority over
the programming on the Station. Moreover, until the consummation of the
assignment of the FCC licenses for the Station to Freedom, this Agreement is
subject to, and shall be interpreted in accordance with, the LMA between Freedom
and the FCC Licensee, a copy of which has been provided to Programmer. Prior to
the consummation of the assignment, "FCC Licensee" shall refer to Richard E.
Witkovski. Subsequent to the consummation of the assignment, "FCC Licensee"
shall refer to Freedom.
2. Term. The term of this Agreement shall commence on a date not
earlier than May 11, 1998 or later than May 18, 1998 (the "Commencement Date").
The Commencement Date shall be selected by Freedom by giving not less than ten
(10) days prior notice to Programmer. Starting on the Commencement Date, Freedom
agrees to make broadcast time available to Programmer in accordance with the
schedule described below and to cause to be broadcast on the Station the Pro
grammer's radio programs. This Agreement shall terminate on the second anniver
sary of the Commencement Date, unless extended by mutual agreement of the
parties hereto or terminated sooner pursuant to the terms of this Agreement.
3. Consideration.
3.1 Monthly Payments. As consideration for the air time made
available hereunder, Programmer shall make monthly payments to Freedom as set
forth in Attachment I hereto.
3.2 Additional Time. Consideration for additional time used by
<PAGE>
Programmer for World Cup events shall be as set forth in Attachment I hereto.
4. Broadcast Operations.
4.1 Broadcast Schedule. Starting on the Commencement Date and
throughout the term of this Agreement, Freedom shall make available to
Programmer all of the broadcast time on the Station (i) from 7:00 a.m. until
2:00 p.m., Central Time, on a daily basis, Monday through Friday of each week,
and from (ii) 10:00 a.m. until 5:00 p.m. Central Time each Saturday (the
"Programmer Time"). Addi tionally, and to the extent outside the time periods
set forth herein, Freedom shall make available all necessary time required by
Programmer to carry all World Cup soccer matches, as set forth in Attachment II
hereto.
4.2 Maintenance. In the event that maintenance work affecting
the operation of the Station by the FCC Licensee is necessary during the
Programmer Time, Freedom shall use its best efforts to provide at least
forty-eight (48) hours prior notice to Programmer, subject to the FCC Licensee's
notice to Freedom. Following the consummation of the assignment of the Station
to Freedom, Freedom shall use its best efforts to schedule and perform any such
maintenance work at times other than during the Programmer Time.
4.3 Interruption Of Normal Operations; Force Majeure. Any
failure or impairment of facilities or any delay or interruption in the
broadcast of programs, in whole or in part, due to a cause beyond the control of
Freedom, shall not constitute a breach of this Agreement by Freedom, but may
result in a proration pursuant to Section 7.2 herein. If the Station suffers
loss or damage of any nature to its transmission facilities which results in the
interruption of service or the inability of the Station to operate with its
maximum authorized facilities, Freedom shall immediately notify Programmer.
5. Station Programming Policies.
<PAGE>
5.1 Broadcast Station Programming Policy Statement. The FCC
Licensee has adopted, and the FCC Licensee and Freedom will enforce, a Broadcast
Station Programming Policy Statement (the "Policy Statement"), a copy of which
appears as Attachment III hereto. Programmer agrees and covenants that all pro
gramming, advertising spots, promotional material and announcements that it
provides for broadcast on the Station shall comply in all material respects with
(i) the Policy Statement; (ii) all applicable federal, state and local laws and
regulations, including the rules and regulations of the FCC and the Federal
Trade Commission ("FTC'), and the Communications Act of 1934, as amended
("Act"); and (iii) all subsequent changes to such rules and regulations and the
Act. Programmer acknowl edges that Freedom has not urged, counseled or advised
the use of any unfair business practice. If either Freedom or the FCC Licensee
determines that a program supplied by Programmer, within its sole discretion,
does not comply with the Policy Statement or conform to the rules and
regulations of the FCC is may, upon prior written notice to Programmer (to the
extent time permits such notice), suspend or cancel such program without
liability to Freedom or the FCC Licensee, subject to Section 7.2 herein. Freedom
will use reasonable efforts to provide such written notice to Programmer prior
to the suspension or cancellation of any such program, subject to the notice
provided to it by the FCC Licensee.
5.2 Programmer Compliance With Copyright Act. Programmer
represents and warrants to Freedom that Programmer has full legal authority for
the broadcast of its programming on the Station, and that Programmer shall not
provide for broadcast of any material in violation of the Copyright Act or any
copyright rules
<PAGE>
and regulations. All music supplied by Programmer shall be: (i) licensed by
ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at the source
by Programmer. Programmer shall be responsible for payment of all such license
fees. The right to use the programming and to authorize its use in any manner
shall be and remain vested in Programmer.
5.3 Sales. Programmer shall retain all revenues from the sale
of advertising time within the programming it provides to Freedom. Programmer
shall be responsible for payment of the commissions due to any national sales
representa tive engaged by it for the purpose of selling national advertising
which is carried during the programming it provides to Freedom. Freedom shall
retain all revenues from its sale of Station's advertising during the hours each
week in which Freedom provides the Station with its own programming outside of
the Programmer Time.
5.4 Payola. Programmer agrees that it will not accept any
consider ation, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees that every six (6) months, or more frequently at
the request of the FCC Licensee or Freedom, it will execute and provide Freedom
with a Payola Affidavit from each of its employees involved with the Station
substantially in the form attached hereto as Attachment IV.
5.5 Cooperation On Programming. Programmer shall provide
Freedom with information concerning such of Programmer's programs as are
<PAGE>
responsive to community issues, as FCC Licensee shall reasonably request, so as
to assist the FCC Licensee in the satisfaction of its public service programming
obligations. Programmer shall also provide Freedom upon request such other
information necessary to enable the FCC Licensee to prepare records and reports
required by the Commission or other local, state or federal government entities,
including quarterly issues/programs lists.
5.6 Station Identification, PSAs And EAS. Freedom shall retain
one minute per hour during the Programmer Time for the purpose of station
identifi cation and the airing of public service announcements ("PSAs"). The
definition of PSA shall be an announcement for which no charge is made and which
promotes activities of federal, state and local governments, or programs,
activities or services of nonprofit organizations (e.g. Red Cross blood
donations). Provided, however, that during any World Cup soccer match, including
the pre and post-match shows, Freedom shall retain only the minimum time
necessary to make station identification announcements. Programmer shall
cooperate with Freedom and the FCC Licensee to ensure compliance with the
Commission's rules regarding the Emergency Alert System (EAS) tests.
5.7 Political Advertising. Programmer shall cooperate with
Freedom to assist the FCC Licensee in complying with all rules of the FCC regard
ing political broadcasting, including those requiring access by any qualified
political candidate for federal elective office, and the Station's political
broadcast policies. Programmer shall promptly supply to Freedom such
information, including all inquires concerning the broadcast of political
advertising, as may be necessary to
<PAGE>
comply with FCC rules and policies, including the lowest unit rate, equal
opportuni ties, reasonable access, political file and related requirements of
federal law and regulations. The FCC Licensee, in consultation with Freedom, and
Programmer, shall develop a statement which discloses its political broadcasting
policies to political candidates, and Programmer shall follow those policies and
rates in the sale of political programming and advertising. In the event that
Programmer fails to satisfy the political broadcasting requirements under the
Act and the rules and regulations of the FCC and such failure inhibits the FCC
Licensee in its compliance with the political broadcasting requirements of the
FCC, then to the extent reason ably necessary to assure such compliance,
Programmer shall either (i) promptly reimburse Freedom for the cost of rebates
to political advertisers or (ii) release broadcast time and/or advertising
availabilities to Freedom at no cost to Freedom.
5.8 Handling Of Mail. Except as required to comply with FCC
rules and policies following consummation of the assignment, including those
regarding the maintenance of the public inspection file, Freedom shall not be
required to receive or handle mail, cables, telegraph or telephone calls in
connection with programs provided by Programmer unless Freedom at the request
of Program mer has agreed in writing to do so.
5.9 Insurance. Programmer shall maintain throughout the term
of this Agreement insurance sufficient to cover general liability and errors and
omis sions with regard to the programming it provides the Station. Such
insurance shall name Freedom as an insured party.
5.10 Freedom Control Of Programming. Freedom and the FCC
Licensee shall maintain absolute rights to suspend or preempt
programming as provided in Section 5.1 herein, and the FCC Licensee right to
suspend or preempt
<PAGE>
programming as provided in Section 7.1 herein.
6. Responsibility For Employees And Expenses. Programmer shall employ
and be responsible for the salaries, commissions, taxes, insurance and all other
related costs of all personnel and property involved in the production and
delivery of Programmer's programming. Programmer shall be responsible for all
liabilities, debts and obligations of Programmer based upon the purchase of air
time and delivery of programming including, without limitation, accounts
payable, barter agreements and unaired advertisements. Freedom or FCC Licensee
shall be respon sible for the employment of a board operator who shall insert
commercial matter provided by Programmer, during the Programmer Time, as set out
in daily logs to be provided in advance by Programmer. Freedom or FCC Licensee
shall provide Programmer with ground or roof rights as necessary for a satellite
receive dish up to 3.5 meters in diameter to receive Programmer's programming at
or near the Station's studio facility.
7. FCC Licensee's Operating Of Station. Notwithstanding any other
provision of this Agreement, the FCC Licensee shall have full authority and
power over the operation of the Station during the period of this Agreement,
including the Station's finances, personnel and programming policies.
7.1 FCC Licensee Control Of Station Operations. Programmer
agrees that the FCC Licensee shall retain control over the policies, programming
and operations of the Station; including, without limitation, (i) the right to
accept or reject any programming or advertisements provided by Programmer
pursuant to Section 5.1, (ii) the right to preempt any programs provided by
Programmer that are not in the public interest, or in order to broadcast a
program deemed by the FCC Licensee to be of greater national, regional or local
interest, and (iii) the right to take any other actions necessary for compliance
with federal, state and local laws, the Act
<PAGE>
and the rules, regulations and policies of other federal government entities,
including the FTC and the Department of Justice. Freedom will use its best
efforts to give Programmer reasonable notice of the FCC Licensee's intention to
preempt Program mer's programs. The FCC Licensee also shall retain the right to
break into Program mer's programming in case of an emergency.
7.2 Preemption Or Rejection Of Programming.
(a) Except as provided in Section 7.2(b) below with
respect to World Cup soccer matches and the substitution of Paid Programming (as
defined below), in the event that the FCC Licensee or Freedom preempts or
rejects program ming from Programmer for any reason pursuant to the terms of
this Agreement, or in the event that the Station experiences a Service
Interruption as defined herein, the amount due Freedom for that month pursuant
to Section 2 and Attachment I shall be prorated, based on the percentage that
the total hours in that calendar month of programming preempted, rejected or not
aired due to a Service Interruption bears to the total amount of programming
that Programmer would have broadcast over the Station during the month if no
programming had been preempted or rejected and/or no Service Interruption had
occurred. The difference between the amount actually paid in advance for that
month and the amount due following the proration shall be deducted from the next
monthly payment made by Programmer to Freedom pursuant to Attachment I.
Provided, however, that no credit shall be given based upon a Service
Interruption unless the Service Interruptions in any month exceed two (2) hours
in the aggregate. Moreover, no credit shall be given for any Service Interrup
tion caused by the negligent or intentional act or omission of
<PAGE>
Programmer and/or its employees or agents. For purposes of this section,
"Service Interruption" is defined as the Station being off the air, or not
operating with at least ninety percent (90%) of its licensed power, during the
Programmer Time.
(b) Programmer shall receive a payment credit as
provided below ("Payment Credit") in the event that Freedom or the FCC Licensee
preempts or rejects (i) any of Programmer's programming in order to substitute
other program ming for which a payment (in cash, trade or barter) has been made
to Freedom or the FCC Licensee ("Paid Programming"), except as necessary to
comply with the FCC political rules pursuant to Section 5.7 herein, or (ii) any
time within a World Cup Soccer match in Programmer's programming, for any reason
other than coverage of a U.C.world, national, regional or local emergency. The
Payment Credit shall be an amount equal to the loss of revenue during the time
the Programmer's programming was preempted, which shall include the loss of
local and national revenues and an allocation of Radio Unica network revenues.
The allocation of Radio Unica network revenues shall be equal to the percentage
of Radio Unica network revenues that is the same percentage determined by
dividing the Hispanic population of the Dallas radio market by the total
Hispanic population reached by the Radio Unica network. The Payment Credit shall
be deducted from the next monthly payment made by Program mer to Freedom
pursuant to Attachment I. In the event that Programmer seeks a Payment Credit,
it shall provide Freedom with appropriate documentation demon strating its lost
revenues.
7.3 Licensee Responsibility For FCC Compliance. The FCC
Licensee shall at all times be solely responsible for meeting all of the
Commission's requirements with respect to public service programming, for
maintaining the political and public inspection files and the Station logs, for
the preparation of issues/programs lists, and for retaining and supervising an
engineer to ensure
<PAGE>
compliance with the Commission's rules and regulations governing the technical
operation of the Station. Programmer shall provide Freedom with information
necessary to maintain all necessary records to permit the FCC Licensee to meet
its obligations under this paragraph.
8. Indemnification.
8.1 Programmer shall indemnify and hold Freedom and its
officers, directors, shareholders, agents, and employees harmless against any
and all claims, damages, liabilities, costs, and expenses (including by way of
example and without limitation, reasonable attorneys' fees) (individually or
collectively "Damages") arising out of (a) libel, slander, illegal competition
or trade practice, infringement of trademarks, trade names, or program titles,
violation of rights of privacy, infringe ment of copyrights or proprietary
rights and any other violations of the rights of any third party, resulting from
the broadcast of the Programmer's programs, or (b) any action taken by
Programmer or its employees or agents with respect to the Station, or any
failure by Programmer or its employees or agents to take any action with respect
to the Station, including but not limited to Programmer's payment and
performance of obligations and liabilities, unless resulting from a failure by
Freedom to perform hereunder, or (c) Programmer's breach of any of its
representations, warranties or covenants set forth in this Agreement.
Programmer's obligation to hold Freedom harmless under this Section shall
survive a termination of this Agreement until the expiration of all applicable
statutes of limitations.
8.2 Freedom shall indemnify and hold Programmer and its
officers, directors, shareholders, agents, and employees harmless against any
and all Damages
<PAGE>
arising out of (a) libel, slander, illegal competition or trade practice,
infringement of trademarks, trade names, or program titles, violation of rights
of privacy, infringe ment of copyrights or proprietary rights and any other
violations of the rights of any third party, resulting from the broadcast of
Freedom's programs, or (b) any action taken by Freedom or its employees or
agents with respect to the Station, or any failure by Freedom or its employees
or agents to take any action with respect to the Station, including but not
limited to Freedom's payment and performance obligations and liabilities, unless
resulting from a failure by Programmer to perform hereunder, or (c) Freedom's
breach of any of its representations, warranties or covenants set forth in this
Agreement. Freedom's obligation to hold Programmer harmless under this Agreement
shall survive any termination of this Agreement until the expiration of all
applicable statutes of limitations.
9. Default.
9.1 Events Of Default. The following shall, after the
expiration of the applicable cure periods, constitute Events of Default:
(i)Programmer's failure to timely make any of the
monthly payments as provided in Attachment I hereto.
(ii) the default by either party hereto in the
material observance or performance of any covenant, condition or agreement
contained herein, or if either party (a) shall make general assignment for the
benefit of credi tors, or (b) files or has filed against it a petition for
bankruptcy, reorganization or an arrangement for the benefit of creditors, or
for the appointment of a receiver, trustee or creditor representative for the
property or assets of such party under any federal or state insolvency law,
which, if filed against such party, has not been dismissed or discharged within
sixty (60) days;
(iii) if any material representation or warranty
herein made
<PAGE>
by either party hereto, or in any certificate or document furnished by either
party to the other pursuant to the provisions hereof, shall prove to have been
false or mislead ing in any material respect as of the time made or furnished.
9.2 Cure Periods. An Event of Default shall not be deemed to
have occurred until five (5) business days after the non-defaulting party has
provided the defaulting party with written notice specifying the event or events
that if not cured would constitute an Event of Default and specifying the action
necessary to cure the default within such period. This period may be extended
for a reasonable period of time, if the defaulting party is acting in good faith
to cure the default and such default is not materially adverse to the other
party.
10. Termination.
10.1 This Agreement shall terminate on the second anniversary
of the Commencement Date, unless extended by mutual agreement of the parties
hereto.
10.2 Termination Upon Default. Upon the occurrence of an Event
of Default, the non-defaulting party may terminate this Agreement provided that
it is not also in material default hereunder. Notwithstanding the foregoing, nor
any provision of this Agreement, any termination of this Agreement: (a) shall
not constitute an election of remedies with regard to such default or such
termination; and (b) shall not affect, or limit, the ability of the
non-defaulting party to avail itself of any and all remedies which otherwise
would have been available to it, at law or in equity.
10.3 Termination By FCC Licensee. In the event that the LMA is
terminated by the FCC Licensee, or by the FCC, another government entity or a
court by a final order no longer subject to reconsideration or review, Freedom
shall have the right to terminate this Agreement.
10.4 Non-Default Termination. Effective three months after the
<PAGE>
Commencement date, Programmer shall have the right, at its option, to terminate
this Agreement, upon four (4) months prior written notification to the other
party. However, in no event shall notice be given by Programmer prior to that
date.
10.5 Termination Upon Order Of Governmental Authority. If this
Agreement is challenged at the FCC, whether or not in connection with the
Station's license renewal application, counsel for the Freedom and counsel for
the Programmer shall jointly defend the Agreement and the parties' performance
thereunder throughout all FCC proceedings at the sole expense of the Programmer.
If portions of this Agreement are questioned, challenged or disapproved by the
FCC, then the parties shall reform the Agreement as necessary to satisfy the
FCC's concerns. If the parties are unable to reform the Agreement as necessary
to satisfy such concerns, this Agreement shall terminate. In the event that a
federal, state or local government authority designates a hearing with respect
to the continuation or renewal of any authorization held by the FCC Licensee for
the operation of the Station or initiates any revocation or other proceeding
with respect to the authoriza tions issued to the FCC Licensee for the operation
of the Station, and Freedom elects to contest the action, then Freedom shall be
responsible for its expenses incurred as a consequence of any such proceeding;
provided, however, that Programmer shall at its own expense cooperate and comply
with any reasonable request of Freedom to assemble and provide information
relating to Programmer's performance under this Agreement to the appropriate
government authority. In the event of termination of this Agreement pursuant to
any government order(s), including a revocation or non-renewal of any
authorization held by the FCC
<PAGE>
Licensee, Programmer shall pay to Freedom any fees due but unpaid as of the date
of termination as may be permitted by such order(s).
10.6 Cooperation Upon Termination. If this Agreement is termi
nated, for whatever reason, the parties agree to reasonably cooperate with one
another, subject to the LMA, to enable Programmer to fulfill advertising or
other programming contracts then outstanding, in which event Freedom shall
receive as compensation for the carriage of such programming that which
otherwise would have been paid to Programmer hereunder. Upon termination of this
Agreement, all sums owing to Freedom shall be paid in full.
11. Representations, Warranties And Covenants. Both Freedom and
Programmer represent that they are legally qualified, empowered and able to
enter into this Agreement, and that the execution, delivery and performance
hereof shall not constitute a breach or violation of any agreement, contract or
other obligation to which either party is subject or by which it is bound.
Without limiting the foregoing, Programmer certifies that this Agreement
complies and will continue to comply with the Commission's multiple ownership
rules and policies, including 47 C.F.R. ss. 73.3555, as now in effect or
hereinafter amended.
12. Notices. All necessary notices and requests permitted or required
under this Agreement shall be in writing and shall be sent (i) by facsimile
transmis sion to the telecopy numbers listed herein, (ii) mailed by certified
mail, return receipt requested, postage prepaid, to the addresses listed herein,
or (iii) sent for overnight delivery via a nationally-recognized overnight
delivery service to the addresses listed herein. Such notices and requests shall
be deemed to have been given (i) if sent by facsimile, upon sender's receipt of
a facsimile confirmation sheet, (ii) if mailed, upon receipt evidenced by return
signature card by postal service to sender, or (iii) if sent for overnight
delivery, upon receipt evidenced by confirmation
<PAGE>
of delivery by delivery service.
If to Programmer: Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, FL 33166
Attn: Herb Levin
FAX: (305) 463-5001
With copy to: John C. Quale, Esq.
Skadden Arps Slate Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, DC 20005-2111
FAX: (202) 371-7475
If to Freedom: The Freedom Network, Inc.
127 Mamanasco Road
Ridgefield, CT 06876
Attn: Otto Miller
FAX: (203) 438-6487
With copy to: Howard A. Topel, Esq.
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Suite 600
Washington, D.C. 20036
FAX: (202) 745-0916
13. Modification And Waiver. No modification of any provision of this
Agreement shall in any event be effective unless it is in writing and then such
modification shall be effective only in the specific instance and for the
purpose for which given.
14. Construction. This Agreement shall be construed in accordance with
the Communications Act of 1934, as amended, the laws of the State of Delaware
and the rules, regulations and policies of the Commission.
<PAGE>
15. Assignment. This Agreement may not be assigned by Programmer
without the approval of Freedom, except for an entity under common control.
Freedom may assign this Agreement to another entity under common control; to any
licensee of the Station; or to another third party with the approval of
Programmer.
16. Counterpart Signatures. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on
the parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be effective as of the
date first above written.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties, subject to and interpreted in accordance with the LMA, and
there are no other agreements, representations, warranties or understanding,
oral or written, between them with respect to the subject matter hereof. No
alteration, modification or change of this Agreement shall be valid unless by
like written instrument executed by an authorized principal.
18. No Partnership Or Joint Venture Created; Expenses. Nothing in this
Agreement shall be construed to make Freedom and Programmer partners or joint
venturers or to afford any rights to any third party other than as expressly
provided herein. Each party shall bear its own expenses in connection with its
performance under this Agreement.
19. Severability. Subject to the provisions hereof, in the event any
provision contained in this Agreement is held to be invalid, illegal or
unenforceable, such holding shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had not been con tained herein.
20. Confidentiality, Public Notices. Programmer and Freedom each
<PAGE>
agree that it will use it best efforts to keep confidential (except for
disclosure requirements of federal or state securities laws and securities
markets along with such disclosure to attorneys, bankers, underwriters,
investors, etc. as may be appro priate in the furtherance of this transaction,
or disclosure requirements of the FCC) all information of a confidential nature
obtained by it from the other, including the terms of their proposal, in
connection with the transactions contemplated by this Agreement. Programmer and
Freedom shall jointly prepare and determine the timing of any press release or
other announcement to the public or the news media relating to the execution of
this Agreement. No party hereto will issue any press release or make any other
public announcement relating to the transactions contemplated by this Agreement
without the prior consent of each other party hereto, except that any party may
make any disclosure required to be made by it under applicable law (including
federal or state securities laws and the regulations of securities markets) if
it determines in good faith that it is appropriate to do so and gives prior
notice to each other party hereto.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
The Freedom Network, Inc.
By: /s/ Otto Miller
-----------------------
Otto Miller
President
Radio Unica Corp.:
By:
-----------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
The Freedom Network, Inc.
By:
-----------------------
Otto Miller
President
Radio Unica Corp.:
By: /s/ Andrew C. Goldman
-----------------------
Name: Andrew C. Goldman
Title: E.V.P.
<PAGE>
Exhibit 10.21
Execution Copy
INDEPENDENT CONTRACTOR AGREEMENT
This Agreement (the "Agreement") dated as of June 30, 1998 is entered into
by and between Radio Unica Network, Inc. ("RUN") having a business address at
8400 N.W. 52nd Street, Miami, Florida 33166 and Dra. Isabel, Inc., a Florida
corporation ("Company") having an address at 5851 N. Bayshore Drive, Miami,
Florida 33137 and furnishing the services of Isabel Gomez Bassols ("Isabel")
hereunder.
The parties agree as follows:
Section 1. Term: RUN agrees to retain Company to cause Isabel to provide
the Services (as defined in Section 2 below) upon the terms and conditions set
forth herein for a three (3) year period ("Initial Term") commencing as of June
1, 1998, unless sooner terminated pursuant to the terms set forth herein,
subject to renewal at the end of the Initial Term by written agreement of the
parties. Each such "year" period shall require Services during fifty (50) weeks
of the subject year, with Services during two (2) of the fifty (50) weeks to be
performed, at the Company's choice, from a destination in the United States
selected by the Company (currently anticipated to be Boston, Massachusetts), as
referenced in Section 10 below. The Initial Term and any renewal terms are
collectively referred to herein as the "Term." The Company agrees to cause
Isabel to serve in such capacity and perform the Services during the Term upon
the terms and conditions set forth herein.
Section 2. Services:
(a) Program Description. The "Program," as such term is used herein, shall
mean a 1ive, spanish only language radio program of a duration of up to but no
more than two (2) hours to be broadcast by RUN on a daily basis, Monday through
Friday, containing subject matter relating to psychology and family counseling
and including advice on particular topics selected by Isabel (subject to Section
2(e) below) and discussions with callers who "call-in" to speak with Isabel
during the
<PAGE>
Program. The Program name, "Dra. Isabel," which name is owned by Company
and/or Isabel, shall not be used as the name for Program (or for an RUN
program similar to the Program) following the Term; provided that such name
may be used after the Term as the name for Program Episodes created during
the Term that are rebroadcast after the Term. Nothing contained in this
Agreement shall be construed so as to prevent Isabel from, after termination
of this Agreement (and after any applicable non-competition period, as
provided in and subject to Section 9 below), marketing and rendering her
services as a host for radio program(s) containing subject matter relating to
psychology and family counseling and including discussions with callers who
"call-in" to speak with the host or to prevent RUN from, after termination of
this Agreement, broadcasting such a program with host(s) other than Isabel
(without use of Isabel's name or the name "Dra. Isabel").
(b) Description of Services. During the Term, the Company shall cause
Isabel to provide the following services (the "Services") to RUN:
(A) Services as host of the Program (requiring Isabel's presence,
in-person, at each broadcast of the live Program) and preparation,
investigation, writing and research therefor;
(B) Scheduling, developing, organizing and conducting any and all
reasonable and customary activities necessary to assist the Program's executive
producer and/or other RUN designee(s) in pre-producing, producing, researching
and developing subject matter for, and broadcasting, the Program;
(C) Attending certain promotional appearances to promote the Program,
as referenced in Section 2(d) below; and
(D) Providing any other reasonable and customary services requested by
RUN in connection with, or as necessary and appropriate to accomplish,
pre-production, production, preparation, investigation, research, writing and
development of subject matter for, and hosting of the Program broadcasts by
Isabel, and generally, in connection with, the Program broadcasts.
(c) Delegation of Services. It is understood and agreed by the parties
that, for Services other than Services as host of the Program and Services for
promotional appearances (which Services as host and for promotional appearances
shall be performed by Isabel personally), Isabel may perform such Services by
delegating certain tasks to RUN staff assigned to assist Isabel with such tasks,
it
<PAGE>
being understood that, notwithstanding any such delegation, Isabel shall remain
responsible for ensuring the Services are properly performed. During the Term,
RUN agrees to make available to Isabel at least one staff person to provide such
assistance to Isabel on a nonexclusive, as needed basis.
(d) Time, Location for Services; Promotional Appearances.
(i) The Company shall cause the Isabel to be available to provide
Services at each live Program broadcast (which live broadcasts are currently
scheduled to occur from 1:00 p.m. to 3:00 p.m., E.S.T., Monday through Friday,
at RUN's studios located in Miami, Florida) and at such other times and places
as RUN shall designate in order to provide the Services hereunder, it being
understood that (A) said time slot and the details regarding the format of the
Program referenced in section 2(a) above are subject to change only by mutual
agreement of the parties, which agreement shall not be unreasonably withheld (it
being understood that (l) Company's withholding agreement to a proposed new time
slot between and including 9:00 a.m. and 6:00 p.m. EST for any reason other
than conflict between the proposed new time slot and Isabel's employment with
Miami-Dade County Public Schools or Isabel's private psychologist practice shall
be deemed "unreasonable" and (2) minor changes to the Program format and to
format details other than those referenced in Section 2(a), such as, by way of
example and not limitation, changes in music broadcast during the Program or the
duration of certain Program segments, shall not require approval of Company but
shall only require RUN's consultation with, and consideration of comments from,
Company) and (B) that RUN shall consult with the Company in connection with
scheduling Services, including promotional appearances by Isabel, at any such
other times and places to prevent conflict with Isabel's employment with
Miami-Dade County Public Schools for so long as such employment relationship is
in place during the Term. Any changes to the nature of the Services and the
Program broadcast location of Miami, Florida shall require the prior approval of
the Company. Notwithstanding anything to the contrary contained herein, the
parties agree that in the event that Company disagrees with such an RUN-proposed
time slot change or format change, following written notice by company to RUN of
such disagreement and a period of ten (10) business days after receipt by RUN of
such notice absent withdrawal by RUN of the proposed time slot change or format
change, Company may terminate this Agreement by delivering written notice to RUN
within ten (10) business days after the end of such 10-day period (in the event
that Company does not so terminate this Agreement, the proposed change shall be
deemed approved by Company and Isabel). Termination as referenced in the
immediately preceding sentence shall not be a for "Cause"
<PAGE>
termination (as defined Section 5(a) (i)) and, following any such termination,
the parties shall be released of any obligations hereunder except for RUN's
obligation to pay to Company any unpaid compensation earned by Company hereunder
through the date of termination.
(ii) The Company shall cause Isabel to be available for and attend at
least three (3) promotional appearances per calendar quarter at no additional
cost to RUN, scheduled at the request of RUN subject to subpart (i) (B)
immediately above. RUN and Company agree that such promotional appearances per
calendar quarter are non-cumulative (such that, for example, if only two (2)
promotional appearances are scheduled during a calendar quarter, the number of
above-referenced appearances for the next calendar quarter shall continue to be
three (3), and shall not be four (4)). If such appearances (or any other
Services, including those referenced in Section 10 below) require airplane
travel to locations outside Miami, Florida, RUN shall pay for roundtrip airfare
for Isabel at the next available class above coach class as well as for single
accommodations if the trip includes an overnight stay (except that
accommodations will not be provided in connection with the two week trip
referenced in Section 10 below).
(iii) The Company shall cause Isabel to adhere to all policies and
procedures of RUN that may be generally applicable to all contractors of RUN who
provide services similar to those provided hereunder (and that do not conflict
with the terms of this Agreement and only if and to the extent applied
consistently by RUN among all such contractors), whether in effect as of the
date of this Agreement or adopted by RUN during the Term (subject to Section
2(e) (iii)), following receipt of copies of those policies and procedures. The
Company shall cause Isabel to refrain from making statements which tend to place
RUN or its sponsors, advertisers or employees in disparagement or false light.
(e) Decisions Regarding Program Subject Matter, Format.
(i) Subject to subpart (iii) of this Section 2(e), in the event that
RUN provides notice to the Company of any particular subject matter that shall
not be addressed or discussed on the Program, the Company shall cause Isabel not
to, following receipt of said notice from RUN, address or discuss (or allow to
be addressed or discussed) such subject matter on the Program. The Company shall
cause Isabel to provide to RUN a description of the subject matter for upcoming
Program broadcasts and promptly upon any request therefor by RUN.
(ii) In the event that RUN provides notice to Isabel of any subject
matter (including, without limitation, references by Isabel to certain
commercial sponsors, advertisers or entities or events related to RUN or the
Program or voice-overs, vignettes or promotional mentions by Isabel that refer
to any of such
<PAGE>
parties or events requested by RUN, subject to the limited prior approval rights
of the Company in Section 4(a) below with respect to certain of such
references) that RUN wishes to be referred to, addressed and discussed on the
Program or of any other requests of RUN with respect to Program format (provided
that changes in Program format shall be subject to Section 2(d) above), the
Company shall cause Isabel to, promptly following receipt of said notice from
RUN, comply with RUN's request(s) in any such notice.
(iii) It is acknowledged and agreed by the parties that, as a licensed
psychologist, Isabel must be in a position to offer advice on the Program
consistent with her professional analysis and opinions and that the terms of
this Section 2(e) will not be construed or applied to require her to modify her
professional analysis or opinions. RUN and Company agree that in the event that
Isabel or Company determines in its reasonable discretion that any subject
matter requested by RUN would result in damage to Isabel's reputation or a
violation of any professional or ethical standard or codes of Isabel's licensing
or association as set forth in Exhibit B, then Isabel or Company shall provide
written notice thereof to RUN. If within ten (10) business days after receipt of
such written notice (or, if the request relates to subject matter for a Program
broadcast during such 10-day period, if prior to said broadcast), RUN fails to
withdraw said request, then Company may terminate this Agreement thereafter by
written notice to RUN within ten (10) business days after the end of such 10-day
period, or sooner if the request relates to subject matter for a Program
broadcast during such 10-day period (in the event that Company does not so
terminate this Agreement, the request shall be deemed approved by Company and
Isabel). Termination as referenced in the immediately preceding sentence shall
not be a for "Cause" termination (as defined Section 5(a)(i)) and, following any
such termination, the parties shall be released of any obligations hereunder
except for RUN's obligation to pay to Company any unpaid compensation earned by
Company hereunder through the date of termination.
(f) Communications Act. The Company represents and warrants that Isabel has
not accepted nor agreed to accept and will not accept nor agree to accept,
directly or indirectly, from any third party any money, service or other
consideration for the inclusion of any material as a part of any Program and
that Isabel will comply with the provisions of Section 508 of the Communications
Act of 1934, as amended, during broadcast of the Program.
Section 3. Compensation:
<PAGE>
(a) Compensation Amount. As compensation for the Services hereunder, RUN
shall pay to the Company the following amounts: during each of the first, second
and third year of the Initial Term, compensation of $45,000. This amount is
referred to below as the applicable "Compensation Amount" for the relevant
portion of the Term. Said amounts shall be payable to Isabel as set forth in
Section 3(b) below.
(b) Payment Schedule for Compensation Amount. Conditioned upon Isabel's
full and faithful performance of all terms of this Agreement to RUN's reasonable
satisfaction, the applicable Compensation Amount shall be payable to the Company
each month in bi-monthly installments of $1,875 during each of the first, second
and third year of the Initial Term.
(c) Commissions; Revenue From International Sales.
(i) The Company will also receive as compensation seven and one-half
(7 1/2) percent of the "Net Profit" from the Program generated during the Term,
as defined in Exhibit A attached hereto and incorporated herein (collectively,
"Commissions"). Commissions in excess of the monthly installments of the
Applicable Guaranteed Minimum, referenced below, for any month will be payable
monthly, in arrears based upon the Net Profit for the previous month, together
with a statement referencing the source and calculation of the amounts so paid.
The Company shall be entitled to minimum Commissions of $40,000 during the first
year of the Initial Term, $80,000 during the second year of the Initial Term and
$110,000 during the third year of the Initial Term (each, the "Applicable
Guaranteed Minimum" for the applicable year of the Initial Term). Payments of
the Applicable Guaranteed Minimum will be paid in bi-monthly installments of
$1,666.67 during the first year of the Initial Term, $3,333.33 during the second
year of the Initial Term and $4,583.33 during the third year of the Initial
Term. Upon execution of this Agreement, RUN shall pay to the Company Commissions
in the amount of $20,000 (a pro-rated portion based upon an annual Applicable
Guaranteed Minimum of $40,000 for six (6) months) in recognition of and for
Program broadcasts during January 1998 through June 1998. This amount shall not
be applied against any Applicable Minimum during the Term.
(ii) The Company will also receive as compensation seven and one-half
(7 1/2) percent of any net revenues (defined as revenues less any commissions
payable to agencies or salespersons procuring the subject sale) received by RUN
for the sale and purchase during the Term (by a "Purchaser") of the Program for
broadcast in
<PAGE>
geographical locations outside of the United States and Puerto Rico
("International Program Sale Revenue"), which sales may be negotiated and made
during or after the Term in RUN's sole discretion (it being understood that RUN
shall have no obligation to seek or enter into any such sales); provided that
(A) a trade or barter arrangement with a Purchaser or (B) a purchase that is
packaged with other RUN programs such that the purchase price for the Program is
not segregated in the total purchase price, shall not result in any
International Program Sale Revenue or any percentage compensation to the Company
or Isabel. Any such amounts shall be payable to the Company within ten (10)
business days after receipt by RUN together with a statement referencing the
source and calculation of such amounts.
(d) Book(s) Written By Isabel. Isabel may, during the Term, promote or
otherwise use her association with RUN under this Agreement (at her cost, unless
otherwise agreed to by RUN) in connection with, books written, in whole or in
part, by Isabel, subject to the prior approval of RUN, which approval shall not
be unreasonably withheld, with respect to the particular book(s) and particular
use(s) of such association. In the event that RUN does not provide said approval
for such a book or in the event that Company and Isabel elect not promote or
otherwise use Isabel's association with RUN (in the manner referenced in the
parenthetical in the next sentence or otherwise) in connection with such a book,
this Section 3(d) shall have no force and effect, neither the Company nor Isabel
shall have any obligation to RUN for compensation of or relating to the book and
Isabel and Company shall not use (in the manner referenced in the parenthetical
in the next sentence or otherwise) Isabel's association with RUN to promote the
book. For any such book(s) in connection with which Isabel's association with
RUN is so used (such as, by way of example and not limitation, use of the
association through references, agreed to by RUN, to the subject book during the
Program, through references to RUN in printed material in or related to the
book(s) or through promotional spots for the subject book by RUN on certain
stations in its network at no or reduced cost to Isabel, the content and
frequency of which will be agreed to by the parties in the event that RUN
provides said approval), RUN will receive thirty (30) percent of any net profits
(with the calculation of "net profits" to be agreed upon by the parties)
generated during the Term and during the twelve (12) month period immediately
following the Term by or in connection with sales of such book(s) and other
income-producing activities, if any, related to such book(s). RUN shall receive
such amounts within ten (10) business days after receipt by the Company, Isabel
or any affiliated entity together with a statement referencing the source and
calculation of such amounts.
(e) Audit Rights. In connection with the amounts payable to each party
under Sections 3(c) and 3(d) above, each party (the "requesting party") shall
have the right to audit, no more than one (l) time per year, the books and
records of the other party relating to the calculation of such amounts, upon
reasonable prior notice to the other party, during regular business hours at the
party's place of business and at the
<PAGE>
requesting party's cost; provided that (i) if the audit reveals a three (3)
percent or greater underpayment to the requesting party, then the reasonable
audit costs of the requesting party will be paid by the other party (and the
other party shall promptly deliver any underpayments to the requesting party)
and (ii) any audit performed hereunder with respect to the accuracy of any
payments shall be performed, and any claims for additional payments shall be
raised, only during the one (1) year period following the date such amounts were
due hereunder.
Section 4. Ownership of and Rights to Program:
(a) No Ownership Interest; Authorization for Use of Name, Voice,
Performances and Services. Neither the Company nor Isabel shall have any
ownership interest in the Program or any Program materials, marks or concepts
created or owned by RUN, or any portion thereof. Said items shall be owned by
RUN, and RUN shall have the right to exploit any or all of said materials in
any form, manner or media (subject to (A) Section 2(e) (iii) and (B) the
condition that no Program materials shall be exploited via the medium of
television without the express written consent of Isabel or the Company)
throughout the world during and after the Term, as between the parties
hereto, in RUN's sole discretion, without limitation and without any further
consideration to the Company or Isabel except the consideration to Company
specifically referenced herein. The Company's or Isabel's ownership rights to
Isabel's name and "Dra. Isabel" (which are hereby licensed to RUN for use in
connection with the Program Episodes created during the Term) and Isabel's
voice, performances and services hereunder and the results and proceeds of
those performances and services may be so exploited by RUN for profit or
otherwise by any means or method (subject to (A) Section 2(e) (iii) and (B)
the condition that no Program materials shall be exploited via the medium of
television without the express written consent of Isabel or the Company)
throughout the world. The Company and Isabel hereby acknowledge and agree
that each is a contractor "for hire" hereunder and that (except as
specifically referenced in Section 3(c) above which provides for payment of
certain amounts to the Company), RUN is the owner of (i) said results and
proceeds, (ii) the right to use and to permit others to use Isabel's name,
voice, and biographical material for and in connection with use of said
results and proceeds (it being understood that said right is exclusive to RUN
only as to said result and proceeds and subject to (A) Section 2(e) (iii) and
(B) the condition that no Program materials shall be exploited via the medium of
television without the express written consent of Isabel or the Company) and
(iii) all rights of every kind and nature in and to said results and proceeds
(subject to (A) Section 2(e) (iii) and
<PAGE>
(B) the condition that no Program materials shall be exploited via the medium
of television without the express written consent of Isabel or the Company).
In the event that RUN wishes to use said materials and results and proceeds
in connection with a commercial sponsor, advertiser or other party, RUN shall
have the right, in its sole discretion (subject to the conditions set forth
herein), to do so; provided that should Isabel be asked to provide additional
services or appearances specifically in connection with said sponsor,
advertiser or other party, then Company's prior approval and agreement to
said additional services and appearances, which approval shall not be
unreasonably withheld, and compensation, as mutually agreed by the parties,
for said services and appearances shall be required (subject to Section 2(d)
above regarding certain promotional appearances). The parties acknowledge and
agree that the references mentioned in the parenthetical in Section 2(c)
above shall not constitute "additional services or appearances specifically
in connection with the sponsor, advertiser or other party," as such phrase is
used in the immediately preceding sentence, unless such references are in the
form of pre-recorded commercial advertisements by Isabel for a sponsor,
advertiser or other party that are greater than thirty (30) continuous
seconds in length, which advertisements are aired during advertising time or
commercial breaks, not within the context of the Program.
(b) Sole Host of Program. The Company acknowledges and agrees that, during
the Term, additional Program host(s) may be retained by RUN (such that the
Program has more than one host) provided that the Company and RUN mutually agree
to retain additional host(s) and provided that the Company's agreement thereto
shall not be unreasonably withheld. If additional Program host(s) are retained
in accordance with the immediately preceding sentence, Isabel will amicably and
effectively work with said other persons (and other RUN designee(s)) to host and
broadcast the Program. Notwithstanding anything to the contrary contained
herein, the parties agree that in the event that Company disagrees with an
RUN-proposed addition of host(s), following written notice by Company to RUN of
such disagreement and a period of ten (10) business days after receipt by RUN
of such notice absent withdrawal by RUN of the proposed addition, Company may
terminate this Agreement by written notice delivered to RUN within ten (10)
business days after the end of such 10-day period (in the event that Company
does not so terminate this Agreement, the proposed addition shall be deemed
approved by Company and Isabel). Termination as referenced in the immediately
preceding sentence shall not be a for "Cause" termination (as defined Section
5(a) (i)) and, following any such termination, the parties shall be released of
any obligations hereunder except for RUN's obligation to pay to Company any
unpaid compensation earned by Company hereunder through the date of termination.
Section 5. Termination:
(a) For Cause.
<PAGE>
(i) RUN may terminate this Agreement at any time during the Term for
Cause upon notice thereof to the Company. For the purposes of this Agreement,
"Cause" shall mean (A) the Company's or Isabel's breach of this Agreement
(includ ing, without limitation, Isabel's failure to provide Services during the
Term); (B) Isabel's acts of moral turpitude or crimes that constitute felonies
whether or not in connection with her contractor relationship hereunder or the
Services hereunder; (C) a material change in Isabel's voice such that it is no
longer appropriate or desirable for radio broadcasts or (D) failure by Isabel to
perform her Services for a period in excess of twenty (20) consecutive days, or
such other period prescribed by applicable law, during the Term, whether as a
result of disability or otherwise.
(ii) Upon termination of this Agreement under this Section 5(a), RUN's
sole obligation following termination shall be to pay to the Company any unpaid
portion of the applicable Compensation Amount (pursuant to Section 3 above) then
due and payable to the Company, prorated for any partial payment period through
the termination date.
(b) No Guarantee of Retention. Consistent with the provisions in this
Section 5 above that provide for early termination of this Agreement, this
Agreement is not intended to and does not guarantee or assure RUN's engagement
or retention of Isabel through the end of the Term or so long as the Program is
broadcast and any such guarantee or assurance is hereby expressly disclaimed.
Any termination in accordance with this Section 5 is in addition to any other
rights the terminating party may be entitled to by the terms of this Agreement
or by law.
(c) Pay or Play. Nothing herein shall be deemed to obligate RUN to use
Isabel's services hereunder, and RUN shall have fully discharged its obligations
by providing the compensation specified hereunder, subject to RUN's termination
rights under this Section 5.
Section 6. Indemnification:
(a) By The Company. The Company hereby agrees to indemnify and hold
harmless RUN and its respective directors, officers, agents and employees, from
and against any damages, losses, claims, suits or liabilities or actions, and
reasonable expenses as incurred (including the expense of investigation and
preparation and reasonable feed and disbursements of RUN and such persons'
counsel) resulting from Isabel's gross negligence or willful misconduct
hereunder or the Company's or
<PAGE>
Isabel's breach of this Agreement. The foregoing agreement shall be in
addition to any rights that RUN or any indemnified person may have at common
law or otherwise.
(b) By RUN. RUN hereby agrees to indemnify and hold harmless the Company
and Isabel from and against any damages, losses, claims, suits or liabilities
or actions, and reasonable expenses as incurred (including the expense of
investigation and preparation and reasonable fees and disbursements of the
Company or Isabel and their counsel) resulting from RUN's gross negligence or
willful misconduct hereunder or RUN's breach of this Agreement. The foregoing
agreement shall be in addition to any rights that the Company or Isabel may
have at common law or otherwise.
Section 7. Confidentiality:
(a) The Company acknowledges and agrees that (i) all of RUN's Confidential
Information (as defined below) is the property of RUN, (ii) the Company and
Isabel shall have no right to use any Confidential Information except in
connection with the business of RUN and (iii) the Company and Isabel will have
access to and will use the Confidential Information in connection with the
relationship with RUN hereunder.
(b) The Company and Isabel shall not, directly or indirectly, use,
disseminate or disclose to third parties any Confidential Information. Upon
expiration or termination of the Term, all documents, records and other
information containing Confidential Information shall be returned to RUN.
(c) For the purposes of this Agreement, "Confidential Information" shall
mean any non-public (so long as the information was not made public through
release of the information by Isabel to third parties in violation of this
Section 7) or proprietary information or trade secrets of RUN or any affiliate
of RUN, including without limitation, personnel information, financial
information, customer lists, rate cards, revenue data, supplier lists, ownership
information, plans, analyses, trade secrets, licenses, copyrights and
trademarks, management agreements, know-how, marketing plans, leases and
computer software and any other processed or collected data.
(d) Any Confidential Information acquired by the Company or Isabel prior to
the date of this Agreement or in the future for with respect to RUN will be
received and held in confidence and as a fiduciary with respect to RUN. The
Company and Isabel hereby assign to RUN any rights each may have or acquire in
RUN Confidential Information in performance of Services hereunder.
<PAGE>
(e) RUN may open mail/correspondence addressed to Isabel and received by
RUN (with copies accessible to the Company at Company's request) and may answer
or cause to be answered any such correspondence. RUN shall forward to Isabel or
Company unopened any mail addressed to Isabel or Company marked "personal" or
"confidential." RUN and Company shall cooperate to assure than any
correspondence received by RUN seeking psychological advice or counseling be
responded to, if at all, only with an effective recommendation that the
correspondent seek competent professional assistance, not with substantive
advice; provided that if a response contains substantive advice other than
merely such recommendation, the advice will only be provided by qualified
psychological professionals. RUN shall have no obligation to retain
professionals for this purpose.
Section 8. Representations and Warranties: The Company represents and
warrants that it is a corporation in good standing in the State of Florida; that
it has the full authority and right to enter into this Agreement and to cause
Isabel to provide the Services hereunder; that Isabel has the full authority and
right to perform the Services hereunder and is not subject to any
non-competition restrictions imposed by third parties as of the date of this
Agreement; that Isabel is proficiently qualified and skilled to perform the
Services hereunder and that she possess (and will maintain in good standing) the
professional licenses, certifications and/or degrees listed on Exhibit B
attached hereto and incorporated herein, which licenses, certifications and/or
degrees are related to the type of Services and/or the nature of the Program
described herein.
Section 9. Exclusivity and Non-Competition:
(a) The Company acknowledges the competitive nature of RUN's business and
that the goodwill and patronage of RUN's customers, advertisers and sponsors and
RUN's ratings from its broadcast audience constitute legitimate business
interests of RUN and are substantial assets of RUN, having been acquired through
time, expense and effort and that the Company and Isabel will have access to,
work with and become familiar to such customers, advertisers, sponsors and
audience during the Term.
(b) Accordingly, in consideration of the execution of this Agreement, the
Company shall cause Isabel not to:
(A) (i) during the Term, provide, in any capacity, directly or indirectly,
services as a producer, host, performer or consultant on any such matters
to or
<PAGE>
for any spanish language radio network business that broadcasts in such
geographic markets where RUN's radio network broadcasts during the Term or
which may conflict with the full and faithful performance of Isabel's
Services for RUN or (ii) for a period of six (6) months after termination
of this Agreement for Cause (except for the Cause referenced in Section
5(a) (i) (C) above and the Cause referenced in Section 5(a) (i) (D) above
if, and only if, the Cause in subpart (D) is as a result of Isabel's
disability or illness which is outside of her control), provide, in any
capacity, directly or indirectly, services as a producer, host, performer
or consultant on any such matters to or for any spanish language radio
network business that broadcasts in any of the top ten hispanic geographic
markets as of the date of termination of this Agreement (for purposes of
this Agreement, "top ten hispanic geographic markets" shall mean the ten
metropolitan areas with the greatest population of hispanics, as reported
by the most recent United States Census report) and, accordingly, Isabel
shall not, during the applicable time period, perform on any such spanish
language radio network; or
(B) during the Term and for a period of six (6) months after termination of
this Agreement for Cause (except for the Cause referenced in Section
5(a)(i)(C) above and the Cause referenced in Section 5(a) (i) (D) above if,
and only if, the Cause in subpart (D) is as a result of Isabel's disability
or illness which is outside of her control), except on RUN's behalf,
solicit or cause to be solicited for or on behalf of third parties any
customers of RUN or any of its affiliates or any entities or individuals
that were customers of RUN or any of its affiliates at any time during
Isabel's contractor relationship hereunder; or
(C) during the Term and for a period of six (6) months after termination of
this Agreement for Cause (except for the Cause referenced in section 5(a)
(i) (C) above and the Cause referenced in Section 5(a)(i)(D) above if, and
only if, the Cause in subpart (D) is as a result of Isabel's disability or
illness which is outside of her control), retain or cause to be retained by
third parties any persons who were employees or contractors of RUN or any
of its affiliates within the six (6) month period preceding the termination
or thereafter.
(c) Notwithstanding the foregoing, the provisions of this Section 9 shall
not restrict Isabel if any of the restrictions contained in this Section 9
should be deemed to be unenforceable by a court by reason of their extent,
duration or geographic scope or otherwise. In such case, the court making such
determination
<PAGE>
shall have the right to reduce such extent, duration, geographic scope or other
provisions, and in its reduced form, this Section 9 shall then be enforceable in
the manner contemplated.
Section 10. Services From Vacation Destination; Holidays. Isabel shall,
during two (2) weeks of each fifty (50) week work year during the Term, have the
right to host Program(s) and provide Services from a destination of her choice
in the United States (currently anticipated to be Boston, Massachusetts),
subject to the mutual agreement of the parties as to the scheduling of such two
(2) week period as well as to the scheduling of the other two (2) week period
during each such fifty two (52) week year when Isabel will not provide Services
(it being understood by RUN, Isabel and Company that such scheduling shall be
completed consistent with the effective discharge of the Company's Services and
the general practices and policies of RUN applicable to independent contractors
of RUN of a status similar to Isabel's status). Isabel shall not be required to
provide Services on federal holidays; provided that Company shall cause Isabel
be available to pre-tape a Program Episode or otherwise provide Services in
advance of the federal holiday so that non-provision of Services by Isabel on
any federal holiday will not interrupt or affect the Program schedule.
Section 11. Survival; Injunctive Relief. The provisions of this Section 11
and Sections 3(d), 3(e) 4, 5, 6, 7, 9, 13 and 14 hereof shall survive
termination of this Agreement. Isabel's Services hereunder are of a unique,
unusual and special nature, and of a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in any action at law and that a
breach by the Company or Isabel will cause RUN irreparable injury and damage. In
the event that the Company or Isabel breaches the provisions said sections, in
addition to the other remedies at law or in equity that may be available to RUN,
the Company and Isabel acknowledge and agree that RUN shall have grounds for
injunctive relief in addition to any other relief that may be available to RUN.
Section 12. Entire Agreement; Waiver; Severability: This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof. All other previous agreements or writings are therefore
superseded. Any waiver of a party's breach of any provision of this Agreement
shall not be taken, construed, or held to be a waiver for any breach thereafter
or any other provision hereof. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable Florida law. However, if any provision of the Agreement is held to be
invalid, illegal or unenforceable, the remaining provisions shall remain in
force as if the invalidated provision did not exist.
Section 13. Jury Waiver; Attorneys' Fees: Each party hereto
<PAGE>
knowingly, voluntarily and intentionally waives the right that it may have to a
trial by jury with respect to any actions arising out of or in connection with
this Agreement or Isabel's independent contractor relationship hereunder. In any
action at law or in equity to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys' and paralegal
fees, costs and expenses, including fees and costs at the appellate level, in
addition to any other relief to which it may be entitled.
Section 14. Choice of Law, Venue, Notices: This Agreement shall be
governed by and construed in accordance with the laws of the State of
Florida. The venue for any actions arising out of this Agreement shall be
courts located in Miami-Dade County, Florida; provided that at the request of
either RUN or Company, any such actions shall be resolved by final and
binding arbitration administered by and in accordance with the then existing
Rules of Practice and Procedure of Judicial Arbitration & Mediation Services,
Inc., and judgment upon any award rendered by the arbitrator(s) may be
entered by any state or federal court having jurisdiction thereof. Any
written notices hereunder shall be sent to the respective parties at the
addresses first set forth above.
Section 15. Modification; Assignment: No modification of any terms of this
Agreement shall be effective unless in writing and signed by both parties to
this Agreement. This Agreement for personal services may not be assigned by the
Company but may be assigned by RUN, without limitation.
Section 16. Counterparts: This Agreement may be executed and delivered in
two or more counterparts, each of which shall be deemed to be an original and
all of which, taken together, shall be deemed to be one agreement.
Section 17. Independent Contractor Status:
(a) No Joint Venture, Partnership, Employment or Agency Relationship.
The parties intend for this Agreement to create an independent contractor
relationship. Nothing herein shall be construed as creating a joint venture,
partnership, employment or agency relationship between the parties.
Accordingly, except as expressly provided in this Agreement, no party to this
Agreement has the authority, implied, apparent or expressed, to lawfully bind
the other with respect to any matter.
(b) End Results, No Withholding of Taxes, No Benefits. RUN is
<PAGE>
interested in the results to be achieved by this Agreement, and the Company
will have the power to select the means and methods of performing the work
required hereunder, with instructions from RUN as to the end results to be
accomplished. RUN shall not withhold, report or pay so-called withholding taxes
with respect to the compensation payable hereunder. Pursuant to the Florida
Worker's Compensation Act, RUN will not provide worker's compensation insurance
to Isabel. Isabel shall not be eligible for participation in any of RUN's
employee or fringe benefit programs that RUN may maintain for its employees.
Radio Unica Network, Inc. Dra. Isabel, Inc.
By: /s/ Steven E. Dawson /s/ Isabel Gomez Bassols
- ------------------------ ------------------------
Isabel Gomez Bassols
Date: June 30, 1998 Date: June 30th, 1998
------------------ ----------------
The undersigned, Isabel Gomez Bassols, by her signature below, agrees to
cooperate with Dra. Isabel, Inc. to provide the personal Services referred to in
this Agreement, to be subject to any restrictions or obligations applicable to
her individually in the Agreement, such as non-competition restrictions and
confidentiality obligations, and to individually make the acknowledgements and
representations in the Agreement, such as the acknowledgments in Section 4
regarding ownership of and rights to the Program.
/s/ Isabel Gomez Bassols
- ------------------------
Isabel Gomez Bassols
Date: June 30th 1998
--------------
MIA4-624488.5
<PAGE>
Exhibit 10.25
KOGER
LEASE
THIS LEASE AGREEMENT, dated 19 September 97 by and between KOALA Miami Realty
Holding Co., Inc., Corporation ("Landlord") with its principal office at 522
Fifth Avenue, New York, N.Y. 10036, and Radio Unica Corp., a Corporation
organized and existing under the laws of the State of Delaware, ("Tenant") with
its principal office at 8400 N.W. 52nd Street, Suite #101, Miami, Florida 33166.
1. BASIC LEASE PROVISIONS
A. DESCRIPTION OF PREMISES:
Suite Number: 101
Building Name: Albany
Address: 8400 N.W. 52nd Street
County: Dade
City: Miami
State/Zip: Florida 33166
Center: Koger - Miami
B. PRINCIPAL LEASE TERMS:
Lease Term (Months) 85
Commencement Date: 01 October 97
Expiration Date: 31 October 04
Monthly Base Rent: $9,690.63
Sales or Use Taxes: $629.89
Total: $10,320.52
Security Deposit: $20,641.04
C. LEASED AREA
Approximately 9303 rentable square feet. (Includes - Tenant's
share of common area.)
D. MANAGER: Koger Realty Services, Inc. is the designated agent of Landlord as
to all matters pertaining to this Lease, including its execution and
amendment and granting or withholding of consents, excluding any activities
prohibited by law.
E. ADDRESS FOR PAYMENT OF RENT AND SECURITY
DEPOSITS:
Payee: KOALA Miami Realty Holding Co., Inc.
Address: P.O. Box D861217
City/State/Zip: Orlando, Florida 32886-1217
Tenant Account#: 1093 (note on remittance)
F. ADDRESSES FOR NOTICES
Tenant: Radio Unica Corp.
8400 N.W. 52nd Street
Suite #101
Miami, Florida 33166
Tenant Fed. I.D./SSN: 65-0776004
Landlord: KOALA Miami Realty Holding Co., Inc.
522 Fifth Avenue
New York, New York 10036
Landlord Fed. I.D.: 13-3842315
With a copy to: Koger Realty Services, Inc.
Attn: President
3986 Blvd. Center Drive
Jacksonville, FL 32207
The provisions contained in Sections 2 through 38, inclusive, which appear
after the signature lines below, are a part of this Lease and are incorporated
in this Lease by reference. The Tenant and the Landlord have executed or caused
to be executed this Lease on the dates shown below their signatures, to be
effective as of the date set forth above.
<PAGE>
Tenant: Radio Unica Corp.
By: /s/Steven E. Dawson (Seal)
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Print Name: Steven E. Dawson
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Title: CFO
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Attest:
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Print Name:
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Title:
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(Corporate Seal)
Date:
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Signed and sealed in the presence of:
(1) /s/Maria Regina Torrez
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Print Name: Maria Regina Torrez
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(2) /s/J. Steve Ross
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Print Name: J. Steve Ross
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As to Tenant
Landlord: KOALA Miami Realty Holding Co., Inc.
By: Koger Realty Services, Inc. as Agent
By: /s/ Bradford A. Chaffin
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Print Name: Bradford A. Chaffin
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Title: Vice President
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Attest: /s/ Sylvia S. Gooding
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Print Name: Sylvia S. Gooding
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Title:
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(Corporate Seal)
Date: September 30, 1997
signed and sealed in the presence of:
(1)
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Print Name:
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(2)
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Print Name:
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As to Landlord
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LEASE PROVISIONS INCORPORATED BY REFERENCE
2. LEASE OF PREMISES: The Landlord hereby leases to the Tenant and the Tenant
hereby takes from the Landlord the premises (the "Premises") which include the
Suite(s) shown and described on Exhibit "A", together with any other parts of
the Building used exclusively by Tenant, which Premises are or will be contained
in the office building (the "Building") located at the address stated in Section
1A, under the terms and conditions contained in this Lease. For the purposes of
this lease, "Property" shall mean the property referred to at the street address
in Section 1A which is more specifically described in the legal description
maintained in the Landlord's records. For the purposes of this lease, "Center"
shall mean The Koger Center referred to in Section 1A.
3. TERM: The term of this Lease (the Term") shall commence on the date (the
"Commencement Date") which is the earlier to occur of the date stated in Section
1B, or the date the Tenant first occupies all or part of the Premises. The Term
shall expire on the date (the "Expiration Date") stated in Section 1B unless
sooner terminated as otherwise provided in this Lease or unless extended
pursuant to Section 27 or other extension provisions contained herein.
4. USE AND POSSESSION: The Tenant covenants and agrees that the Premises are
to be used by the Tenant for general office purposes "and radio broadcasting
transmissions and production," and for no other purposes without the prior
written consent of the Landlord. The Tenant shall not occupy or use the Premises
or permit the use or occupancy of the Premises for any purpose or in any manner
which: (a) is unlawful or is in violation of any applicable legal, governmental
or quasi-governmental requirement, ordinance, rule or code; (b) may be dangerous
to persons or property; (c) may invalidate any insurance policy held by the
Landlord or increase the amount of premiums for any insurance policy affecting
the Building or the Property (if any additional amounts of insurance premiums
are so incurred, the Tenant shall pay the Landlord the additional amounts on
demand as Additional Rent, provided that such payment shall not authorize such
use); (d) may create a nuisance or disturb any other tenant of the Building or
the occupants of neighboring Property or injure the reputation of the Building
or the Center; and (e) violates the "Rules and Regulations" of the Building as
may from time to time be adopted by Landlord, or any restriction of record. The
Tenant agrees that Tenant shall be responsible for any costs incurred by
Landlord by reason of Tenant's misuse of the Premises or the Building and common
areas, including without limitation any damages incurred by Tenant in moving
into or out of the Premises. If any costs are so incurred by Landlord, the
Tenant shall pay the Landlord such costs on demand as Additional Rent.* as
attached in Exhibit "C"
The Landlord agrees to have the Premises substantially completed and
ready for possession on or before the Commencement Date, subject to delays
caused or occasioned by strikes, insurrections, Acts of God, labor unrest,
shortage of materials, civil disturbances and other casualties or unforeseen
causes or events beyond the control of the Landlord ("Unforeseen Causes"). The
Tenant agrees to accept possession of the Premises within ten (10) days after
the receipt of notice from the Landlord of substantial completion (if after the
date specified in Section 1B).
5. RENT: Tenant agrees to pay to Landlord at the address specified in Section
1E, or at such other place designated in writing by Landlord, the Monthly Rent,
and any Additional Rent, plus any sales or use taxes (collectively called
"Rent"). "Monthly Rent" shall mean the initial monthly base rent stated in
Section 1B for the first twelve months following the Commencement Date of the
Term of this Lease ("First Lease Year"), and the Adjusted Monthly Rent as
adjusted in the lease rider. Rent shall be paid without any prior notice or
demand and without any deduction whatsoever. Monthly Rent shall be due in
advance on the first day of each month of the
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Term. The first installment of Monthly Rent shall be paid by Tenant to Landlord
upon execution of this Lease. Rent for any partial lease month shall be
prorated. Tenant's obligation to pay Rent to Landlord shall be independent of
every other covenant or obligation of Landlord under this Lease. All delinquent
Rent shall bear interest at the maximum rate permitted by applicable law or 18%
per annum, whichever is less, from the date due until paid. Rent shall be
considered delinquent after the 10th day following the date it is due. If Tenant
fails to pay Rent or any other charge when due under this Lease, then Tenant
shall pay and Landlord shall be entitled to receive a late payment service
charge, in addition to any interest charge due hereunder, covering
administrative and overhead expenses incurred by Landlord caused by such late
payment, which the parties stipulate and agree are hereby liquidated and shall
be equal to five percent of the overdue amount. Tenant shall pay a charge equal
to $25.00 per returned check or the amount to which Landlord is entitled under
State Law, whichever is greater, for any checks written to Landlord which are
returned for insufficient funds.
6. REAL ESTATE TAX INCREASES: Tenant agrees to pay to Landlord as Additional
Rent, Tenant's pro rata share of any and all increases in real estate taxes and
assessments levied against the Property in which the Premises are located over
the real estate taxes and assessments due and payable on the Property at the
commencement of this Lease. Tenant's prorata share shall be based on the
rentable square footage in the Premises compared to the rentable square footage
in the Building or Buildings subject to the applicable assessment. Payment of
Tenant's pro rata share will be due to Landlord upon 30 days written notice from
Landlord specifying the amount of taxes for the initial year of this lease, the
amount of taxes for the current year, Tenant's rentable square footage, and the
rentable square footage within the Building or Buildings subject to the
applicable tax assessment. If, for any reason, the amount of rentable square
footage included within a tax assessment is reduced or increased, the Tenant's
pro rata share will be adjusted in like manner to reflect the rentable square
footage subject to assessment.
7. RENT ADJUSTMENT:
8. SALES AND USE TAX: In addition to the Rent and other amounts due to the
Landlord under this Lease, the Tenant shall pay to the Landlord and the Landlord
shall remit to the appropriate governmental authorities any sales, use, or other
tax, excluding Federal or State income taxes, now or hereafter imposed upon
rents and other amounts due to the Landlord under this Lease, notwithstanding
the fact that any statute, ordinance, enactment, or regulation may impose any of
those types of taxes on the Landlord.
9. NOTICES: For the purpose of any notice or demand under this Lease, the
respective parties shall be served by overnight delivery, personal delivery or
certified or registered mail, return receipt requested, addressed to the Tenant
at the address as set forth in Section 1F and to the Landlord at the addresses
set forth in Section 1F or other such addresses designated in writing by
Landlord. Any notice shall be effective when delivered.
10. ORDINANCES AND REGULATIONS: The Tenant shall comply promptly, at the
Tenant's sole cost and expense, with all present and future laws, codes,
ordinances, rules and regulations of any municipal, county, state, federal or
other governmental authority, including environmental laws, and any bureau or
department thereof, and of the Board of Fire Underwriters or any other body
exercising similar functions, which may be applicable to the Premises and
Tenant's use or occupancy of the Premises, and shall comply with the
requirements of all of Landlord's policies of insurance at any time in force
with respect to the Building in which the Premises are located. The Tenant
agrees for itself and for its subtenants, employees, agents, and invitees to
comply with the Rules and Regulations,
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promulgated from time to time with respect o the Premises, Building, Property
and Center, a copy of which is available in the management office in the Center.
Notwithstanding any other provision of this lease to the contrary,
Tenant shall comply with the Americans with Disabilities Act ("ADA"), as it now
exists and as it may hereafter be amended, with regard to the Premises and the
Tenant's use of the Premises, including, without limitation, the obligation to
make the Premises accessible and shall hold Landlord harmless with respect
thereto. Landlord shall not be responsible for compliance with the ADA with
respect to the Premises, including the design or construction thereof. Tenant
waives any right, claim, defense or set off which Tenant may have, now or
hereafter, based upon any responsibility Landlord may have under the ADA with
respect to the Premises, the Building, the Property or otherwise. Tenant agrees
that any and all steps taken or to be taken by Landlord, in Landlord's
judgement, now or hereafter, to comply with the ADA concerning the Building or
the Property are authorized and permitted under the Lease and shall not
constitute an interruption, disturbance or other breach of Tenant's rights under
this Lease. Nothing herein shall constitute an admission by Landlord that the
ADA governs any part of the Premises, Building or Property or any activities of
Landlord with respect thereto.
Tenant covenants and agrees that Tenant shall not at any time maintain
on, or dispose or discharge from, the Property or the Premises any "Hazardous
Materials", as defined below, except Tenant may use and store minor quantities
of Hazardous Materials for cleaning purposes only or in connection with the use
of office equipment so long as the quantities and use are exempt from applicable
governmental regulation and such Hazardous Materials are disposed of in
accordance with all applicable laws. The failure to comply with all applicable
laws regarding Hazardous Materials and this covenant shall constitute an Event
of Default by the Tenant under this Lease and shall entitle the Landlord to all
rights and remedies provided in this Lease, at law or in equity. The term
"Hazardous Materials" as used herein shall mean collectively, any hazardous
waste, any hazardous substances, any pollutant or contaminant, all as defined by
42 USC ss. 9601, and any toxic substances, petroleum products, other hazardous
materials, or other chemicals or substances regulated by any environmental laws
of any county, state or federal government or any other governmental entity.
Tenant's obligations as set forth in this paragraph shall survive the
termination of this Lease.
11. SIGNS: The Tenant shall not place any signs or other advertising matter or
materials on the exterior or on the interior of the Building or at any other
location on the Property or Center, without the prior written consent from the
Landlord. Any lettering or signs placed on the interior of the Common Areas of
the Building shall be for directional purposes only, and such signs and
lettering shall be of a type, kind, character, location and description which
have been approved by the Landlord in writing. Directional and identification
signage provided by the Landlord shall be limited to the tenant directory of the
Building.
12. SERVICES: The Landlord shall provide and maintain the following: apparatus
for heating and cooling of the Premises, during normal business hours to the
extent necessary for the comfortable occupancy of the Premises, according to
Landlord's standard, under normal business operations and in the absence of the
use of machines, equipment, or devices which affect the temperature otherwise
maintained in the Premises; water from the regular Building fixtures for
drinking, lavatory, and toilet purposes; customary cleaning and janitorial
services in the Premises five times per week Monday through Friday and excluding
national holidays; customary cleaning, mowing, grounds keeping, and trash
removal in the Common Areas; and Landlord's customary security services
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for the Property. The Landlord shall provide Landlord's standard amount of free
non-exclusive parking for the employees and visitors of the Tenant on the
parking areas adjacent to the Building.
The services to be provided by Landlord at its cost under the terms of
this Lease shall not include any maintenance or replacement of non-standard
building items such as kitchen or breakroom fixtures and appliances including
but not limited to sinks, disposals, dishwashers, water heaters, refrigerators,
icemakers, special air conditioning or heating units, and card access systems or
special facilities such as showers. All cost for maintenance or replacement of
such items shall be the obligation of the Tenant.
The Tenant agrees that the Landlord shall not be liable for damages for
failure to furnish or delay in furnishing any service if attributable to any of
the causes described in Sections 16 and 17 or as a result of unforeseen causes.
No failure or delay resulting from the foregoing reasons shall be considered to
be an eviction or disturbance of the Tenant's quiet enjoyment, use, or
possession of the Premises. If the Tenant shall require electrical current to
operate equipment or machines, including heating, refrigeration, computer(s),
data processing, or other machines or equipment using electrical current or
maintain office hours that will increase the amount of the electricity usually
furnished by the Landlord for use in general office space, the Tenant will
obtain the prior written approval of the Landlord and pay to the Landlord the
additional direct expense incurred, including any installation or maintenance
cost, as Additional Rent. Landlord reserves the right to install a submeter for
such service.
13. ALTERATIONS: The Tenant, by occupancy hereunder, accepts the Premises as
being in good repair and condition and suitable for Tenant's intended use of the
Premises subject to Tenant's punch list items not directly related to tenant
leasehold improvements. The Tenant shall maintain the Premises and every part
thereof in good repair and condition, reasonable use, wear and tear excepted.
The Tenant shall not make or suffer to be made any alterations, additions or
improvements excluding normal, reasonable painting and decorating to or of the
Premises or any part thereof without Landlord's prior written consent. The
Tenant shall not permit any lien or claim for lien of a mechanic, laborer, or
supplier or any other lien to be filed against the Center, the Property
containing the Building, the Premises, or any part of such property, arising out
of work performed, or alleged to have been performed by, or at the direction of,
or on behalf of the Tenant.
The interest of Landlord in the Property or any part thereof shall not
be subject to liens for improvements made by Tenant or by persons claiming by,
through or under Tenant, and Tenant agrees that Tenant shall notify any person
making any improvements on behalf of Tenant of this provision. Upon request of
Landlord, Tenant will execute a short form of this Lease which states that the
terms of this Lease expressly prohibits any liability to Landlord or the
Landlord's property for any improvements made by, through or under Tenant which
may be recorded by Landlord.
14. QUIET ENJOYMENT: Subject to the provisions of this Lease, the Tenant shall
be entitled to peaceful and quiet enjoyment of the Premises, so long as the
Tenant is not in default under this Lease.
15. LANDLORD'S RIGHTS: The Landlord and its agents shall have the right, at all
reasonable times during the Term of this Lease, to enter the Premises for the
purpose of inspecting the Premises and of making any repairs and alterations as
the Landlord shall deem necessary. Landlord will make a reasonable effort to
schedule entry so as not to interrupt broadcasting in such cases where
interruption is necessary. The Landlord and its agents shall also
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have the right to enter the Premises at all reasonable hours for the purpose of
displaying the Premises to prospective tenants during the ninety (90) day period
prior to the Expiration Date of this Lease. Landlord and its agents shall have
the right at all times to alter, renovate, and repair portions of the Building
which do not include the Premises, notwithstanding any temporary inconvenience
or disturbance to Tenant caused by such repairs, renovations, or alterations.
16. DESTRUCTION OF PREMISES: If the Premises, the Building, or the Property is
rendered substantially untenantable by fire or other casualty, the Landlord may
elect, by giving the Tenant written notice within sixty (60) days after the date
of the fire or casualty, either to: (a) terminate this Lease as of the date of
the fire or other casualty; or (b) proceed to repair or restore the Premises,
the Building, or the Property (other than the leasehold improvements and
personal property installed by the Tenant), to substantially the same condition
as existed immediately prior to fire or other casualty.
If the Landlord elects to proceed pursuant to 16(b) above, the
Landlord's notice shall contain the Landlord's reasonable estimate of the time
required to substantially complete the repair or restoration. If the estimate
indicates that the time so required will exceed one hundred twenty (120) days
from the date of the casualty and the Landlord does not make available to the
Tenant for its use and occupancy other office space, substantially similar to
the Premises and located in the Property or in the Center, if any, pursuant to
Section 23, then the Tenant shall have the right to terminate this Lease as of
the date of such casualty by giving written notice to the Landlord not later
than twenty (20) days after the date of the Landlord's notice. If the Landlord's
estimate indicates that the repair or restoration can be substantially completed
within one hundred eighty (180) days, or if the Tenant fails to exercise its
right to terminate this Lease, this Lease shall remain in force and effect.
If the Premises are damaged by fire or other casualty but the Premises
are not rendered substantially untenantable, then the Landlord shall diligently
proceed to repair and restore the damaged portions thereof (other than the
leasehold improvements and personal property installed by the Tenant), to
substantially the same condition as existed immediately prior to such fire or
other casualty, unless such damage occurs during the last twelve (12) months of
the Term, in which event the Landlord shall have the right to terminate this
Lease as of the date of such fire or other casualty by giving written notice to
the Tenant within thirty (30) days after the date of such fire or other
casualty.
If all or any part of the Premises are damaged by fire or other
casualty and this Lease is not terminated, the Rent shall abate for that part of
the Premises which are untenantable on a per diem and proportionate area basis
from three (3) days after the date of the fire or other casualty until the
Landlord has substantially completed the repair and restoration work in the
Premises which it is required to perform, provided, that as a result of such
fire or other casualty, the Tenant does not occupy the portion of the Premises
which are untenantable during such period.
17. CONDEMNATION: If all or part of the Premises, Building or Property is taken
or condemned by any authority for any public use or purpose (including a deed
given in lieu of condemnation), which renders the Premises substantially
untenantable, this Lease shall terminate as of the date title vests in such
authority, and the Rent shall be apportioned as of such date.
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If any part of the Premises, Building, or Property is taken or
condemned but the Premises are not rendered substantially untentable (including
a deed given in lieu of condemnation), this Lease shall not terminate. If the
taking reduces the rentable square feet in the Premises, Rent shall be equitably
reduced for the period of such taking by an amount which bears the same ratio to
the Rent then in effect as the number of square feet so taken or condemned bears
to the Leased Area set forth in Section 1C. The Landlord, upon receipt and to
the extent of the award in condemnation or proceeds of sale, shall make
necessary repairs and restorations (exclusive of leasehold improvements and
personal property installed by the Tenant) to restore the Premises remaining to
as near its former condition as circumstances will permit, and to the Building
and the Property to the extent necessary to constitute the portion of same not
so taken or condemned as complete.
The Landlord shall be entitled to receive the entire price or award
from any sale, taking or condemnation without any payment to the Tenant and the
Tenant hereby assigns to the Landlord the Tenant's interest, if any, in such
award. However, the Tenant shall have the right separately to pursue against the
condemning authority an award with respect to the loss, if any, to leasehold
improvements paid by the Tenant without any credit or allowance for the Landlord
and for any loss for injury, damage, or destruction of the Tenant's business
resulting from such taking. Under no circumstances shall the Tenant seek or be
entitled to any compensation for the value of its leasehold estate which Tenant
hereby assigns to Landlord.
18. ASSIGNMENT AND SUBLEASE: Without the prior written consent of the Landlord
which will not be unreasonably withheld, the Tenant shall not sublease the
Premises, or assign, mortgage, pledge, hypothecate or otherwise transfer or
permit the transfer of this Lease or the interest of the Tenant in this Lease,
in whole or in part, by operation of law, court decree or otherwise. Landlord
may grant, deny or withhold consent or impose conditions on the granting of
consent, in Landlord's sole discretion. If the Tenant desires to assign this
Lease or to enter into any sublease of the Premises, the Tenant shall deliver
written notice of such intent to the Landlord, together with a copy of the
proposed assignment or sublease at least thirty (30) days prior to the effective
date of the proposed assignment or commencement date of the term of the proposed
sublease. Any approved sublease shall be expressly subject to the terms and
conditions of this Lease. In the event of any approved sublease or assignment,
the Tenant shall not be released or discharged from any liability, whether past,
present or future, under this Lease, including any renewal term of this Lease,
and if the sublease or assignment provides for rent in excess of the Rent
payable to Landlord under the terms of this Lease, one-half (1/2) of the
difference between the rent payable by the assignee or subtenant and the Rent
payable to Landlord under the terms of this Lease shall be paid to Landlord in
consideration of its consent to the assignment or sublease. For purposes of this
Section 18, an assignment shall be considered to include a change in the
majority ownership or control of Tenant if Tenant is a corporation whose shares
of stock are not traded publicly, or if the Tenant is a partnership, a change in
the general partner of the partnership or a change in the persons holding more
than 50% interest in the partnership, or a change in majority ownership or
control of any general partner of the partnership.
19. HOLDING OVER: If the Tenant, or any assignee or sublessee of the Tenant,
shall continue to occupy the Premises after the termination or expiration of
this Lease (including a termination by notice under Section 24 or a termination
or expiration under Section 27), without the prior written consent of the
Landlord, such tenancy shall be a Tenancy at Sufferance. During the period of
any hold over tenancy by the Tenant, or any assignee or sublessee, the Landlord,
by notice to the Tenant, may adjust the Rent to an amount equal to one hundred
and fifty percent of the Rent of the last month of the Term in which Rent was
payable. Acceptance by the Landlord of any Rent after
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termination shall not constitute a renewal of this Lease or a consent to such
hold over occupancy nor shall it waive the Landlord's right of re-entry or any
other right contained in this Lease or provided by law.
20. SUBORDINATION AND ATTORNMENT: This Lease and the right of the Tenant
hereunder are expressly subject and subordinate to the lien and provisions of
any mortgage, deed of trust, deed to secure debt, ground lease, assignment of
leases, or other security instrument or operating agreement (collectively a
"Security Instrument") now or hereafter encumbering the Premises, the Building,
the Property, or any part thereof, and all amendments, renewals, modifications
and extensions of and to any such Security Instrument and to all advances made
or hereafter to be made upon such Security Instrument, provided, however, that
so long as the Tenant is not in default under the terms of this Lease, the
holder of any such instrument shall not disturb the Tenant's possession of the
Premises in the event of the exercise of such holder's rights under such
instrument. The Tenant agrees to execute and deliver such further instruments,
in such form as may be required by Landlord or any holder of a proposed or
existing Security Instrument, subordinating this Lease to the lien of any such
Security Instrument as may be requested in writing by the Landlord or holder
from time to time.
In the event of the foreclosure of any such Security Instrument by
voluntary agreement or otherwise, or the commencement of any judicial action
seeking such foreclosure, the Tenant, at the request of the then Landlord, shall
attorn to and recognize such mortgagee or purchaser in foreclosure as the
Tenant's landlord under this Lease. The Tenant agrees to execute and deliver at
any time upon request of such mortgagee, purchaser, or their successors, any
instrument to further evidence such attornment.
The Tenant shall from time to time, upon not less than ten (10) days'
prior written request by the Landlord, deliver to the Landlord a statement in
writing certifying that this Lease is unmodified and in full force and effect,
or, if there have been modifications, that this Lease, as modified, is in full
force and effect; providing a true, correct and complete copy of the Lease and
any and all modifications of the Lease; the amount of each item of the Rent then
payable under this Lease and the date to which the Rent has been paid; that the
Landlord is not in default under this Lease or, if in default, a detailed
description of such default; that the Tenant is or is not in possession of the
Premises, as the case may be; and containing such other information and
agreements as may be reasonably requested.
21. WAIVER AND INDEMNIFICATION: To the full extent permitted by law, the Tenant
hereby releases and waives all claims against the Landlord and its agents,
employees, officers, directors, and independent contractors, for injury or
damage to person, property or business sustained in or about the Property, the
Building, or the Premises by the Tenant, its agents or employees other than
damage proximately and solely caused by the gross negligence of the Landlord or
its agents and employees.
The Tenant agrees to indemnify and hold harmless the Landlord and its
agents and employees, from and against any and all liabilities, claims, demands,
costs, and expenses of every kind and nature, including those arising from any
injury or damage to any person (including death) or property sustained in the
Premises, or resulting from the failure of the Tenant to perform its obligations
under this Lease; provided, however, the Tenant's obligations under this section
shall not apply to injury or damage resulting from the negligence or willful act
of the Landlord or its agents or employees.
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The Landlord agrees to indemnify and hold harmless the Tenant, and its
respective agents and employees, from and against any and all liabilities,
claims, demands, costs and expenses of every kind and nature, arising from any
injury or damage to any person (including death) or property sustained in or
about the Building proximately caused by the gross negligence or willful act or
omission of the Landlord; provided, however, the Landlord's obligations under
this section shall not apply to injury or damage resulting from the negligence
or willful act or omission of the Tenant, or its agents or employees.
The Landlord shall not be responsible or liable to the Tenant for any
event, act or omission to the extent covered by insurance and maintained or
required to be maintained by the Tenant with respect to the Premises and its use
and occupancy thereof (whether or not such insurance is actually obtained or
maintained). At the request of the Landlord, the Tenant shall from time to time
cause its insurers to provide effective waivers of subrogation for the benefit
of the Landlord, and its agents or employees and insurers, in a form
satisfactory to the Landlord.
22. SURRENDER OF PREMISES: Upon the expiration or termination of this Lease or
the termination of the Tenant's right of possession of the Premises, the Tenant
shall surrender and vacate the Premises immediately and deliver possession
thereof to the Landlord in a clean, good, and tenantable condition, except for
a) damages beyond the control of the Tenant; b) reasonable use; c) ordinary wear
and tear. Any movable trade fixtures and personal property that may be removed
from the Premises by the Tenant at the end of the Lease term, but which are not
so removed, shall be conclusively presumed to have been abandoned by the Tenant
and title to such property shall pass to the Landlord without any payment or
credit; or, the Landlord may, at its option, either store or dispose of such
trade fixtures and personal property at the Tenant's expense. Tenant agrees that
it shall not remove any of the personal property from the Premises without
Landlord's consent so long as any Rent or Additional Rent, or other sums owed to
Landlord, remain unpaid.
23. RELOCATION OF TENANT:
24. EVENTS OF DEFAULT: Each of the following shall constitute an event of
default by the Tenant under this Lease: Landlord shall provide Tenant with
written notice of any monetary default and on the part of Tenant at Landlord's
first opportunity no more than once each (12) twelve month period. (1) the
Tenant fails to pay any installment of Rent or Additional Rent within ten (10)
days after the date on which the installment of Rent or Additional Rent first
becomes due; (2) the Tenant fails to observe or perform its obligations under
sub-section (d) of Section 4 above and such violation continues for more than 24
hours after such notice or Tenant fails to observe or perform any of the other
covenants, conditions or provisions of this Lease other than the payment of any
installment of Rent or Additional Rent, and fails to cure such default within
fifteen (15) days after written notice from the Landlord to the Tenant; (3) the
Tenant fails a second time to observe or perform any of the other covenants,
conditions or provisions of this Lease other than the payment of any installment
of Rent or Additional Rent after prior written notice of the failure; (4) a
petition is filed by or against the Tenant or any Guarantor to declare the
Tenant or the Guarantor, as the case may be, bankrupt or to seek relief for such
Tenant or Guarantor under any chapter of the Bankruptcy Code, as amended, or
under any other law imposing a moratorium on, or granting debtor's relief with
respect to, the rights of creditors; (5) the Tenant or any Guarantor becomes or
is declared insolvent by law or Tenant or any Guarantor makes an assignment for
the benefit of creditors; (6) a receiver is appointed for the
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Tenant or the Tenant's property or for any Guarantor or any of Guarantor's
property; (7) the interest of the Tenant in this Lease is levied upon under
execution or other legal process.
Upon the occurrence of an event of default by the Tenant under this
Lease, the Landlord at its option, without further notice or demand to the
Tenant, may in addition to all other rights and remedies provided in this Lease
at law or in equity:
A. Terminate this Lease and Tenant's right of possession of the
Premises, and recover all damages to which the Landlord in entitled under this
Lease, at law and in equity, specifically including, without limitation, all the
Landlord's reasonable expenses of reletting (including repairs, alterations,
improvements, additions, decorations, legal fees and brokerage commissions).
B. Terminate the Tenant's right of possession of the Premises without
terminating this Lease, in which event the Landlord may, but shall not be
obligated to, relet the Premises, or any part thereof for the account of the
Tenant, for such rent and such term and upon such terms and conditions as are
acceptable to the Landlord. For purposes of any reletting of the Premises, the
Landlord is authorized to redecorate, repair, alter and improve the Premises to
the extent necessary or desirable in the Landlord's judgement. For any period
during which the Premises have not been relet, Tenant shall pay Landlord monthly
on the first day of each month during the period that Tenant's right of
possession is terminated, a sum equal to the amount of Rent due under this Lease
for such month. If and when the Premises are relet and a sufficient sum is not
realized from such reletting after payment of all the Landlord's expenses of
reletting (including repairs, alterations, improvements, additions, decorations,
legal fees and brokerage commissions) to satisfy the payment of Rent due under
this Lease for any month, the Tenant shall pay to the Landlord any such
deficiency monthly upon demand. The Tenant agrees that the Landlord may file
suit to recover any sums due to the Landlord under this section and that such
suit or recovery of any amount due the Landlord shall not be any defense to any
subsequent action brought for any amount not previously reduced by judgement in
favor of the Landlord. If the Landlord elects to terminate the Tenant's right to
possession only without terminating this Lease, the Landlord may, at its option,
enter into the Premises, removing the Tenant's signs and other evidences of
tenancy, and take and hold possession thereof; provided, however, that such
entry and possession shall not terminate this Lease or release the Tenant, in
whole or in part, from the Tenant's obligation to pay the Rent reserved
hereunder for the full Term or from any other obligation of the Tenant under
this Lease.
Tenant shall pay on demand or reimburse Landlord for payment of
Landlord's reasonable attorney's fees, expenses and court costs in negotiation,
at trial, and on appeal incurred by Landlord to enforce any obligation of Tenant
under this Lease or to defend any claim brought by Tenant against Landlord or by
any person claiming by, through or under Tenant, or in curing any default by
Tenant, or in connection with any action or proceeding arising out of or
occasioned by any lien or claim of lien on the Premises, the Building, or the
Center, or in defending or otherwise participating in any legal proceeding
initiated by Tenant or against Tenant, or in connection with the investigation
of a response to any request for consent or other amendments to the Lease by
Tenant.
25. SUCCESSOR AND ASSIGNS: This Lease shall bind and inure to the benefit of
the successors, assigns, heirs, executors, administrators, and legal
representatives of the parties hereto. In the event of the sale, assignment, or
transfer by the Landlord of its interest in the Building or in this Lease (other
than a collateral assignment to secure a debt of the Landlord prior to
enforcement) to a successor in interest who expressly assumes the obligations of
the
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<PAGE>
Landlord hereunder, the Landlord shall thereupon be released or discharged
from all of its covenants and obligations hereunder, except such obligations as
the Landlord shall have accrued prior to any such sale, assignment or transfer;
and the Tenant agrees to look solely to such successor of the Landlord for
performance of such obligations. Any securities or funds given by the Tenant to
the Landlord to secure performance by the Tenant of its obligations hereunder
may be assigned by the Landlord to such successor of the Landlord and, upon
acknowledgment by such successor or receipt of such security and its assumption
of the obligation to account for such security in accordance with the terms of
the Lease, the Landlord shall be discharged of any further obligation relating
thereto. The Landlord's assignment of the Lease or of any or all of its rights
herein shall in no manner affect the Tenant's obligations hereunder. The
Landlord shall have the right to freely sell, assign or otherwise transfer its
interest in the Building and/or this Lease.
26. NON-WAIVER: No waiver of any covenant or condition of this Lease by either
party shall be deemed to imply or constitute a further waiver of any other
covenant or condition of this Lease.
27. AUTOMATIC RENEWAL:
28. SECURITY DEPOSIT: As security for the performance of its obligations
under this Lease, the Tenant upon its execution of this Lease has paid to the
Landlord a security deposit (the "Security Deposit") in the amount stated in
Section 1B. The Security Deposit may be applied by the Landlord to cure or
partially cure any default of the Tenant under this Lease, and upon notice by
the Landlord of such application, the Tenant shall replenish the Security
Deposit in full by promptly paying to the Landlord the amount so applied. The
Landlord shall not pay any interest on the Security Deposit. The Security
Deposit shall not be deemed an advance payment of rent or a measure of damages
for any default by the Tenant under this Lease, nor shall it be a bar or defense
to any action which the Landlord may at any time commence against the Tenant.
29. LIMITATION OF THE LANDLORD'S LIABILITY: As used in this Lease, the term
"Landlord" shall mean the entity herein named as such, and its successors and
assigns. No person holding the Landlord's interest under the Lease (whether or
not such person is named as the "Landlord") shall have any liability hereunder
after such person ceases to hold such interest, except for any liability
accruing hereunder while such person held such interest. No principal, officer,
employee, or partner (general or limited) of the Landlord shall have any
personal liability under any provision of this Lease. If the Landlord defaults
in the performance of any of its obligations under this Lease or otherwise, the
Tenant shall look solely to the Landlord's interest in the Building and not to
the other assets of Landlord or the assets, interest, or rights of any
principal, officer, employee, or partner (general or limited) for satisfaction
of the Tenant's remedies on account thereof.
30. COMMON AREAS: For purposes of this Lease "Common Areas" shall mean all
areas, improvements, space, and equipment (owned or controlled by the Landlord)
in or at the Property, provided by the Landlord for the common or joint use and
benefit of tenants, customers and other invitees.
31. MISCELLANEOUS: This Lease, the Exhibits, the Riders and Addendums contained
herein or attached hereto contain the entire agreement between the Landlord and
the Tenant and there are no other agreements, either oral or written. This Lease
shall not be modified or amended except by a written document signed by the
Landlord and the Tenant which specifically refers to this Lease. The captions in
this Lease are for convenience only and in
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no way define, limit, construe or describe the scope or intent of the provisions
of this Lease. This Lease shall be construed in accordance with the laws of the
state in which the Building is located. If any provision of this Lease or any
amendment hereof is invalid or unenforceable in any instance, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision, or such provision in any circumstance not controlled by such
determination.
32. TENANT'S INSURANCE: Tenant shall obtain and keep in force during the Term
of this Lease, including any extension and renewal, comprehensive general
liability insurance, including contractual liability coverage, insuring Landlord
(as an additional insured) and Tenant against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises, and all areas
appurtenant thereto. Such policy shall provide minimum limits of $1,000,000 for
damage to property or for death or injury to any one person in any one accident.
Tenant shall deliver to Landlord, prior to occupancy of the Premises, a
certificate of insurance and evidence of payment of one year's premium, and
shall deliver a new certificate as and when the policy is renewed or replaced.
Said policy shall contain a waiver of subrogation clause in form and content
satisfactory to Landlord and provide that it will not be subject to
cancellation, non-renewal, reduction or other change except after at least
thirty (30) days prior written notice to Landlord. If Tenant fails to comply
with such requirements, Landlord may obtain such insurance and keep the same in
effect and Tenant shall pay Landlord, as Additional Rent due hereunder, the
premium cost thereof upon demand.
33. NO RECORDING: NEITHER THIS LEASE NOR ANY MEMORANDUM OF THIS LEASE MAY BE
RECORDED OR FILED FOR RECORD IN ANY PUBLIC RECORDS WITHOUT THE SEPARATE EXPRESS
WRITTEN CONSENT, IN RECORDABLE FORM, OF THE LANDLORD.
34. ENCUMBRANCES ON LANDLORD'S TITLE: Upon request of Landlord, Tenant will
promptly release or modify, or cause to be released or modified, any financing
statement given by Tenant to a third party, any notice of commencement filed by
Tenant with respect to work on the Premises, or any other recorded document
filed by or on account of Tenant ("Document"), which adversely affects, clouds,
or otherwise encumbers Landlord's title to the Center or any part thereof, so
that the Document shall not encumber any portion of the Center, Building, or
Property other than the Tenant's leasehold interest in the Premises. Tenant's
obligations as set forth in this Section 34 shall survive termination of this
Lease.
35. RADON DISCLOSURE FOR FLORIDA LEASES: Radon is a naturally occurring
radioactive gas which, when it has accumulated in a building in sufficient
quantities, may present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon testing
may be obtained from your county public health unit. Tenant acknowledges this
disclosure by signing this Lease.
36. ERISA: (1) As used herein, the following terms have the following
meanings: (a) "Affiliate" means (1) any person directly or indirectly through
one or more intermediaries, controlling, controlled by, or under common control
with the person, (2) any officer, director, employee, relative of, or partner in
any such person, and (3) any corporation, partnership, trust or unincorporated
enterprise of which such person is an officer, director, partner or employee;
(b) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended; (c) "Code" means the Internal Revenue Code of 1986, as amended; (d)
"DOL" means the United States Department of Labor;
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(e) "Morgan" means Morgan Guaranty Trust Company of New York, a New York trust
company, (f) "Fund" means the Commingled Pension Trust Fund (Special Situation
Investments - Real Estate) of Morgan; (g) "10% Plan " means any employee benefit
plan, other than a governmental or church plan, whose interest in the Fund,
together with the interests of any other employee benefit plans maintained by
the same employer or employee organization in the Fund, exceeds 10% of the total
of all assets in the Fund (10% Plans in the Fund as of the date hereof are
described in Exhibit attached hereto); (h) "employee benefit plan" is defined in
section 3 (3) of ERISA; and (i) "party in interest" is defined in section 3 (14)
of ERISA and includes the term "disqualified person" as defined in section 4975
(e)(2) of the Code.
(2) Tenant represents and covenants that either - (a) Tenant is not a party in
interest with respect to any 10% Plan or 10% Plans in the Fund; or (b) Tenant is
not Morgan or any Affiliate of Morgan or any other collective investment fund
maintained by Morgan and the annual amount involved in this Lease (including the
amount of any other lease or arrangement for the furnishing of goods in
connection with real property investments of the Fund with the Tenant or any
Affiliate thereof), determined on a calendar year basis, does not exceed
$7,500,000; or (c) Tenant is a party in interest with respect to a 10% Plan or
10% Plans in the Fund, but such party-in-interest relationship arises solely by
reason of providing services to such 10% Plan or 10% Plans (including services
as a fiduciary) and/or solely by reason of a relationship to a service provider
(including a fiduciary) described in section 3 (14)(F),(G), (H) or (I) of ERISA,
and Tenant (i) neither exercised nor has any discretionary authority, control,
responsibility or influence with respect to the investment of plan assets in, or
held by, the Fund, and (ii) is not an Affiliate of Morgan; or (d) if Tenant
cannot make any of the representations and covenants described in either clause
(a), (b), or (c) of subparagraph (2), then Tenant has otherwise satisfied
Landlord, by providing such information as reasonably requested by Landlord,
including, if so requested, an opinion of counsel (satisfactory to Landlord in
content and scope) to the effect that Prohibited Transaction Class Exemption
84-14 promulgated by the U.S. Department of Labor will exempt the execution of
this Lease and the consummation of the transactions contemplated thereby from
the restrictions of sections 406(a)(1)(A) through (D) of ERISA and sections 4975
(c)(1)(A) through (D) of the Code.
(3) Tenant further represents and covenants that, notwithstanding anything to
the contrary herein, without the Landlord's written approval (a) Tenant shall
not (voluntarily, by operation of law or otherwise), sublease, assign or
otherwise transfer its interest under this Lease to any subtenant, assignee or
other transferee which could not satisfy the representations and covenants made
under either clause (a), (b) or (c) of subparagraph (2), and (b) throughout the
Term of this Lease and any extension or renewal thereof, Tenant shall not
(voluntarily, by operation of law or otherwise) enter into any agreement,
relationship or contract which would cause it to fail to satisfy the
representations and covenants under either clause (a), (b) or (c) of
subparagraph (2). The provisions of this subparagraph (3) are not intended to
expand or otherwise provide Tenant with rights to sublease, assign or transfer
its interest under this Lease beyond that provided herein.
(4) In the event Landlord gives a notice to Tenant identifying any additional
10% Plan or 10% Plans in the Fund and requests verification that Tenant is in
compliance with the representations and covenants of subparagraph (2)(a) above
with respect to such additional 10% Plan or 10% Plans, or in the event Landlord
otherwise requests that Tenant verify that Tenant is in compliance with said
subparagraph (2) generally, within ten (10) days after such request, Tenant
shall furnish to Landlord a certificate confirming whether or not Tenant is in
compliance with said subparagraph (2) and, in the event of its failure to
comply, the reason for such failure. In the event Tenant obtains
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<PAGE>
knowledge that it is not in compliance with said subparagraph (2), within the
ten (10) days after obtaining such knowledge, Tenant shall notify Landlord of
such failure to comply with said subparagraph (2) and the reason for such
failure.
(5) The failure of Tenant to comply with the provisions of subparagraph (3)
shall constitute an immediate Event of Default by Tenant under this Lease and
entitle Landlord, at Landlord's election, immediately to terminate this Lease
and pursue any and all other rights and remedies available to Landlord
hereunder, at law or in equity. In addition, in the event of any sublease,
assignment or other transfer by Tenant of, or any attempt by Tenant to sublease,
assign or otherwise transfer, Tenant's interest under this Lease contrary to the
provisions of said subparagraph (3), without limiting any other provision of
this Lease, Tenant hereby expressly covenants and agrees that Landlord shall be
entitled to a decree or order to rescind or restrain and enjoin such sublease,
assignment or other transfer and that Tenant shall not plead in defense thereof
that there may be an adequate remedy at law.
(6) If at any time, by reason of change in circumstance or otherwise, (i) the
exemptions from the prohibitions of section 406 of ERISA and section 4975 of the
Code specified in subparagraph (2) no longer apply to Tenant, or (ii) a
sublessee, assignee or transferee is no longer able to satisfy any of the
conditions set forth in clauses (a), (b) and (c) of subparagraph (2), and, in
either case, the Landlord determines that no other basis for exemption from the
prohibitions of section 406 of ERISA or section 4975 of the Code is reasonably
available, the Tenant shall take such action as is necessary to eliminate the
prohibition within ninety (90) days after the date on which Tenant obtains
knowledge that it is not in compliance with said subparagraph (2). If Tenant
fails to complete such cure within ninety (90) days after it obtains such
knowledge, Landlord shall be entitled to terminate this Lease without additional
penalty to Tenant.
37. UBTI: (A) Manager shall not enter into any lease, license or operating
agreement or consent to any sublease which (i) contains any provision for the
payment of rents based in whole or in part on the income, net revenues, net
receipts or profits derived by any person, including the tenant or subtenant,
from the lease premises, provided that any such lease or sublease may contain
provisions for rents based on a fixed percentage or percentages of gross
receipts or sales of the tenant or subtenant, or (ii) provides for or
contemplates rents attributable to personal property for any year in excess of
ten percent (10%) of the total rents under such lease or sublease for such year,
determined at the time the personal property is first placed in service by the
lessee, and redetermined subsequently if (a) additional or substitute personal
property is placed in service and the rents attributable to the personal
property leased under the lease increases by 100% or more or (b) there is a
modification of the lease which results in a change in the rent charged under
the lease.
(B) Manager may perform on behalf of owner only those services (including,
without limitation, construction management services) for tenants as provided in
the applicable lease and which are customarily provided by owners for tenants,
in the geographic area in which the leased property is located, in connection
with the rental of space in similar types of properties. For such services,
Manager may charge additional rent reasonably related to the cost of providing
such services, including associated overhead. Owner acknowledges that Manager's
affiliates may provide construction management services to tenants under
separate agreements provided Manager gives Owner written notice of such
agreements to perform such services.
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(C) If, and only if, a prospective tenant (the "Prospective Tenant") informs
Manager that it is unable to make the representation set forth in subparagraph
(E)(3) below (which representation shall appear in each prospective tenant's
lease), Manager shall not enter into any lease with the Prospective Tenant,
until such time as Manager shall have received from the Prospective Tenant a
written statement (the "Related Party Statement") setting forth the name of each
Related Party (as defined in subparagraph (E)(3) below) of the Prospective
Tenant that is a tenant in the same Office Center as the Office Center in which
the leasable floor space to be covered by the Prospective Tenant's lease is
located. For purposes of this paragraph (C), the term "Office Center" shall mean
an office park which is managed by Manager and owned by Owner and which is
located in (i) Miami, Florida, (ii) Tampa, Florida, (iii) Raleigh-Crossroads,
North Carolina, (iv) Raleigh-Glenwood, North Carolina, (v) Norfolk, Virginia or
(vi) Richmond, Virginia.
(D) Before entering into any lease with a Prospective Tenant covering leasable
floor space in any office Center (the "Prospective Lease), Manager shall have
determined that, if the Manager were to enter into the Prospective Lease, the
aggregate amount of leasable floor space in such Office Center that would be
covered by the Prospective Lease and, if applicable, by any and all leases with
those tenants identified in any Related Party Statement submitted by the
Prospective Tenant to the Manager pursuant to paragraph (C) above, would not
constitute more than 15% of the total amount of leasable floor space in such
Office Center (the "15% Determination"). In the event that Manager is unable to
make the 15% Determination, Manager shall, before entering into the Prospective
Lease, (i) notify Owner that it is unable to make the 15% Determination in
respect of the Prospective Tenant, (ii) if applicable, forward a copy of the
Prospective Tenant's Related Party Statement to Owner and (iii) have received
written direction from Owner to enter into the Prospective Lease.
(E) (1) Notwithstanding anything to the contrary herein, Tenant shall not
(voluntarily, by operation of law of otherwise) sublease, assign or otherwise
transfer its interest under this Lease to any subtenant, assignee or other
transferee under a sublease, assignment or other agreement which contains any
provision for the payment of rents based in whole or in part on the income, net
revenues, net receipts or profits derived by any person, including the assignee,
subtenant or other transferee, from the leased premises, provided that any such
assignment, sublease or other agreement may contain provisions for rents based
on a fixed percentage or percentages of gross receipts or sales of the assignee,
subtenant or other transferee. (2) The failure of Tenant to comply with the
provisions of the foregoing clause (1) shall constitute an immediate Event of
Default by Tenant under this Lease and entitle Landlord, at Landlord's election,
immediately to terminate this Lease and pursue any and all other rights and
remedies available to Landlord hereunder, at law or in equity. In addition, in
the event of any sublease, assignment or other transfer by Tenant of, or any
attempt by Tenant to sublease, assign or otherwise transfer, Tenant's interest
under this Lease contrary to the provisions of the foregoing clause (1), without
limiting any other provision of this Lease, tenant hereby expressly covenants
and agrees that Landlord shall be entitled to a decree or order to rescind or
restrain and enjoin such sublease, assignment or other transfer and that Tenant
shall not plead in defense thereof that there may be an adequate remedy at law.
(3) Tenant represents that no Related Party (as defined below) is a tenant in
the same Office Center (as defined below) as the Office Center in which the
leasable floor space covered by this lease is located. For purposes of this
representation, the terms "Related Party" and "Office Center" shall have the
following meanings:
Related Party shall mean, as to any tenant, any person who bears a relationship
to such tenant that is described in section 267(b) or section 707(b) of the
Internal Revenue Code of 1986, as amended.
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Office Center shall mean, The Koger Center referred to in Section 1A.
38. RIDERS & ADDENDA: All riders and addenda contained herein or attached
hereto shall be deemed to be a part hereof and hereby incorporated in this Lease
by reference.
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KROGER
LEASE RIDER
This Rider is attached to and made a part of the Lease dated September 19, 1997,
by and between KOALA Miami Realty Holding Co., Inc., a Delaware Corporation
("Landlord") with its principal office at 522 Fifth Avenue, New York, New York
10036, and Radio Unica Corp., a Corporation organized and existing under the
laws of the State of Florida ("Tenant") with its principal office at 8400 N.W.
52nd Street, Suite #101, Miami, Florida 33166.
1. Tenant, at its sole expense, agrees to provide tenant improvements to
the premise as noted in the attached Exhibit "B", consisting of
finishes stated such improvements will be performed in accordance with
local building code requirements. Landlord will be furnished, at
tenant's expense, a complete set of "as built" plans upon substantial
completion of improvements.
2. Rent Schedule. Monthly rental payments for the term of the Lease will
be according to the following schedule plus applicable sales tax:
<TABLE>
<CAPTION>
From To Monthly
<S> <C> <C> <C>
01-Oct-97 31-Oct-97 $0.00
01-Nov-97 31-Oct-98 $9,690.63
01-Nov-98 01-Nov-99 $10,175.16
01-Nov-99 31-Oct-2000 $10,683.91
01-Nov-2000 31-Oct-2001 $11,218.11
01-Nov-2001 31-Oct-2002 $11,779.02
01-Nov-2002 31-Oct-2003 $12,367.97
01-Nov-2003 31-Oct-2004 $12,986.36
</TABLE>
3. Tenant shall have the right to install three (3) antennas (which may be
satellite dish or tower antennas, both of which are referred to as antennas in
this paragraph), on the Common Areas. All costs related to the installation,
maintenance, and operation of such antennas shall be borne by Tenant. Landlord
shall have the right to approve the size and location of the antennas. At
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Landlord's option and Tenant's cost, the antennas will be screened from view of
the surrounding area by fencing and landscaping acceptable to Landlord. Tenant
shall be responsible, at Tenant's sole cost, for the repair and maintenance of
the antennas and any wall or roof penetrations created to accommodate such
antennas, including but limited to, the water tightness of the roof and walls at
the locations of such penetrations. Tenant shall remove the antennas at the
termination of this Lease and repair any damage to or penetrations of the roof
or walls, all at Tenant's cost. Upon demand, Tenant shall reimburse Landlord for
any increase in Landlord's insurance resulting from the presence of the antennas
of the Common Areas. Tenant shall indemnify and hold Landlord harmless from any
loss, cost, claim or liability arising out of or related to the installation,
use and removal of any such antennas. Tenant will promptly resolve any technical
interference problems with other equipment located within the Center on the
Commencement Date, or caused by changes in Tenant's equipment or transmission
after the Commencement Date.
4. Tenant shall have the right to install additional air conditioning units to
serve the Premises at Tenant's sole cost and expense as to installation,
operation , and maintenance. Landlord shall have the right to approve the size
and location of the air conditioning units and the design of any related
facilities which approval shall not be unreasonably withheld. Tenant shall have
a separate electric meter installed for the additional air conditioning units.
Tenant shall be responsible, at Tenant's sole cost, for the repair and
maintenance of the air conditioning units and related facilities, and any wall
or roof penetrations created to accommodate such facilities, including, but not
limited to, the water tightness of the roof and walls at the locations of such
penetrations. Tenant shall remove the air conditioning units and related
facilities at the termination of this Lease and repair any damage to or
penetrations of the Building, including, but not limited to, the roof and walls,
all at Tenant's cost. Tenant shall indemnify and hold Landlord harmless from any
loss, cost, claim or liability arising out of or related to the installation,
use and removal of any such air conditioning units and related facilities.
5 Tenant shall have the right at Tenant's sole cost to install, operate and
maintain a backup diesel-powered generator and uninterrupted power supply
("UPS") on the Common Areas. Landlord shall have the right to approve the
location of the generator and the design of any modifications to the Building to
accommodate the UPS which shall not be unreasonably withheld. The generator and
UPS will be screened from view by fencing and landscaping which are acceptable
to Landlord. Tenant shall provide any sound barriers or noise reducing apparatus
reasonably required by Landlord to prevent the generator from creating an
nuisance to other tenants. The size and type of generator and UPS shall be
subject to Landlord's prior, reasonable approval. Tenant shall be responsible at
Tenant's sole cost for the repair and maintenance of the generator, the UPS and
connections to the Building's power supply. Tenant shall remove the generator
and UPS at the termination of this Lease and repair any damage to the Premises,
Building and Common Areas, all at Tenant's cost. Upon demand, Tenant shall
reimburse Landlord for any increase in Landlord's insurance resulting from the
presence of the generator and UPS. Tenant shall indemnify and hold Landlord
harmless from any loss, cost, claim or liability arising out of or related to
the installation, use and removal of the generator and UPS. The type and
location of
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any fuel tanks for the generator shall be subject to Landlord's reasonable
approval. If required by Landlord, Tenant shall provide a policy or policies of
insurance insuring against risks associated with the generator and the UPS,
including, but not limited to liability and casualty insurance, and insurance
against releases of petroleum products.
6. Electrical utility service will be separately metered and paid for by the
tenant for lights, air conditioning, heating and general office use.
7. Renewal Option: Tenant shall have one three-year option to renew at the then
monthly rent plus five percent (5%) or the then asking rate of the building,
whichever is less escalated annually by four percent (4%).
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Exhibit 10.26
AMENDMENT
TO TIME BROKERAGE AGREEMENT
This Amendment to Time Brokerage Agreement (the "Amendment") is made
and entered into as of May 20th, 1998 by and between The Freedom Network, Inc.,
a Delaware corporation ("Freedom"), and Radio Unica Corp., a Delaware
corporation ("Programmer").
WHEREAS, an application is pending before the Federal Communications
Commission ("FCC") to assign the license for commercial AM broadcast station
KDFT(AM), licensed to broadcast on frequency 540 kHz at Ferris, Texas (the
"Station"), to Freedom;
WHEREAS, Freedom has entered into a Time Brokerage Agreement ("LMA")
with the licensee of Station to broker broadcast time on Station in accor dance
with the FCC rules;
WHEREAS, Freedom and Programmer have entered into a separate Time
Brokerage Agreement, dated as of April 27, 1998 ("TBA"), through which Program
mer agreed to purchase time on and to provide radio programming to the Station
and to sell advertising time for inclusion in said programming, all subject to
the terms of the LMA;
WHEREAS, the term of the TBA commenced May 18, 1998 (the "Com mencement
Date") and shall continue until May 18, 2000 unless extended by
<PAGE>
mutual agreement of the parties or terminated sooner pursuant to the terms of
the TBA;
WHEREAS, pursuant to the terms of the TBA, Programmer has made an
advance payment to Freedom;
WHEREAS, Freedom now desires to obtain additional programming from
Programmer for the Station on Monday through Friday of each week and Program mer
desires to make such programming available, on the terms provided for herein;
WHEREAS, the parties desire to amend the TBA to provide for such addi
tional weekly programming and to adjust the payments to Freedom accordingly;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowl edged, Freedom and Programmer do hereby agree that the TBA is amended to
provide that:
1. Section 4.1 of the TBA is hereby amended to provide that, starting
May 20, 1998, and throughout the term of the TBA, Freedom shall make available
to Programmer all of the broadcast time on the Station (i) from 7:00 a.m. until
5:00 p.m., Central Time, on a daily basis, Monday through Friday of each week,
and from (ii) 10:00 a.m. until 5:00 p.m., Central Time, each Saturday ("the
Programmer Time"). Freedom's obligation to make available all necessary time
required by Programmer to carry all World Cup soccer matches, as set forth in
Attachment II of the TBA, shall remain unchanged.
<PAGE>
2. Attachment I of the TBA is hereby amended to provide that Program
mer shall compensate Freedom for the broadcast time made available at the rate
of Forty Four Thousand, Seven Hundred and Eighty Six Dollars ($44,786.00) per
month from the Commencement Date until May 30, 1999, with the month of May, 1998
to be prorated at Nineteen Thousand, Five Hundred and Eighty Three Dollars
($19,583.00); which monthly payment shall increase to Fifty Six Thousand, Five
Hundred and Forty Six Dollars ($56,546.00) per month from June 1, 1999 until May
18, 2000, with the month of May, 2000 to be prorated based upon the number of
hours of Programmer Time during which Programmer's programming is broadcast that
month multiplied by the rate of Two Hundred and Twenty Nine Dollars ($229.00)
per hour. Compensation for World Cup soccer matches shall remain as originally
provided in Attachment I.
3. Within two (2) days after the execution of this Amendment, Program
mer shall make an additional payment of Fifty One Thousand, Four Hundred and
Ninety-Four Dollars and forty-one cents ($51,494.41) to cover the increase in
the aggregate payment due in advance for the prorated portion of May, 1998 and
the months of June, 1998 through September, 1998.
4. Any provision in the TBA not specifically amended by this Amend ment
shall remain in full force and effect.
5. In the event of any conflict between the terms of this Amendment and
the TBA, the terms of this Amendment shall control.
6. This Amendment may be signed in one or more counterparts, each of
which shall be deemed a duplicate original, binding on the parties hereto
notwith standing that the parties are not signatory to the same counterpart.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
The Freedom Network, Inc.:
/s/ Otto Miller
--------------------------------
Otto Miller, President
Radio Unica Corp.:
--------------------------------
Andrew Goldman, Executive Vice President
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
The Freedom Network, Inc.:
--------------------------------
Otto Miller, President
Radio Unica Corp.:
/s/ Andrew Goldman
--------------------------------
Andrew Goldman, Executive Vice President
<PAGE>
Exhibit 10.27
- --------------------------------------------------------------------------------
LOCAL PROGRAMMING AND MARKETING AGREEMENT
By and Between
CHILDREN'S RADIO OF NEW YORK, INC.
AND
RADIO UNICA CORP.
Dated as of June 1, 1998
- --------------------------------------------------------------------------------
<PAGE>
LOCAL PROGRAMMING AND MARKETING AGREEMENT
THIS LOCAL PROGRAMMING AND MARKETING AGREEMENT (the "LMA"), dated as of
June 1, 1998, is entered into by and between CHILDREN'S RADIO OF NEW YORK,
INC., a New Jersey corporation (referred to herein as the "Licensee"), and RADIO
UNICA CORP., a Delaware corporation (the "Programmer").
Programmer and Licensee are desirous of setting forth the terms of
their agreement granting Programmer the right to air its programming (the
"Programming") on radio station WJDM (AM), licensed to Elizabeth, New Jersey
(the "Station"), all subject to applicable regulations of the FCC and the
specific terms and conditions set forth below.
THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. SALE OF TIME
1.1. Broadcast of Programming. Commencing June 1, 1998, Licensee
shall broadcast on the Station the Programming for One Hundred
Sixty-six (166) hours per week. Programmer will transmit its
Pro gramming from Licensee's transmitting facilities .
1.2. Advertising and Programming Revenues. During the period in
which Programmer delivers the Programming to the Station,
Programmer shall have full authority to sell for its own
account commercial time on the Station and to retain all
revenues from the sale of such advertising. The parties agree
that Programmer shall have complete discretion to deal as it
deems appropriate with all advertising accounts relating to
advertising sold by it.
Licensee shall retain all rights and obligations with respect
to accounts receivable of the Station for sale of commercial
time on the
<PAGE>
Station for periods of time prior to the effective date
hereof.
1.3. Force Majeure. Any failure or impairment of facilities or any
delay or interruption in broadcasting the Programming, or
failure at any time to furnish the facilities, in whole or in
part, for broadcasting, due to acts of God, strikes or threats
thereof, force majeure or any other causes beyond the control
of Licensee or Programmer, shall not constitute a breach of
this LMA; provided, however, that Programmer may terminate
this LMA if not then in default hereunder if broadcast of the
Programming has been interrupted for more than fourteen (14)
continuous days or for more than three hundred thirty-six
(336) hours during any sixty (60) day period. Neither
Programmer nor Licensee shall be liable to the other for any
costs incurred with respect to any such failure or impairment.
1.4. Payments. Programmer shall pay to Licensee the fee (the "Fee")
set forth on Schedule l hereto for the rights granted under
this LMA. The Fee shall be paid upon execution of this LMA. In
the event Programmer exercises its option to extend the term
as described in Section 1.5 below, Programmer shall pay to
Licensee an additional fee as set forth on Schedule 1 hereto
on the Extension Termination Date (as defined below).
1.5. Term. Unless terminated earlier pursuant to the terms of this
LMA, the term of this LMA shall end on August 31, 1998,
provided, how ever, that Programmer, at its sole option, may
upon ten (10) days prior written notice to Licensee, extend
the term of this LMA to the date on which the sale of the
Station to Catholic Radio Network, LLC ("CRN") closes or the
date that the agreement to purchase the Station is terminated
(the "Extension Termination Date").
<PAGE>
2. PROGRAMMING AND OPERATING STANDARDS
2.1. Obligations and Rights of Licensee. Notwithstanding anything
to the contrary in this LMA, as long as Licensee remains the
licensee of the Station, it will have full authority, power
and control over the operations of the Station and over all
persons employed by it at the Station during the Term of this
LMA to enable Licensee to fulfill all its obligations as a
Licensee under the rules, regulations and policies of the FCC.
Licensee shall be responsible for the direction of the day-
to-day operation of the Station, shall maintain the Station's
transmis sion equipment and facilities, including the antenna,
transmitter and transmission line, and shall provide for the
delivery of electrical power to the Station's transmitting
facilities at all times in order to ensure operation of the
Station (subject to downtime for mutually agreed upon
scheduled maintenance, breakdowns not a result of Licensee's
negligence, or damage contemplated under Section 1.3 above) in
conformance with its FCC licenses, permits and authorizations.
Licensee specifically agrees to pay all employee salaries of
employees engaged by Licensee pursuant to and consistent with
FCC regulations and policies, real estate taxes, personal
property taxes, utilities, maintenance, repair and engineering
fees associated with maintaining the operation of the Station
in compliance with FCC regulations.
2.1.1. Licensee's Right to Reject Programming. Licensee
shall retain the right to accept or reject any
programming or advertisements which Licensee deems
contrary to the public interest. Licensee reserves
the right to refuse to broadcast any Programming or
advertising containing matter which is, or in the
reasonable opinion of Licensee may be, violative of
any right of any third party, or which may constitute
a "personal attack" as that term is and has been
defined by the FCC, or which Licensee determines is,
or in the reasonable opinion of Licensee may be
determined to be, indecent or obscene by the FCC or
any court or other regulatory body with authority
over Licensee or the Station, or which otherwise is
contrary to the rules, regulations or policies of the
FCC or the Licensee's Statement of Station Policies
annexed hereto as Exhibit A. Licensee further
reserves the right to preempt the Programming in the
event of a local, state or national emergency.
Programmer agrees to cooperate with Licensee to
ensure that EAS transmissions are properly performed
in accordance with Licensee's instructions.
<PAGE>
Licensee reserves the right to delete any commercial
announcements that do not comply with the
requirements of the FCC's sponsorship identification
rules and policies as set forth in 47 C.F.R. Sections
73.1212 and 73.4242, and as such rules and policies
may be changed from time to time by the FCC.
Programmer will immediately serve Licensee with
notice and a copy of any letters of complaint it
receives concerning any program furnished by
Programmer, for Licensee's review and inclusion in
the Station's public inspection files. In the event
of any preemption by Licensee of the Programming
under this section 2.1.1, Licensee shall pay to
Programmer amount equal to the loss of revenue by
Programmer which shall equal the loss of the
respective Station's local and national revenues and
the respective Station's allocation of Programmer
network revenues. The respective Station's allocation
of Programmer network revenues shall be equal to the
percentage of Programmer network revenues that is the
same percentage determined by dividing the Hispanic
population of the respective Station's market by the
total Hispanic population reached by the Programmer
net work.
2.1.2. Licensee's Right to Preempt Programming for Special
Events. Licensee shall also have the right, in its
reasonable discretion, to preempt any of the
broadcasts of the Programming, in order to broadcast
a program deemed by Licensee to be of greater
national, regional, or local interest. In the event
of such preemption under this section 2.1.2, Licensee
shall pay to Programmer an amount equal to the loss
of revenue by Programmer which shall equal the loss
of the respective Station's local and national
revenues and the respective Station's allocation of
Programmer network revenues. The respective
Station's allocation of Programmer network revenues
shall be equal to the percentage of Programmer
network revenues that is the same percentage
determined by dividing the Hispanic population of the
respective Station's market by the total Hispanic
population reached by the Programmer network. In all
such cases, Licensee will use its best efforts to
give Programmer
<PAGE>
reasonable advance notice of its intention to preempt
any regularly scheduled programming. Preemption shall
occur only to the extent Licensee deems necessary to
carry out its obligations as an FCC licensee, and
Licensee expressly agrees that its right of
preemption shall not be exercised in an arbitrary
manner or solely for the commercial advantage of
Licensee.
2.1.3. FCC Public Interest Requirements. The parties agree
that Licensee may broadcast its own public service
programming between the hours of 6:00 a.m. and 8:00
a.m. on Saturday. Subject to Section 2.2 of this LMA,
the parties acknowledge that Licensee is ultimately
responsible for meeting all of the FCC's requirements
as announced from time to time, including those with
respect to (a) the carriage of political
advertisements and programming (including, without
limitation, the rights of candidates and, as
appropriate, others to "equal opportunities," "lowest
unit charge" and reasonable access, (b) the broadcast
and nature of any public service programming, (c)
maintaining the political and public inspection files
and the Station's logs, (d) the ascertainment of
issues of community concern and (e) the preparation
of all quarterly issues/programs lists. Licensee
shall further retain the right to take any other
actions necessary for compliance with the laws of the
United States and the State of New Jersey the rules,
regulations, and policies of the FCC (including the
prohibition on unauthorized transfers of control),
and the rules, regulations and policies of other
federal governmental authorities, including the
Federal Trade Commission and the Department of
Justice. If, in the judgment of Licensee, any portion
of the Programming presented by Programmer does not
comply with any such law or governmental rule,
regulation or policy, Licensee may suspend, cancel
or refuse to broadcast any such portion of the
Programming not in compliance without reduction or
offset in the payments due Licensee under this LMA.
2.2. Obligations of Programmer
2.2.1. Compliance with Laws and Station's Policies. All
programs supplied by Programmer shall meet in all
material respects all applicable rules, regulations
and policies of the FCC and all other laws or
regulations applicable to the broadcast of
programming by the Station, as well as the
<PAGE>
Licensee's Statement of Station Policies annexed
hereto as Exhibit A. All advertising spots and
promotional material or announcements shall comply
with all applicable federal, state and local
regulations, as well as the Licensee's Statement of
Station Policies.
2.2.2. Cooperation with Licensee. Programmer agrees that it
will consult with Licensee in the selection of the
Programming it transmits to Licensee for broadcast to
ensure that the Programming contains matter
responsive to community needs and issues of public
concern in the Station's communities of licenses as
those needs and issues are made known to Programmer
by Licensee. Licensee will retain all rights to call
letters assigned by the FCC for use by the Station.
However, Programmer is specifically authorized to use
the said call letters, or other call letters used by
Licensee for the Station, in its Programming and in
any promotional material, in any media, used in
connection with the Programming, and shall, upon
request by Licensee, provide information with respect
to any of the Programming which is responsive to the
public needs and interests of the areas served by the
Station so as to assist Licensee in the preparation
of any required programming reports, and will
provide upon request other information to enable
Licensee to prepare other records, reports and logs
required by the FCC or other local, state or federal
governmental agencies. Programmer shall maintain and
deliver to Licensee all records and information
required by the FCC to be placed in the public
inspection file of the Station pertaining to the
broadcast of political programming and
advertisements, in accordance with the provisions of
Sections 73.1940 and 73.3526 of the FCC's rules, and
agrees to broadcast sponsored programming addressing
political issues or controversial subjects of public
importance, in accordance with the provisions of
Section 73.1212 of the FCC's rules. Programmer also
shall consult with the Licensee and adhere strictly
to all applicable statutes and the rules, regulations
and policies of the FCC, as announced from time to
time, with respect to the carriage of political
advertisements and
<PAGE>
programming (including, without limitation, the
rights of candidates and, as appropriate, others to
"equal opportunities") and the charges permitted
therefor. Programmer shall provide to Licensee such
documentation relating to such programming as
Licensee shall reasonably request, and shall
indemnify Licensee for any claim, demand or cost or
expense (including reasonable attorneys' fees)
arising from the broadcast of any such material on
the Station during the term of this LMA. To the
extent that Licensee believes necessary, in its sole
discretion, Programmer shall release advertising
availabilities to Licensee during the Programming to
permit Licensee to comply with the political
broadcast rules of the FCC and the provisions of
Section 315 of the Communications Act of 1934, as
amended (the "Act"); provided, however, that revenues
received by Licensee as a result of any such release
of advertising time shall promptly be remitted to
Programmer.
2.2.3. Payola and Plugola. Programmer shall not pay or
accept or promise to pay or accept any money or other
consideration for the inclusion of any matter as a
part of any programming or commercial material to be
supplied to Licensee by Programmer for broadcast on
the Station, unless the party making such payment or
furnishing such consideration is identified in the
program as having paid for or furnished such
consideration in accordance with FCC requirements.
Programmer will at all times endeavor to proceed in
good faith to comply with the requirements of
Sections 317 and 507 of the Communications Act of
1934, as amended, and the related rules and
regulations of the FCC.
2.3. Handling of Mail. Programmer shall provide to Licensee the
original or a copy of any correspondence from a member of the
public relating to the Programming to enable Licensee to
comply with FCC rules and policies, including those regarding
the maintenance of the public inspection file (which shall at
all times remain the responsibility of Licensee). Licensee
shall promptly forward to Programmer all correspondence,
payments, communications or other information and/or documents
which it receives and which relate to the Programming,
including without limitation, invoices, billing inquiries,
checks, money orders, wire transfers, or other payments for
services or advertising.
<PAGE>
2.4. Promotions. Programmer may engage in promotional activity
designed to promote the Station, subject to the ultimate
authority of Licensee as provided elsewhere herein and as
required under rules, regulations and policies of the FCC. All
costs associated with any such promotional activity shall be
borne by Programmer.
2.5. World Cup. Licensee covenants and agrees to have an engineer
on call during all time periods in which the World Cup Soccer
Match is broadcast on the Station by Programmer.
3. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
3.1. Licensee's Responsibility for Employees and Expenses. Licensee
will provide the Station's station manager and chief
operator/operations manager, who shall each report and be
accountable solely to Licensee, and will be responsible for
the salaries, taxes, insurance, utilities, maintenance
expenses and related costs for such Station personnel, and all
equipment and facilities used in the broadcast transmission
of the Programming. Licensee shall also provide board
operators or automated operations for the insertion into the
Programming of (i) Licensee's station identification
announcement required by the FCC's rules, and (ii)
Programmer's commercial announcements. Programmer shall
provide to Licensee audio cassettes of the commercial
announcements and a log of air times. Whenever on the
Station's premises, all personnel shall be subject to the
supervision and the direction of the Station's station
managers and/or the Station's chief operators. Licensee shall
be responsible for all music performance licenses from ASCAP,
BMI, SESAC and any other copyright licenses as are required
for the presentation of any program ming of the Station not
provided by Programmer.
3.2. Programmer's Responsibility for Employees and Expenses.
Programmer shall furnish or cause to be furnished the artistic
personnel and material for the production of the Programming
to be provided under this LMA. Programmer shall employ and be
responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of the
Programming (including
<PAGE>
salespeople, traffic personnel, and programming staff).
Programmer shall pay for all telephone calls associated with
program production and listener responses, for all fees to
ASCAP, BMI and SESAC, for any other copyright fees, and for
all costs or expenses attributable to the Programming that is
broadcast on the Station.
4. INDEMNIFICATION
4.1. Indemnification by Programmer and Licensee. Each of Programmer
and Licensee (the "Indemnifying Party") shall indemnify,
defend and hold harmless the other (the "Indemnified Party")
from and against (i) all claims, losses, liabilities, and
expenses (including reasonable attorneys' fees and related
expenses) asserted against or incurred by the Indemnified
Party and resulting from any misrepresentation or material
breach of warranty, covenant or other agreement by the
Indemnifying Party in this LMA and (ii) all liability for
libel, slander, illegal competition or trade practice,
infringement of trade marks, trade names, or program titles,
violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from programming supplied by
the Indemnifying Party. The parties' indemnification
obligations hereunder shall survive any termination or
expiration of this LMA for a period of twelve (12) months.
4.2. Indemnification Procedure.
(a) The Indemnified Party agrees to give written notice
within a reasonable time to the Indemnifying Party of
any claim or other assertion of liability by third
parties which could give rise to a claim for
indemnification hereunder (hereinafter collectively
"Claims," and individually a "Claim"), it being
understood that the failure to give such notice shall
not affect the Indemnified Party's obligation to
indemnify as set forth in this Agreement, unless, and
then only to the extent, the Indemnifying Party's
ability to contest, defend or settle with respect to
such Claim is thereby demonstrably and materially
prejudiced. The obligations and liabilities of the
parties hereto with respect to their respective
indemnities pursuant to this Section 4 resulting from
any Claim, shall be subject to the following
additional terms and conditions:
(b) Provided the indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified
Party with respect
<PAGE>
to the Claim and further satisfies the Indemnified
Party as to its financial ability to satisfy such
indemnification obliga tion, the Indemnifying Party
shall have the right to under take, by counsel or
other representatives of its own choosing, the
defense or opposition to such Claim.
(c) In the event that the Indemnifying Party shall either
(i) elect not to undertake, or shall fail to satisfy
any requirements to undertake, such defense or
opposition, or (ii) fail to properly elect within
thirty (30) days after notice of any such Claim from
the Indemnified Party or thereafter fail to defend or
oppose such Claim, then, in either such event, the
Indemnified Party shall have the right to undertake
the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of
its own choosing, on behalf of and for the account
and risk of the Indemnifying Party.
(d) Anything in this Section 4 to the contrary
notwithstanding, (i) the Indemnifying Party shall
not, without the Indemnified Party's written consent,
settle or compromise any Claim or consent to entry of
any judgment which includes any admission of
liability or does not include as a term thereof the
giving by the claimant or the plaintiff to the
Indemnified Party of an unconditional release from
all liability in respect of such Claim, and (ii) in
the event that the Indemnifying Party undertakes
defense of or opposition to any Claim, the
Indemnified Party, by counsel or other representative
of its own choosing and at its sole cost and expense,
shall have the right to consult with the Indemnifying
Party and its counsel or other representatives
concerning such Claim and the Indemnifying Party and
the Indemnified Party and their respective counsel or
other representatives shall cooperate in good faith
with respect to such Claim.
4.3. Insurance. Each party shall maintain comprehensive general
liability insurance with respect to their respective business
operations and as contemplated hereunder, having the other as
an additional insured. The amounts of such coverage shall be
mutually agreed upon from
<PAGE>
time to time, and each party shall provide proof of such
insurance to the other upon request.
5. STUDIO LICENSE AGREEMENT
5.1. License To Use Studio Facilities. Programmer is hereby granted
a license to utilize the Station's studio facilities located
at 9 Caldwell Street, Elizabeth, New Jersey (the "Premises")
during the term of this LMA subject to Licensee's continuing
control over such facilities as provided elsewhere hereunder.
5.2. Rental. During the term of this LMA, Programmer shall be
obligated to make no payments for the license to use studio
facilities other than the Fee called for by Section 1.4
hereof.
5.3. No Further Improvements. The Licensee shall not be required to
provide any further improvements to the Premises, and
Programmer shall be responsible for any additional
improvements that it requires in connection with the operation
of its business.
5.4. Programmer Improvements. Programmer shall not make any
material physical improvements or changes to the Premises
without Licensee's prior written consent, which consent shall
not be unreasonably denied nor delayed; provided, however,
that Programmer may, at its own expense, install on the
Premises such equipment, including, without limitation,
satellite receivers, as will permit Programmer to broadcast
the Programming on the Station. Title to any such equip ment
installed on the Premises by Programmer shall remain with the
Programmer.
5.5. Contracts.
5.5.1. Programmer expressly does not assume, and shall not
be deemed to assume, under this LMA or otherwise by
reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Licensee
of any nature whatsoever, regardless of whether
arising from or relating to the ownership, operations
or business of the Station (the "Retained
Liabilities").
5.5.2. This LMA shall not constitute an assignment of any
contract or lease to which Licensee is a party,
including without limitation any studio or tower
leases. Licensee shall
<PAGE>
continue to perform all of its obligations under all
contracts, leases and other agreements in a timely
manner and other wise keep all such contracts and
leases in full force and effect.
6. EVENTS OF DEFAULT AND CURE PERIODS
6.1. Events of Default. The following shall, after the expiration
of the applicable cure periods, each constitute an Event of
Default under this Agreement:
6.1.1. Default in Covenants or Adverse Legal Action.
Either party defaults in the performance of any
material covenant, condition or undertaking
contained in this LMA; and
6.1.2. Breach of Representation. Any material
representation or warranty made by either party to
this LMA, or in any certificate or document
furnished by either party to the other pursuant to
the provisions of this LMA, proves to have been
false or misleading in any material respect as of
the time made or furnished.
6.2. Cure Periods. An Event of Default shall not be deemed to have
occurred until thirty (30) days after the non-defaulting party
has provided the defaulting party with written notice
specifying the event or events that, if not cured, would
constitute an Event of Default and specifying the actions
necessary to cure the default(s) within such period. This
period may be extended for a reasonable period of time if the
defaulting party is acting in good faith to cure and such
delay is not materially adverse to the other party.
7. TERMINATION
7.1. Termination Upon Default. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this LMA,
provided that it is not also in material default of this LMA.
7.2. Termination for Change in FCC Rules or Policies. In the event
that a federal, state or local government authority,
(including, without
<PAGE>
limitation, the FCC) orders, or takes or announces other
action which would require, the termination of this LMA and/or
the curtailment, in any materially adverse manner, of the
transactions contemplated by this LMA or, the relationship
between the parties hereto or the provision of programming by
Programmer hereunder, either party, at its option, may: (a)
seek administrative or judicial relief from such order in
which event the parties shall cooperate with each other,
provided that the party seeking such relief shall be
responsible for legal fees and costs incurred in such
proceedings; or (b) elect to terminate this LMA upon ten (10)
days' prior written notice to the other party. In the event of
termination of this LMA by either party pursuant to cause (b)
of the preceding sentence, the Programmer shall be entitled to
a proration of the sums owed to or paid to Licensee pursuant
to Section 1.4 hereof, provided that Programmer is not in
default under this LMA as of the effective date of such
termination of this LMA. If the FCC designates the license
renewal application of the Station for a hearing as a
consequence of this LMA or for any other reason, or initiates
any revocation or other proceeding with respect to the
authorizations issued to the Licensee, and Licensee elects to
contest the action, then Licensee shall be responsible for its
expenses incurred as a consequence of the FCC proceeding;
provided, however, that Programmer shall at its own expense
cooperate and comply with any reasonable request of Licensee
to assemble and provide to the FCC information relating to
Programmer's performance under this LMA. In the event that the
validity of any portion of this LMA is called into question by
the FCC or as the result of any change in FCC rules or
policies, the parties hereto shall consult with the FCC and
its staff concerning such matters which would obviate any such
FCC questions as to validity while preserving, to the extent
possible, the intent of the parties and the economic and other
benefits of this LMA and the portion thereof whose validity is
called into question. If the parties cannot agree within a
reasonable time to a modification or modifications deemed
necessary by either party to meet FCC require ments, either
party, if not then in default, may terminate this LMA upon ten
(10) days' written notice to the other party.
7.3. Certain Matters Upon Termination.
7.3.1. Following termination or expiration of this LMA for
any reason, Programmer shall be solely responsible
for all liabilities, debts and obligations accrued
from the sale of air time or use of the Station's
facilities by Programmer including, without
limitation, accounts payable, barter
<PAGE>
agreements, tradeout agreements, and unaired
advertisements. In the event of termination of this
LMA as the consequence of any government order,
Programmer shall be entitled to pursue collection of
its own accounts receivable accrued from any
advertiser which has contracted directly with
Programmer for the purchase of advertising time on
the Station. If this LMA is terminated for any reason
other than a default by Programmer:
(a) Licensee agrees to cooperate reasonably with
Program mer to make air time available on
the Station following the date of
termination to discharge Programmer's
remaining obligations to advertisers who
purchased air time from Programmer prior to
termination and who desire to utilize air
time at Licensee's established rates.
Licensee shall have no other obligation to
any advertisers who purchased air time from
Programmer prior to termination and, in
particular, shall not be obligated to
provide air time to or reimburse any sums
paid to Programmer by advertisers who do
not desire air time on the Station after
termination of this LMA.
(b) Programmer shall return to Licensee any
equipment or property of the Station used by
Programmer, its employees or agents, in
substantially the same condition as such
equipment existed as of the initial date
hereof, ordinary wear and tear excepted.
7.3.2. No expiration or termination of this LMA shall
terminate the obligation of each party to indemnify
the other for claims of third parties under Section
4 of this LMA or limit or impair any party's rights
to receive payments due and owing here under on or
before the date of such termination.
8. REPRESENTATIONS AND WARRANTIES
8.1. Representations and Warranties of Licensee. Licensee hereby
represents and warrants that:
<PAGE>
8.1.1. Authorization and Binding Obligation. The Licensee is
a corporation organized and existing in good standing
under the laws of the State of New Jersey, with full
power and authority to enter into this LMA and to
enter into and complete the transactions
contemplated herein; all required corporate actions
have been taken by the Licensee to make and carry out
this LMA, which is a valid and binding obligation of
Licensee and which is enforceable in accordance with
its terms.
8.1.2. Absence of Conflicting Agreements or Required
Consents. The execution of this LMA will not result
in the violation of any order, license, permit, rule,
judgment or decree to which Licensee or WJDM-AM, Inc.
("WJDM") is subject or the breach of any contract,
agreement or other commitment to which the Licensee
or WJDM is a party or by which either of them is
bound; and no other consents of any kind are required
that have not been obtained for the Licensee or WJDM
to make or carry out the terms of this LMA. The
execution, delivery and performance of this LMA will
not violate any provision in the Licensee's or WJDM's
respective certificate of incorporation or bylaws.
8.1.3. Main Studio. Licensee warrants and represents that it
will maintain its main studios in compliance with the
rules, regulations and decisions of the FCC.
8.1.4. Compliance with Laws. Licensee has operated the
Station in all material respects in compliance with
all laws, regulations and governmental orders
applicable to the conduct of the business and
operations of the Station.
8.1.5. FCC Matters. During the term of this LMA, Licensee,
directly or through its wholly owned subsidiary,
WJDM, will hold all licenses and other permits and
authorizations necessary for the operation of the
Station, and such licenses, permits and
authorizations are and will be in full force and
effect throughout the term of this LMA. There is not
pending, or to Licensee's knowledge, threatened, any
action by the FCC or by any other party to revoke,
cancel, suspend, refuse to renew or modify adversely
any of such licenses, permits or authorizations. To
the best of Licensee's
<PAGE>
knowledge, Licensee and WJDM are not in violation of
any statute, ordinance, rule, regulation, policy,
order or decree of any federal, state or local
entity, court or authority having jurisdiction over
them or the Station, which would have an adverse
effect upon Licensee, its assets, WJDM, the Station
or upon Licensee's ability to perform this LMA.
Licensee shall not take any action or omit to take
any action which would have an adverse impact upon
Licensee, its assets, the Station or upon Licensee's
abilities to perform this LMA. All reports and
applications required to be filed with the FCC or any
other governmental body during the term of this LMA
will be filed in a timely and complete manner.
Licensee has, and throughout the term of this LMA
will maintain, good title to, or rights by license,
lease or other agreement to use, all of the assets
and properties used in the operation of the Station.
During the term of this LMA, Licensee shall not
dispose of, transfer, assign or pledge any of such
assets and properties, except with the prior written
consent of programmer, if such action would adversely
affect Licensee's performance hereunder or the
business and operations of the Licensee or the
Station permitted hereby.
8.1.6. Maintenance of Equipment. The transmitter equipment
and antennas used for the Station's broadcasts owned
by Licensee (the "Transmission Equipment") shall be
maintained by Licensee in a condition consistent
with good engineering practices and in compliance in
all material respect with the Act and all other
applicable rules, regulations and technical standards
of the FCC. Licensee shall maintain power and
modulation of the Station's broadcasts in a manner
consistent with Licensee's past practices. All
capital expenditures reasonably required to maintain
the technical quality of the Station's Transmission
Equipment and their compliance with applicable laws
and regulations shall be made at the sole expense and
in the sole discretion of Licensee. Except for
maintenance of the Transmission Equipment, Licensee
shall have no obligation to obtain or maintain any
equipment necessary to the broadcast by Programmer
of the Programming covered by this LMA.
8.1.7. Litigation. Neither Licensee nor WJDM is subject to
any judgment, award, order, writ, injunction,
arbitration decision
<PAGE>
or decree which would materially adversely affect the
conduct of the business of the Station as it is to
be conducted under this LMA, and there is no
litigation, proceeding or investigation pending or,
to the best of Licensee's knowledge, threatened
against Licensee or WJDM in any federal, state or
local court, or before any administrative agency or
arbitrator which would have a material adverse effect
upon the Station or which seeks to enjoin or
prohibit, or otherwise is reasonably likely to defeat
the validity of, any action taken or to be taken
pursuant to or in connection with this LMA.
8.1.8. Bankruptcy. No insolvency proceedings of any
character, including, without limitation, bankruptcy,
receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary,
affecting Licencee or WJDM are pending or threatened,
and neither Licensee nor WJDM has made any assignment
for the benefit of creditors or taken any action in
contemplation of or which would constitute the basis
for the institution of such insolvency proceedings.
8.2. Representations and Warranties of Programmer. Programmer
hereby represents and warrants that:
8.2.1. Authorization and Binding Obligation. The Programmer
is a corporation organized and existing in good
standing under the laws of the State of Delaware with
full power and authority to enter into this LMA and
enter into and complete the transactions contemplated
herein; Programmer is, or will be at the time of
Closing, qualified to do business in the States of
New York and New Jersey; all required corporate
action has been taken by Programmer to make and carry
out this LMA.
8.2.2. Absence of Conflicting Agreements or Required
Consents. The execution, delivery and performance of
this LMA by Programmer will not result in the
violation of any order, license, permit, rule,
judgment or decree to which Programmer is subject or
the breach of any contract,
<PAGE>
agreement or other commitment to which Programmer is
a party or by which it is bound; no other consent of
any kind is required that has not been obtained for
Programmer to make or carry out the terms of this
LMA.
8.2.3. Litigation. Programmer is subject to no judgment,
award, order, writ, injunction, arbitration decision
or decree which would materially adversely affect the
conduct of the business of the Station as it is to be
conducted under this LMA, and there is no litigation,
proceeding or investigation pending or, to the best
of Programmer's knowledge, threatened against
Programmer in any federal, state or local court, or
before any administrative agency or arbitrator which
would have a material adverse effect upon the Station
or which seeks to enjoin or prohibit, or otherwise is
reasonably likely to defeat the validity of, any
action taken or to be taken pursuant to or in
connection with this LMA.
8.2.4. Bankruptcy. No insolvency proceedings of any
character, including, without limitation, bankruptcy,
receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary,
affecting Programmer are pending or threatened, and
Programmer has made no assignment for the benefit of
creditors or taken any action in contemplation of or
which would constitute the basis for the institution
of such insolvency proceedings.
9. CERTIFICATIONS
9.1. Programmer's Certification. Programmer hereby certifies that
this LMA complies with the provisions of Sections 73.3555
(a)(1) and (e)(1) of the FCC's rules and regulations.
9.2. Licensee's Certification. Licensee hereby certifies that it
shall maintain the ultimate control over the Station's
facilities, including but not limited to control over the
finances with respect to the operation of the Station, over
the personnel operating the Station, and over the programming
to be broadcast by the Station.
10. MISCELLANEOUS
10.1. Modification and Waiver. No modification or waiver of any
provision of this LMA shall be effective unless made in
writing and
<PAGE>
signed by the party adversely affected, and any such waiver
and consent shall be effective only in the specific instance
and for the purpose for which such consent was given.
10.2. No Waiver; Remedies Cumulative. No failure or delay on the
part of Licensee or Programmer in exercising any right or
power under this LMA shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power.
The rights and remedies of the parties to this LMA are
cumulative and are not exclusive of any right or remedies
which either may otherwise have.
10.3. Governing Law; Arbitration. The construction and performance
of this LMA shall be governed by the laws of the State of
Minnesota without regard to its principles of conflicts of
law. Any dispute arising under or related to this LMA shall be
resolved by binding arbitration in Wilmington, Delaware in
accordance with the then existing Rules of Practice and
Procedure of Judicial Arbitration & Mediation Services, Inc.,
and judgment upon any award rendered by the arbitrator(s) may
be entered by any State or Federal Court having jurisdiction
thereof. The prevailing party shall be awarded all of its
legal fees, disbursements and costs of arbitration.
10.4. No Partnership or Joint Venture. This LMA is not intended to
be and shall not be construed as a Partnership or Joint
Venture Agreement between the parties. Except as otherwise
specifically provided in this LMA, no party to this LMA shall
be authorized to act as agent of or otherwise represent any
other party to this LMA.
10.5. Confidentiality. Each party hereto will maintain the
confidentiality of all the information and materials delivered
to it or made available for its inspection by the other
hereunder.
10.6. Benefit and Assignment. This LMA shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns. No party hereto may
voluntarily or involuntarily assign its interest under this
LMA without the prior
<PAGE>
written consent of the other party.
10.7. Headings. The headings contained in this LMA are included for
convenience only and shall not in any way alter the meaning of
any provision.
10.8. Counterpart Signatures. This LMA may be signed in one or more
counterparts, each of which shall be deemed an original and
together which shall constitute one and the same instrument.
10.9. Notices. Any notice required hereunder shall be in writing and
any payment, notice or other communications shall be deemed
given when delivered personally, or mailed by certified mail
or Federal Express, postage prepaid, with return receipt
requested, and addressed as follows:
<TABLE>
<S> <C>
If to the Licensee: Children's Broadcasting Corporation
724 First Street North, Fourth Floor
Minneapolis, Minnesota 55401
Attention: Mr. Christopher T. Dahl
with copy to: Children's Broadcasting Corporation
724 First Street North, Fourth Floor
Minneapolis, Minnesota 55401
Attention: Lance W. Riley, Esq.
If to the Programmer: Radio Unica Corp.
8400 Northwest 52nd Street, Suite 101
Miami, Florida 33166
Attention: Mr. Joaquin F. Blaya
with copy to: Skadden, Arps, Slate, Meagher & Flom
LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attention: John C. Quale, Esq.
</TABLE>
10.10. Entire Agreement. This LMA entered into contemporaneously
herewith by the parties hereto, including the schedules and
exhibits hereto and thereto, embody the entire agreement
between the parties and there are no other agreements,
representations, warranties, or understandings, oral or
written, between them with respect to the subject matter
hereof. Schedules and Exhibits are set out separately
<PAGE>
from the body of this LMA for convenience only and shall be
deemed to be an integral part hereof.
10.11. Severability. In the event that any of the provisions
contained in this LMA is held to be invalid, illegal or
unenforceable, such holding shall not affect any other
provision hereof, and this LMA shall be construed as if such
invalid, illegal or unenforceable provisions had not been
contained herein.
10.12. Brokers. The parties hereto each represent to the other that
they have not engaged a broker in connection with the
contemplated transaction, and each party agrees to pay the
respective commissions owed under any such agreements and
agrees to indemnify and hold the other party or parties
harmless against any claims made by a broker through it or
them in connection with the transactions contemplated
hereunder.
IN WITNESS WHEREOF, the parties have executed this LMA as of the date
first above written.
CHILDREN'S RADIO OF NEW YORK, INC. RADIO UNICA CORP.
By: /s/ By: /s/
---------------------------- --------------------------
Its: C.O.O. Its: Executive V.P.
---------------------------- -------------------------
<PAGE>
SCHEDULE 1
FEE PAYMENT SCHEDULE
Programmer agrees to pay to Licensee upon execution of this agreement a fee in
the amount of $175,000.00. Programmer further agrees that, in the event it
exercises its option to extend the term of this LMA as set forth in Section 1.5
of this LMA, it shall pay Licensee an additional fee equal to the number of days
following August 31, 1998 on which the Extension Termination Date occurs
multiplied by $1,902.00. Programmer further agrees to run 10 minutes of
Licensee's commercial spots per day during the term hereof between the hours of
8:00 p.m. and 6:00 a.m., seven (7) days per week. Licensee agrees that such
commercials shall be in Spanish and that it will not sell against Programmer in
the New York City marketplace.
<PAGE>
EXHIBIT A
STATEMENT OF STATION POLICIES
Programmer and Licensee shall cooperate in broadcasting programming
that meets high standards of quality and serves the public interest. Without
limiting the foregoing, the parties will observe the following policies in the
preparation, writing, production, and broadcast of all programming of the
Station:
I. No Attacks. The programs broadcast on the Station will not be
used as a medium for attack on any race, ethnic group, gender,
nationality, faith, denomination or sect or upon any
individual or organization.
II. Controversial Issue. Any discussion of controversial issues of
public importance will be reasonably balanced with the
presentation of contrasting viewpoints in the course of
overall programming; no attacks on the honesty, integrity or
like personal qualities of any person or group of persons will
be made during the discussion of controversial issues of
public importance; and, during the course of political
campaigns, the Station's programs are not to be used as a
forum for editorializing about individual candidates. If such
events occur, Licensee may require that responsive programming
be aired. In the event that a statute, regulation or policy is
adopted that requires the airing of responsive programming,
Programmer agrees to comply with such statute, regulation or
policy and will prepare such responsive programming.
III. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional or other related
endeavor, except where contained in an actual commercial
message of a sponsor is prohibited. No commercial messages
("plug") or undue references shall be made in programming
presented over the Station to any business venture, profit
making activity or other interest (other than noncommercial
announcements for bona fide charities, church activities or
other public service activities) in which Programmer or its
employees is (are) directly or indirectly interested without
the same having been approved in advance by the Licensee's
General Manager and such broadcast being announced and logged
as sponsored.
IV. No Gambling. Any form of gambling on the programs broadcast on
the Station is prohibited.
V. Election Procedures. At least 30 days before the start of any
primary or general election campaign, Programmer will clear
with the Licensee's General Manager the rates that Programmer
will charge for the time to be sold to candidates for public
office or their supporters to make certain that
<PAGE>
such rates conform with applicable law and Station policy.
VI. Required Announcements. Programmer will broadcast (i) an
announcement in form satisfactory to Licensee at the
beginning of each hour to identify the Station; (ii) an
announcement at the beginning and end of each broadcast day or
appropriate broadcast period to indicate that the program time
has been purchased by Programmer; and (iii) any other
announcements required by applicable law or Station policy.
VII. Credit Terms Advertising. Pursuant to rules of the Federal
Trade Commission, no advertising of credit terms will be made
over the Station beyond mention of the fact that, if desired,
credit terms are available.
VIII. No Illegal Announcements. No announcements or promotions
prohibited by federal or state law or regulation or any
lottery or game will be made over the Station. Any game,
contest or promotion relating to, or to be presented over, the
Station must be fully stated and explained in advance to
Licensee, which reserves the right, in its sole but reasonable
discretion, to reject any game, contest or promotion.
IX. Licensee Discretion Paramount. In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the rules and regulations of the FCC,
Licensee reserves the right to reject or terminate any
advertising proposed to be presented or being presented over
the Station which is in conflict with Station policy or which,
in Licensee's sole but reasonable judgment, would not serve
the public interest.
X. Programming Prohibitions. Programmer will not broadcast any of
the following programs or announcements:
(a) False Claims. False, deceptive or unwarranted claims
for any product or service.
(b) Unfair Imitation or Disparagement. Infringements of
another advertiser's rights through plagiarism or
unfair imitation of either program idea or copy or
any other unfair competition, or unfair disparagement
of competitors or competitive goods.
<PAGE>
(c) Profanity and Foul Language. Any programs or
announcements that are slanderous, obscene, indecent,
profane, vulgar, repulsive or offensive, either in
theme or in treatment.
(d) Unauthenticated Testimonials. Any testimonials which
cannot be authenticated.
(e) Descriptions of Bodily Functions. Any presentation
which describes bodily functions in a repellant
manner.
(f) Harmful Advertising. Any advertising matter or
announcement which may, in the sole but reasonable
judgment of Licensee, be injurious or prejudicial to
the interests of the public, the Station, or honest
advertising and reputable business in general.
(g) Contests. Any contests or promotions which are in any
way misleading or constitute a public nuisance or are
likely to lead to injury to persons or property.
(h) Telephone Conversations. Any programming in violation
of any statute, regulation or policy, including
without limitation to, Section 73.1206 of the FCC's
rules, or any successor regulation, dealing with the
taping and/or broadcast of telephone conversations.
The parties may jointly waive any of the foregoing regulations and
restrictions in specific instances if, in their opinion, good broadcasting in
the public interest is served thereby.
In any case where obvious questions of policy or interpretation arise,
Programmer will attempt in good faith to submit the same to Licensee for
decision before making any commitments in connection therewith.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. SALE OF TIME................................................................1
1.1. Broadcast of Programming....................................................1
1.2. Advertising and Programming Revenues........................................1
1.3. Force Majeure...............................................................2
1.4. Payments ...................................................................2
1.5. Term ...................................................................2
2. PROGRAMMING AND OPERATING STANDARDS.........................................3
2.1. Obligations and Rights of Licensee..........................................3
2.1.1. Licensee's Right to Reject Programming.............................3
2.1.2. Licensee's Right to Preempt Programming for Special Events.........4
2.1.3. FCC Public Interest Requirements...................................5
2.2. Obligations of Programmer ..................................................6
2.2.1. Compliance with Laws and Station's Policies........................6
2.2.2. Cooperation with Licensee..........................................6
2.2.3. Payola and Plugola.................................................7
2.3. Handling of Mail............................................................7
2.4. Promotions..................................................................8
2.5. World Cup...................................................................8
3. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES...................................8
3.1. Licensee's Responsibility for Employees and Expenses........................8
3.2. Programmer's Responsibility for Employees and Expenses......................9
4. INDEMNIFICATION.............................................................9
4.1. Indemnification by Programmer and Licensee..................................9
4.2. Indemnification Procedure...................................................9
4.3. Insurance..................................................................11
5. STUDIO LICENSE AGREEMENT...................................................11
5.1. License To Use Studio Facilities...........................................11
5.2. Rental ..................................................................11
5.3. No Further Improvements....................................................11
5.4. Programmer Improvements....................................................11
5.5. Contracts..................................................................12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6. EVENTS OF DEFAULT AND CURE PERIODS.........................................12
6.1. Events of Default..........................................................12
6.1.1. Default in Covenants or Adverse Legal Action......................12
6.1.2. Breach of Representation..........................................12
6.2. Cure Periods...............................................................13
7. TERMINATION................................................................13
7.1. Termination Upon Default...................................................13
7.2. Termination for Change in FCC Rules or Policies............................13
7.3. Certain Matters Upon Termination...........................................14
8. REPRESENTATIONS AND WARRANTIES.............................................15
8.1. Representations and Warranties of Licensee.................................15
8.1.1. Authorization and Binding Obligation..............................15
8.1.2. Absence of Conflicting Agreements or Required Consents............15
8.1.3. Main Studio.......................................................16
8.1.4. Compliance with Laws..............................................16
8.1.5. FCC Matters.......................................................16
8.1.6. Maintenance of Equipment..........................................17
8.1.7. Litigation .......................................................17
8.1.8. Bankruptcy .......................................................18
8.2. Representations and Warranties of Programmer...............................18
8.2.1. Authorization and Binding Obligation..............................18
8.2.2. Absence of Conflicting Agreements or Required Consents............18
8.2.3. Litigation .......................................................18
8.2.4. Bankruptcy .......................................................19
9. CERTIFICATIONS.............................................................19
9.1. Programmer's Certification.................................................19
9.2. Licensee's Certification...................................................19
10. MISCELLANEOUS..............................................................19
10.1. Modification and Waiver....................................................19
10.2. No Waiver; Remedies Cumulative.............................................19
10.3. Governing Law; Arbitration.................................................20
10.4. No Partnership or Joint Venture............................................20
10.5. Confidentiality............................................................20
10.6. Benefit and Assignment.....................................................20
10.7. Headings ..................................................................20
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
10.8. Counterpart Signatures.....................................................21
10.9. Notices ..................................................................21
10.10. Entire Agreement...........................................................21
10.11. Severability...............................................................22
10.12. Brokers ..................................................................22
</TABLE>
iii
<PAGE>
Exhibit 10.28
STOCK PURCHASE AGREEMENT
Among
RADIO UNICA CORP.
and
JOAQUIN F. BLAYA
and
BLAYA, INC.
Dated as of June 10, 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
SALE AND PURCHASE OF SHARES................................................................2
Section 1.1 Sale and Purchase of Shares. ..................................2
Section 1.2 Consideration. ................................................2
Section 1.3 Payment of Purchase Price. ....................................2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF..........................................................2
Section 2.1 Absence of Certain Changes. ...................................2
Section 2.2 Authority. ....................................................2
Section 2.3 Non-Contravention. ............................................3
Section 2.4 Capitalization. ...............................................3
Section 2.5 Organization; Authority. ......................................3
Section 2.6 Actions. ......................................................4
Section 2.7 No Liabilities. ...............................................4
Section 2.8 No Defaults. ..................................................4
Section 2.9 Enforceability of Agreement. ..................................5
Section 2.10 The Capital Stock. ............................................5
Section 2.11 Properties. ...................................................5
Section 2.13 Intellectual Property. ........................................6
Section 2.14 Taxes. ........................................................6
Section 2.15 Insurance. ....................................................6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................7
Section 3.1 Organization of Purchaser. ....................................7
Section 3.2 Authority of Purchaser. .......................................7
Section 3.3 Non-Contravention. ............................................7
ARTICLE 4
PRE-CLOSING FILINGS AND UNDERTAKINGS.......................................................8
Section 4.1 Applications for FCC Consent. .................................8
Section 4.2 Sharing Information. ..........................................8
ARTICLE 5
COVENANTS AND AGREEMENTS
OF SELLER AND THE COMPANY..................................................................9
Section 5.1 Negative Covenants. ...........................................9
5.1(a) Dispositions; Mergers...........................................9
5.1(b) Additional Agreements...........................................9
Section 5.2 Affirmative Covenants. .......................................10
5.2(a) Normal Operations..............................................10
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.2(b) FCC Matters....................................................10
5.2(c) Actions........................................................10
Section 5.3 Confidentiality. .............................................10
ARTICLE 6
COVENANTS AND AGREEMENTS OF PURCHASER.....................................................11
Section 6.1 Confidentiality. .............................................11
Section 6.2 Actions. .....................................................11
ARTICLE 7
CONDITIONS PRECEDENT
TO PURCHASER'S OBLIGATION TO CLOSE........................................................12
Section 7.1 Representation and Covenants. ................................12
Section 7.2 Delivery of Documents. .......................................12
Section 7.3 FCC Order. ...................................................12
Section 7.4 Legal Proceedings. ...........................................12
ARTICLE 8
CONDITIONS PRECEDENT TO...................................................................13
Section 8.1 Representations and Covenants. ...............................13
Section 8.2 Delivery by Purchaser. .......................................13
Section 8.3 FCC Order. ...................................................13
Section 8.4 Legal Proceedings. ...........................................13
ARTICLE 9
THE CLOSING...............................................................................14
Section 9.1 Closing. .....................................................14
Section 9.2 Delivery by Seller and the Company. ..........................14
9.2(a) Contracts, Agreements and Instruments...........................14
9.2(b) Certified Resolutions...........................................14
9.2(c) Officers' Certificates..........................................14
9.2(g) Other Documents.................................................15
Section 9.3 Delivery by Purchaser. .......................................15
9.3(a) Purchase Price Payment..........................................15
9.3(b) Purchaser Documents.............................................15
9.3(c) Certified Resolution............................................15
9.3(d) Officers' Certificate...........................................15
9.3(e) Other Documents.................................................16
ARTICLE 10
SURVIVAL..................................................................................16
Section 10.1 Survival of Representations. .................................16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 11
TERMINATION...............................................................................16
Section 11.1 Termination. .................................................16
Section 11.2 Effect of Termination. .......................................17
ARTICLE 12
REMEDIES..................................................................................17
Section 12.1 Default by Seller. ...........................................17
Section 12.2 Default by Purchaser. ........................................17
Section 12.3 Remedies Not Exclusive. ......................................17
ARTICLE 13
GENERAL PROVISIONS........................................................................18
Section 13.1 Notices. .....................................................18
Section 13.2 Waiver. ......................................................19
Section 13.3 Benefit and Assignment. ......................................19
Section 13.4 Entire Agreement; Amendment. .................................20
Section 13.5 Severability. ................................................20
Section 13.6 Headings. ....................................................20
Section 13.7 Governing Law. ...............................................20
Section 13.8 Signature in Counterparts. ...................................20
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
June 10, 1998, by and among Radio Unica Corp., a Delaware corporation
("Purchaser"), Blaya, Inc., a Delaware corporation (the "Company"), and Joaquin
F. Blaya, an individual ("Seller").
WHEREAS, the Company is the owner and operator of radio
station KXYZ (AM), licensed to Houston, Texas (the "Station");
WHEREAS, Purchaser and the Company have entered into a Time
Brokerage Agreement ("TBA"), dated as of December 24, 1997, whereby the Company
has made available to Purchaser substantial broadcasting time on the Station;
WHEREAS, Purchaser owns 800 shares of Class B Common Stock of
the Company which shares represent 49.9% of the voting power of the Company and
Seller owns 200 shares of the Class A Common Stock of the Company which
represent 50.1% of the voting power of the Company;
WHEREAS, Seller and Purchaser have entered into that certain
Pledge Agreement, dated as of March 10, 1998 ("Pledge Agreement"), and that
certain Stockholders Agreement, dated as of March 10, 1998 ("Stockholders
Agreement"); and
WHEREAS, in connection with the Pledge Agreement, the
Stockholders Agreement and the TBA, Purchaser desires to purchase from Seller
all of Seller's Class A Common Stock of the Company (the "Shares");
In consideration of the mutual covenants, agreements,
representations and warranties herein set forth, it is hereby agreed between
Seller and Purchaser as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
Section 1.1 Sale and Purchase of Shares. Subject to the terms
and conditions hereof and in reliance upon the representations, warranties,
covenants and agreements contained herein, at the closing (the "Closing"),
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser agrees
<PAGE>
to purchase from Seller, all of Seller's right, title and interest in and to the
Shares.
Section 1.2 Consideration. The consideration for the sale of
the Shares shall be $160,000 (the "Purchase Price").
Section 1.3 Payment of Purchase Price. At the Closing,
Purchaser shall pay the Purchase Price due from Purchaser hereunder by wire
transfer of immediately available federal funds to the account or accounts
identified by Seller in writing not less than three (3) days prior to the date
of the Closing (the "Closing Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE COMPANY
As an inducement to the Purchaser to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company and Seller
represent and warrant to Purchaser as follows:
Section 2.1 Absence of Certain Changes. Except as disclosed in
Section 3.1 of a letter dated the date hereof from and previously delivered by
the Company to the Purchaser (the "Disclosure Letter"), since the date of the
latest bal ance sheet presented to Purchaser, there has been no material adverse
change in the business, properties, prospects, operations, condition (financial
or other) or results of operations of the Company taken as a whole, whether or
not arising from transactions in the ordinary course of business.
Section 2.2 Authority. Each of Seller and the Company has all
necessary corporate power and corporate authority, and in the case of Seller,
capacity, to enter into this Agreement and to consummate the transactions con
templated hereby and thereby.
Section 2.3 Non-Contravention. The execution, delivery, and
performance of this Agreement by the Company and Seller and the consummation of
the transactions contemplated thereby by the Company and Seller do not and will
not (a) result in a breach of any of the terms and provisions of, or constitute
a default (or an event which with notice or lapse of time, or both, would
constitute a
<PAGE>
default) under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to any
agreement, instrument, fran chise, license or permit to which the Company or
Seller is a party or by which the Company or the Company's properties or assets
may be bound or (b) violate any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
applicable to the Company or Seller or any of the Company's properties or
assets, other than such breaches, defaults or violations that are not reasonably
expected to impair the ability of the Company or Seller to consummate the
transactions contemplated by this Agreement. The execu tion, delivery and
performance of this Agreement by the Company and Seller and the consummation of
the transactions contemplated thereby do not and will not violate or conflict
with any provision of the certificate of incorporation or by-laws of the Com
pany, as currently in effect. Except for the approval of the Federal
Communications Commission ("FCC") or as otherwise set forth in Section 2.3 of
the Disclosure Letter, no consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any government
agency or body applicable to the Company or Seller or any of the Company's
properties or assets is required for the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated thereby.
Section 2.4 Capitalization. The Company had, as of the date
hereof, an authorized and outstanding capitalization as set forth in Section 2.4
of the Disclosure Letter.
Section 2.5 Organization; Authority. The Company does not own
or control, directly or indirectly, any subsidiary corporation. The Company has
been duly organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. The Company is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, lease
or licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing
which will not in the aggregate have a material adverse effect on the Company
taken as a whole. The Company has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted, except where the failure to possess
such requisite power and authority would not have a material adverse effect on
the business, properties, prospects, operations, condition (financial or other)
or results of operations of the Company taken as a whole.
Section 2.6 Actions. Except as described in Section 2.6 of the
<PAGE>
Disclosure Letter, there is no litigation or governmental proceeding to which
the Company is a party or to which any property of the Company is subject or
which is pending or, to the knowledge of the Company, threatened against the
Company which could reasonably be expected to have a material adverse effect on
the busi ness, properties, prospects, operations, condition (financial or other)
or results of operations of the Company taken as a whole.
Section 2.7 No Liabilities. The Company has no material
liabilities or obligations (direct or indirect, contingent or absolute, known or
unknown, matured or unmatured) of any nature whatsoever, whether arising out of
contract, tort, statute or otherwise, except as set forth in Section 2.7 of the
Disclosure Letter.
Section 2.8 No Defaults. Except as disclosed in Section 2.8 of
the Disclosure Letter, the Company is not in violation or default under any
provision of its certificate of incorporation, by-laws or other organization
documents, and is not in breach of or default with respect to any provision of
any agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it is a party
or by which it or any of its properties are bound; and there does not exist an
event of default on the part of the Company as defined in such documents which,
with notice or lapse of time or both, would con stitute a default, which such
violation or default, in either such case, would not have a material adverse
effect on the business, properties, prospects, operations, condition (financial
or other) or results of operations of the Company taken as a whole.
Section 2.9 Enforceability of Agreement. This Agreement has
been, and the other agreements to be executed and delivered by Seller and the
Company pursuant hereto have been or will be, duly and validly authorized,
executed and delivered by Seller and the Company and this Agreement is, and such
other agreements when so executed and delivered will be, valid and binding
obligations of Seller and the Company, enforceable against each of Seller and
the Company in accordance with their terms.
Section 2.10 The Capital Stock. (a) All of the outstanding
shares of Common Stock are duly and validly authorized and issued, fully paid
and nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued and are not now in violation of or subject
to any pre emptive rights. Except as disclosed in Section 2.10 of the Disclosure
Letter,
<PAGE>
as of the date hereof, the Company has no outstanding options to purchase, or
any preemp tive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations.
(b) The Shares have been duly and validly authorized by the
Com pany and the Shares, when issued, sold and delivered in accordance with this
Agreement, will be duly and validly issued, fully paid and nonassessable.
Section 2.11 Properties. The Company holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as
disclosed in Section 2.11 of the Disclosure Letter, the Company owns or leases
all such properties as are necessary to its operations as now conducted.
Section 2.12 FCC Licenses. The Company holds the radio station
licenses issued by the FCC as disclosed in Section 2.12 of the Disclosure Letter
(the "FCC Licenses"). The FCC Licenses constitute all of the licenses, permits
and authorizations from the FCC that are necessary or required for and/or used
in the business and operations of the Station. The FCC Licenses are valid and in
full force and effect through the dates set forth in Section 2.12 of the
Disclosure Letter. Except as set forth in Section 2.12 of the Disclosure Letter,
no application, action or proceeding is pending for the renewal or modification
of any of the FCC Licenses, and, except for actions or proceedings affecting
radio broadcast stations generally, in Section 2.12 of the Disclosure Letter, no
application, complaint, action or proceeding is pending or, to the best of the
Company's knowledge, threatened that may result in the (i) denial of an
application for renewal, (ii) the revocation, modification, non-renewal or
suspension of any of the FCC Licenses, (iii) the issuance of a cease-and-desist
order relating to the FCC Licenses or the Station, or (iv) the imposition of any
administrative or judicial sanction with respect to the Station. The Station,
its physical facilities, electrical and mechanical systems and transmitting and
studio equipment (i) are being operated in compliance with the specifications of
the applicable FCC Licenses, and (ii) are being operated in material compliance
with all of the requirements of the Communications Act of 1934, as amended (the
"Communications Act"). Seller has complied with all requirements of the FCC and
the FAA with respect to the construction and/or alteration of Seller's antenna
structures, and "no hazard" determinations for each antenna structure have been
obtained. Seller and the Station are in compliance with the Communications Act.
Section 2.13 Intellectual Property. Except as disclosed in
Section 2.13 of the Disclosure Letter, the Company has sufficient trademarks,
<PAGE>
trade names, patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct its businesses substantially as now conducted.
Section 2.14 Taxes. The Company has duly and timely filed all
federal, state, local and foreign income, franchise, sales, use, property,
employment tax returns required to be filed by it, and all such tax returns are
true, correct and complete; and the Company has paid all taxes shown as due
thereon (or otherwise assessed) and no tax deficiency has been asserted or
threatened against the Company (and no audits or other administrative
proceedings or court proceedings exist or have been initiated) which could have
a material adverse effect on the business, properties, prospects, operations,
condition (financial or otherwise) or results of operations of the Company.
Section 2.15 Insurance. The Company maintains insurance of the
types and in the amounts generally deemed adequate for its business against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller and the Company to enter into this
Agreement and to consummate the transactions contemplated hereby,
Purchaser hereby represents and warrants to Seller and the Company as
follows:
Section 3.1 Organization of Purchaser. Purchaser is duly
organized and validly existing under the laws of the jurisdiction of its
organization.
Section 3.2 Authority of Purchaser. Purchaser has the
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to comply with the terms,
conditions and provisions hereof. The execution, delivery and performance of
this Agreement by Purchaser has been duly authorized by Purchaser. This
Agreement is the legal, valid and binding agreement of Purchaser, enforceable
against Purchaser in accordance with its terms.
<PAGE>
Section 3.3 Non-Contravention. The execution, delivery and
performance of this Agreement by Purchaser and the consummation of any of the
transactions contemplated hereby by Purchaser will not (a) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Purchaser pursuant to
any agree ment, instrument, franchise, license or permit to which Purchaser is a
party or by which any of its properties or assets may be bound or (b) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body applicable to
Purchaser or any of its properties or assets, other than such breaches, defaults
or violations that are not reasonably expected to impair the ability of
Purchaser to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by Purchaser and the
consumma tion of the transactions contemplated hereby by Purchaser do not and
will not violate or conflict with any provision of the certificate of
incorporation or by-laws of Purchaser, as currently in effect. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any government agency or body applicable to
Purchaser is required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
Section 3.4 Purchaser is qualified under the rules and
regulations of the FCC to control the licensee of the Station.
ARTICLE 4
PRE-CLOSING FILINGS AND UNDERTAKINGS
Section 4.1 Applications for FCC Consent. As promptly as
practicable and no later than five (5) business days following the execution of
this Agreement, the Company, Seller and Purchaser shall jointly file one or more
applications with the FCC requesting its consent to the transfer of control of
the FCC Licenses for the Station from Seller to Purchaser (the "Transfer of
Control Applications"). The Company, Seller and Purchaser will diligently take,
or fully cooperate in the taking of, all necessary and proper steps, and provide
any additional information reasonably requested, and use their respective
reasonable commercial efforts to resolve and/or overcome objections that may be
asserted by
<PAGE>
the FCC or any third party, in order to obtain promptly the requested consent
and approval of the Transfer of Control Applications by the FCC.
Section 4.2 Sharing Information. Each party hereto shall as
promptly as possible, and in any event within two (2) business days, inform the
other parties of any material communications between such party and the FCC or
any other governmental authority regarding this Agreement or the transactions
contemplated hereby. If any party receives a request for additional information
or documentary material from any such governmental authority, then such party
shall endeavor in good faith to make, or cause to be made, as promptly as
practicable and after consultation with the other parties, an appropriate
response to such request.
ARTICLE 5
COVENANTS AND AGREEMENTS OF SELLER AND THE COMPANY
Section 5.1 Negative Covenants. Pending and prior to the
Closing, Seller or the Company, or both, as the case may be, will not, without
the prior written consent or approval of Purchaser, which shall not be
unreasonably withheld, do or agree to do any of the following, as such actions
relate to the Station or the Shares:
5.1(a) Dispositions; Mergers. Sell, assign, or otherwise
transfer or dispose of any of the Shares or assets of the Company; or merge or
consolidate with or into any other entity or enter into any contracts relating
thereto; provided, however, that the Company may sell, assign, lease or
otherwise transfer or dispose of any asset in the ordinary course of business
provided that either (i) it is replaced or (ii) the sale proceeds in respect of
such asset are held for the benefit of the Purchaser.
5.1(b) Additional Agreements. Acquire or enter into any
additional agreements except in the ordinary course of business, or renew,
extend, amend, alter, modify, replace or otherwise change any contract, except
in the ordinary course of business.
5.1(c) Actions Affecting Capitalization. The Company shall not
(i) declare, set aside or pay any dividends, on, or make any other distributions
in respect of, any of its capital stock; split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; or
purchase, redeem or otherwise acquire any shares of capital stock of the Company
or any other securities thereof or any rights, warrants or options to acquire
any such shares or
<PAGE>
other securities; (ii) issue, deliver, sell grant pledge or otherwise encumber
any shares of its capital stock or other voting securities, or any securities
convertible into, or any rights, warrants or options to acquire, any such shares
of voting securities, or any phantom stock options, phantom stock appreciation
rights or stock based performance units; (iii) amend its articles of
incorporation, bylaws or other comparable charter or organizational documents;
(iv) make any change in accounting methods, principles or practices materially
affecting the reported consolidated assets, liabilities or results of operations
of the Company, except as required by a change in GAAP.
Section 5.2 Affirmative Covenants. Pending and prior to the
Closing Date, the Company will, as such actions relate to the Station:
5.2(a) Normal Operations. Subject to the terms and conditions
of this Agreement (including, without limitation, Section 5.1) (i) carry on the
business and activities of the Station in the Ordinary Course of Business; (ii)
pay or otherwise satisfy all obligations (cash and barter) of the Station as
they come due and payable; (iii) maintain all Assets in customary repair, order
and condition; and (iv) maintain their books of account, records, and files in
substantially the same manner as heretofore maintained.
5.2(b) FCC Matters. (i) Maintain the validity of the FCC
Licenses, and comply in all material respects with all requirements of the FCC
Licenses and the rules and regulations of the FCC; and (ii) deliver to
Purchaser, within ten (10) business days after filing, copies of any reports,
applications or responses to the FCC related to the Station that are filed
between the date of this Agreement and the Closing Date.
5.2(c) Actions. Take all actions under the applicable laws and
regulations of any state having jurisdiction over the Company necessary to
effectuate the transactions contemplated by this Agreement.
Section 5.3 Confidentiality. Seller and the Company shall
maintain strict confidentiality with respect to all documents and information
furnished to them by or on behalf of Purchaser. Nothing shall be deemed to be
confidential information that: (a) is known to Seller at the time of its
disclosure to them; (b) becomes publicly known or available other than through
disclosure by Seller or the Company; (c) is received by Seller or the Company
from a third party not actually known by Seller or the Company to be bound by a
confidentiality agreement with or obligation to Purchaser; or (d) is
independently developed by
<PAGE>
Seller or the Company as clearly evidenced by its records. Notwithstanding the
foregoing provisions of this Section 5.3, the Company and Seller, as the case
may be, may disclose such confidential information (x) to the extent required or
deemed advisable to comply with applicable laws and regulations, (y) to the
Company's officers, directors, employees, and representatives, and to Seller's
financial advisors, attorneys, accountants, and agents with respect to the
transactions contemplated hereby (so long as such parties are informed of the
confidentiality of such information), and (z) to any governmental authority in
connection with the transactions contemplated hereby. In the event this
Agreement is terminated, Seller shall return to Purchaser all confidential
information prepared or furnished by Purchaser relating to the transactions
contemplated hereunder, whether obtained before or after the execution of this
Agreement.
ARTICLE 6
COVENANTS AND AGREEMENTS OF PURCHASER
Section 6.1 Confidentiality. Purchaser shall maintain strict
confidentiality with respect to all documents and information furnished to
Purchaser by or on behalf of Seller or the Company. Nothing shall be deemed to
be confidential information that: (a) is known to Purchaser at the time of its
disclosure to Purchaser; (b) becomes publicly known or available other than
through disclosure by Purchaser; (c) is received by Purchaser from a third party
not actually known by Purchaser to be bound by a confidentiality agreement with
or obligation to Seller; or (d) is independently developed by Purchaser as
clearly evidenced by its records. Notwithstanding the foregoing provisions of
this Section 6.1, Purchaser may disclose such confidential information (x) to
the extent required or deemed advisable to comply with applicable laws and
regulations, (y) to its officers, directors, employees, representatives,
financial advisors, attorneys, accountants, and agents with respect to the
transactions contemplated hereby (so long as such parties are informed of the
confidentiality of such information), and (z) to any governmental authority in
connection with the transactions contemplated hereby. In the event this
Agreement is terminated, Purchaser will return to Seller or the Company all
confidential information prepared or furnished by Seller or the Company,
respectively, relating to the transactions contemplated hereunder, whether
obtained before or after the execution of this Agreement.
Section 6.2 Actions. Prior to the Closing, Purchaser shall
take all action under the applicable laws and regulations of any state having
jurisdiction over Purchaser necessary to effectuate the transactions
contemplated by this Agreement.
<PAGE>
ARTICLE 7
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligations of Purchaser to purchase the Shares and to
proceed with the Closing are subject to the satisfaction (or waiver in writing
by Purchaser) at or prior to the Closing of each of the following conditions:
Section 7.1 Representation and Covenants. Each of the
representations and warranties (other than those representations and warranties
which by their terms are as of a specific date) of Seller and the Company made
in this Agreement shall be true, correct, and complete as though made on or as
of the Closing Date, and the Company or Seller, as the case may be, shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Company or Seller prior to the Closing.
Section 7.2 Delivery of Documents. Seller shall have delivered
to Purchaser all documents required to be delivered by Seller to Purchaser
pursuant to Section 9.2.
Section 7.3 FCC Order. The FCC shall have issued an consenting
order to the transfer of control to Purchaser of the Company ("the FCC Order").
Section 7.4 Legal Proceedings. No governmental authority shall
have enacted, enforced, issued or entered any law, rule, regulation or order,
including in connection with any action or proceeding brought by a third party
(not subsequently dismissed, settled or otherwise terminated) which prohibits or
invalidates the transactions contemplated by this Agreement or prevents, limits,
restricts or impairs the ownership, use or operation of the Station by
Purchaser, other than an action or proceeding instituted by Purchaser
ARTICLE 8
CONDITIONS PRECEDENT TO
THE COMPANY'S AND SELLER'S OBLIGATION TO CLOSE
<PAGE>
The respective obligations of the Company and Seller to sell
the Shares and to proceed with the Closing are subject to the satisfaction (or
waiver in writing by the Company or Seller, as the case may be) at or prior to
the Closing of each of the following conditions:
Section 8.1 Representations and Covenants. Each of the
representations and warranties of Purchaser made in this Agreement shall be
true, correct, and complete as though made on or as of the Closing Date, and
Purchaser shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by Purchaser prior to the Closing.
Section 8.2 Delivery by Purchaser. Purchaser shall have
delivered (i) the Purchase Price to Seller and (ii) any other document required
to be delivered by Purchaser to Seller pursuant to Section 9.3.
Section 8.3 FCC Order. The FCC Order shall have been issued.
Section 8.4 Legal Proceedings. No governmental authority shall
have enacted, enforced, issued or entered any law, rule, regulation or order,
including in connection with any action or proceeding brought by a third party
(not subsequently dismissed, settled, or otherwise terminated) which prohibits
or invalidates the transactions contemplated by this Agreement other than an
action or proceeding instituted by the Company or Seller.
ARTICLE 9
THE CLOSING
Section 9.1 Closing.
9.1(a) Unless otherwise agreed upon in writing by Purchaser
and Seller, the Closing Date shall be on the tenth business day following
satisfaction or waiver of the last condition precedent to Closing specified
herein, but in no event later than June 30, 1999, (the "Final Closing Date").
9.1(b) The Closing shall be held at such time of day and place
or places as the parties may agree.
Section 9.2 Delivery by Seller and the Company. At or before
the Closing, the Company or Seller, as the case may be, shall deliver to
<PAGE>
Purchaser the following:
9.2(a) Contracts, Agreements and Instruments. All such
instruments of transfer, assignment and conveyance, and other instruments or
documents in form and substance satisfactory to Purchaser, as shall be necessary
to evidence the sale, assignment, transfer and conveyance of the Shares to
Purchaser in accordance with this Agreement.
9.2(b) Certified Resolutions. A copy of (i) the resolutions of
the board of directors of the Company, certified as being true, correct and
complete and then in full force and effect, authorizing the execution, delivery
and performance of the Agreement, and the consummation of the transactions
contemplated thereby, and (ii) a copy of the articles of incorporation and
by-laws of the Company, certified by the corporate secretary of the Company as
being true, correct and complete as of the Closing Date.
9.2(c) Officers' Certificates.
(i) A certificate of the Company signed
by its president and corporate secretary certifying that all conditions set
forth in Section 7.1 have been satisfied; and
(ii) A certificate signed by the
corporate secretary of the Company as to the incumbency of the officer executing
this Agreement on behalf of the Company.
9.2(d) Stock Certificates. Stock certificates representing the
Shares.
9.2(g) Other Documents. Such other documents to be delivered
by Seller hereunder as are reasonably necessary for Purchaser to effectuate and
document the transactions contemplated hereby.
Section 9.3 Delivery by Purchaser. At or before the Closing,
Purchaser shall deliver to Seller the following:
9.3(a) Purchase Price Payment. The Purchase Price to Seller.
9.3(b) Purchaser Documents. Such certificates, instruments or
<PAGE>
documents as Seller may reasonably request in order to effect and document the
transactions contemplated hereby.
9.3(c) Certified Resolution. A copy of (i) the resolutions of
the board of directors of Purchaser, certified as being true, correct and
complete and then in full force and effect, authorizing the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby and (ii) a copy of the certificate of incorporation and
by-laws of Purchaser, certified by the corporate secretary of Purchaser as being
true, correct and complete as of the Closing Date.
9.3(d) Officers' Certificate.
(i) A certificate of Purchaser signed by
its president and corporate secretary certifying that all conditions set forth
in Section 10.1 have been satisfied; and
(ii) a certificate signed by the
corporate secretary of Purchaser as to the incumbency of the officer of
Purchaser executing this Agreement on behalf of the Purchaser.
9.3(e) Other Documents. Such other documents to be delivered
by Purchaser hereunder as are reasonably necessary for Seller to effectuate the
transactions contemplated herein.
ARTICLE 10
SURVIVAL
Section 10.1 Survival of Representations. Except as otherwise
set forth herein, all representations and warranties, covenants and agreements
of Seller, the Company and Purchaser contained in or made pursuant to this
Agreement or in any certificate furnished pursuant hereto shall not survive the
Closing Date.
ARTICLE 11
TERMINATION
Section 11.1 Termination. This Agreement may be terminated
at any time prior to the Closing by:
<PAGE>
11.1(a) the mutual consent of Seller and Purchaser;
11.1(b) Purchaser, by written notice of termination delivered
to Seller if either the Company or the Seller is in material default of its or
his respective obligations hereunder and has failed to cure such default to
Purchaser's reasonable satisfaction within thirty (30) days following written
notice of such default sent by Purchaser to the Company or Seller, as
appropriate, provided Purchaser is not in default hereof or;
11.1(c) Seller, by written notice of termination delivered to
Purchaser, if Purchaser is in material default of its obligations hereunder and
has failed to cure such default to Seller' reasonable satisfaction within thirty
(30) days following written notice of such default sent by Seller to Purchaser,
provided that Seller and the Company are not in default hereof;
11.1(d) By either Purchaser or Seller upon written notice of
termination delivered to the other in the event the conditions precedent to such
party's obligations to close have not been satisfied or the closing has
otherwise failed to occur by the Final Closing Date (as such date may be
extended in accordance with Section 9.1).
Section 11.2 Effect of Termination. In the event this
Agreement is terminated as provided in Section 11.1(a) or (d), this Agreement
shall be deemed null, void and of no further force or effect, and the parties
hereto shall be released from all future obligations hereunder with respect to
the Station; provided, however, that the obligations of Purchaser and Seller as
in Sections 5.3, 6.1, and 11.2, shall survive such termination. If this
Agreement is subject to termination as provided in Sections 11.1(b) or (c), the
rights of the parties shall be governed by ARTICLE 12.
ARTICLE 12
REMEDIES
Section 12.1 Default by Seller. If this Agreement is
terminable by Purchaser pursuant to Section 11.1(b), Purchaser shall be
entitled:
<PAGE>
(i) by written notice to Seller, to terminate this
Agreement; and
(ii) to pursue any and all remedies against Seller and the
Company available at law or in equity.
Section 12.2 Default by Purchaser. If this Agreement is
terminated pursuant to Section 11.1(c), Seller shall be entitled to pursue any
and all remedies available at law or in equity against Purchaser.
Section 12.3 Remedies Not Exclusive. The remedies provided in
this ARTICLE 12 shall be cumulative and not exclusive.
ARTICLE 13
GENERAL PROVISIONS
Section 13.1 Notices. All notices, demands, requests, or other
communications which may be or are required to be given or made by any party to
any other party pursuant to this Agreement shall be in writing and shall be hand
delivered or delivered by overnight air courier and addressed as follows:
(i) If to Purchaser:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attention: Steven E. Dawson
with a required copy (which shall not constitute
notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue
Washington, D.C. 20005
Attention: John C. Quale
(ii) If to the Company:
Blaya, Inc.
13645 Deering Bay Drive
Coral Gables, FL 33158
Attention: Joaquin F. Blaya
<PAGE>
with a required copy (which shall not constitute
notice) to:
Leibowitz & Associates
One Southeast Third Avenue
Suite 450
Miami, FL 33131-1715
Attention: Matthew L. Leibowitz
(iii) If to Seller:
Joaquin F. Blaya
13645 Deering Bay Drive
Coral Gables, FL 33158
Each notice, demand, delivery, request, or communication which
shall be given or made in the manner described above shall be deemed
sufficiently given or made for all purposes at such time as it is delivered to
the addressee (with the delivery receipt or the affidavit of messenger being
deemed conclusive but not exclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
Section 13.2 Waiver. No delay or failure on the part of any
party hereto in exercising any right, power or privilege under this Agreement or
under any other instrument or document given in connection with or pursuant to
this Agreement shall impair any such right, power or privilege or be construed
as a waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other right,
power or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such waiver
is sought and then only to the extent expressly specified therein.
Section 13.3 Benefit and Assignment.
13.3(a) Except as hereinafter specifically provided in this
Section 13.3, no party hereto shall assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
Seller (if the assignor is Purchaser) or Purchaser (if the assignor is the
Company or Seller); and any purported assignment contrary to the terms hereof
shall be null, void and of no force and effect. Purchaser shall have the right
to assign this Agreement to any entity or entities controlling, controlled by,
or under common control with Purchaser so long as any such assignment will not
delay the Closing beyond the date on which any Closing is required to occur in
accordance with this Agreement.
<PAGE>
Any assignment in accordance with the terms hereof shall become effective upon
delivery of written notice in accordance with Section 13.1.
13.3(b) This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns
as permitted hereunder. No person or entity other than the parties hereto is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto or their respective successors and assigns as permitted
hereunder.
Section 13.4 Entire Agreement; Amendment. This Agreement, and
the other instruments and documents referred to herein or delivered pursuant
hereto contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by the parties hereto.
Section 13.5 Severability. If any part of any provision of
this Agreement or any other contract, agreement, document or writing given
pursuant to or in connection with this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provisions or the remaining provisions of said contract,
agreement, document or writing.
Section 13.6 Headings. The headings of the sections and
subsections contained in this Agreement are inserted for convenience only and
do not form a part or affect the meaning, construction or scope thereof.
Section 13.7 Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed under and in accordance with the laws of the
State of Delaware, excluding the choice of law rules thereof.
Section 13.8 Signature in Counterparts. This Agreement may be
executed in separate counterparts, none of which need contain the signatures of
all parties, each of which shall be deemed to be an original, and all of
<PAGE>
which taken together constitute one and the same instrument
IN WITNESS WHEREOF, each of the parties hereto has executed
this Stock Purchase Agreement, or has caused this Stock Purchase Agreement to be
duly executed and delivered in its name on its behalf, all as of the day and
year first above written.
COMPANY
BLAYA, INC.
By: /s/ Joaquin F. Blaya
---------------------
Name: Joaquin F. Blaya
Title: Chairman and CEO
BLAYA
/s/ Joaquin F. Blaya
---------------------
Joaquin F. Blaya
PURCHASER
RADIO UNICA CORP.
By: /s/ Steven E. Dawson
---------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
<PAGE>
Exhibit 10.29
OPTION AGREEMENT
This OPTION AGREEMENT, dated as of October 31, 1997, is made
and entered into by and between Lotus Oxnard Corp., a California corporation
("Seller"), and Radio Unica Corp., a Delaware corporation ("Buyer").
WHEREAS, Seller is the owner and operator of radio station
KVCA, 670 kHz, licensed to Simi Valley, California (the "Station");
WHEREAS, Seller and Buyer have entered into a Time Brokerage
Agreement ("TBA"), dated as of October 31, 1997, whereby Seller has made
available to Buyer substantial broadcasting time on the Station; and
WHEREAS, in connection with the TBA the parties have agreed
that Seller will grant to Buyer an option to purchase the assets used in the
conduct of the business and ownership and operation of the Station on the terms
and conditions set forth herein and subject to the rules, regulations and
policies of the Federal Communications Commission ("FCC").
NOW THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants contained herein, and other good and valuable
consideration, the parties, intending to be legally bound, hereby agree as
follows:
SECTION 1. OPTION TO PURCHASE ASSETS
1.1 In consideration of Buyer entering into the TBA with
Seller upon the terms and conditions set forth therein, Seller hereby grants to
Buyer an exclusive, irrevocable option (the "Option") to purchase the assets,
real, personal and mixed, tangible and intangible, owned and held by Seller,
including the real property set forth in Exhibit 1 (the "Real Property") to be
acquired by Seller, that are used in the conduct of the business and operations
of the Station (the "Station Assets"), free and clear of all material debts,
liens, encumbrances or other liabili ties, subject to the terms and conditions
set forth herein.
1.2 The Option granted hereunder shall be exercisable at any
time from June 24, 2001 through and including September 30, 2001; provided, how
ever, that upon a Lotus Material Adverse Event pursuant to the terms of the
1
<PAGE>
TBA, the Option shall become immediately exercisable and shall remain
exercisable for a period of ninety (90) days from the date of such Lotus
Material Adverse Event and, if not exercised within such 90-day period, shall
thereafter terminate and, provided, further, that upon a Unica Material Adverse
Event pursuant to the terms of the TBA, the Option shall not be exercisable and
shall thereafter terminate.
1.3 In the event that Buyer wishes to exercise the Option,
Buyer shall give written notice (the date of such notice being referred to as
the "Exercise Date") to Seller and the giving of such notice shall be deemed to
exercise the Option. In the event that the Option is exercised, the parties
shall, within ten (10) days of the Exercise Date, execute an Asset Purchase
Agreement (the "Purchase Agreement") in the form attached hereto as Exhibit A,
it being understood that (i) the asset purchase price shall be determined
pursuant to Section 1.4 of this Agreement and (ii) the only changes to such
form shall be changes, if any, in the information contained in the schedules
thereto and the addition, if any, of schedules thereto that are reasonably
required to reflect events occurring after the date hereof; provided, however,
that Buyer shall not be required to accept any such change that could reasonably
be expected to cause an adverse change in, or have an adverse effect on, the
assets to be conveyed to Buyer pursuant to the Purchase Agreement or the ability
of Seller to consummate the transactions contemplated by the Purchase Agreement,
and thereafter Buyer and Seller shall perform their respective obligations under
the Purchase Agreement, including, without limitation, filing and prosecuting
an appropriate application for FCC consent to the assignment of the FCC licenses
for the Station from Seller to Buyer. Notwithstanding anything contained in
this Agreement to the contrary, Buyer may withdraw its notice of exercise of
its Option at any time prior to its execution of the Purchase Agreement without
any liability to Seller.
1.4 Determined as of the Exercise Date, the purchase price
for the Station Assets shall be as follows: (i) in the event the Phase I
Upgrade (as defined below) has been completed, $ *; (ii) in the event both
the Phase I Upgrade and the Phase II Upgrade (as defined below) have been
completed, $ *, plus reimbursement of actual and reasonable out-of-pocket
expenses (including professional fees and disbursements) incurred in
connection with the Phase II Upgrade, minus any Phase
- ----------
(*) The purchase price has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities
and Exchange Commission.
2
<PAGE>
II Credits (as defined below); or (iii) $ *. For purposes of this Agreement,
the term "Phase I Upgrade" shall mean the actual implementation of the
increase in authorized Station power from 1 KW nighttime to 3 KW nighttime,
pursuant to FCC construction permit BP960117AB, and that KBOI-AM, in Boise,
Idaho, shall have reduced interference with the Station essentially as
contemplated in FCC application BP970415AE; the term "Phase II Upgrade" shall
mean the actual implementation of the increase in authorized Station power to
between 30 KW and 50 KW daytime/nighttime; and the term "Phase II Credits"
shall mean the aggregate proceeds received by Seller from the sale of any
Station Assets that are no longer useful in the operations of the Station as
a result of the Phase II Upgrade.
SECTION 2. SPECIFIC PERFORMANCE
The parties agree that the FCC licenses and the broadcast
business of the Station made possible thereby are unique assets not readily
available on the open market. For this reason, Seller acknowledges that monetary
damages alone would not be adequate to compensate Buyer and that specific
performance is an appropriate remedy for Buyer in the event this Agreement is
breached by Seller. The parties agree that the rights afforded by the preceding
sentence shall be in addition to any and all rights Buyer may have at law or
equity. If any action is brought by Buyer to enforce this Agreement, Seller
shall waive the defense that there is an adequate remedy at law.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Seller is, and upon exercise of the Option will be, a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California.
3.2 Seller has, and upon the exercise of the Option will have,
full corporate power and authority to enter into this Agreement and the Purchase
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller and no other corporate proceedings on the
3
<PAGE>
part of Seller are necessary to authorize this Agreement and the Purchase
Agreement or to consummate the transactions contemplated hereby and thereby.
This Agreement constitutes, and any other instruments contemplated hereby
when executed will constitute, the legal, valid and binding obligations of
Seller, enforceable in accordance with their terms, except as may be affected
by bankruptcy and insolvency laws and court-applied equitable principles.
3.3 The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance with
the terms, conditions and provisions of this Agreement, with or without the
giving of notice or the passage of time, or both, will not: (i) violate any
provision of Seller's articles of incorporation or by-laws, (ii) conflict
with or result in a breach of or constitute a default under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement
or any other agreement or instrument to which Seller is party or by which it
or any of the assets of Seller may be bound or affected, or any decree,
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulation, including but not limited to the
Communications Act of 1934, as amended (the "Act"), and the rule and
regulations of the FCC promulgated thereunder.
3.4 All of the Station Assets other than the Real Property
are, and upon the exercise of the Option all of the Station Assets (including
the Real Property) will be, owned by Seller free and clear of all liens,
pledges, charges, claims, security interests of other encumbrances, whether
consensual, statutory or otherwise (collectively, "Liens").
SECTION 4. COVENANTS OF SELLER
4.1 So long as this Agreement is in effect, Seller covenants
that it will not, without the Buyer's prior written approval, which shall not be
unreasonably withheld:
(a) Create, assume or suffer to exist, directly or
indirectly, any mortgage, deed of trust or Lien of any nature whatsoever, upon
any of the Station Assets, now owned or hereafter as acquired, excluding, Liens
incurred in the ordinary course of business.
4
<PAGE>
(b) Sell, transfer, lease or otherwise dispose of
any of the Station Assets excepts in connection with the acquisition of
replacement property of equivalent kind and value.
(c) Enter into any agreement to consolidate or merge
with or into, or to sell all or substantially all of its capital stock,
properties or assets to, any person or entity.
(d) Enter into any agreement or grant any person or
entity a right to purchase the Station's FCC licenses or all or substantially
all of the Station Assets.
(e) Enter into any agreement or take any other
action that would interfere with, or prevent, Seller from transferring the
Station Assets to Buyer as contemplated hereunder or under the Purchase
Agreement.
(f) Take any action that jeopardizes the validity or
enforceability of or rights under the Station's FCC licenses.
4.2 So long as this Agreement is in effect, Seller covenants
that it will:
(a) Subject to the terms and conditions of the TBA,
(i) carry on the business and activities of the Station in the ordinary course
of business, consistent with past practices of Seller, (ii) pay or otherwise
satisfy all obligations of the Station as they come due and payable; (iii)
maintain all Station Assets in customary repair, order and condition; and (iv)
maintain their books of account, records and files in substantially the same
manner as heretofore maintained.
(b) Maintain the validity of the Station's FCC
licenses, comply in all material respects with all requirements of the Station's
FCC licenses and the rules and regulations of the FCC, and deliver to Buyer,
within ten (10) days after filing, copies of any reports, applications or
responses to the FCC related to the Station that are filed from and after the
date hereof.
(c) Maintain in full force and effect all existing
casualty, liability and other insurance insuring the Station and the Station
Assets in amounts not less than those in effect on the date hereof.
5
<PAGE>
(d) Upon receiving notice or otherwise becoming
aware of any violation relating to the Station's FCC licenses, any violation by
the Station of any rules and regulations of the FCC or any material violations
under any other applicable laws and regulations, promptly notify Buyer and, at
Seller's expense, use reasonable commercial efforts to cure all such violations
in a timely fashion.
4.3 Seller covenants that it will acquire good, record and
marketable fee simple title to the Real Property no later than December 31,
1997.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that Buyer has full
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as may be affected by bankruptcy and
insolvency laws and court-applied equitable principles.
SECTION 6. MISCELLANEOUS
6.1 If any provision or provisions contained in this
Agreement are held to be invalid, illegal or unenforceable, this shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unen forceable provision or provisions had not been
contained herein.
6.2 No party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, and any purported assignment without such consent shall be null and
void and of no legal force or effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto and their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
6
<PAGE>
6.3 No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.
6.4 The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
6.5 This Agreement shall be governed by, enforced under and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule thereof.
6.6 Any notice required hereunder shall be in writing and
any notice or other communications shall be deemed given when delivered
personally or one (1) day after deposited with a recognized overnight air
courier for overnight delivery and addressed as follows:
(a) if to Buyer:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33176
Attn: Joaquin F. Blaya
with a required copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attn: John C. Quale, Esq.
(b) If to Seller:
Lotus Oxnard Corp.
6290 Sunset Boulevard
Suite 1600
Los Angeles, California 90028
Attn: Howard A. Kalmenson
7
<PAGE>
with a required copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Jerome S. Boros, Esq.
or such other address as the addressee may have specified in a notice duly given
to the sender as provided herein.
6.7 This Agreement may be executed in one or more counter
parts, each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
6.8 After the date hereof, Buyer shall be afforded
reasonable opportunity to inspect the Station and the books and records of the
Seller relating to the Station and the Station Assets upon reasonable request.
6.9 Buyer and Seller each agree that they will use their
best efforts to keep confidential (except for such disclosure to attorneys,
bankers, underwriters, investors, etc. as may be appropriate in the furtherance
of this transaction and except for such filings with the FCC as may be required)
all information of a confidential nature obtained in connection with the
transactions contemplated by this Agreement, and in the event that such
transactions are not consummated, each party will return to the other party such
documents and other material obtained from the other party in connection
therewith.
6.10 Buyer and Seller shall jointly prepare, and determine
the timing of, any press release or other announcement to the public relating to
the execution of this Agreement. No party hereto will issue any press release or
make any other public announcement relating to the transactions contemplated
hereby without the prior consent of the other party hereto, except that any
party may make any disclosure required to be made by it under applicable law if
it determines in good faith that it is appropriate to do so and gives prior
notice to the other party.
6.11 Each party shall bear all costs incurred by it in
connection with the transactions contemplated by this Agreement.
8
<PAGE>
6.12 Seller agrees that from the date hereof and during the
time period in which the Option is exercisable hereunder, or if the Option is
exercised, during the period prior to execution of the Purchase Agreement, it
shall not offer or seek to offer, or entertain or discuss any offer, to sell the
Station or the Station Assets, other than as contemplated under this Agreement.
6.13 This Agreement (together with the Exhibits hereto) and
the TBA embody the entire agreement between the parties regarding the subject
matter hereof and there are no other agreements, representations, warranties, or
understandings, oral or written, between them with respect to the subject
matter hereof.
6.14 Prior to consummation of the Purchase Agreement and to
obtaining consent from the FCC, Buyer shall not, directly or indirectly,
control, supervise or direct or attempt to control, supervise or direct the
operations of the Station or Seller; such operations, including complete
ultimate control and supervision of all of the Station's programs, employees
and policies, shall remain the sole responsibility of Seller, as set forth in
the rules and policies of the FCC.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
LOTUS OXNARD CORP.
By: /s/ Howard A. Kalmenson
-------------------------------
Name: Howard A. Kalmenson
Title: President
RADIO UNICA CORP.
By:
-------------------------------
Name: Joaquin F. Blaya
Title: President
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
LOTUS OXNARD CORP.
By:
-------------------------------
Name: Howard A. Kalmenson
Title: President
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
-------------------------------
Name: Joaquin F. Blaya
Title: Chairman & C.E.O.
10
<PAGE>
LOTUS COMMUNICATIONS JOINDER AGREEMENT
As a material inducement for Buyer to enter into the foregoing
Option Agreement of even date herewith and for other valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Lotus Communications
Corp., a California corporation ("Lotus") and owner of all of the issued and
outstanding capital stock of Seller, hereby joins in and agrees to be bound by
the provisions of Section 4.2(c) of the foregoing Option Agreement for the
purposes of making the covenant set forth in Section 4.2(c). In addition, and in
furtherance of Seller's covenant set forth in Section 4.3, Lotus covenants and
agrees that it will transfer to Seller by December 31, 1997 good, record and
marketable fee simple title to the Real Property. Lotus acknowledges that
specific performance is an appropriate remedy in the event this covenant is
breached. In addition, Lotus acknowledges and agrees that (i) any claim of
Buyer arising under the Option Agreement may be asserted against Lotus and (ii)
Lotus shall be jointly and severally liable under the Option Agreement for any
default in the performance of the obligations of Seller thereunder or for any
breach by Seller of any representa tion, warranty, covenant or agreement
contained therein.
Lotus represents and warrants to Buyer as follows: (a) Lotus
is, and upon exercise of the Option will be, a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California;
(b) Lotus has, and upon the exercise of the Option will have, full corporate
power and authority to enter into this Joinder Agreement and the Joinder
Agreement attached to the Purchase Agreement and to consummate the transactions
contemplated hereby and thereby; (c) the execution and delivery of this Joinder
Agreement and the consummation of the transactions contemplated hereby have been
duly autho rized by all necessary corporate action on the part of Lotus and no
other corporate proceedings on the part of Lotus are necessary to authorize this
Joinder Agreement and the Joinder Agreement attached to the Purchase Agreement
or to consummate the transactions contemplated hereby and thereby; and (d) this
Joinder Agreement constitutes, and any other instruments contemplated hereby
when executed will constitute, the legal, valid and binding obligations of
Lotus,
11
<PAGE>
enforceable in accordance with their terms, except as may be affected by bank
ruptcy and insolvency laws and court-applied equitable principles.
Dated as of the 31st day of October, 1997.
LOTUS COMMUNICATIONS CORP.
By: /s/ Howard A. Kalmenson
----------------------------
Name: Howard A. Kalmenson
Title: President
12
<PAGE>
Exhibit 1
That portion of Lot 75, Rancho Tapo, Subdivision No. 3, in the County of
Ventura, State of California, according to the Map recorded in Book 8, Page 26
of Miscellaneous Records (Maps), in the office of the County Recorder of said
County, as such portion of said Lot 75 is shown as Parcel B on that certain
Parcel Map Waiver and Lot Line Adjustment recorded February 8, 1990, as
Instrument No. 90-020583, of Official Records.
13
<PAGE>
Exhibit 10.30
OPTION AGREEMENT
This OPTION AGREEMENT, dated as of October 31, 1997, is made
and entered into by and between Texas Lotus Corp., a Texas corporation
("Seller"), and Radio Unica Corp., a Delaware corporation ("Buyer").
WHEREAS, Seller is the owner and operator of radio station
KZDC, 1250 kHz, licensed to San Antonio, Texas (the "Station");
WHEREAS, Seller and Buyer have entered into a Time Brokerage
Agreement ("TBA"), dated as of October 31, 1997, whereby Seller has made
available to Buyer substantial broadcasting time on the Station; and
WHEREAS, in connection with the TBA the parties have agreed
that Seller will grant to Buyer an option to purchase the assets used in the
conduct of the business and ownership and operation of the Station on the terms
and conditions set forth herein and subject to the rules, regulations and
policies of the Federal Communications Commission ("FCC").
NOW THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants contained herein, and other good and valuable
consideration, the parties, intending to be legally bound, hereby agree as
follows:
SECTION 1. OPTION TO PURCHASE ASSETS
1.1 In consideration of Buyer entering into the TBA with
Seller upon the terms and conditions set forth therein, Seller hereby grants to
Buyer an exclusive, irrevocable option (the "Option") to purchase the assets,
real, personal and mixed, tangible and intangible, owned and held by Seller that
are used in the conduct of the business and operations of the Station (the
"Station Assets"), free and clear of all material debts, liens, encumbrances or
other liabilities, subject to the terms and conditions set forth herein.
1.2 The Option granted hereunder shall be exercisable at any
time from June 24, 2001 through and including September 30, 2001; provided, how
ever, that upon a Lotus Material Adverse Event pursuant to the terms of the
1
<PAGE>
TBA, the Option shall become immediately exercisable and shall remain
exercisable for a period of ninety (90) days from the date of such Lotus
Material Adverse Event and, if not exercised within such 90-day period, shall
thereafter terminate and, provided, further, that upon a Unica Material Adverse
Event pursuant to the terms of the TBA, the Option shall not be exercisable and
shall thereafter terminate.
1.3 In the event that Buyer wishes to exercise the Option,
Buyer shall give written notice (the date of such notice being referred to as
the "Exercise Date") to Seller and the giving of such notice shall be deemed to
exercise the Option. In the event that the Option is exercised, the parties
shall, within ten (10) days of the Exercise Date, execute an Asset Purchase
Agreement (the "Purchase Agreement") in the form attached hereto as Exhibit A,
it being understood that the only changes to such form shall be changes, if any,
in the information contained in the schedules thereto and the addition, if any,
of schedules thereto that are reasonably required to reflect events occurring
after the date hereof; provided, however, that Buyer shall not be required to
accept any such change that could reasonably be expected to cause an adverse
change in, or have an adverse effect on, the assets to be conveyed to Buyer
pursuant to the Purchase Agreement or the ability of Seller to consummate the
transactions contemplated by the Purchase Agreement, and thereafter Buyer and
Seller shall perform their respective obligations under the Purchase Agreement,
including, without limitation, filing and prosecuting an appropriate application
for FCC consent to the assignment of the FCC licenses for the Station from
Seller to Buyer. Notwithstanding anything contained in this Agreement to the
contrary, Buyer may withdraw its notice of exercise of its Option at any time
prior to its execution of the Purchase Agreement without any liability to
Seller.
SECTION 2. SPECIFIC PERFORMANCE
The parties agree that the FCC licenses and the broadcast
business of the Station made possible thereby are unique assets not readily
available on the open market. For this reason, Seller acknowledges that monetary
damages alone would not be adequate to compensate Buyer and that specific
performance is an appropriate remedy for Buyer in the event this Agreement is
breached by Seller. The parties agree that the rights afforded by the preceding
sentence shall be in addition to any and all rights Buyer may have at law or
equity. If any action is brought by Buyer to enforce this Agreement, Seller
shall waive the defense that there is an adequate remedy at law.
2
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Seller is, and upon exercise of the Option will be, a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas.
3.2 Seller has, and upon the exercise of the Option will have,
full corporate power and authority to enter into this Agreement and the Purchase
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller and no other corporate proceedings on the
part of Seller are necessary to authorize this Agreement and the Purchase
Agreement or to consummate the transactions contemplated hereby and thereby.
This Agreement constitutes, and any other instruments contemplated hereby when
executed will constitute, the legal, valid and binding obligations of Seller,
enforceable in accordance with their terms, except as may be affected by
bankruptcy and insolvency laws and court-applied equitable principles.
3.3 The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance with
the terms, conditions and provisions of this Agreement, with or without the
giving of notice or the passage of time, or both, will not: (i) violate any
provision of Seller's articles of incorporation or by-laws, (ii) conflict
with or result in a breach of or constitute a default under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement
or any other agreement or instrument to which Seller is party or by which it
or any of the assets of Seller may be bound or affected, or any decree,
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulation, including but not limited to the
Communications Act of 1934, as amended (the "Act"), and the rule and
regulations of the FCC promulgated thereunder.
3.4 All of the Station Assets are, and upon the exercise of
the Option will be, owned by Seller free and clear of all liens, pledges,
charges, claims, security interests of other encumbrances, whether consensual,
statutory or otherwise (collectively, "Liens").
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<PAGE>
SECTION 4. COVENANTS OF SELLER
4.1 So long as this Agreement is in effect, Seller covenants
that it will not, without the Buyer's prior written approval, which shall not be
unreasonably withheld:
(a) Create, assume or suffer to exist, directly or
indirectly, any mortgage, deed of trust or Lien of any nature whatsoever, upon
any of the Station Assets, now owned or hereafter as acquired, excluding, Liens
incurred in the ordinary course of business.
(b) Sell, transfer, lease or otherwise dispose of
any of the Station Assets excepts in connection with the acquisition of
replacement property of equivalent kind and value.
(c) Enter into any agreement to consolidate or merge
with or into, or to sell all or substantially all of its capital stock,
properties or assets to, any person or entity.
(d) Enter into any agreement or grant any person or
entity a right to purchase the Station's FCC licenses or all or substantially
all of the Station Assets.
(e) Enter into any agreement or take any other
action that would interfere with, or prevent, Seller from transferring the
Station Assets to Buyer as contemplated hereunder or under the Purchase
Agreement.
(f) Take any action that jeopardizes the validity or
enforce ability of or rights under the Station's FCC licenses.
4.2 So long as this Agreement is in effect, Seller covenants
that it will:
(a) Subject to the terms and conditions of the TBA,
(i) carry on the business and activities of the Station in the ordinary course
of business, consistent with past practices of Seller, (ii) pay or otherwise
satisfy all obligations of the Station as they come due and payable; (iii)
maintain all Station Assets in customary repair, order and condition; and (iv)
maintain their books of account, records and files in substantially the same
manner as heretofore maintained.
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(b) Maintain the validity of the Station's FCC
licenses, comply in all material respects with all requirements of the Station's
FCC licenses and the rules and regulations of the FCC, and deliver to Buyer,
within ten (10) days after filing, copies of any reports, applications or
responses to the FCC related to the Station that are filed from and after the
date hereof.
(c) Maintain in full force and effect all existing
casualty, liability and other insurance insuring the Station and the Station
Assets in amounts not less than those in effect on the date hereof.
(d) Upon receiving notice or otherwise becoming
aware of any violation relating to the Station's FCC licenses, any violation by
the Station of any rules and regulations of the FCC or any material violations
under any other applicable laws and regulations, promptly notify Buyer and, at
Seller's expense, use reasonable commercial efforts to cure all such violations
in a timely fashion.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that Buyer has full
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as may be affected by bankruptcy and
insolvency laws and court-applied equitable principles.
SECTION 6. MISCELLANEOUS
6.1 If any provision or provisions contained in this
Agreement are held to be invalid, illegal or unenforceable, this shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unen forceable provision or provisions had not been
contained herein.
6.2 No party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, and any purported assignment without such consent shall be null and
void and of no
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legal force or effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended to confer on any
person other than the parties hereto and their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
6.3 No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.
6.4 The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
6.5 This Agreement shall be governed by, enforced under and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule thereof.
6.6 Any notice required hereunder shall be in writing and
any notice or other communications shall be deemed given when delivered
personally or one (1) day after deposited with a recognized overnight air
courier for overnight delivery and addressed as follows:
(a) if to Buyer:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33176
Attn: Joaquin F. Blaya
with a required copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attn: John C. Quale, Esq.
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(b) If to Seller:
Texas Lotus Corp.
c/o Lotus Communications Corp.
6290 Sunset Boulevard
Suite 1600
Los Angeles, California 90028
Attn: Howard A. Kalmenson
with a required copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Jerome S. Boros, Esq.
or such other address as the addressee may have specified in a notice duly given
to the sender as provided herein.
6.7 This Agreement may be executed in one or more counter
parts, each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
6.8 After the date hereof, Buyer shall be afforded
reasonable opportunity to inspect the Station and the books and records of the
Seller relating to the Station and the Station Assets upon reasonable request.
6.9 Buyer and Seller each agree that they will use their
best efforts to keep confidential (except for such disclosure to attorneys,
bankers, underwriters, investors, etc. as may be appropriate in the furtherance
of this transaction and except for such filings with the FCC as may be required)
all information of a confidential nature obtained in connection with the
transactions contemplated by this Agreement, and in the event that such
transactions are not consummated, each party will return to the other party such
documents and other material obtained from the other party in connection
therewith.
6.10 Buyer and Seller shall jointly prepare, and determine
the timing of, any press release or other announcement to the public relating to
the execution of this Agreement. No party hereto will issue any press release or
make
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<PAGE>
any other public announcement relating to the transactions contemplated hereby
without the prior consent of the other party hereto, except that any party may
make any disclosure required to be made by it under applicable law if it
determines in good faith that it is appropriate to do so and gives prior notice
to the other party.
6.11 Each party shall bear all costs incurred by it in
connection with the transactions contemplated by this Agreement.
6.12 Seller agrees that from the date hereof and during the
time period in which the Option is exercisable hereunder, or if the Option is
exercised, during the period prior to execution of the Purchase Agreement, it
shall not offer or seek to offer, or entertain or discuss any offer, to sell the
Station or the Station Assets, other than as contemplated under this Agreement.
6.13 This Agreement (together with the Exhibits hereto) and
the TBA embody the entire agreement between the parties regarding the subject
matter hereof and there are no other agreements, representations, warranties, or
understandings, oral or written, between them with respect to the subject
matter hereof.
6.14 Prior to consummation of the Purchase Agreement and to
obtaining consent from the FCC, Buyer shall not, directly or indirectly,
control, supervise or direct or attempt to control, supervise or direct the
operations of the Station or Seller; such operations, including complete
ultimate control and supervision of all of the Station's programs, employees
and policies, shall remain the sole responsibility of Seller, as set forth in
the rules and policies of the FCC.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
TEXAS LOTUS CORP.
By: /s/ Howard A. Kalmenson
--------------------------------
Name: Howard A. Kalmenson
Title: President
RADIO UNICA CORP.
By:
--------------------------------
Name: Joaquin F. Blaya
Title: President
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
TEXAS LOTUS CORP.
By:
--------------------------------
Name: Howard A. Kalmenson
Title: President
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
--------------------------------
Name: Joaquin F. Blaya
Title: President
9
<PAGE>
LOTUS COMMUNICATIONS JOINDER AGREEMENT
As a material inducement for Buyer to enter into the foregoing
Option Agreement of even date herewith and for other valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Lotus Communications
Corp., a California corporation ("Lotus") and owner of all of the issued and
outstanding capital stock of Seller, hereby joins in and agrees to be bound by
the provisions of Section 4.2(c) of the foregoing Option Agreement for the
purposes of making the covenant set forth in Section 4.2(c). In addition, Lotus
acknowledges and agrees that (i) any claim of Buyer arising under the Option
Agreement may be asserted against Lotus and (ii) Lotus shall be jointly and
severally liable under the Option Agreement for any default in the performance
of the obligations of Seller thereunder or for any breach by Seller of any
representation, warranty, covenant or agreement contained therein.
Lotus represents and warrants to Buyer as follows: (a) Lotus
is, and upon exercise of the Option will be, a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California;
(b) Lotus has, and upon the exercise of the Option will have, full corporate
power and authority to enter into this Joinder Agreement and the Joinder
Agreement attached to the Purchase Agreement and to consummate the transactions
contemplated hereby and thereby; (c) the execution and delivery of this Joinder
Agreement and the consummation of the transactions contemplated hereby have been
duly autho rized by all necessary corporate action on the part of Lotus and no
other corporate proceedings on the part of Lotus are necessary to authorize this
Joinder Agreement and the Joinder Agreement attached to the Purchase Agreement
or to consummate the transactions contemplated hereby and thereby; and (d) this
Joinder Agreement constitutes, and any other instruments contemplated hereby
when executed will constitute, the legal, valid and binding obligations of
Lotus, enforceable in accordance with their terms, except as may be affected by
bankruptcy and insol vency laws and court-applied equitable principles.
Dated as of the 31st day of October, 1997.
LOTUS COMMUNICATIONS CORP.
By: /s/ Howard A. Kalmenson
------------------------
Name: Howard A. Kalmenson
Title: President
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<PAGE>
Exhibit 10.31
OPTION AGREEMENT
This OPTION AGREEMENT, dated as of June 9, 1998 (this
"Agreement"), is made and entered into by and between Personal Achievement Radio
of Illinois, Inc., an Illinois corporation ("Achievement"), and Radio Unica
Corp., a Delaware corporation ("Unica").
WHEREAS, Achievement is the licensee of commercial AM
broadcast radio station WYPA licensed to broadcast on frequency 820 kHz at
Chicago, Illinois (the "Station");
WHEREAS, Achievement is the wholly owned subsidiary of
Achievement Radio Holdings, Inc., a Delaware corporation, ("Holdings").
WHEREAS, Holdings and Unica have entered into a Time Broker-
age Agreement ("TBA"), dated as of June 9, 1998; and
WHEREAS, in connection with the TBA the parties have agreed
that Achievement will grant to Unica an option to purchase the assets used in
the conduct of the business and ownership and operation of the Station on the
terms and conditions set forth herein and subject to the rules, regulations and
policies of the FCC.
NOW THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants contained herein, and other good and valuable
consideration, the parties, intending to be legally bound, hereby agree as
follows:
SECTION 1. OPTION TO PURCHASE ASSETS
1.1 In consideration of Unica entering into the TBA with
Achieve ment upon the terms and conditions set forth therein, Achievement hereby
grants to Unica an exclusive, irrevocable option (the "Option") to purchase the
assets, real, personal and mixed, tangible and intangible, owned and held by
Achievement that are used in the conduct of the business and operations of the
Station (the "Station Assets"), free and clear of all material debts, liens,
encumbrances or other liabilities for a price of $*
- ----------
(*) The purchase price has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities
and Exchange Commission.
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<PAGE>
, subject to adjustment of price as provided in Section 2 herein, and to the
terms and conditions set forth herein.
1.2 Subject to the provisions of Section 2 hereof, the Option
granted hereunder shall be exercisable at any time from the date hereof, through
the first anniversary thereof; provided, that the Option shall be extended
through the Renewal Term (as defined in the TBA), and shall be exercisable upon
the same terms and conditions set forth herein, if Unica decides to extend the
term of the TBA as provided in Section 3 thereof.
1.3 In the event that Unica wishes to exercise the Option,
Unica shall give written notice (the date of such notice being referred to as
the "Exercise Date") to Achievement and the giving of such notice shall be
deemed to exercise the Option. In the event that the Option is exercised, the
parties shall, within ten (10) days of the Exercise Date, execute an Asset
Purchase Agreement (the "Purchase Agreement") substantially in the form
attached hereto as Exhibit A, it being understood that the only changes to
such form shall be changes, if any, in the information contained in the
schedules thereto (which schedules are to be prepared as promptly as
practicable following the execution of this Agreement but in no event later
than twenty-one (21) days following such execution) and the addition, if any,
of new schedules thereto that are reasonably required to reflect events
occurring or information learned after the date hereof; provided, however,
that Unica shall not be required to accept any such change that could
reasonably be expected to cause a materially adverse change in, or have a
materially adverse effect on, the assets to be conveyed to Unica pursuant to
the Purchase Agreement or the ability of Achievement to consummate the
transactions contemplated by the Purchase Agreement, and further provided
that Achievement shall not be required to accept any change that could
reasonably be expected to have a material adverse effect on the ability of
Unica to consummate the transactions contemplated by the purchase agreement
and thereafter Unica and Achievement shall perform their respective
obligations under the Purchase Agreement, including, without limitation,
filing and prosecuting an appropriate application for FCC consent to the
assignment of the FCC licenses for the Station from Achievement to Unica.
Notwithstanding anything contained in this Agreement to the contrary, except
as provided in Section 2.2, Unica may withdraw its notice of exercise of its
Option at any time prior to its execution of the Purchase Agreement without
any liability to Achievement.
SECTION 2. OFFER TO PURCHASE BY THIRD PARTY
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<PAGE>
2.1 For a period of eight (8) months from the date of
execution of this Agreement, Achievement shall not directly or indirectly, take
any action to solicit, initiate submission of or encourage proposals or offers
from any person relating to any acquisition or purchase of the Station or the
Station Assets or participate in any discussions or negotiations regarding, or
furnish to any other person any information with respect to, afford access to
the properties, books or records of the Station to any person that may consider
making or has made an offer with respect to an acquisition or to otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing.
If, however, after such eight (8) month period, Achievement shall receive a bona
fide offer to purchase the Station Assets from a third party purchaser (the
"Third Party Purchaser") and Achievement desires to accept such offer,
Achievement agrees to give notice in writing to Unica (the "Offer Notice") and
Unica shall have the right, subject to the provisions of Section 2.2 hereof, to
exercise the Option. The Offer Notice shall state the name and address of the
proposed Third Party Purchaser, the consideration for the proposed transfer, and
the other material terms relating to the transfer. A copy of any writing setting
forth the terms of the proposed sale shall also be provided to Unica with the
Offer Notice.
2.2 Unica shall have the right, within sixty (60) days after
receipt of the Offer Notice, to exercise the Option and purchase the Station
Assets upon the terms and for the purchase price set forth in this Agreement;
provided, however, that if the consideration in the Offer Notice delivered to
Unica pursuant to Section 2.1 hereof is less than the consideration under this
Agreement and the Third Party Purchaser is independent of and unaffiliated with
Unica, Unica may choose to exercise the Option for the consideration and upon
the terms specified in the Offer Notice; and provided, further that Unica may
only withdraw its notice of exercise of the Option pursuant to this Section 2.2
if, based upon Unica's subsequent due diligence, there are any changes in the
information in the schedules to the Asset Purchase Agreement that could
reasonably be expected to have a material adverse effect on the Station.
2.3 If Unica elects not to exercise the Option within such
sixty (60) day evaluation period following the receipt of the Offer Notice,
Achievement may sell the Station Assets to the Third Party Purchaser; provided,
that such sale must be made substantially on the terms set forth in the Offer
Notice and for the consideration specified in the Offer Notice; and provided,
further that Unica, at its
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<PAGE>
sole option, may determine to continue the term of the TBA for a period of six
months from the date of delivery of the execution of a purchase agreement or
other contract with the Third Party Purchaser.
SECTION 3. SPECIFIC PERFORMANCE
The parties agree that the FCC licenses and the broadcast
business of the Station made possible thereby are unique assets not readily
available on the open market. For this reason, Achievement acknowledges that
monetary damages alone would not be adequate to compensate Unica and that
specific performance is an appropriate remedy for Unica in the event this
Agreement is breached by Achievement. The parties agree that the rights afforded
by the preceding sentence shall be in addition to any and all rights Unica may
have at law or equity. If any action is brought by Unica to enforce this
Agreement, Achievement shall waive the defense that there is an adequate remedy
at law.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ACHIEVEMENT
Achievement represents and warrants to Unica as follows:
4.1 Achievement is, and upon exercise of the Option will be, a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Illinois.
4.2 Achievement has, and upon the exercise of the Option
will have, full corporate power and authority to enter into this Agreement
and the Purchase Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
duly authorized by all necessary corporate action on the part of Achievement
and no other corporate proceedings on the part of Achievement are necessary
to authorize this Agreement and the Purchase Agreement or to consummate the
transactions contemplated hereby and thereby. This Agreement constitutes, and
any other instruments contemplated hereby when executed will constitute, the
legal, valid and binding obligations of Achievement, enforceable in
accordance with their terms, except as may be affected by bankruptcy and
insolvency laws and court-applied equitable principles.
4.3 The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance with
the terms,
4
<PAGE>
conditions and provisions of this Agreement, with or without the giving of
notice or the passage of time, or both, will not: (i) violate any provision of
Achievement's articles of incorporation or by-laws (ii) conflict with or result
in a breach of or constitute a default under any of the terms, conditions or
provisions of any indenture, mortgage, loan or credit agreement or any other
agreement or instrument to which Achievement is party or by which it or any of
the assets of Achievement may be bound or affected, or any decree, judgment or
order of any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any applicable law, ordinance, rule or
regulation, including but not limited to the Communications Act of 1934, as
amended (the "Act"), and the rule and regulations of the FCC promulgated
thereunder.
4.4 Except as disclosed in Schedule 4.4, all of the Station
Assets are and upon exercise of the Option will be owned by Achievement free and
clear of all liens, pledges, charges, claims, security interests of other
encumbrances, whether consensual, statutory or otherwise (collectively,
"Liens").
SECTION 5. COVENANTS OF ACHIEVEMENT
5.1 So long as this Agreement is in effect, Achievement
covenants that it will not, without Unica's prior written approval, which shall
not be unreasonably withheld:
(a) Except as disclosed in Schedule 4.4, create,
assume or suffer to exist, directly or indirectly, any mortgage, deed of trust
or Lien of any nature whatsoever, upon any of the Station Assets, now owned or
hereafter as acquired, excluding Liens incurred in the ordinary course of
business.
(b) Sell, transfer, lease or otherwise dispose of
any of the Station Assets of value greater than $5,000 or $25,000 in the
aggregate, except in connection with the acquisition of replacement property of
equivalent kind and value, or in connection with the retirement of assets
consistent with Achievement's past practice.
(c) Subject to the provisions of Section 2 hereof,
enter into any agreement to consolidate or merge with or into, or to sell all or
substantially all of its capital stock, properties or assets to, any person or
entity not under common control with Achievement.
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<PAGE>
(d) Subject to the provisions of Section 2 hereof,
enter into any agreement or grant any person or entity a right to purchase the
Station's FCC licenses or all or substantially all of the Station Assets.
(e) Subject to the provisions of Section 2 hereof,
enter into any agreement or take any other action that would interfere with, or
prevent, Achievement from transferring the Station Assets to Unica as
contemplated hereunder or under the Purchase Agreement.
(f) Take any action that jeopardizes the validity or
enforce ability of or rights under the Station's FCC licenses.
5.2 So long as this Agreement is in effect, Achievement
covenants that it will:
(a) Subject to the terms and conditions of the TBA,
(i) carry on the business and activities of the Station in the ordinary course
of business, consistent with past practices of Achievement, except as modified
by the TBA, (ii) pay or otherwise satisfy all obligations of the Station as they
come due and payable; (iii) maintain all Station Assets in customary repair,
order and condition; and (iv) maintain their books of account, records and files
in substantially the same manner as heretofore maintained.
(b) Maintain the validity of the Station's FCC
licenses, comply in all material respects with all requirements of the Station's
FCC licenses and the rules and regulations of the FCC, and deliver to Unica,
within ten (10) days after filing, copies of any reports, applications or
responses to the FCC related to the Station that are filed from and after the
date hereof. Provided, however, that the parties acknowledge that Achievement
may be required to file an application at the FCC to return to the direct
measurement of power.
(c) Maintain in full force and effect all existing
casualty, liability and other insurance insuring the Station and the Station
Assets in amounts not less than those in effect on the date hereof.
(d) Upon receiving written notice of any violation
relating to the Station's FCC licenses or any violation by the Station of any
rules and regula tions of the FCC, or upon receiving any written notice or
otherwise becoming aware of any material violations under any rules and
regulations of the FCC or any
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<PAGE>
other applicable laws and regulations, promptly notify Unica and, at Achieve-
ment's expense, use reasonable commercial efforts to cure all such violations in
a timely fashion.
5.3 As soon as practicable following the execution of this
Agreement, but in no event later than twenty-one (21) days following such
execution, Achievement will provide Unica with the schedules to the Purchase
Agreement.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF UNICA
6.1 Unica is, and upon exercise of the Option will be, a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
6.2 Unica represents and warrants to Achievement that Unica
has full corporate power and authority to enter into this Agreement and the
Purchase Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Unica and no other corporate proceedings on the
part of Unica are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement constitutes, and any other
instruments contemplated hereby when executed will constitute, the legal, valid
and binding obligations of Unica, enforceable in accordance with their terms,
except as may be affected by bankruptcy and insolvency laws and court-applied
equitable principles.
6.3 The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance with
the terms, conditions and provisions of this Agreement, with or without the
giving of notice or the passage of time, or both, will not: (i) violate any
provision of Unica's articles of incorporation or by-laws, (ii) conflict with or
result in a breach of or constitute a default under any of the terms, conditions
or provisions of any indenture, mortgage, loan or credit agreement or any other
agreement or instrument to which Unica is a party, or any decree, judgment or
order of any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any applicable law, ordinance, rule or
regulation, including but not limited to the Act, and the rule and regulations
of the FCC promulgated thereunder.
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6.4 Upon the exercise of the Option and continuing thereafter
through consummation of the transaction contemplated by this Agreement and the
Purchase Agreement, Unica shall have available the funds necessary to allow it
to consummate Unica's purchase of the Station Assets.
SECTION 7. MISCELLANEOUS
7.1 If any provision or provisions contained in this
Agreement are held to be invalid, illegal or unenforceable, this shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had not been
contained herein.
7.2 No party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, and any purported assignment without such consent shall be null and
void and of no legal force or effect, provided that either party may assign this
Agreement if it would constitute a pro forma assignment (on Form 316) under
Section 73.3540(f) of the FCC's rules. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto and their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
7.3 No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.
7.4 The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
7.5 This Agreement shall be governed by, enforced under and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule thereof.
7.6 Any notice required hereunder shall be in writing and
any notice or other communications shall be deemed given when delivered
personally or one (1) day after deposited with a recognized overnight air
courier for overnight delivery and addressed as follows:
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(a) if to Unica:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attn: Joaquin F. Blaya
FAX: (305) 442-4077
with a required copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
Attn: John C. Quale, Esq.
FAX: (202) 371-7475
(b) If to Achievement:
Personal Achievement Radio of Illinois, Inc.
c/o TSG Capital Group L.L.C.
177 Broad Street
12th Floor
Stamford, CT 06901
Attn: Darryl Thompson
FAX: (203) 406-1590
with a required copy to:
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Suite 600
Washington, D.C. 20036
Attn: Howard A. Topel, Esq.
FAX: (202) 745-0916
or such other address as the addressee may have specified in a notice duly given
to the sender as provided herein.
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7.7 This Agreement may be executed in one or more
counterparts, parts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.8 After the date hereof, Unica shall be afforded
reasonable opportunity to inspect the Station and the books and records of the
Achievement relating to the Station and the Station Assets upon reasonable
request.
7.9 Unica and Achievement each agree that they will use
their best efforts to keep confidential (except for such disclosure to
attorneys, bankers, underwriters, investors, etc. as may be appropriate in the
furtherance of this transaction and except for such filings with the FCC as may
be required) all information of a confidential nature obtained in connection
with the transactions contemplated by this Agreement, and in the event that such
transactions are not consummated, each party will return to the other party such
documents and other material obtained from the other party in connection
therewith, and will continue to use its best efforts to preserve all information
obtained from the other party hereunder as confidential for a period of two
years after the termination of the parties' efforts to consummate the
transactions contemplated hereby.
7.10 Unica and Achievement shall jointly prepare, and
determine the timing of, any press release or other announcement to the public
relating to the execution of this Agreement. No party hereto will issue any
press release or make any other public announcement relating to the transactions
contemplated hereby without the prior consent of the other party hereto, except
that any party may make any disclosure required to be made by it under
applicable law if it determines in good faith that it is appropriate to do so
and gives prior notice to the other party.
7.11 Each party shall bear all costs incurred by it in
connection with the transactions contemplated by this Agreement.
7.12 Notwithstanding any other provision of this Agreement,
Achievement agrees that if the Option is exercised, during the period from the
Exercise Date and prior to execution of the Purchase Agreement or the withdrawal
of its notice of exercise of the Option, it shall not offer or seek to offer, or
entertain or discuss any offer, to sell the Station or the Station Assets, other
than as contemplated under this Agreement.
10
<PAGE>
7.13 This Agreement (together with the Exhibits hereto) and
the TBA embody the entire agreement between the parties regarding the subject
matter hereof and there are no other agreements, representations, warranties, or
under standings, oral or written, between them with respect to the subject
matter hereof.
7.14 Prior to consummation of the Purchase Agreement and to
obtaining consent from the FCC, Unica shall not, directly or indirectly,
control, supervise or direct or attempt to control, supervise or direct the
operations of the Station or Achievement; such operations, including complete
ultimate control and supervision of all of the Station's programs, employees and
policies, shall remain the sole responsibility of Achievement, as set forth in
the rules and policies of the FCC.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
PERSONAL ACHIEVEMENT RADIO
OF ILLINOIS, INC.
By: /s/ Darryl Thompson
-----------------------------
Darryl Thompson
President
RADIO UNICA CORP.
By:
-----------------------------
Andrew C. Goldman
Executive Vice President
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
PERSONAL ACHIEVEMENT RADIO
OF ILLINOIS, INC.
By
-----------------------------
Darryl Thompson
President
RADIO UNICA CORP.
By: /s/ Andrew C. Goldman
-----------------------------
Andrew C. Goldman
Executive Vice President
12
<PAGE>
ACHIEVEMENT RADIO HOLDINGS JOINDER AGREEMENT
As a material inducement for Unica to enter into the
foregoing Option Purchase Agreement of even date herewith and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Achievement Radio Holdings, Inc., a Delaware corporation
("Holdings") and owner of all of the issued and outstanding capital stock of
Personal Achievement Radio of Illinois, Inc., an Illinois corporation
("Achievement"), hereby joins in and agrees to be bound by the provisions of
the foregoing Option Agreement as they relate to Achievement. In addition,
Holdings acknowledges and agrees that (i) any claim of Radio Unica Corp., a
Delaware corporation ("Unica") arising under the Option Agreement or under
any other document called for thereunder ("Other Documents") may be asserted
against Holdings and (ii) Holdings shall be jointly and severally liable
under the Option Agreement and the Other Documents for any default in the
performance of the obligations of Achievement thereunder or for any breach by
Achievement of any representation, warranty, covenant or agreement contained
in such documents.
Holdings represents and warrants to Unica as follows: (a)
Holdings is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; (b) Holdings has all requisite power
and authority to execute and deliver this Joinder Agreement and to consummate
the transaction contemplated hereby; (c) the execution and delivery of this
Joinder Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Holdings and no other corporate proceedings or actions on the part of Holdings,
its board of directors or its shareholders is necessary therefore; and (d) this
Joinder Agreement constitutes a valid and binding agreement and obligation of
Holdings enforceable in accordance with its terms.
Dated as of the 9th day of June, 1998.
ACHIEVEMENT RADIO HOLDINGS, INC.
By: /s/ Darryl Thompson
-----------------------------
Darryl Thompson
President
13
<PAGE>
Exhibit 10.32
FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of September 11, 1998, among Radio Unica Corp., a Delaware
corporation (the "Company"), Blaya, Inc., a Delaware corporation ("Blaya"),
Radio Unica of Houston License Corp., a Delaware corporation ("Houston License
Corp." and together with Blaya, the "Additional Guarantors"), each, directly or
indirectly a wholly owned a subsidiary of the Company, and Wilmington Trust
Company, a Delaware banking corporation, as trustee (the "Trustee").
WITNESSETH
WHEREAS, the Company, the guarantors named therein and the
Trustee have heretofore executed an indenture (the "Indenture"), dated as of
July 27, 1998, providing for the issuance of an aggregate principal amount at
maturity of $158,088,000 of the Company's 11 3/4% Senior Discount Notes due 2006
(the "Notes");
WHEREAS, each of the Additional Guarantors became a Restricted
Subsidiary (as defined in the Indenture) of the Company as of September 11,
1998;
WHEREAS, Section 10.03 of the Indenture requires that the Com
pany cause any Person (as defined in the Indenture) which becomes a Restricted
Subsidiary (other than a Foreign Restricted Subsidiary (as defined in the
Indenture)) to execute a supplemental indenture pursuant to which such
Restricted Subsidiary shall guarantee the obligations of the Company under the
Notes and the Indenture; and
WHEREAS, pursuant to Sections 8.01 and 10.03 of the Indenture,
the Trustee is authorized to execute and deliver this Supplemental Indenture and
Section 8.01 of the Indenture provides that the Company may amend the Indenture
without notice to or consent of any Noteholder to add a Guarantor;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company, the Additional Guarantors and the Trustee mutually covenant and
agree for the equal and ratable benefit of the holders of the Notes as follows:
<PAGE>
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meaning assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) 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.
2. Agreement to Guarantee. Each of the Additional Guarantors hereby
agrees, jointly and severally with all other Guarantors under the Indenture, to
guarantee the obligations of the Company under the Notes and the Indenture in
accordance with Article 10 of the Indenture with the same effect and to the same
extent as if each Additional Guarantor had been named in the Indenture as a
Guaran tor. 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 Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. This Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. The Additional Guarantors agree to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Supplemental Indenture.
4. Trustee Makes No Representation. The Trustee makes no representa
tion as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
BLAYA, INC.
By: /s/ Joaquin F. Blaya
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
RADIO UNICA OF HOUSTON LICENSE
CORP.
By: /s/ Joaquin F. Blaya
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
WILMINGTON TRUST COMPANY, as
Trustee
By:
--------------------------------------
Name: Bruce L. Bisson
Title: Vice President
3
<PAGE>
6. EFFECT OF HEADINGS. The Section headings herein are
for convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
RADIO UNICA CORP.
By:
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
BLAYA, INC.
By:
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
RADIO UNICA OF HOUSTON LICENSE
CORP.
By:
--------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive
Officer
WILMINGTON TRUST COMPANY, as
Trustee
By: /s/ Bruce L. Bisson
--------------------------------------
Name: Bruce L. Bisson
Title: Vice President
3
<PAGE>
Exhibit 10.33
GUARANTEE
Each of the undersigned (the "Guarantors") hereby jointly and
severally unconditionally guarantees, to the extent set forth in the Indenture
dated as of July 27, 1998 by and among Radio Unica Corp., as Issuer, the
guarantors named therein, and Wilmington Trust Company, as Trustee (as amended,
restated or supplemented from time to time, the "Indenture"), and subject to the
provisions of the Indenture, (a) the due and punctual payment of Accreted Value
or principal of, and premium, if any, and interest on the Notes, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on overdue Accreted Value of
or principal of, and premium and, to the extent permitted by law, interest, and
the due and punctual performance of all other obligations of the Issuer to the
Noteholders or the Trustee, all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
No equity holder, officer, director or incorporator, as such,
past, present or future, of any Guarantor shall have any liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Notes upon which the
Guarantees are noted shall have been
<PAGE>
executed by the Trustee under the Indenture by the manual signature of one of
its authorized Signatories.
The obligations of the Guarantors to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms and limitations of this Guarantee. Capitalized terms used and
not otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
IN WITNESS WHEREOF, each of the Guarantors has caused this
Guarantee to be signed by a duly authorized officer.
BLAYA, INC.
By: /s/ Steven E. Dawson
--------------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF HOUSTON LICENSE
CORP.
By: /s/ Steven E. Dawson
--------------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
2
<PAGE>
EXHIBIT 10.34
SUBSIDIARY PLEDGE AGREEMENT
(BLAYA, INC.)
PLEDGE AGREEMENT, dated as of September 11, 1998, made by BLAYA, INC., a
Delaware corporation (the "PLEDGOR"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as agent (in such capacity, the "AGENT") for the several banks and
other financial institutions (the "LENDERS") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among RADIO UNICA
HOLDINGS, CORP., a Delaware corporation (the "PARENT"), RADIO UNICA CORP. (the
"BORROWER"), the Lenders and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, the Pledgor has guaranteed the obligations of the Borrower
described above pursuant to the Guarantee, dated as of September 11, 1998,
executed by the Pledgor (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE"); and
WHEREAS, the Pledgor is the legal and beneficial owner of all the shares of
Pledged Stock (as hereinafter defined) issued by each of the Issuers (as
hereinafter defined); and
WHEREAS, Pledgor is, or from time to time may become, the beneficiary of
Pledged Promissory Notes (as hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans to the Borrower under the Credit Agreement that the
Borrower shall have executed and delivered this Pledge Agreement to the Agent
for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the Agent
and the Lenders to enter into the Credit Agreement and the Lenders to make their
respective Loans under the Credit Agreement, the Pledgor hereby agrees with the
Agent, for the ratable benefit of the Lenders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein are used as defined therein, and the following
terms shall have the following meanings:
<PAGE>
"CODE" shall mean the Uniform Commercial Code from time to time in effect
in the State of New York.
"COLLATERAL" shall mean the Pledged Stock, the Pledged Promissory Notes and
all Proceeds.
"GUARANTEE OBLIGATIONS" shall mean all obligations of the Pledgor under the
Guarantee including, without limitation, in respect of the Obligations (as
defined in the Credit Agreement) to the extent set forth in the Guarantee.
"ISSUERS" shall mean the collective reference to the Issuers listed on
Schedule I hereto.
"PLEDGE AGREEMENT" shall mean this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"PLEDGED PROMISSORY NOTES" shall mean any now existing or future promissory
note or instrument executed by a Person in favor of the Pledgor other than any
intercompany notes or instrument executed by any Loan Party in favor of another
Loan Party in accordance with Section 6.2(d) of the Credit Agreement.
"PLEDGED STOCK" shall mean the shares of capital stock of the Issuers
listed on Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by the Issuers to
the Borrower while this Pledge Agreement is in effect.
"PROCEEDS" means all "proceeds" as such term is defined in Section 9-306(1)
of the Code and, in any event, shall include, without limitation, all dividends
or other income from the Pledged Stock, collections thereon or distributions
with respect thereto.
2. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby delivers to
the Agent, for the ratable benefit of the Lenders, all the Pledged Stock and the
Pledged Promissory Notes endorsed as described in Section 4 below, and hereby
grants to the Agent, for the ratable benefit of the Lenders, a first priority
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Guarantee Obligations.
3. STOCK POWERS. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock to the Agent, the
Pledgor shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor.
4. ENDORSEMENT. Concurrently with the delivery of the Pledged Promissory
Notes to the Agent, the Pledgor shall deliver an undated endorsement carrying
such Pledged Promissory Notes, duly executed in blank by the Pledgor.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
that:
(a) the shares of Pledged Stock listed on Schedule I constitute all the
issued and outstanding shares of each class of the Capital Stock of each Issuer;
(b) all the shares of Pledged Stock have been duly and validly issued and
are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has good
and marketable title to, the Pledged Stock listed on Schedule I, free of any and
all Liens or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement; and
(d) to the extent in existence on the date hereof, the Pledgor is the sole
legal and beneficial holder of the Pledged Promissory Notes free and clear of
any and all Liens or options in favor of, or claims of, any other person, except
the Lien created by this Pledge Agreement;
(e) upon delivery to the Agent of the Pledged Promissory Notes and the
stock certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority Lien on
the Collateral, enforceable as such against all creditors of the Pledgor and any
Persons purporting to purchase any Collateral from the Pledgor, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(f) The chief executive office of the Pledgor and the office where the
Pledgor keeps its records concerning the Pledged Promissory Notes and all
contracts relating thereto is located at 8400 N.W. 52nd Street, Suite 101,
Miami, Florida 33166. The Pledgor shall not establish a new location for its
chief executive office or change its name until (i) it has given to the Agent
not less than 30 days' prior written notice of its intention to do so, clearly
describing such new location or specifying such new name, as the case may be,
and (ii) with respect to such new location or such new name, as the case may be,
it shall have all action, satisfactory to the Agent, to maintain the security
interest of the Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
6. COVENANTS. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Pledge Agreement until the
Guarantee Obligations are paid in full and the Commitments are terminated:
(a) If the Pledgor shall, as a result of his ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or
<PAGE>
in exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the Agent and the
Lenders, hold the same in trust for the Agent and the Lenders and deliver the
same forthwith to the Agent in the exact form received, duly endorsed by the
Pledgor to the Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by the Pledgor and with, if the Agent so
requests, signature guaranteed, to be held by the Agent, subject to the terms
hereof, as additional collateral security for the Guarantee Obligations. Any
sums paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer shall be paid over to the Agent to be held by it
hereunder as additional collateral security for the Guarantee Obligations, and
in case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to the
Pledged Stock pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Guarantee Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged Stock shall
be received by the Pledgor, the Pledgor shall, until such money or property is
paid or delivered to the Agent, hold such money or property in trust for the
Lenders, segregated from other funds of the Pledgor, as additional collateral
security for the Guarantee Obligations.
(b) If the Pledgor shall become entitled to receive or shall have
received any Pledged Promissory Notes, the Pledgor shall accept the same as the
agent of the Agent and the Lenders, hold the same in trust for the Agent and the
Lenders and deliver the same forthwith to the Agent in the exact form received,
together with an undated endorsement covering such Promissory Note duly executed
in blank by the Pledgor, to be held by the Agent, subject to the terms hereof,
as additional collateral security for the Guarantee Obligations. Any sums paid
upon or in respect of any Pledged Promissory Note upon the bankruptcy,
liquidation or dissolution of any of the makers of any such Pledged Promissory
Notes shall be paid over to the Agent to be held by it hereunder as additional
collateral security for the Guarantee Obligations. If any sums of money or
property so paid in respect of any such Pledged Promissory Notes shall be
received by the Pledgor, the Pledgor shall, until such money or property is paid
or delivered to the agent, hold such money or property in trust for the agent
and Lenders, segregated from other funds of the Pledgor, as additional
collateral security for the Guarantee Obligations.
(c) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, any Issuer to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, or (iii) create, incur or permit to exist any other
Lien or option in favor of, or any claim of any Person with respect to, any of
the Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend and will indemnify and hold
harmless the Agent and the Lenders against the claims and demands of all Persons
whomsoever with respect to any claim arising from or in connection with the
right, title and interest of the Agent and the Lenders in and to the Collateral.
<PAGE>
(d) At any time and from time to time, upon the written request of
the Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge Agreement.
(e) The Pledgor agrees to pay, and to save the Agent and the Lenders
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamps, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement.
(f) The Pledgor agrees that within 30 days of any corporation
becoming a Subsidiary (as defined in the Credit Agreement) in the case of shares
of stock of such Subsidiary, it shall (i) upon the request of the Agent, deliver
to the Agent all such shares owned by the Pledgor, together with appropriate
undated stock powers duly executed in blank, and (ii) execute and deliver a new
pledge agreement (or a supplement to this Pledge Agreement) covering such
shares. Upon such delivery, such shares shall constitute a representation and
warranty as of the date of such delivery that the representations and warranties
contained in SECTION 5 above are true and correct on such date after giving
effect to such delivery. The Pledgor shall also furnish to the Lenders such
legal opinions confirming such representations and warranties as the Agent or
any Lender may reasonably request, which opinions shall not be broader in scope
than those with respect to this Agreement delivered to the Lenders on the
Closing Date (as defined in the Credit Agreement).
7. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default shall have
occurred and be continuing (or, solely with respect to dividends permitted under
Section 6.7 of the Credit Agreement, an Event of Default), the Pledgor shall be
permitted to RECEIVE ALL cash dividends paid to the extent permitted in the
Credit Agreement, in respect of the Pledged Stock; PROVIDED that any such cash
dividends received by the Pledgor during the pendency of any Default or Event of
Default, as applicable, shall be promptly returned to the Issuers and any such
cash dividends received during the pendency of any Event of Default or during
the pendency of a Default but not returned prior to such Event of Default shall
be promptly delivered to the Agent. Unless an Event of Default shall have
occurred and be continuing, the Pledgor shall be permitted to exercise all
voting and corporate rights with respect to the Pledged Stock; PROVIDED that no
vote shall be cast or corporate right exercised or other action taken which, in
the Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, the Notes, the other Loan Documents or this Pledge Agreement.
<PAGE>
8. RIGHTS OF THE LENDERS AND THE AGENT. (a) If an Event of Default
shall occur and be continuing and the Agent shall give notice of its intent to
exercise such rights to the Pledgor, (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and make
application thereof to the Guarantee Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares of
the Pledged Stock at any meeting of shareholders of the Issuers or otherwise and
(B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver any
and all the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine), all without liability to the Agent except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall not be
conditioned or contingent upon the pursuit by the Agent or any Lender of any
right or remedy against the Pledgor, the Parent, the Borrower, any Issuer, any
guarantor or against any other Person which may be or become liable in respect
of all or any part of the Guarantee Obligations or against any collateral
security therefor, guarantee therefor or right of offset with respect thereto.
Neither the Agent nor any Lender shall be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Agent be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof.
9. REMEDIES. If an Event of Default shall occur and be continuing,
the Agent, on behalf of the Lenders, may exercise, in addition to all other
rights and remedies granted in this Pledge Agreement and in any other instrument
or agreement securing, evidencing or relating to the Guarantee Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Pledgor, the Parent,
the Borrower, any Issuer or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Agent or any Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk.
<PAGE>
The Agent or any Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold free of any right or
equity of redemption in the Pledgor, which right or equity is hereby waived or
released. The Agent shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Agent and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Agent, to the payment in
whole or in part of the Guarantee Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to the Pledgor. To the extent permitted by applicable law, the Pledgor waives
all claims, damages and demands it may acquire against the Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of Collateral are
insufficient to pay the Guarantee Obligations and the fees and disbursements of
any attorneys employed by the Agent or any Lender to collect such deficiency.
10. PRIVATE SALES. (a) The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Promissory Notes, by reason of certain prohibitions contained in the Securities
Act of 1933 (the "SECURITIES ACT") and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Agent shall be under no
obligation to delay a sale of any of the Pledged Stock or the Pledged Promissory
Notes for the period of time necessary to permit any Issuer or the Pledgor to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer or the Pledgor would agree
to do so.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock or the Pledged Promissory
Notes pursuant to this SECTION 10 valid and binding and in compliance with any
and all other applicable Requirements of Law. The Pledgor further agrees that a
breach of any of the covenants contained in this SECTION 10 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the Lenders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this SECTION 10 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of
<PAGE>
such covenants except for a defense that no Event of Default has occurred under
the Credit Agreement.
11. LIMITATION ON DUTIES REGARDING COLLATERAL. The Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. None of the Agent, the Lenders or
any of their respective directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or otherwise.
12. FCC COMPLIANCE. Notwithstanding anything herein to the contrary,
but without limiting or waiving Pledgor's obligations hereunder, the Lenders'
remedies hereunder are subject to the Communications Act of 1934, as amended,
and all applicable rules, regulations and policies of the FCC ("FCC Law"), and
the Agent and the lenders will not take any action pursuant to this Agreement
that would constitute or result in any assignment or transfer of control of any
FCC authorization held by Pledgor if such assignment or transfer of control
would require under then existing FCC Law the prior approval of the FCC, without
first obtaining such approval of the FCC. Pledgor agrees to take any action
which the Agent may reasonably request in order to cause the Agent (on behalf of
the Lenders) to obtain and enjoy the full rights and benefits granted by this
Agreement, including specifically, at the cost and expense of Pledgor, the use
of its commercially reasonable best efforts to assist in obtaining approval of
the FCC or Governmental Authority for an action or transaction contemplated by
this Agreement which are then required by law, and specifically, without
limitation, upon request upon and during the continuance of an Event of Default,
to prepare, sign and file (or cause to be filed) with the FCC or other
Governmental Authority the assignor's, transferor's or controlling person's
portion of any application or applications for consent to (i) the assignment of
any FCC license or transfer or control thereof, (ii) any sale or sales of
property constituting any Collateral by the Agent or on behalf of the Lenders,
or (iii) any assumption by the Agent, the Lenders or their designees of voting
rights or management rights in property constituting any Collateral effected in
accordance with the terms of this Agreement or any other Loan Document.
13. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
14. SEVERABILITY. Any provision of this Pledge 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.
15. SECTION HEADINGS. The Section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
<PAGE>
16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to SECTION 17 hereof)
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Agent or any Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING LAW.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Agent; PROVIDED that any provision of this Pledge Agreement
may be waived by the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Pledge Agreement shall
inure to the benefit of the Agent and the Lenders and their respective
successors and assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
18. NOTICES. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement or the Guarantee, as the case may be and shall be effective (a) in the
case of mail, three days after deposit in the postal system, first class postage
pre-paid, and (b) in the case of telex or facsimile notices, when sent. The
Pledgor and the Issuers may change their respective addresses and transmission
numbers by written notice to the Agent.
19. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuers shall be fully protected in so
complying.
20. AUTHORITY OF AGENT. The Pledgor acknowledges that the rights and
responsibilities of the Agent under this Pledge Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement
<PAGE>
shall, as between the Agent and the Lenders, be governed by the Credit Agreement
and by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Agent and the Pledgor, the Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
21. TERMINATION; RELEASE. Upon the repayment of all the Obligations
in full and the termination of the Commitment, this Pledge Agreement shall
terminate, and the Agent, at the request of and expense of the Pledgor, will
promptly execute and deliver to the Pledgor the proper instruments (including
Uniform Commercial Code termination statements on form UCC-2) acknowledging the
termination of this Pledge Agreement, and will duly assign, transfer and deliver
to the Pledgor (without recourse and without any representation or warranty of
any kind) such of the Collateral as may be in the possession of the Agent and
has not theretofore been disposed of or otherwise applied or released. In
addition, upon payment in full of a Pledged Promissory Note by the maker
thereof, upon request of the Pledgor and after receipt by the Agent in its sole
discretion, the Agent will return such Pledged Promissory Note to the Pledgor
for further delivery to such maker.
22. COUNTERPARTS. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
BLAYA, INC.
By /s/ Steven E. Dawson
------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By /s/ Harold Birk
------------------------------
Name: Harold Birk
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
<PAGE>
ACKNOWLEDGMENT AND CONSENT
RADIO UNICA OF HOUSTON LICENSE CORP., a Delaware corporation (the
"COMPANY"), one of the Issuers referred to in the foregoing Pledge Agreement,
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to it. The
Company agrees to notify the Agent promptly in writing of the occurrence of any
of the events described in SECTION 6(a) of the Pledge Agreement. The Company
further agrees that the terms of SECTION 10(b) of the Pledge Agreement shall
apply to it, MUTATIS MUTANDIS, with respect to all actions that may be required
of it under or pursuant to or arising out of SECTION 10 of the Pledge Agreement.
RADIO UNICA OF HOUSTON LICENSE CORP.
By: /s/ Steven E. Dawson
-----------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
<PAGE>
SCHEDULE 1
PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Issuer Class of Stock Stock Certificate No. No. of Shares
------ -------------- --------------------- -------------
Radio Unica of Houston Common Stock 1 100
License Corp.
<PAGE>
Exhibit 10.35
SUBSIDIARY SECURITY AGREEMENT
(BLAYA, INC.)
SECURITY AGREEMENT, dated as of September 11, 1998, made by BLAYA,
INC., a Delaware corporation (the "GRANTOR"), in favor of CANADIAN IMPERIAL BANK
OF COMMERCE, as agent (in such capacity, the "AGENT") for the several banks and
other financial institutions (the "LENDERS") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among RADIO UNICA
HOLDINGS CORP., a Delaware corporation (the "PARENT"), RADIO UNICA CORP., a
Delaware corporation (the "BORROWER"), the Lenders and the Agent.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, the Grantor has guaranteed the obligations of the Borrower
described above pursuant to the Guarantee, dated as of September 11, 1998,
executed by the Grantor (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE"); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Grantor shall have executed and delivered this Security Agreement to the
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, the Grantor
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
<PAGE>
"CODE" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"COLLATERAL" shall have the meaning assigned to it in SECTION 2.
"CONTRACTS" shall mean all contracts executed from time to time by the
Grantor, including, without limitation, with respect to an Account, in each
case, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of the
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of the Grantor to damages arising out
of, or for, breach or default in respect thereof and (iii) all rights of
the Grantor to perform and to exercise all remedies thereunder.
"GUARANTEE OBLIGATIONS" shall mean all obligations of the Grantor
under the Guarantee including, without limitation, in respect of the
Obligations (as defined in the Credit Agreement) to the extent set forth in
the Guarantee.
"SECURITY AGREEMENT" means this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. GRANT OF SECURITY INTEREST. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Guarantee Obligations, the
Grantor hereby grants to the Agent for the ratable benefit of the Lenders a
security interest in all the following property now owned or at any time
hereafter acquired by the Grantor or in which the Grantor now has or at any time
in the future may acquire any right, title or interest in (collectively, the
"COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property; and
-2-
<PAGE>
(x) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
PROVIDED that nothing contained herein shall create a collateral assignment with
respect to or a security interest in (A) any Contract if the grant of such
collateral is (or is determined by non-appealable adjudication of a court or
other dispute resolution tribunal to be) expressly prohibited by the terms of
such Contract, (B) with respect to any other Collateral which is subject to a
Lien permitted under Section 6.3 of the Credit Agreement or (C) any license,
permit or other governmental authorization which by its terms is not assignable.
3. RIGHTS OF AGENT AND LENDERS; LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS.
(a) GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) or under any Contract by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any such Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Grantor under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto) or under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any time
after the occurrence and during the continuance of an Event of Default, the
Agent shall have the right upon written notice to the Grantor of its intention
to do so, to notify account debtors or obligors on the Accounts and parties to
the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the ratable benefit of the Lenders and that payments due or to become
due to the Grantor in respect thereof shall be made directly to the Agent and,
upon such notification, and at the expense of the Grantor, to enforce collection
of any such Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Agent may, at any time, in its own name
or in the name of the Lenders or the Grantor communicate with account debtors on
the Accounts and parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Accounts or Contracts.
(c) COLLECTIONS ON ACCOUNTS. The Agent hereby authorizes the Grantor
to collect the Accounts and the Agent may curtail or terminate said authority at
any time upon the occurrence and during the continuance of an Event of Default.
If required by the Agent at any
-3-
<PAGE>
time after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, when collected by the Grantor, shall be forthwith (and, in
any event, within two Business Days) deposited by the Grantor in the exact form
received, duly endorsed by the Grantor to the Agent if required, in a special
collateral account maintained by the Agent, subject to withdrawal by the Agent
for the account of the Lenders only, as hereinafter provided, and, until so
turned over, shall be held by the Grantor in trust for the Agent and the
Lenders, segregated from other funds of the Grantor. Each deposit of any such
Proceeds shall be accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit. All Proceeds
constituting collections of Accounts while held by the Agent (or by the Grantor
in trust for the Agent and the Lenders) shall continue to be collateral security
for all the Guarantee Obligations and shall not constitute payment thereof until
applied as hereinafter provided. At such intervals as may be agreed upon by the
Grantor and the Agent, or, if an Event of Default shall have occurred and be
continuing, at any time at the Agent's election, the Agent shall apply all or
any part of the funds on deposit in said special collateral account on account
of the Guarantee Obligations in such order as the Agent may elect, and any part
of such funds which the Agent elects not so to apply and deems not required as
collateral security for the obligations shall be paid over from time to time by
the Agent to the Grantor or to whomsoever may lawfully be entitled to receive
the same. Upon the occurrence of an Event of Default that is continuing, at the
Agent's request, the Grantor shall deliver to the Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
(d) ANALYSIS OF ACCOUNTS. The Agent shall have the right to make
test verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection therewith;
PROVIDED that the Agent shall use its reasonable efforts to minimize any
disruption of the Grantor's business resulting from such verifications. At any
time and from time to time if the Agent concludes in its reasonable judgment,
based upon its evaluation of the general creditworthiness of the Grantor, that
such examination is required, and so requests, the Grantor shall, at the
Grantor's expense if at any time after the occurrence and during the continuance
of an Event of Default, and otherwise at the Agent's expense, cause independent
public accountants or other parties that are not Affiliates of the Grantor and
are satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents
and warrants that:
(a) TITLE; NO OTHER LIENS. Except as permitted under Section 6.3 of
the Credit Agreement, the Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. Except as permitted under
Section 6.3 of the Credit Agreement no security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Agent, for the ratable benefit of the Lenders, pursuant to this
Security Agreement.
-4-
<PAGE>
(b) PERFECTED FIRST PRIORITY LIENS. Except as permitted under
Section 6.3 of the Credit Agreement the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements, constitute
perfected Liens on the Collateral in favor of the Agent, for the ratable benefit
of the Lenders, which are prior to all other Liens on the Collateral created by
the Grantor and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from the Grantor and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(c) ACCOUNTS. The amount represented by the Grantor to the Lenders
from time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually owing
by such account debtor or debtors thereunder. No amount payable to the Grantor
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent. The place where the
Grantor keeps its records concerning the Accounts is 8400 N.W. 52nd Street,
Suite 101, Miami, Florida 33166.
(d) MATERIAL AGREEMENT. Except as set forth in Schedule 3.4 to the
Credit Agreement, no consent of any party (other than the Grantor) to any
Material Agreement is required, or purports to be required, in connection with
the execution, delivery and performance of this Security Agreement. Each
Material Agreement is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Agreements by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Agreement to any material adverse limitation, either
specific or general in nature. Neither the Grantor nor to the best of the
Grantor's knowledge any other party to any Material Agreement is in default in
the performance or observance of any of the terms thereof. The Grantor has
fully performed in all material respects all its obligations under each of the
Material Agreements. The right, title and interest of the Grantor in, to and
under each Material Agreement are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of such
Material Agreement as Collateral, nor have any of the foregoing been asserted or
alleged against the Grantor as to any Material Agreement. The Grantor has
delivered to the Agent a complete and correct copy of each Material Agreement,
including all amendments, supplements and other modifications thereto and will
deliver any other Contract which the Agent may request. No amount payable to
the Grantor under or in connection with any Material Agreement is evidenced by
any Instrument or Chattel Paper which has not been delivered to the Agent.
-5-
<PAGE>
(e) INVENTORY AND EQUIPMENT. Except as permitted in Section 5(p),
the Inventory and the Equipment are kept at the locations listed on Schedule I
hereto.
(f) CHIEF EXECUTIVE OFFICE. Except as permitted in Section 5(p), the
Grantor's chief executive office and chief place of business is located at 8400
N.W. 52nd Street, Suite 101, Miami, Florida 33166.
(g) FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(i) INVESTMENT PROPERTY. The Investment Property, other than
accounts invested in cash equivalents and other than shares of capital stock of
the Grantor's Subsidiaries, consists of the items set forth on Annex A.
5. COVENANTS. The Grantor covenants and agrees with the Agent and
the Lenders that, from and after the date of this Security Agreement until the
Guarantee Obligations are paid in full and the Commitments are terminated:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL PAPER.
At any time and from time to time, upon the written request of the Agent, and at
the sole expense of the Grantor, the Grantor will promptly and duly execute and
deliver such further instruments and documents and take such further action as
the Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Grantor also hereby
authorizes the Agent to file any such financing or continuation statement
without the signature of the Grantor to the extent permitted by applicable law.
A carbon, photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(b) INDEMNIFICATION. The Grantor agrees to pay, and to save the
Agent and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security Agreement,
except resulting from the Agent's or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Agent or any
Lender under any Account or Contract for any sum owing thereunder, or to enforce
any provisions of any Account or Contract, the Grantor will save, indemnify and
keep the Agent
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<PAGE>
and such Lender harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by the Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from the Grantor, except resulting
from the Agent's or any Lender's gross negligence or willful misconduct.
(c) MAINTENANCE OF RECORDS. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Grantor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby in such manner as the Agent may request. For
the Agent's and the Lenders' further security, the Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Grantor's
books and records pertaining to the Collateral, and the Grantor shall, during
the continuance of a Default under Section 7.1(a) or Section 7.1(c) as it
relates to Section 6.1, turn over copies of such books and records and during
the continuation of an Event of Default turn over any such books and records, in
each case, to the Agent or to its representatives during normal business hours
at the request of the Agent.
(d) RIGHT OF INSPECTION. The Agent and the Lenders shall after
reasonable notice to the Grantor be permitted to visit and inspect any of the
properties of the Grantor and examine and make abstracts from any books and
records of the Grantor at any reasonable time and as often as may reasonably be
desired, and the Grantor agrees to render to the Agent and the Lenders, at the
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Agent and the Lenders and their
respective representatives shall after reasonable notice to the Grantor be
permitted to visit any of the properties of the Grantor where any of the
Inventory or Equipment is located at any reasonable time and as often as may
reasonably be desired, for the purpose of inspecting the Inventory or Equipment,
observing its use or otherwise protecting its interests therein. Each such
visitation and inspection (a) by or on behalf of any Lender shall be at such
Lender's expense and (b) by or on behalf of the Agent following the occurrence
and during the continuance of any Default or Event of Default shall be at the
Grantor's expense.
(e) COMPLIANCE WITH LAWS. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any part
thereof or to the operation of the Grantor's business; except to the extent that
failure to do so could not reasonably by expected to have a Material Adverse
Effect.
(f) COMPLIANCE WITH TERMS OF CONTRACTS. The Grantor will perform and
comply in all material respects with all its obligations under the Contracts and
all its other Contractual Obligations relating to the Collateral except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(g) PAYMENT OF OBLIGATIONS. The Grantor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect
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of its income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to the Collateral, except that no such charge need be
paid if (i) the validity thereof is being contested in good faith by appropriate
proceedings, (ii) such proceedings do not involve any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest therein and
(iii) such charge is adequately reserved against on the Grantor's books in
accordance with GAAP.
(h) LIMITATION ON LIENS ON COLLATERAL. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Grantor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except as permitted pursuant to Section 6.6 of the
Credit Agreement.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business, the Grantor will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(l) MAINTENANCE OF EQUIPMENT. The Grantor will maintain each item of
Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(n) FURTHER IDENTIFICATION OF COLLATERAL. The Grantor will furnish
to the Agent and the Lenders from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may request, all in reasonable detail.
(o) NOTICES. The Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the Collateral
and (ii) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the Liens created hereunder.
(p) CHANGES IN LOCATIONS, NAME, ETC. Unless the Grantor gives 30
days' prior written notice to the Agent, the Grantor will not (i) change the
location of its chief executive office/chief place of business from that
specified in SECTION 4(F) or remove its books and records from the location
specified in SECTION 4(C), (ii) permit any of the Inventory or Equipment to be
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<PAGE>
kept at a location other than those listed on Schedule I hereto or (iii) change
its name, identity or corporate structure to such an extent that any financing
statement filed by the Agent in connection with this Security Agreement would
become seriously misleading.
6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Grantor and in the name of the Grantor or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do the following:
(i) in the case of any Account, at any time when the authority of
the Grantor to collect the Accounts has been curtailed or terminated
pursuant to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against the Grantor with respect to
any Collateral; (F) to settle,
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<PAGE>
compromise or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and the Grantor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve or realize upon
the Collateral and the Agent's and the Lenders' Liens thereon and to effect
the intent of this Security Agreement, all as fully and effectively as the
Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) OTHER POWERS. The Grantor also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in this SECTION 6 or in SECTION 9 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) NO DUTY ON AGENT OR LENDERS' PART. The powers conferred on
the Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to the Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
7. PERFORMANCE BY AGENT OF GRANTOR'S OBLIGATIONS. If the Grantor
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Security Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum 2%
above the Alternate Base Rate, shall be payable by the Grantor to the Agent on
demand and shall constitute Guarantee Obligations secured hereby.
8. PROCEEDS. In addition to the rights of the Agent and the
Lenders specified in SECTION 3(C) with respect to payments of Accounts, it is
agreed that if an Event of Default shall occur and be continuing (a) upon
written notice by the Agent to the Grantor, all Proceeds received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor, and, forthwith upon receipt by the Grantor, shall be turned over to
the Agent in the exact form received by the Grantor (duly endorsed by the
Grantor to the Agent, if required), and (b) any and all such Proceeds received
by the Agent (whether from the Grantor or otherwise) may, in the sole discretion
of the Agent, be held by the Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be applied by
the Agent against, the Guarantee Obligations (whether matured or unmatured),
such application to be in such order as
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<PAGE>
the Agent shall elect. Any balance of such Proceeds remaining after the
Guarantee Obligations shall have been paid in full and the Commitments shall
have been terminated shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive the same.
9. REMEDIES. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted to them in this Security Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Guarantee Obligations, all rights and remedies of a secured party under the
Code. Without limiting the generality of the foregoing, the Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Parent, the Borrower, the Grantor, any guarantor, or any other Person
(all and each of which demands, defenses, advertisements and notices being
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity is
hereby waived or released. The Grantor further agrees, at the Agent's request,
to assemble the Collateral and make it available to the Agent at such places as
the Agent shall reasonably select, whether at the Grantor's premises or
elsewhere. The Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Guarantee Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(i)(c) of the Code, need the Agent account for the surplus, if any,
to the Grantor. To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands it may acquire against the Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Guarantee Obligations and the fees and disbursements
of any attorneys employed by the Agent or any Lender to collect such deficiency.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any
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<PAGE>
Lender, nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the Grantor
or otherwise.
11. FCC COMPLIANCE. Notwithstanding anything herein to the
contrary, but without limiting or waiving Grantor's obligations hereunder, the
Lenders' remedies hereunder are subject to the Communications Act of 1934, as
amended, and all applicable rules, regulations and policies of the FCC ("FCC
Law"), and the Agent and the lenders will not take any action pursuant to this
Agreement that would constitute or result in any assignment or transfer of
control of any FCC authorization held by Grantor if such assignment or transfer
of control would require under then existing FCC Law the prior approval of the
FCC, without first obtaining such approval of the FCC. Grantor agrees to take
any action which the Agent may reasonably request in order to cause the Agent
(on behalf of the Lenders) to obtain and enjoy the full rights and benefits
granted by this Agreement, including specifically, at the cost and expense of
Grantor, the use of its commercially reasonable best efforts to assist in
obtaining approval of the FCC or Governmental Authority for an action or
transaction contemplated by this Agreement which are then required by law, and
specifically, without limitation, upon request upon and during the continuance
of an Event of Default, to prepare, sign and file (or cause to be filed) with
the FCC or other Governmental Authority the assignor's, transferor's or
controlling person's portion of any application or applications for consent to
(i) the assignment of any FCC license or transfer or control thereof, (ii) any
sale or sales of property constituting any Collateral by the Agent or on behalf
of the Lenders, or (iii) any assumption by the Agent, the Lenders or their
designees of voting rights or management rights in property constituting any
Collateral effected in accordance with the terms of this Agreement or any other
Loan Document.
12. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
13. LIMITATION ON LINES OF BUSINESS. Nothing contained in this
Security Agreement shall be deemed or construed as modifying in any way the
restrictions on Grantor's activities as set forth in Section 6.14 of the Credit
Agreement.
14. SEVERABILITY. Any provision of this Security 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.
15. SECTION HEADINGS. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Agent nor any
Lender shall by any act (except by a written instrument pursuant to Section 17),
delay, indulgence,
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<PAGE>
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the
terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Grantor and the Agent; PROVIDED that any provision of this Security
Agreement may be waived by the Agent in a written letter or agreement executed
by the Agent or by telex or facsimile transmission from the Agent. This
Security Agreement shall be binding upon the successors and assigns of the
Grantor and shall inure to the benefit of the Agent and the Lenders and their
respective successors and assigns.
18. GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
19. NOTICES. Notices hereunder may be given by mail, by telex or
by facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement or the Guarantee, as the case may be, and shall be effective
(a) in the case of mail, three days after deposit in the postal system, first
class postage pre-paid and (b) in the case of telex or facsimile notices, when
sent. The Grantor may change its address and transmission number by written
notice to the Agent, and the Agent or any Lender may change its address and
transmission number by written notice to the Grantor and, in the case of any
Lender, to the Agent.
20. AUTHORITY OF AGENT. The Grantor acknowledges that the rights
and responsibilities of the Agent under this Security Agreement with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Grantor, the Agent shall be conclusively presumed
to be acting as
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agent for the Lenders with full and valid authority so to act or refrain from
acting, and the Grantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
21. COUNTERPARTS. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
BLAYA, INC.
By: /s/ Steven E. Dawson
-----------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
CANADIAN IMPERIAL BANK OF COMMERCE, as Agent
By: /s/ Harold Birk
-----------------------------------
Name: Harold Birk
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
<PAGE>
SCHEDULE 1
TO SUBSIDIARY
SECURITY
AGREEMENT
BLAYA, INC.
LOCATION OF INVENTORY
---------------------
NONE.
LOCATION OF EQUIPMENT
---------------------
Houston, Texas
Pasadena, Texas
<PAGE>
ANNEX A
TO SUBSIDIARY
SECURITY
AGREEMENT
BLAYA, INC.
LIST OF INVESTMENT PROPERTY
---------------------------
NONE
<PAGE>
EXHIBIT 10.36
SUBSIDIARY SECURITY AGREEMENT
-----------------------------
(RADIO UNICA OF HOUSTON LICENSE CORP.)
--------------------------------------
SECURITY AGREEMENT, dated as of September 11, 1998, made by RADIO
UNICA OF HOUSTON LICENSE CORP., a Delaware corporation (the "GRANTOR"), in favor
of CANADIAN IMPERIAL BANK OF COMMERCE, as agent (in such capacity, the "AGENT")
for the several banks and other financial institutions (the "LENDERS") from time
to time parties to the Credit Agreement, dated as of July 8, 1998 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among RADIO UNICA HOLDINGS CORP., a Delaware corporation (the "PARENT"), RADIO
UNICA CORP., a Delaware corporation (the "BORROWER"), the Lenders and the Agent.
W I T N E S S E T H :
---------------------
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, the Grantor has guaranteed the obligations of the Borrower
described above pursuant to the Guarantee, dated as of September 11, 1998,
executed by the Grantor (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE"); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Grantor shall have executed and delivered this Security Agreement to the
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, the Grantor
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
<PAGE>
"CODE" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"COLLATERAL" shall have the meaning assigned to it in SECTION 2.
"CONTRACTS" shall mean all contracts executed from time to time by the
Grantor, including, without limitation, with respect to an Account, in each
case, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of the
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of the Grantor to damages arising out
of, or for, breach or default in respect thereof and (iii) all rights of
the Grantor to perform and to exercise all remedies thereunder.
"GUARANTEE OBLIGATIONS" shall mean all obligations of the Grantor
under the Guarantee including, without limitation, in respect of the
Obligations (as defined in the Credit Agreement) to the extent set forth in
the Guarantee.
"SECURITY AGREEMENT" means this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. GRANT OF SECURITY INTEREST. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Guarantee Obligations, the
Grantor hereby grants to the Agent for the ratable benefit of the Lenders a
security interest in all the following property now owned or at any time
hereafter acquired by the Grantor or in which the Grantor now has or at any time
in the future may acquire any right, title or interest in (collectively, the
"COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property; and
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<PAGE>
(x) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
PROVIDED that nothing contained herein shall create a collateral assignment with
respect to or a security interest in (A) any Contract if the grant of such
collateral is (or is determined by non-appealable adjudication of a court or
other dispute resolution tribunal to be) expressly prohibited by the terms of
such Contract, (B) with respect to any other Collateral which is subject to a
Lien permitted under Section 6.3 of the Credit Agreement or (C) any license,
permit or other governmental authorization which by its terms is not assignable.
3. RIGHTS OF AGENT AND LENDERS; LIMITATIONS ON AGENT'S AND
LENDERS' OBLIGATIONS.
(a) GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) or under any Contract by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any such Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Grantor under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto) or under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any
time after the occurrence and during the continuance of an Event of Default, the
Agent shall have the right upon written notice to the Grantor of its intention
to do so, to notify account debtors or obligors on the Accounts and parties to
the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the ratable benefit of the Lenders and that payments due or to become
due to the Grantor in respect thereof shall be made directly to the Agent and,
upon such notification, and at the expense of the Grantor, to enforce collection
of any such Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Agent may, at any time, in its own name
or in the name of the Lenders or the Grantor communicate with account debtors on
the Accounts and parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Accounts or Contracts.
(c) COLLECTIONS ON ACCOUNTS. The Agent hereby authorizes the
Grantor to collect the Accounts and the Agent may curtail or terminate said
authority at any time upon the occurrence and during the continuance of an Event
of Default. If required by the Agent at any
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time after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, when collected by the Grantor, shall be forthwith (and, in
any event, within two Business Days) deposited by the Grantor in the exact form
received, duly endorsed by the Grantor to the Agent if required, in a special
collateral account maintained by the Agent, subject to withdrawal by the Agent
for the account of the Lenders only, as hereinafter provided, and, until so
turned over, shall be held by the Grantor in trust for the Agent and the
Lenders, segregated from other funds of the Grantor. Each deposit of any such
Proceeds shall be accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit. All Proceeds
constituting collections of Accounts while held by the Agent (or by the Grantor
in trust for the Agent and the Lenders) shall continue to be collateral security
for all the Guarantee Obligations and shall not constitute payment thereof until
applied as hereinafter provided. At such intervals as may be agreed upon by the
Grantor and the Agent, or, if an Event of Default shall have occurred and be
continuing, at any time at the Agent's election, the Agent shall apply all or
any part of the funds on deposit in said special collateral account on account
of the Guarantee Obligations in such order as the Agent may elect, and any part
of such funds which the Agent elects not so to apply and deems not required as
collateral security for the obligations shall be paid over from time to time by
the Agent to the Grantor or to whomsoever may lawfully be entitled to receive
the same. Upon the occurrence of an Event of Default that is continuing, at the
Agent's request, the Grantor shall deliver to the Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
(d) ANALYSIS OF ACCOUNTS. The Agent shall have the right to make
test verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Agent may require in connection therewith;
PROVIDED that the Agent shall use its reasonable efforts to minimize any
disruption of the Grantor's business resulting from such verifications. At any
time and from time to time if the Agent concludes in its reasonable judgment,
based upon its evaluation of the general creditworthiness of the Grantor, that
such examination is required, and so requests, the Grantor shall, at the
Grantor's expense if at any time after the occurrence and during the continuance
of an Event of Default, and otherwise at the Agent's expense, cause independent
public accountants or other parties that are not Affiliates of the Grantor and
are satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents
and warrants that:
(a) TITLE; NO OTHER LIENS. Except as permitted under Section 6.3
of the Credit Agreement, the Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. Except as permitted under
Section 6.3 of the Credit Agreement no security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Agent, for the ratable benefit of the Lenders, pursuant to this
Security Agreement.
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(b) PERFECTED FIRST PRIORITY LIENS. Except as permitted under
Section 6.3 of the Credit Agreement the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements, constitute
perfected Liens on the Collateral in favor of the Agent, for the ratable benefit
of the Lenders, which are prior to all other Liens on the Collateral created by
the Grantor and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from the Grantor and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(c) ACCOUNTS. The amount represented by the Grantor to the
Lenders from time to time as owing by each account debtor or by all account
debtors in respect of the Accounts will at such time be the correct amount
actually owing by such account debtor or debtors thereunder. No amount payable
to the Grantor under or in connection with any Account is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent. The
place where the Grantor keeps its records concerning the Accounts is 8400 N.W.
52nd Street, Suite 101, Miami, Florida 33166.
(d) MATERIAL AGREEMENT. Except as set forth in Schedule 3.4 to
the Credit Agreement, no consent of any party (other than the Grantor) to any
Material Agreement is required, or purports to be required, in connection with
the execution, delivery and performance of this Security Agreement. Each
Material Agreement is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Agreements by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Agreement to any material adverse limitation, either
specific or general in nature. Neither the Grantor nor to the best of the
Grantor's knowledge any other party to any Material Agreement is in default in
the performance or observance of any of the terms thereof. The Grantor has
fully performed in all material respects all its obligations under each of the
Material Agreements. The right, title and interest of the Grantor in, to and
under each Material Agreement are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of such
Material Agreement as Collateral, nor have any of the foregoing been asserted or
alleged against the Grantor as to any Material Agreement. The Grantor has
delivered to the Agent a complete and correct copy of each Material Agreement,
including all amendments, supplements and other modifications thereto and will
deliver any other Contract which the Agent may request. No amount payable to
the Grantor under or in connection with any Material Agreement is evidenced by
any Instrument or Chattel Paper which has not been delivered to the Agent.
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(e) INVENTORY AND EQUIPMENT. Except as permitted in Section 5(p),
the Inventory and the Equipment are kept at the locations listed on Schedule I
hereto.
(f) CHIEF EXECUTIVE OFFICE. Except as permitted in Section 5(p),
the Grantor's chief executive office and chief place of business is located at
8400 N.W. 52nd Street, Suite 101, Miami, Florida 33166.
(g) FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(i) INVESTMENT PROPERTY. The Investment Property, other than
accounts invested in cash equivalents and other than shares of capital stock of
the Grantor's Subsidiaries, consists of the items set forth on Annex A.
5. COVENANTS. The Grantor covenants and agrees with the Agent
and the Lenders that, from and after the date of this Security Agreement until
the Guarantee Obligations are paid in full and the Commitments are terminated:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL
PAPER. At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Grantor, the Grantor will promptly and
duly execute and deliver such further instruments and documents and take such
further action as the Agent may reasonably request for the purpose of obtaining
or preserving the full benefits of this Security Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Grantor also
hereby authorizes the Agent to file any such financing or continuation statement
without the signature of the Grantor to the extent permitted by applicable law.
A carbon, photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(b) INDEMNIFICATION. The Grantor agrees to pay, and to save the
Agent and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security Agreement,
except resulting from the Agent's or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Agent or any
Lender under any Account or Contract for any sum owing thereunder, or to enforce
any provisions of any Account or Contract, the Grantor will save, indemnify and
keep the Agent
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and such Lender harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by the Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from the Grantor, except resulting
from the Agent's or any Lender's gross negligence or willful misconduct.
(c) MAINTENANCE OF RECORDS. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Grantor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby in such manner as the Agent may request. For
the Agent's and the Lenders' further security, the Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Grantor's
books and records pertaining to the Collateral, and the Grantor shall, during
the continuance of a Default under Section 7.1(a) or Section 7.1(c) as it
relates to Section 6.1, turn over copies of such books and records and during
the continuation of an Event of Default turn over any such books and records, in
each case, to the Agent or to its representatives during normal business hours
at the request of the Agent.
(d) RIGHT OF INSPECTION. The Agent and the Lenders shall after
reasonable notice to the Grantor be permitted to visit and inspect any of the
properties of the Grantor and examine and make abstracts from any books and
records of the Grantor at any reasonable time and as often as may reasonably be
desired, and the Grantor agrees to render to the Agent and the Lenders, at the
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Agent and the Lenders and their
respective representatives shall after reasonable notice to the Grantor be
permitted to visit any of the properties of the Grantor where any of the
Inventory or Equipment is located at any reasonable time and as often as may
reasonably be desired, for the purpose of inspecting the Inventory or Equipment,
observing its use or otherwise protecting its interests therein. Each such
visitation and inspection (a) by or on behalf of any Lender shall be at such
Lender's expense and (b) by or on behalf of the Agent following the occurrence
and during the continuance of any Default or Event of Default shall be at the
Grantor's expense.
(e) COMPLIANCE WITH LAWS. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any part
thereof or to the operation of the Grantor's business; except to the extent that
failure to do so could not reasonably by expected to have a Material Adverse
Effect.
(f) COMPLIANCE WITH TERMS OF CONTRACTS. The Grantor will perform
and comply in all material respects with all its obligations under the Contracts
and all its other Contractual Obligations relating to the Collateral except to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(g) PAYMENT OF OBLIGATIONS. The Grantor will pay promptly when
due all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect
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of its income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to the Collateral, except that no such charge need be
paid if (i) the validity thereof is being contested in good faith by appropriate
proceedings, (ii) such proceedings do not involve any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest therein and
(iii) such charge is adequately reserved against on the Grantor's books in
accordance with GAAP.
(h) LIMITATION ON LIENS ON COLLATERAL. The Grantor will not
create, incur or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Agent and the Lenders in and to any of the Collateral
against the claims and demands of all Persons whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Grantor will
not sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except as permitted pursuant to Section 6.6
of the Credit Agreement.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business, the Grantor will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(l) MAINTENANCE OF EQUIPMENT. The Grantor will maintain each item
of Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(n) FURTHER IDENTIFICATION OF COLLATERAL. The Grantor will
furnish to the Agent and the Lenders from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Agent may request, all in reasonable
detail.
(o) NOTICES. The Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the Collateral
and (ii) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the Liens created hereunder.
(p) CHANGES IN LOCATIONS, NAME, ETC. Unless the Grantor gives 30
days' prior written notice to the Agent, the Grantor will not (i) change the
location of its chief executive office/chief place of business from that
specified in SECTION 4(F) or remove its books and records from the location
specified in SECTION 4(C), (ii) permit any of the Inventory or Equipment to be
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kept at a location other than those listed on Schedule I hereto or (iii) change
its name, identity or corporate structure to such an extent that any financing
statement filed by the Agent in connection with this Security Agreement would
become seriously misleading.
6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Grantor hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do the following:
(i) in the case of any Account, at any time when the authority of
the Grantor to collect the Accounts has been curtailed or terminated
pursuant to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against the Grantor with respect to
any Collateral; (F) to settle,
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compromise or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and the Grantor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve or realize upon
the Collateral and the Agent's and the Lenders' Liens thereon and to effect
the intent of this Security Agreement, all as fully and effectively as the
Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) OTHER POWERS. The Grantor also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in this SECTION 6 or in SECTION 9 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) NO DUTY ON AGENT OR LENDERS' PART. The powers conferred on
the Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to the Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
7. PERFORMANCE BY AGENT OF GRANTOR'S OBLIGATIONS. If the Grantor
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Security Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum 2%
above the Alternate Base Rate, shall be payable by the Grantor to the Agent on
demand and shall constitute Guarantee Obligations secured hereby.
8. PROCEEDS. In addition to the rights of the Agent and the
Lenders specified in SECTION 3(C) with respect to payments of Accounts, it is
agreed that if an Event of Default shall occur and be continuing (a) upon
written notice by the Agent to the Grantor, all Proceeds received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Agent and the Lenders, segregated from other funds of
the Grantor, and, forthwith upon receipt by the Grantor, shall be turned over to
the Agent in the exact form received by the Grantor (duly endorsed by the
Grantor to the Agent, if required), and (b) any and all such Proceeds received
by the Agent (whether from the Grantor or otherwise) may, in the sole discretion
of the Agent, be held by the Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be applied by
the Agent against, the Guarantee Obligations (whether matured or unmatured),
such application to be in such order as
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the Agent shall elect. Any balance of such Proceeds remaining after the
Guarantee Obligations shall have been paid in full and the Commitments shall
have been terminated shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive the same.
9. REMEDIES. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted to them in this Security Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Guarantee Obligations, all rights and remedies of a secured party under the
Code. Without limiting the generality of the foregoing, the Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Parent, the Borrower, the Grantor, any guarantor, or any other Person
(all and each of which demands, defenses, advertisements and notices being
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity is
hereby waived or released. The Grantor further agrees, at the Agent's request,
to assemble the Collateral and make it available to the Agent at such places as
the Agent shall reasonably select, whether at the Grantor's premises or
elsewhere. The Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Guarantee Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(i)(c) of the Code, need the Agent account for the surplus, if any,
to the Grantor. To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands it may acquire against the Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Guarantee Obligations and the fees and disbursements
of any attorneys employed by the Agent or any Lender to collect such deficiency.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any
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Lender, nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the Grantor
or otherwise.
11. FCC COMPLIANCE. Notwithstanding anything herein to the
contrary, but without limiting or waiving Grantor's obligations hereunder, the
Lenders' remedies hereunder are subject to the Communications Act of 1934, as
amended, and all applicable rules, regulations and policies of the FCC ("FCC
Law"), and the Agent and the lenders will not take any action pursuant to this
Agreement that would constitute or result in any assignment or transfer of
control of any FCC authorization held by Grantor if such assignment or transfer
of control would require under then existing FCC Law the prior approval of the
FCC, without first obtaining such approval of the FCC. Grantor agrees to take
any action which the Agent may reasonably request in order to cause the Agent
(on behalf of the Lenders) to obtain and enjoy the full rights and benefits
granted by this Agreement, including specifically, at the cost and expense of
Grantor, the use of its commercially reasonable best efforts to assist in
obtaining approval of the FCC or Governmental Authority for an action or
transaction contemplated by this Agreement which are then required by law, and
specifically, without limitation, upon request upon and during the continuance
of an Event of Default, to prepare, sign and file (or cause to be filed) with
the FCC or other Governmental Authority the assignor's, transferor's or
controlling person's portion of any application or applications for consent to
(i) the assignment of any FCC license or transfer or control thereof, (ii) any
sale or sales of property constituting any Collateral by the Agent or on behalf
of the Lenders, or (iii) any assumption by the Agent, the Lenders or their
designees of voting rights or management rights in property constituting any
Collateral effected in accordance with the terms of this Agreement or any other
Loan Document.
12. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
13. LIMITATION ON LINES OF BUSINESS. Nothing contained in this
Security Agreement shall be deemed or construed as modifying in any way the
restrictions on Grantor's activities as set forth in Section 6.14 of the Credit
Agreement.
14. SEVERABILITY. Any provision of this Security 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.
15. SECTION HEADINGS. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Agent nor any
Lender shall by any act (except by a written instrument pursuant to Section 17),
delay, indulgence,
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<PAGE>
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the
terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Grantor and the Agent; PROVIDED that any provision of this Security
Agreement may be waived by the Agent in a written letter or agreement executed
by the Agent or by telex or facsimile transmission from the Agent. This
Security Agreement shall be binding upon the successors and assigns of the
Grantor and shall inure to the benefit of the Agent and the Lenders and their
respective successors and assigns.
18. GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
19. NOTICES. Notices hereunder may be given by mail, by telex or
by facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement or the Guarantee, as the case may be, and shall be effective
(a) in the case of mail, three days after deposit in the postal system, first
class postage pre-paid and (b) in the case of telex or facsimile notices, when
sent. The Grantor may change its address and transmission number by written
notice to the Agent, and the Agent or any Lender may change its address and
transmission number by written notice to the Grantor and, in the case of any
Lender, to the Agent.
20. AUTHORITY OF AGENT. The Grantor acknowledges that the rights
and responsibilities of the Agent under this Security Agreement with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Grantor, the Agent shall be conclusively presumed
to be acting as
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<PAGE>
agent for the Lenders with full and valid authority so to act or refrain from
acting, and the Grantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
21. COUNTERPARTS. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
RADIO UNICA OF HOUSTON LICENSE CORP.
By: /s/ Steven E. Dawson
-----------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
CANADIAN IMPERIAL BANK OF COMMERCE, as Agent
By: /s/ Harold Birk
-----------------------------------
Name: Harold Birk
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
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<PAGE>
SCHEDULE 1
TO SUBSIDIARY
SECURITY
AGREEMENT
RADIO UNICA OF HOUSTON LICENSE CORP.
LOCATION OF INVENTORY
---------------------
NONE.
LOCATION OF EQUIPMENT
---------------------
NONE.
<PAGE>
ANNEX A
TO SUBSIDIARY
SECURITY
AGREEMENT
RADIO UNICA OF HOUSTON LICENSE CORP.
LIST OF INVESTMENT PROPERTY
---------------------------
NONE
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<PAGE>
Exhibit 10.37
SUBSIDIARY GUARANTEE
(BLAYA, INC.)
GUARANTEE, dated as of September 11, 1998, made by BLAYA,
INC., a Delaware corporation (the "Guarantor") in favor of CANADIAN IMPERIAL
BANK OF COMMERCE, as agent (in such capacity, the "Agent") for the several banks
and financial institutions (the "Lenders") from time to time parties to the
Credit Agreement, dated as of July 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among RADIO UNICA
HOLDINGS CORP., a Delaware corporation (the "Parent"), RADIO UNICA CORP., a
Delaware corporation (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the
Lenders have agreed to make certain Loans to or for the benefit of the Borrower;
and
WHEREAS, the Guarantor became a direct, wholly owned
subsidiary of the Borrower on September 11, 1998; and
WHEREAS, a portion of the proceeds of the Loans will be used
in part to enable the Borrower to make valuable transfers to the Guarantor in
connection with the operation of its business; and
WHEREAS, the Borrower is entering into the Credit Agreement to
finance the operations of the Borrower and its Subsidiaries (including the
Guarantor), and the Guarantor will derive substantial direct and indirect
benefit from the making of the Loans; and
WHEREAS, the obligation of the Lenders to make the Loans is
conditioned upon, among other things, the execution and delivery by the
Guarantor of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Credit Agreement and to make the Loans, the
Guarantor hereby agrees with and for the benefit of the Agent and the Lenders as
follows:
1. Defined Terms. As used in this Guarantee, terms defined in
the Credit Agreement are used herein as therein defined, and the following term
shall have the following meanings:
<PAGE>
"Obligations" shall mean 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 Parent, the Borrower or any
Subsidiary, as applicable, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and whether the
Agent is oversecured or undersecured with respect to such Loans), the
Notes and all other obligations and liabilities of the Parent, the
Borrower or any Subsidiary, as applicable, to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, the Notes, the
other Loan Documents or any Hedging Agreement with the Agent or any
Lender 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 fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the
Parent, the Borrower or any Subsidiary, as applicable, pursuant to the
terms of the Credit Agreement, any other Loan Document or any Hedging
Agreement with the Agent or any Lender) or otherwise.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Agent and the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
by the Borrower when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, and the Guarantor further agrees to pay any and
all expenses (including, without limitation, all fees and disbursements of
counsel) which may be paid or incurred by the Agent or any Lender in enforcing,
or obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all the Obligations and/or enforcing any rights with respect
to, or collecting against, the Guarantor under this Guarantee; provided, that
the obligations of the Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of any applicable state law.
(b) No payment or payments made by the Parent, the
Borrower, any other guarantor or any other Person or received or collected by
the Agent or any Lender from the Parent, the Borrower, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made by the
Guarantor in respect of the Obligations or payments received or collected from
the Guarantor in respect of the Obligations, remain liable for the Obligations
until the Obligations are paid in full and the Commitments are terminated.
(c) The Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Agent or any Lender on
account of its liability hereunder,
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<PAGE>
it will notify the Agent in writing that such payment is made under this
Guarantee for such purpose.
3. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default specified in the Credit Agreement, the
Guarantor hereby irrevocably authorizes the Agent and each Lender at any time
and from time to time without notice to the Guarantor or any other guarantor,
any such notice being expressly waived by the Guarantor, to setoff and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Agent and/or
such Lender to or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Agent or such Lender may elect, against and on
account of the obligations and liabilities of the Guarantor to the Agent or such
Lender hereunder and claims of every nature and description of the Agent or such
Lender against the Guarantor, in any currency, whether arising hereunder, under
the Credit Agreement, the Notes, the Security Documents, any other Loan
Document, any Hedging Agreement with any Lender or otherwise, as the Agent or
such Lender may elect, whether or not the Agent or any Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Agent and each Lender agrees to notify the
Guarantor promptly of any such set-off and the application made by the Agent or
such Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Agent and each
Lender under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent or such
Lender may have.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder or any set-off or application of funds of the
Guarantor by the Agent or any Lender, the Guarantor hereby waives any claim,
right or remedy which the Guarantor may now have or may hereafter acquire
against the Borrower that arises hereunder and/or from the performance by the
Guarantor hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of the Lenders and the Agent against
the Borrower or any security which the Lenders and the Agent now have or
hereafter acquire, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise. If any amount shall
be paid to the Guarantor on account of such subrogation rights at any time when
all the Obligations shall not have been paid in full, such amount shall be held
by the Guarantor in trust for the Agent and the Lenders, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Agent in the exact form received by the Guarantor (duly
endorsed by the Guarantor to the Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Agent may
determine.
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<PAGE>
5. Amendments, etc, with respect to the Obligations: Waiver
of Rights. The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment of any
of the Obligations made by the Agent or any Lender may be rescinded by such
party and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released, in
accordance with the terms of such agreement, by the Agent or any Lender and
the Credit Agreement, the Notes, the Security Documents, the other Loan
Documents, any Hedging Agreement with the Agent or any Lender and any other
collateral security document or other guarantee or document in connection
therewith may be amended, modified, supplemented or terminated, in whole or
in part, in accordance with the terms of such agreement, as the Agent and/or
any Lender may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Agent or any Lender for
the payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held as security for
the Obligations or for this Guarantee or any property subject thereto. When
making any demand hereunder against the Guarantor, the Agent or any Lender
may, but shall be under no obligation to, make a similar demand on the
Parent, the Borrower or any other guarantor, and any failure by the Agent or
any Lender to make any such demand or to collect any payments from the
Parent, the Borrower or any such other guarantor or any release of the
Parent, the Borrower or such other guarantor shall not relieve the Guarantor
of its obligations or liabilities hereunder, and shall not impair or affect
the rights and remedies, express or implied, or as a matter of law, of the
Agent or any Lender against the Guarantor. For the purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee, the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Guarantee; and
all dealings between the Parent, the Borrower or the Guarantor and the Agent or
any Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Parent, the Borrower or the Guarantor with respect to the
Obligations. The Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, any of the Security Documents, any other Loan Document,
any of the obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Lender, (b) any defense, set-off or counterclaim (other than
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<PAGE>
a defense of payment or performance) which may at any time be available to or
be asserted by the Parent or the Borrower against the Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge
of the Parent, the Borrower or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower or
the Parent for the Obligations, or of the Guarantor under this Guarantee, in
bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against the Guarantor, the Agent and any Lender may, but shall be
under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security
or guarantee for the obligations or any right of offset with respect thereto,
and any failure by the Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Borrower, the Parent or any such
other Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of the Borrower, the
Parent or any such other Person or any such collateral security, guarantee or
right of offset, shall not relieve the Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Agent or any Lender against
the Guarantor. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor
and the successors and assigns thereof, and shall inure to the benefit of the
Agent and the Lenders, and their respective successors, endorsees,
transferees and assigns, until all the Obligations and the obligations of the
Guarantor under this Guarantee shall have been satisfied by payment in full
and the Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower and the Parent may
be free from any Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, the Parent or the
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower, the Parent
or the Guarantor or any substantial part of its property, or otherwise, all as
though such payments had not been made.
8. Payments. The Guarantor hereby guarantees that payments
hereunder will be paid to the Agent for the benefit of the Lenders without
set-off or counterclaim in U.S. Dollars at the office of the Agent located at
425 Lexington Avenue, New York, New York 10017 or such other location as the
Agent may from time to time direct the Guarantor.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
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<PAGE>
(a) the Guarantor has the corporate power and authority,
and the legal right, to execute, deliver and perform its obligations under, this
Guarantee and the other Loan Documents to which the Guarantor is a party, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Guarantee and the other Loan Documents to which the
Guarantor is a party;
(b) this Guarantee and the other Loan Documents to which
the Guarantor is a party each constitute a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors, rights
generally or by general principles of equity (whether enforcement is sought
by proceedings in equity or at law) ;
(c) the execution, delivery and performance of this
Guarantee or any other Loan Document to which the Guarantor is a party will not
violate any Requirement of Law or Contractual Obligation of the Guarantor and
will not result in, or require, the creation or imposition of any Lien on any of
the properties or revenues of the Guarantor pursuant to any such Requirement of
Law or Contractual Obligation; and
(d) no consent or authorization of, filing with or other
act by or in respect of, any Governmental Authority or any other Person
(including, without limitation, any stockholder or creditor of the Guarantor) is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee or any other Loan Document to which the
Guarantor is a party.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on the date of
each borrowing by the Borrower under the Credit Agreement on and as of such date
of borrowing as though made hereunder on and as of such date.
10. Severability. (a) Any provision of this Guarantee 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.
(b) The parties hereto have agreed as provided in Section
13 of this Guarantee and in the Credit Agreement, that New York law is to
govern, among other matters, the amount of interest that may lawfully be
charged, received or contracted for in connection with the Obligations. If, not
withstanding such agreement, a court of competent jurisdiction applies the law
of any other jurisdiction to such interest, then the following shall apply:
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<PAGE>
It is expressly stipulated and agreed to be the intent of
the Guarantor and the Agent at all times to comply with applicable state law
governing the maximum rate or amount of interest payable with respect to the
Obligations (or applicable United States federal law to the extent that it
permits the Agent to contract for, charge, take, reserve or receive a greater
amount of interest than under state law, including, without limitation, 12
U.S.C. ss. 85 (1994)). If the applicable law is ever judicially interpreted
so as to render usurious any amount called for under the Obligations or under
this Guarantee, or contracted for, charged, taken, reserved or received with
respect to the Obligations, then it is the Guarantor's and the Agent's
express intent that all excess amounts theretofore collected by the Agent be
credited on the principal balance of the Obligations (or, if the Obligations
have been or would thereby be paid in full, refunded to the Guarantor), and
the provisions of this Guarantee and all other documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
11. Section Heading. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
12. No Waiver: Cumulative Remedies. Neither the Agent nor any
Lender shall by any act (except by a written instrument pursuant to Section 13),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
13. Integration; Waivers and Amendments; Successors and
Assigns; Governing Law. This Guarantee represents the agreement of the Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein. None of the terms or provisions of this Guarantee may be
waived, amended or supplemented or otherwise modified except by a written
instrument executed by the Guarantor and the Agent; provided that any provision
of this Guarantee may be waived by the Agent and the Required Lenders in a
letter or agreement executed by the Agent or by telex or facsimile transmission
from the Agent. This Guarantee shall be binding upon the successors and assigns
of the Guarantor and shall inure to the benefit of the Agent and the Lenders and
their respective successors and assigns. THIS GUARANTEE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTEE
-7-
<PAGE>
SHALL BE GOVERNED BY AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
14. Notices. All notices, requests and demands to or upon the
Guarantor or the Agent or any Lender to be effective shall be in writing or by
telegraph or telex and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or, in the case
of mail, three days after deposit in the postal system, first class
postage prepaid, or by overnight courier, in each case addressed to a party at
the address provided for such party in the Credit Agreement or set forth under
its signature below, as the case may be.
15. Submission to Jurisdiction: Waivers. (A) The Guarantor
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and any other Loan Document to which it is
party, or for recognition and enforcement of any judgment 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;
(ii) 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 any inconvenient court and agrees not
to plead or claim the same;
(iii) 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
Guarantor at its address set forth below or at such other address of which the
Agent shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(v) 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 Section any special, exemplary, punitive or consequential damage.
(B) THE GUARANTOR, THE LENDERS AND THE AGENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
BLAYA, INC.
By: /s/ Steven E. Dawson
--------------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
-9-
<PAGE>
Exhibit 10.38
SUBSIDIARY GUARANTEE
(RADIO UNICA OF HOUSTON LICENSE CORP.)
GUARANTEE, dated as of September 11, 1998, made by RADIO UNICA
OF HOUSTON LICENSE CORP., a Delaware corporation (the "Guarantor") in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, as agent (in such capacity, the "Agent") for
the several banks and financial institutions (the "Lenders") from time to time
parties to the Credit Agreement, dated as of July 8, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among RADIO UNICA HOLDINGS CORP., a Delaware corporation (the "Parent"), RADIO
UNICA CORP., a Delaware corporation (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the
Lenders have agreed to make certain Loans to or for the benefit of the Borrower;
and
WHEREAS, the Guarantor became a indirect, wholly owned
subsidiary of the Borrower on September 11, 1998; and
WHEREAS, a portion of the proceeds of the Loans will be used
in part to enable the Borrower to make valuable transfers to the Guarantor in
connection with the operation of its business; and
WHEREAS, the Borrower is entering into the Credit Agreement to
finance the operations of the Borrower and its Subsidiaries (including the
Guarantor), and the Guarantor will derive substantial direct and indirect
benefit from the making of the Loans; and
WHEREAS, the obligation of the Lenders to make the Loans is
conditioned upon, among other things, the execution and delivery by the
Guarantor of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Credit Agreement and to make the Loans, the
Guarantor hereby agrees with and for the benefit of the Agent and the Lenders as
follows:
1. Defined Terms. As used in this Guarantee, terms defined in
the Credit Agreement are used herein as therein defined, and the following term
shall have the following meanings:
<PAGE>
"Obligations" shall mean 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 Parent, the Borrower or any
Subsidiary, as applicable, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and whether the
Agent is oversecured or undersecured with respect to such Loans), the
Notes and all other obligations and liabilities of the Parent, the
Borrower or any Subsidiary, as applicable, to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, the Notes, the
other Loan Documents or any Hedging Agreement with the Agent or any
Lender 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 fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the
Parent, the Borrower or any Subsidiary, as applicable, pursuant to the
terms of the Credit Agreement, any other Loan Document or any Hedging
Agreement with the Agent or any Lender) or otherwise.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Agent and the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
by the Borrower when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, and the Guarantor further agrees to pay any and
all expenses (including, without limitation, all fees and disbursements of
counsel) which may be paid or incurred by the Agent or any Lender in enforcing,
or obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all the Obligations and/or enforcing any rights with respect
to, or collecting against, the Guarantor under this Guarantee; provided, that
the obligations of the Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of any applicable state law.
(b) No payment or payments made by the Parent, the
Borrower, any other guarantor or any other Person or received or collected by
the Agent or any Lender from the Parent, the Borrower, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made by the
Guarantor in respect of the Obligations or payments received or collected from
the Guarantor in respect of the Obligations, remain liable for the Obligations
until the Obligations are paid in full and the Commitments are terminated.
(c) The Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Agent or any Lender on
account of its liability hereunder,
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<PAGE>
it will notify the Agent in writing that such payment is made under this
Guarantee for such purpose.
3. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default specified in the Credit Agreement, the
Guarantor hereby irrevocably authorizes the Agent and each Lender at any time
and from time to time without notice to the Guarantor or any other guarantor,
any such notice being expressly waived by the Guarantor, to setoff and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Agent and/or
such Lender to or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Agent or such Lender may elect, against and on
account of the obligations and liabilities of the Guarantor to the Agent or such
Lender hereunder and claims of every nature and description of the Agent or such
Lender against the Guarantor, in any currency, whether arising hereunder, under
the Credit Agreement, the Notes, the Security Documents, any other Loan
Document, any Hedging Agreement with any Lender or otherwise, as the Agent or
such Lender may elect, whether or not the Agent or any Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Agent and each Lender agrees to notify the
Guarantor promptly of any such set-off and the application made by the Agent or
such Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Agent and each
Lender under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent or such
Lender may have.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder or any set-off or application of funds of the
Guarantor by the Agent or any Lender, the Guarantor hereby waives any claim,
right or remedy which the Guarantor may now have or may hereafter acquire
against the Borrower that arises hereunder and/or from the performance by the
Guarantor hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of the Lenders and the Agent against
the Borrower or any security which the Lenders and the Agent now have or
hereafter acquire, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise. If any amount shall
be paid to the Guarantor on account of such subrogation rights at any time when
all the Obligations shall not have been paid in full, such amount shall be held
by the Guarantor in trust for the Agent and the Lenders, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Agent in the exact form received by the Guarantor (duly
endorsed by the Guarantor to the Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Agent may
determine.
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<PAGE>
5. Amendments, etc, with respect to the Obligations: Waiver
of Rights. The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment of any
of the Obligations made by the Agent or any Lender may be rescinded by such
party and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released, in
accordance with the terms of such agreement, by the Agent or any Lender and
the Credit Agreement, the Notes, the Security Documents, the other Loan
Documents, any Hedging Agreement with the Agent or any Lender and any other
collateral security document or other guarantee or document in connection
therewith may be amended, modified, supplemented or terminated, in whole or
in part, in accordance with the terms of such agreement, as the Agent and/or
any Lender may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Agent or any Lender for
the payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held as security for
the Obligations or for this Guarantee or any property subject thereto. When
making any demand hereunder against the Guarantor, the Agent or any Lender
may, but shall be under no obligation to, make a similar demand on the
Parent, the Borrower or any other guarantor, and any failure by the Agent or
any Lender to make any such demand or to collect any payments from the
Parent, the Borrower or any such other guarantor or any release of the
Parent, the Borrower or such other guarantor shall not relieve the Guarantor
of its obligations or liabilities hereunder, and shall not impair or affect
the rights and remedies, express or implied, or as a matter of law, of the
Agent or any Lender against the Guarantor. For the purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee, the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Guarantee; and
all dealings between the Parent, the Borrower or the Guarantor and the Agent or
any Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Parent, the Borrower or the Guarantor with respect to the
Obligations. The Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, any of the Security Documents, any other Loan Document,
any of the obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Lender, (b) any defense, set-off or counterclaim (other than
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<PAGE>
a defense of payment or performance) which may at any time be available to or
be asserted by the Parent or the Borrower against the Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge
of the Parent, the Borrower or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower or
the Parent for the Obligations, or of the Guarantor under this Guarantee, in
bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against the Guarantor, the Agent and any Lender may, but shall be
under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security
or guarantee for the obligations or any right of offset with respect thereto,
and any failure by the Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Borrower, the Parent or any such
other Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of the Borrower, the
Parent or any such other Person or any such collateral security, guarantee or
right of offset, shall not relieve the Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Agent or any Lender against
the Guarantor. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor
and the successors and assigns thereof, and shall inure to the benefit of the
Agent and the Lenders, and their respective successors, endorsees,
transferees and assigns, until all the Obligations and the obligations of the
Guarantor under this Guarantee shall have been satisfied by payment in full
and the Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower and the Parent may
be free from any Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, the Parent or the
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower, the Parent
or the Guarantor or any substantial part of its property, or otherwise, all as
though such payments had not been made.
8. Payments. The Guarantor hereby guarantees that payments
hereunder will be paid to the Agent for the benefit of the Lenders without
set-off or counterclaim in U.S. Dollars at the office of the Agent located at
425 Lexington Avenue, New York, New York 10017 or such other location as the
Agent may from time to time direct the Guarantor.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
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<PAGE>
(a) the Guarantor has the corporate power and authority,
and the legal right, to execute, deliver and perform its obligations under, this
Guarantee and the other Loan Documents to which the Guarantor is a party, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Guarantee and the other Loan Documents to which the
Guarantor is a party;
(b) this Guarantee and the other Loan Documents to which
the Guarantor is a party each constitute a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors, rights
generally or by general principles of equity (whether enforcement is sought
by proceedings in equity or at law) ;
(c) the execution, delivery and performance of this
Guarantee or any other Loan Document to which the Guarantor is a party will not
violate any Requirement of Law or Contractual Obligation of the Guarantor and
will not result in, or require, the creation or imposition of any Lien on any of
the properties or revenues of the Guarantor pursuant to any such Requirement of
Law or Contractual Obligation; and
(d) no consent or authorization of, filing with or other
act by or in respect of, any Governmental Authority or any other Person
(including, without limitation, any stockholder or creditor of the Guarantor) is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee or any other Loan Document to which the
Guarantor is a party.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on the date of
each borrowing by the Borrower under the Credit Agreement on and as of such date
of borrowing as though made hereunder on and as of such date.
10. Severability. (a) Any provision of this Guarantee 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.
(b) The parties hereto have agreed as provided in Section
13 of this Guarantee and in the Credit Agreement, that New York law is to
govern, among other matters, the amount of interest that may lawfully be
charged, received or contracted for in connection with the Obligations. If, not
withstanding such agreement, a court of competent jurisdiction applies the law
of any other jurisdiction to such interest, then the following shall apply:
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<PAGE>
It is expressly stipulated and agreed to be the intent of
the Guarantor and the Agent at all times to comply with applicable state law
governing the maximum rate or amount of interest payable with respect to the
Obligations (or applicable United States federal law to the extent that it
permits the Agent to contract for, charge, take, reserve or receive a greater
amount of interest than under state law, including, without limitation, 12
U.S.C. ss. 85 (1994)). If the applicable law is ever judicially interpreted
so as to render usurious any amount called for under the Obligations or under
this Guarantee, or contracted for, charged, taken, reserved or received with
respect to the Obligations, then it is the Guarantor's and the Agent's
express intent that all excess amounts theretofore collected by the Agent be
credited on the principal balance of the Obligations (or, if the Obligations
have been or would thereby be paid in full, refunded to the Guarantor), and
the provisions of this Guarantee and all other documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
11. Section Heading. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
12. No Waiver: Cumulative Remedies. Neither the Agent nor any
Lender shall by any act (except by a written instrument pursuant to Section 13),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Agent or such Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
13. Integration; Waivers and Amendments; Successors and
Assigns; Governing Law. This Guarantee represents the agreement of the Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein. None of the terms or provisions of this Guarantee may be
waived, amended or supplemented or otherwise modified except by a written
instrument executed by the Guarantor and the Agent; provided that any provision
of this Guarantee may be waived by the Agent and the Required Lenders in a
letter or agreement executed by the Agent or by telex or facsimile transmission
from the Agent. This Guarantee shall be binding upon the successors and assigns
of the Guarantor and shall inure to the benefit of the Agent and the Lenders and
their respective successors and assigns. THIS GUARANTEE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTEE
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<PAGE>
SHALL BE GOVERNED BY AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
14. Notices. All notices, requests and demands to or upon
the Guarantor or the Agent or any Lender to be effective shall be in writing
or by telegraph or telex and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or,
in the case of mail, three days after deposit in the postal system, first
class postage prepaid, or by overnight courier, in each case addressed to a
party at the address provided for such party in the Credit Agreement or set
forth under its signature below, as the case may be.
15. Submission to Jurisdiction: Waivers. (A) The Guarantor
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and any other Loan Document to which it is
party, or for recognition and enforcement of any judgment 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;
(ii) 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 any inconvenient court and agrees not
to plead or claim the same;
(iii) 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
Guarantor at its address set forth below or at such other address of which the
Agent shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(v) 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 Section any special, exemplary, punitive or consequential damage.
(B) THE GUARANTOR, THE LENDERS AND THE AGENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
RADIO UNICA OF HOUSTON LICENSE CORP.
By: /s/ Steven E. Dawson
-------------------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
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<PAGE>
EXHIBIT 10.39
EXECUTION COPY
AGREEMENT
This AGREEMENT ("Agreement") is made as of this 28th day of September, 1998
between Inter/Forever Sports, Inc. ("IFS") and Radio Unica Corp. ("RUC").
RECITALS
A. IFS and RUC are parties to that certain agreement (the "1998-2001
Agreement") dated September 28, 1998 for the purchase by RUC from IFS of certain
"Radio Rights" and an "Option" (as such terms are defined in the 1998-2001
Agreement).
B. IFS and RUC wish to enter into this Agreement for the purchase by RUC
from IFS of exclusive radio broadcasting rights to soccer tournaments scheduled
to occur during various years from 1999 through 2002 and of a "First Option" (as
such term is defined herein) to purchase exclusive radio broadcasting rights to
certain soccer matches and soccer-related events scheduled to occur during the
years 2002 through 2006.
TERMS
A. RECITALS. The Recitals set forth above are hereby incorporated into
the terms of this Agreement.
2. NATIONS CUP L999, CHAMPIONS CUP 1999 AND 2000 AND GOLD CUP 2002; FIRST
OPTION.
(a) (i) IFS hereby grants to RUC the following rights (the
"Rights") : (A) Exclusive Spanish language radio broadcasting rights in the
United States, excluding its territories and possessions (but including Puerto
Rico) and in Canada (the "Territory") to the Gold Cup 2002 soccer matches (which
matches are scheduled to occur during February 2002); (B) exclusive Spanish
language radio
<PAGE>
broadcasting rights in the Territory to the Champions Cup 1999 and Champions Cup
2000 soccer matches (which matches are scheduled to occur during 1999 and 2000,
respectively) and (C) exclusive Spanish language radio broadcasting rights in
the Territory to the Nations Cup 1999 soccer matches (which matches are
scheduled to occur during May 1999).
(ii) Section 1(j) (A) of the 1998-2001 Agreement shall include
confirmation of the type referenced therein with respect to the Champions Cup
1999, Champions Cup 2000 and the Nations Cup 1999 and Section 1(j) (B) of the
1998-2001 Agreement shall include confirmation of the type referenced therein
with respect to the Gold Cup 2002, such that the Written Confirmation required
under Section 1(j) (and referenced in Section 3(b) (ii) of the 1998-2001
Agreement) must incorporate such confirmations of IFS' ownership of Rights to
said matches without restriction as to the right to re-sell such Rights.
(b) IFS hereby grants to RUC a first option ("First Option") to acquire
any and all Spanish language radio broadcasting rights in the Territory (or any
portion thereof) and Australia, or any portion thereof (collectively, the
"Expanded Territory") to soccer matches or soccer-related soccer events,
exclusive or otherwise (the "Broadcast Rights"), that are acquired by IFS or any
Subsidiary (capitalized terms used in this Agreement shall have the meanings
assigned to them in the 1998-2001 Agreement unless otherwise defined herein) of
IFS for soccer matches or soccer-related events scheduled to occur during the
years 2002, 2003, 2004, 2005 and 2006 (the "Years") , including without
limitation, Copa America 2003, Gold Cup 2004 and the matches referenced in
Exhibit A of the 1998-2001 Agreement that are scheduled to occur during the
Years (the "2002-2006 Matches") . IFS represents and warrants that, as of the
date of this Agreement, IFS owns exclusive Broadcast Rights to Copa America 2003
and Gold Cup 2004 and has the right to freely sell those rights to a third party
without infringing on any third party's rights or interests therein.
(c) The First Option shall be exercisable in accordance with, and governed
by, the Option Exercise Procedure in Section 1(c) of the 1998-2001 Agreement
(which terms are expressly incorporated by reference herein), substituting
references therein to the "Option Rights" to reference to "Broadcast
Rights" for the subject 2002-2006 Matches and substituting references
therein to the "Option" to reference the "First Option" except that:
(i) the deadline for delivery of the initial written notice by IFS to
RUC offering the First Option Broadcast Rights to Grantee shall be June l, 2002
(such
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<PAGE>
notice shall include offer terms for any 2002-2006 Matches for which IFS then
owns Broadcast Rights in the Expanded Territory) or within three (3) calendar
months after IFS acquires Broadcast Rights for the Expanded Territory for
2002-2006 Matches for which IFS acquires such Broadcast Rights after June l,
2002;
(ii) the time period for response by RUC to the initial written
offer notice shall be ten (10) calendar days after receipt;
(iii) the time period for response by IFS to any counteroffer shall
be ten (10) calendar days after receipt; and
(iv) the time period for entering into a written agreement between
the parties after notice of desire to enter into an agreement upon the terms in
the initial written offer or a counteroffer shall be thirty (30) calendar days
after receipt.
(d) The purchase of the Rights and the First Option hereunder shall be
governed by and subject to the applicable terms of the 1998-2001 Agreement
(which terms are expressly incorporated by reference herein), such that
1998-2001 Agreement terms that reference or apply to "Radio Rights," "Scheduled
Events" or "Matches and Events" thereunder apply to the Rights (and the matches
that are the subject of such Rights) purchased hereunder and such that 1998-2001
Agreement terms that reference or apply to the "Option" apply to the "First
Option" purchased hereunder, such that, for example, and not by way of
limitation, the provision of Basic Feed terms, applicable representations and
warranties, applicable indemnification provisions and applicable termination
provisions in the 1998-2001 Agreement shall apply to this Agreement, except that
the consideration amount payable for the Rights and First Option is set forth in
Section 3 below. In the event that Grantee wishes to terminate this Agreement
as provided in Section 8(a) of the 1998-2001 Agreement (which terms are
expressly incorporated herein by reference) , Grantee may terminate this
Agreement entirely or, in its sole discretion, may terminate only the portion
related to the purchase of the Rights or the First Option. A breach by either
party of the 1998-2001 Agreement may, at the non-breaching party's election, be
deemed a breach hereof entitling the non-breaching party to terminate this
Agreement in whole or in part in accordance with Section 8 of the 1998-2001
Agreement.
(e) The terms of Section 4(c) of the 1998-2001 Agreement shall apply to
Gold Cup 2002 except that the deadline for delivery by IFS to RUC of the written
list of Official Sponsors shall be May 31, 2001 (not May 31, 1999).
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<PAGE>
3. CONSIDERATION.
(a) RUC shall pay to IFS as full and complete consideration for
the Rights and the First Option the sum of $*(*) payable no later than January
7, 2002 in the manner set forth at the end of Section 3(b) of the 1998-2001
Agreement, subject to decrease in accordance with the Consideration Decrease
Formula. Such consideration is full and complete consideration for purchase of
the Rights and the First Option notwithstanding the fact that the consideration
is payable subsequent to the scheduled dates for certain of the matches and
events that are the subject of the Rights and subsequent to certain obligations
associated with the First Option.
(b) The Consideration Decrease Formula shall apply to the Gold Cup
2002 pursuant to the applicable terms of Exhibit B of the 1998-2001 Agreement.
For purposes of the Consideration Decrease Formula, the minimum number of games
for Gold Cup 2002 shall be twenty six (26), the Decrease Amount for the types of
games referenced in (l) on Exhibit B of the 1998-2001 Agreement shall be $* per
game (not $* per game) and the Decrease Amount for the types of games referenced
in (2) on Exhibit B of the 1998-2001 Agreement shall be $* per game (not $* per
game).
4. MISCELLANEOUS. The provisions of Section 9 of the 1998-2001
Agreement, except Section 9(h), are expressly incorporated into this Agreement
by reference and are applicable to this Agreement.
5. RESTRICTIONS ON RUC'S NEGOTIATIONS WITH ORIGINAL RIGHTS OWNERS.
Section 10 of the 1998-2001 Agreement shall apply during the term of this
Agreement which expires December 31, 2006, or upon earlier, premature
termination of this Agreement in accordance with Section 2(b) above.
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(*) The purchase price has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Release and Agreement as
of the date first set forth above. Each signatory below certifies his authority
to execute this Agreement on behalf of the signatory's respective entity.
Radio Unica Corp.
By: /s/ Steven E. Dawson
------------------------------
Print: Steven E. Dawson
------------------------------
Steven E. Dawson, CFO and
Secretary
Inter/Forever Sports, Inc.
By: /s/ Stefano Turconi
------------------------------
Print: Stefano Turconi
------------------------------
Stefano Turconi, CEO
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<PAGE>
EXHIBIT 10.40
EXECUTION COPY
AGREEMENT
THIS AGREEMENT ("AGREEMENT") is entered into as of the 28th day of
September, 1998 between INTER/FOREVER SPORTS, INC., a Florida corporation
("Grantor") and RADIO UNICA CORP., a Delaware corporation ("Grantee").
RECITALS
A. Grantor is a re-seller of broadcasting and other rights to certain
sporting events, which rights it acquires pursuant to agreements with sports
teams, leagues or other organizations that own those rights ("Original Rights
Owners"), and, in certain cases, acts as a promoter or producer to produce the
sporting events (Grantor's business as described above is collectively referred
to as the "Re-Sale Business" herein);
B. Grantor has acquired, or may acquire, Spanish language radio
broadcasting rights in and to soccer matches and other soccer-related events
scheduled to occur during the years 1998 through 2001;
C. Grantee owns and operates a Spanish language radio network in the
United States and other geographic areas ("Network") and, through the Network,
is in the business of broadcasting radio programming to its owned and/or
operated radio stations and affiliated radio stations.
D. Grantor wishes to sell to Grantee, and Grantee wishes to purchase from
Grantor, the radio broadcasting rights referenced in Recital B above, or a first
option therefor (as further described in this Agreement) upon the terms and
conditions in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT AND DESCRIPTION OF RIGHTS.
(a) DESCRIPTION OF RADIO RIGHTS. Grantor hereby grants to Grantee the
exclusive Spanish language radio broadcasting rights in the United States,
excluding its territories and possessions (but including Puerto Rico) and Canada
(the "Territory") to
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the soccer matches and soccer-related events referenced on Exhibit A attached
hereto and incorporated herein (the "Scheduled Events") and non-exclusive
Spanish language radio broadcasting rights in Central America (excluding Mexico)
and Australia to the CONCACAF Scheduled Events (the "Radio Rights").
(b) FIRST OPTION. Grantee will have the first option (the "Option") to
acquire (exercisable in accordance with the procedure referenced in Section 1(c)
below) any and all other Spanish language radio broadcasting rights (the "Option
Rights"), whether exclusive or non-exclusive, in the Territory (or any portion
thereof) for soccer matches or soccer-related events which are scheduled to
occur during the years 1998, 1999, 2000 or 2001, that are acquired by Grantor or
any entity of which Grantor owns or controls more than 50% of the voting
interests (referred to as a "Subsidiary" of Grantor herein). The matches and
events referenced in Section 1(a) above and this Section 1(b) are collectively
the "Matches and Events."
(c) FIRST OPTION; OPTION EXERCISE PROCEDURE.
(i) In the event that Grantor or any Subsidiary of Grantor acquires
any Option Rights, then the procedure for offer and exercise of the Option shall
be as follows (the "Option Exercise Procedure"):
(A) Grantor shall, prior to offering or selling the Option
Rights to any third party (or negotiating with any third party for such sale),
first offer the rights to Grantee by delivering a written notice to Grantee
offering to sell the rights to Grantee on terms and at a price specified in the
notice.
(B) Grantee shall advise Grantor within three (3) business days
of receipt of the written notice (by delivery of written notice to Grantor) of
its desire to enter into an agreement with Grantor upon the terms specified in
the written notice or its rejection of the Grantor's offer or of a counteroffer.
Non-response by Grantee within such three (3) business day period shall be
deemed a rejection of the Grantor's offer.
(C) If Grantee delivers a counteroffer to Grantor, Grantor will
advise Grantee within three (3) business days of receipt of the written notice
from Grantee (by delivery of written notice to Grantee) of its desire to enter
into an agreement with Grantee upon the terms specified in the counteroffer
notice or of its rejection of those terms. Non-response by Grantor within such
three (3) three business day period shall be deemed a rejection of the
counteroffer's terms.
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(D) If Grantee rejects the Grantor's initial offer (referenced
in (A) above) without also delivering a counteroffer to Grantor, then Grantor
will be free to offer and sell the subject Option Rights to third party(ies).
If Grantee delivers a counteroffer to Grantor, then (E) below will apply.
(E) After Grantor rejects any counteroffer, if Grantor does so,
then Grantor will be free to offer and sell the subject Option Rights to third
party(ies) but only at a price higher than that specified in Grantee's
counteroffer; provided that if Grantor thereafter desires to sell the subject
Option Rights to a third party at a price equal to or lower than the Grantee's
counteroffer, Grantee shall have a right of first refusal to acquire the subject
Option Rights at said "equal to or lower than" price, which right of first
refusal shall be exercisable (by written notice to Grantor) within three (3)
business days following receipt by Grantee of written notice offering to sell
the rights to Grantee at said price.
(F) If Grantee notifies Grantor of its desire to enter into an
agreement upon the terms specified in Grantor's initial offer (referenced in (A)
above) or Grantor notifies Grantee of its desire to enter into an agreement upon
the Grantee's counteroffer terms, then the parties shall, within three (3)
business days of receipt by Grantor or Grantee, whichever applicable, of such
notice, proceed in good faith to enter into a written agreement for the purchase
of the rights upon said agreed terms, failing which Grantor shall be free of its
"first option" obligations and may freely offer and sell said rights to third
party(ies) but only at a price higher than Grantee's counteroffer price;
provided that if Grantor thereafter desires to sell the subject Option Rights to
a third party at a price equal to or lower than such counteroffer price, Grantee
shall have a right of first refusal to acquire the subject Option Rights at said
"equal to or lower than" price, which right of first refusal shall be
exercisable (by written notice to Grantor) within three (3) business days
following receipt by Grantee of a written notice offering to sell the rights to
Grantee at said "equal to or lower than" price.
(d) PERIOD OF EXCLUSIVITY. Grantee's exclusivity with respect to the
Radio Rights shall extend throughout the Term such that, during the Term,
neither Grantor nor any third party authorized by Grantor or any of its
Subsidiary of Grantor will broadcast the Scheduled Events (or any portion
thereof) on Spanish language radio in the Territory. During the Term, Grantee
shall have the exclusive right to use on, for and in connection with Spanish
language radio the Basic Feed (as described in Section 1(e) below) for each of
the Scheduled Events and for any other Matches and Events to which exclusive
rights have been granted to Grantee. Grantee recognizes that Grantor may market
and sell rights other than the Radio Rights to the Matches and Events
(including,
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without limitation, television rights) in the Spanish language or any other
language and that this activity is not a conflict with Grantee's rights under
this Agreement.
(e) PROVISION OF BASIC FEED. The "Basic Feed" is a live, uninterrupted,
unedited feed transmitted from the venue of the subject event containing natural
sound. Grantor shall, at its cost and expense, produce or cause to be produced,
at its cost and expense, the Basic Feed for each of the Scheduled Events and the
other Matches and Events for which rights are granted to Grantee hereunder.
Grantor acknowledges and agrees that Grantee will use the Basic Feed to produce
and edit for radio broadcast an audio play-by-play description of the subject
matter of the Basic Feed containing Grantee's voice-over descriptions and to
incorporate in such broadcasts the audio soundtrack of the Basic Feed containing
natural sound. Grantee shall, at its cost and expense, be responsible for the
full international route of the Basic Feed If the Basic Feed is uplinked to an
international satellite, Grantee will be responsible for the downlink of the
Basic Feed and all costs associated therewith including, if applicable, the
appropriate percentage of uplink costs. If the Basic Feed is available to an
earth station in the United States, Grantee will be responsible at its cost and
expense, for the retrieval of the Basic Feed therefrom. The parties contemplate
that the Copa America 1999 and Gold Cup 2000 Basic Feed will be available at a
United States teleport. If the Basic Feed for either such event is not otherwise
available at a United States teleport, then Grantor, at its cost and expense,
will be responsible for making the Basic Feed available at a United States
teleport.
(f) DEFINITION OF TERM "RADIO". "Radio" or "radio broadcast" as such terms
are used in this Agreement shall include any and all forms of radio
distribution, including over-the-air broadcast and satellite transmission of
audio programming, but excluding internet and direct-to-home video services (it
being understood that Grantee is not responsible for the unauthorized receipt of
its radio transmissions hereunder by internet or direct-to-home video services
users).
(g) BROADCASTING BY GRANTEE AT AND FROM VENUES; TICKETS.
(i) In exercising its Radio Rights under this Agreement, Grantee shall
have the right, in its sole discretion, to broadcast from the Matches and Events
directly. For those Matches and Events for which Grantor is the promoter,
Grantor shall provide to Grantee adequate facilities at no cost for Grantee's
transmission of the Matches and Events upon Grantee's prior written request
therefor. For those Matches and Events for which Grantor is not the promoter,
Grantee shall be solely responsible, at its own cost and expense, to acquire the
adequate space required to broadcast directly from the
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facilities, venue management group, the Match or Event promoter or other
applicable party; provided that Grantor will use its good faith efforts to
assist Grantee in obtaining such space at a reasonable price. Similarly, Grantee
shall be solely responsible for all costs of establishing and installing all
telephone lines or other technical equipment it may need for broadcast from the
venues, whether or not Grantor is the Match or Event promoter. For purposes of
this Agreement, "promoter" shall mean serving as the promoter, owner, producer
or coordinator of the subject event.
(ii) For those Matches and Events for which Grantor is the promoter,
Grantor shall provide to Grantee at least seven (7) calendar days prior to the
subject match or event at no cost to Grantee at least twenty (20) "premium
seating" tickets for each game or event included in the subject match or event
and shall use its good faith efforts to make an additional, reasonable number of
tickets available to Grantee at face value if Grantee requests them. For those
Matches and Events for which Grantor is not the promoter, Grantor shall use its
good faith efforts to cause a reasonable number of tickets to be made available
to Grantee at face value if Grantee requests them.
(h) USE OR NON-USE OF RADIO RIGHTS, BASIC FEED. Grantee warrants and
represents that it shall transmit or cause to be transmitted live and
uninterrupted, without exception, at least seventy five percent (75%) of the
games of the Copa America 1999, Gold Cup 2000, and the World Cup Qualifying
Events' games sold to Grantee hereunder (such qualifying events are referenced
in numbers (4) and (5) on Exhibit A) over its owned and/or operated stations and
affiliated stations. Furthermore, Grantee warrants and represents that it shall
transmit or cause to be transmitted live and uninterrupted at least ten (10) of
all games included in any remaining Matches and Events, which ten (10) games
shall be selected by Grantee in its sole discretion. Grantee may, in its sole
discretion (i) broadcast and re-broadcast, or cause to be broadcast and
re-broadcast, without limitation as to the number of times of broadcast, on its
owned and/or operated and/or affiliated stations and (ii) aside from the
percentages with respect to live transmission referenced in this Section 3(h)
above, broadcast or cause to be broadcast on its owned and/or operated and/or
affiliated stations, the remaining games of the Matches or Events (or any
portions thereof) and the other Matches and Events (or any portions thereof) by
live or delayed broadcast. Grantee may modify or add to the audio portion of the
Basic Feed, in its sole discretion, in exercising its Radio Rights under this
Agreement. The Radio Rights may be exploited by, and the broadcast obligations
set forth in this Section 3(h) above may be fulfilled by, broadcast by Grantee
or any of its affiliated companies.
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(i) PRODUCTION. Grantee shall, in its sole discretion, control and be
responsible for the radio production of Matches and Events broadcast by Grantee,
and Grantee shall pay all costs of such radio production, including costs
related to announcers, production personnel and radio transmission (following
delivery of the Basic Feed to Grantee and subject to Grantor's responsibilities
set forth in Sections 1(e) and 1(g) above). It is understood and agreed that
Grantor will be solely responsible for all costs of production of the Basic Feed
(which feed includes an video signal and soundtrack with natural sound that will
facilitate radio broadcast hereunder) and delivery of the Basic Feed to Grantee
as required under Section 1(e) above. Grantor will use its good faith efforts to
minimize any costs of radio production and transmission in respect of which
Grantor has any influence.
(j) AGREEMENTS WITH ORIGINAL RIGHTS OWNERS. Grantor shall deliver to
Grantee within three (3) weeks of the date first set forth above, in order to
evidence its ownership of the Radio Rights for each of the Scheduled Events: (i)
copies of its agreements with each of the Original Rights Owners establishing
Grantor's ownership of the Radio Rights for the Scheduled Events without
restriction as to the right to re-sell such Radio Rights (which agreements may
be provided in a redacted form reasonably acceptable to Grantee) or (ii) at
Grantor's election, written confirmation from each of the Original Rights Owners
of Grantor's ownership of the Radio Rights for the Scheduled Events without
restrictions as to the right to re-sell such Radio Rights (or any combination of
(i) and (ii), at Grantor's election, for all Scheduled Events). On or about
Tuesday, September 29, 1998, counsel for IFS (Allen & Galego) shall deliver to
Grantee written confirmation of (A) and (B) below (the "Written Confirmation"):
(A) based upon review of written confirmation(s) from Traficc
Marketing Exportivo ("Traficc") of Traficc's ownership of the subject Radio
Rights and Traficc's subsequent sale or assignment of the rights to Grantor,
Grantor, without qualification (except by reference to and reliance upon the
Traficc written confirmation(s)) owns the Radio Rights for the Scheduled Events
referenced in (1), (3), (4), (7), 8(a) and (9) on Exhibit A without restriction
as to the right to re-sell such Radio Rights; and
(B) based upon said counsel's review of the agreements between
Grantor and the Original Rights Owners documenting the purchase of rights by
Grantee for the Scheduled Events referenced in (2), (5), (6), (8)(b) and (10) on
Exhibit A without restriction as to the right to re-sell such Radio Rights.
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2. TERM. The term of this Agreement ("Term") shall commence as of the date
first set forth above and shall end on December 31, 2001, unless sooner
terminated in accordance with Section 8 below.
3. CONSIDERATION; DECREASE IN CONSIDERATION.
(a) CASH AND BARTER CONSIDERATION. Grantee shall pay to Grantor, as full
and complete consideration for the Radio Rights granted to Grantee hereunder:
(i) $*(*) ("Cash Consideration"), payable as set forth in the payment schedule
in Section 3(b) below and subject to decrease as set forth in Section 3(c) below
plus (ii) rights to radio advertising time on certain stations in the Network
(as further described in Section 3(d) below) valued at $* (the "Barter
Consideration"). The Cash Consideration plus the Barter Consideration is
collectively referred to as the "Consideration" hereunder. All dollar values set
forth in this Agreement are stated in U.S. dollars.
(b) PAYMENT SCHEDULE. Grantee shall (subject to Section 3(c) below) pay
the Cash Consideration to Grantor pursuant to the following payment schedule:
(i) Upon execution of this Agreement, $* (it being understood and
agreed that the $* deposit previously paid by Grantee to Grantor shall be
applied toward this payment such that no payment shall be due from Grantee to
Grantor upon execution of this Agreement).
(ii) (A) No later than the business day following receipt of that
portion of the Written Confirmation referenced in Section 1 (j)(A) above, $*
(B) No later than the business day following receipt of that
portion of the Written Confirmation referenced in Section 1 (j)(B) above, $*
(iii) No later than January 15, 2000, $*
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(*) The purchase price has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
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(iv) No later than June 30, 2000, $*
(v) No later than March 31, 2001, $*
All the above payments shall be due and payable, via wire transfer to an account
designated in writing by Grantor or by certified check in U.S. funds (if by
check, from a Florida bank with a branch located in Miami-Dade County), on or
before the date due. Failure to make timely payments hereunder shall be
considered a breach of this Agreement and may result in termination pursuant to
the terms in Section 8(b)(i) but only following notice to Grantee and failure of
Grantee to cure thereafter as provided in Section 8(b)(i).
(c) DECREASE IN CASH CONSIDERATION.
(i) In addition to any and all remedies to which Grantee may be
entitled hereunder, in the event that:
(A) any of the Scheduled Events (or portions thereof) referenced
on Exhibit B attached hereto and incorporated herein do not occur during the
year therefor referenced on Exhibit A, or within six (6) months of the month and
year referenced on Exhibit A, if both a month and year are referenced on Exhibit
A (it being understood that a non-substantial decrease, defined as no greater
than a 30% decrease, in the number of games per a Scheduled Event, as referenced
on Exhibit B, caused by changes in event format or other changes outside of
Grantor's control, including, without limitation, changes by an event organizer
in the schedule for any Scheduled Event, shall not be a breach of this Agreement
by Grantor); or
(B) the rights acquired by Grantor for any such events from the
Original Rights Owners and re-sold to Grantee hereunder are (1) lost by Grantor
or are (2) otherwise affected by a breach by Grantor of this Agreement or by a
force majeure event (as described in Section 3(c)(ii) below) such that, in
either case (1) or (2), Grantee is unable to exploit Radio Rights for such
events (or portions thereof), it being understood that any such loss of such
rights (but not if due to a force majeure event) will constitute a breach of
this Agreement by Grantor, then the Cash Consideration and Barter Consideration
shall be decreased, by a "Decrease Amount," (applied in equal proportion to
decrease Cash Consideration and Barter Consideration in equal amounts) as
calculated by the formula set forth on Exhibit B (the "Consideration Decrease
Formula"), for each such Scheduled Event (or portion thereof, as described on
Exhibit B) that does not occur, is so affected or to which rights are lost.
Grantor shall promptly notify Grantee in writing upon receipt of information
regarding re-scheduling or
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cancellation of any Scheduled Event (or regarding any circumstance that has or
may cause loss of rights or adverse effect on the rights). Grantee may offset
any Decrease Amount from any upcoming installment payment of Cash Consideration
or any upcoming year's allocation of Barter Consideration, as may be applicable,
or may, in the case of a decrease to Cash Consideration, deliver written notice
to Grantor requesting a Decrease Amount if Cash Consideration in the decrease
amount has been paid by Grantee to Grantor. Grantor shall, promptly upon receipt
of any such notice, deliver to Grantee the noticed amount in immediately
available funds.
(ii) The parties recognize that the nature of the technology which is
contemplated to be used for the fulfillment of Grantor's duties and obligations
is subject, from time to time, to technical difficulties beyond Grantor's
control, including but not limited to, acts of God, war, strikes, riots, and
technical difficulties beyond Grantor's control that may cause partial or
complete loss of video and audio satellite signals (collectively, "force
majeure" events). Should any of the above occur, which occurrences shall not be
considered a breach of Grantor's duties pursuant to this Agreement, Grantor and
Grantee shall work together in good faith in order to fulfill each others
obligations hereunder. If a force majeure event affects Grantee's broadcast (or
planned broadcast) of a Match or Event or portion thereof, Grantee shall
nevertheless be deemed to have broadcast such Match or Event or portion thereof
for purposes of its broadcast obligations in Section 1(h) above.
(d) DESCRIPTION OF BARTER CONSIDERATION. The Barter Consideration shall
consist of radio advertising time, as described below, for use by Grantor on
Grantee's owned and/or operated stations in the Territory, as such stations may
change from time to time (the "Barter Stations"). Such stations include, as of
the date of this Agreement: the Los Angeles, California; New York, New York; San
Francisco, California; Miami, Florida; Chicago, Illinois; San Antonio, Texas;
Houston, Texas and Dallas, Texas Network radio stations. Grantee shall use its
good faith efforts to assist Grantor in obtaining, at Grantor's sole cost, a
reasonable number of promotional spots (which promotional spots shall be used
only for the purposes referenced in Section 3(e) below) on Grantee's affiliated
stations. The Barter Consideration shall consist of radio advertising time
valued at the following amounts during each of the following years based upon
regular local "run of schedule" rates in effect. On or about January 1 and July
1 of each year during the Term of this Agreement, Grantee shall provide to
Grantor a rate sheet, listing its Barter Stations' net advertising rates thereon
(after commissions) for each time slot. Such rates, which shall be equal to the
current net market rates (after commissions) for each station/market, shall be
applicable for the following full six (6)
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month period, through July 1 or January 1 (whichever applicable), without change
or modification, for Grantor's advertising time under this Section 3(c), and
Grantor's usage of its Barter Consideration shall be calculated based on the
rates set out therein for the relevant six (6) month period.
YEAR VALUE
---- -----
1998 $*
1999 $*
2000 $*
2001 $*
2002 $*
(e) REPORTING REGARDING BARTER CONSIDERATION. Grantee shall, on or about
January 1 and July 1 of each year during the Term, also provide Grantor with a
complete report of the advertising placed pursuant to Section 3(d) above. Such
report shall contain, at a minimum, the cost of each advertisement placed, the
time slot each advertisement was placed in, and the remaining amount of Barter
Consideration due Grantor for that particular year pursuant to the
above-referenced schedule. Grantor may not sell or otherwise assign said rights
to advertising time and Grantor may elect, at its sole discretion, to hold over
up to twenty (20) percent of a particular year's advertising time in order to
use that time only in the following year if it so desires. Except for the hold
over authorization referenced in the immediately preceding sentence, Grantor may
only use advertising time during the years set forth in the above-referenced
schedule and may not hold over advertising time for use in different years.
Advertisement placement shall be subject to availability on the requested
station at the time(s) requested by Grantor, but Grantee shall use its good
faith efforts to comply with Grantor's requests for time. Spots placed by
Grantor in such time shall be for the sole purpose of promoting an event or a
closed circuit broadcast owned and controlled by the Grantor or to sell
merchandising items (such as videotapes of the events or t-shirts) related to
events. Without limiting the foregoing, spots placed by Grantor in such time
shall not promote radio stations, companies or networks other than Grantee and
shall not include advertisements for any third party products or services.
Unless Grantee agrees otherwise, Grantor shall not use any more than forty
percent (40%) of the above-referenced advertising time for each year during any
calendar quarter of the subject year (provided that this restriction shall not
apply during 1998) and shall not use any more than thirty five percent (35%) of
the above-referenced advertising time for each year on any one Barter Station
during any year. The parties acknowledge and agree that $* of the Barter
Consideration for the year 1998 has, prior to the effective date, been provided
to Grantor such that only $* in Barter Consideration is, as of the date first
set forth above, due to Grantor during 1998.
(f) REVENUES AS PROPERTY OF GRANTEE. Any and all revenues generated from
or in connection with the exercise of Grantee's Radio Rights, regardless of the
form, manner or media in which the revenues are generated (and including,
without limitation,
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radio advertising time sold by Grantee on the Network during broadcast of the
Matches and Events, which sales shall be in Grantee's sole discretion), shall be
the sole property of Grantee.
4. ORIGINAL RIGHTS OWNERS; PROMOTION AND MARKETING; SPONSORSHIP; MERCHANDISE.
(a) INFORMATION, ASSISTANCE REGARDING MATCHES AND EVENTS. Grantor shall
provide, or cause to be provided to Grantee by the Original Rights Owners or
others, information and assistance reasonably requested by Grantee regarding the
Matches and Events for purposes of exercise of Grantee's Radio Rights under this
Agreement. Grantor shall provide Grantee with information concerning the Matches
and Events that is relevant to Grantee's Radio Rights promptly upon receipt of
such information regardless of a request by Grantee therefor.
(b) ANCILLARY RIGHTS. Grantee may use the official logos and emblems of
the Matches and Events of which Grantor is the owner or promoter, but only for
the sole purpose of promoting its transmission of such Match or Event and in
connection with exploitation of its Radio Rights hereunder, and only with
Grantor's prior written permission, which permission shall not be unreasonably
withheld. Grantor shall reply to any request to Grantee for such use within five
(5) business days after any request by Grantee therefor. Grantee may, in its
sole discretion, arrange for sponsor(s) in connection with exercise of its Radio
Rights with respect to particular Matches and Events. Sponsorship by any such
sponsor(s) shall be limited to official sponsorship by the sponsor of Grantee's
broadcast of certain Matches and Events, not official sponsorship of Matches or
Events themselves.
(c) GOLD CUP 2000. Grantee shall offer to the Official Sponsors (as
defined below) a right of first refusal to be a radio sponsor of Grantee for the
Gold Cup) 2000 event. Such rights of first refusal shall be on terms and at
rates determined by Grantee. No later than May 31,1999, Grantor shall provide to
Grantee a written list of no more than eight (8) official sponsors for the Copa
de Oro 2000 event (the "Official Sponsors"). Thereafter, Grantee shall establish
its pricing for the radio sponsorships and offer such a right of first refusal
to each of the Official Sponsors as aforesaid; provided that if Grantee objects
to any such Official Sponsors with reasonable justification (by way of example
and not by way of limitation, if an Official Sponsor is a major competitor of
one of Grantee's advertisers), then Grantee's shall be relieved and released of
its obligation to offer a right of first refusal to such Official Sponsor as set
forth in this Section 4(c) upon notice to Grantor of any such objections.
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5. REPRESENTATIONS AND WARRANTIES.
(a) GRANTOR. Grantor represents and warrants that:
(i) it owns (free and clear of any restrictions, liens or
encumbrances, including without limitation, any rights of first refusal or
options held by any third party for any of the Radio Rights), all rights
necessary to, and has the full power and authority to, enter into this Agreement
and to grant the Radio Rights and Option to Grantee as provided in this
Agreement (provided that, with respect to the World Cup Qualifying Events
referenced on Exhibit A, as of the date first set forth above, Grantor's
representation and warranty in this subpart (i) is limited to its representation
and warranty that it owns the Radio Rights to at least 80 games that are World
Cup Qualifying Events and may acquire the rights to additional games that are
World Cup Qualifying Events, the Radio Rights to which additional games Grantee
will own upon acquisition by Grantor);
(ii) for each of the Scheduled Events (subject to Section 5(a)(i)
above, as limited by the "provided that" parenthetical at the end of Section
5(a)(i)), it has acquired the Radio Rights granted to Grantee hereunder pursuant
to a valid and effective agreement with the Original Rights Owner of the subject
rights and this Agreement does not violate or conflict with any terms of any of
such agreements (and, if the subject Radio Rights were acquired by Grantor from
a party, the "Prior Owner," that acquired the Radio Rights from a prior Original
Rights Owner, then, to Grantor's knowledge after reasonable inquiry, the Prior
Owner acquired the Radio Rights pursuant to valid and effective agreement(s)
with the prior Original Rights Owner(s) and this Agreement does not violate or
conflict with any terms of such agreement(s));
(iii) the grant of Radio Rights to Grantee in the Territory during the
Term is and will be exclusive, as described in Section 1(d) above;
(iv) Grantor has made no other agreement for the option, sale, license
or use of rights which would interfere with the grant of Radio Rights and the
Option to Grantee hereunder or Grantee's exploitation of the Radio Rights as set
forth in this Agreement;
(v) the exploitation of the Radio Rights by Grantee during the Term as
contemplated by this Agreement will not violate the radio transmission rights of
any third party;
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(vi) Grantor will defend (at its cost) the Radio Rights and Option
against all third parties claiming ownership therein or usage rights thereto and
will execute and deliver, or cause to be executed and delivered, such further
instruments or documents, and take such further actions, as may be necessary or
appropriate to do so (in this regard, Grantor, at Grantee's request, shall
author or co-author a letter with Grantee to be forwarded to Spanish language
radio broadcasters that broadcast in the Territory advising that Grantee is the
exclusive owner of the Radio Rights in the Territory);
(vii) it is a corporation duly incorporated and in good standing under
the laws of Florida, has the full power and authority to enter into this
Agreement and the individual signing on behalf of it below is duly authorized to
sign this Agreement on its behalf as the Chief Executive Officer of Grantor;
(viii) if and to the extent that Grantor is not the owner of copyright
and other property right interests in recordings of Matches and Events, Grantor
represents and warrants that no royalties or fees will be payable by Grantee to
the owner in connection with Grantee's Radio Rights hereunder.
Each of Grantor's representations and warranties above (except those in subpart
(vii) above) shall be true and correct in all material respects on the date of
each exploitation and/or use of the Radio Rights during the Term. Grantee is
entering into this Agreement in reliance upon each of the above-referenced
representations and warranties of Grantor. In the event of breach of any of the
above-referenced representations and warranties of Grantor, the indemnification
obligations in Section 7 below shall apply.
(b) GRANTEE. Grantee represents and warrants that:
(i) it is a corporation duly incorporated and in good standing under
the laws of Delaware, has the full power and authority to enter into this
Agreement and the individual signing on behalf of it below is duly authorized to
sign this Agreement on its behalf as the Chief Financial Officer and Secretary
of the Grantee;
(ii) it has the financial and technical ability to satisfy this
Agreement; and
(iii) it owns and/or operates the Barter Stations, as such term is
defined in Section 3(d).
13
<PAGE>
Grantor is entering into this Agreement in reliance upon each of the
above-referenced representations and warranties of Grantee. In the event of
breach of any of the above- referenced representations and warranties of
Grantee, the indemnification obligations in Section 7 below shall apply.
6. INFRINGEMENT OF RIGHTS. The parties acknowledge and agree that instances
may arise where third parties may engage in conduct which constitutes an
infringement of the Radio Rights granted to Grantee hereunder. Grantor
authorizes Grantee to initiate and maintain any enforcement action against
infringing conduct solely in the name of Grantee, or in the name of Grantee and
Grantor if reasonably deemed necessary by Grantee, and Grantor agrees to
cooperate with Grantee in the investigation and/or prosecution of any such
enforcement action.
7. INDEMNIFICATION.
(a) INDEMNIFIABLE LOSSES. Grantor will indemnify Grantee against, and hold
it harmless from, any claims, deficiencies, liabilities, losses, judgments,
damages and expenses (collectively, "Losses") which it may incur by reason of
Grantor's breach of any term of this Agreement, including without limitation,
any of the representations and warranties in Section 5(a) above; provided that
Grantor's indemnification obligations under this Section 7 will not exceed the
Cash Consideration amount. Grantee will indemnify Grantor against, and hold it
harmless from (i) any Losses which it may incur by reason of Grantee's breach of
any term of this Agreement, including without limitation any of the
representations and warranties in Section 5(b) above or (ii) any intentionally
wrongful or negligent acts or omissions of Grantee's radio personnel during the
set up, preparation for, and/or transmission of the Matches and Events, unless
such acts or omissions are as a result of Grantor's (or its agents)
intentionally wrongful or negligent acts or omissions; provided that Grantee's
indemnification obligations under this Section 7 will not exceed the Cash
Consideration amount.
(b) PROCEDURE.
(i) In the event of a claim for indemnification hereunder, the party
seeking indemnification ("Indemnitee") shall send a written notice to the party
from which indemnification is sought ("Indemnitor"), setting forth facts
relating to the claim then known to the Indemnitee (provided that failure to
give such notice shall not release Indemnitor from its indemnification
obligations hereunder unless and to the extent that Indemnitor has been
prejudiced thereby and then only to the extent of such prejudice). The
Indemnitor shall, promptly after receipt of said notice, send a written response
to
14
<PAGE>
Indemnitee stating whether it agrees or rejects the claim in whole or in part.
Failure to give such response within thirty (30) calendar days after receipt of
the notice shall constitute acknowledgment of the validity of the claim. In any
such claim, Indemnitor shall have the right to assume the defense of the matter
giving rise to the claim for indemnification through counsel of its selection
reasonably acceptable to Indemnitee at Indemnitor's expense, and Indemnitee
shall have the right, at its own expense, to employ counsel to represent it.
(ii) If Indemnitor fails or refuses to undertake the defense within
thirty (30) calendar days after receipt of an indemnification notice, Indemnitee
shall have the right to assume the defense of such matter on behalf of, and for
the account of, Indemnitor; provided, however that unless Indemnitor has refused
to undertake the defense, Indemnitee shall not settle or compromise any claim
without the consent of Indemnitor, which consent shall not be unreasonably
withheld. Indemnitee will not enter into an unreasonable settlement of any
claim against it and Indemnitor shall not settle or compromise any claim without
the consent of Indemnitee, which consent shall not be unreasonably withheld. Any
claims settled by Indemnitor shall be at its sole expense.
(iii) If Grantor becomes liable for the payment of any amounts under
this Section 7 in respect of Losses incurred by Grantee, such amounts shall be
reduced by any recovery by Grantee from third parties in connection with such
claim or insurance proceeds, if any, received by Grantee in connection with such
claims and such amounts (subject to such reduction) may be offset, in Grantee's
sole discretion, against Cash Consideration or against Barter Consideration.
8. TERMINATION DUE TO BREACH/BANKRUPTCY.
15
<PAGE>
(a) If this Agreement is breached by Grantor, Grantee may terminate this
Agreement following written notice of the breach to Grantor and failure by
Grantor to cure the breach within ten (10) business days of delivery of the
written notice. Upon termination of this Agreement in accordance with this
Section 8(a), neither party shall have any obligation to the other party (except
for payment of Cash Consideration required to have been paid prior to the date
of the breach, which Cash Consideration may be offset by any applicable Decrease
Amount). In the event that this Agreement is prematurely terminated in
accordance with this Section 8(a) such that Grantee does not broadcast any of
the Scheduled Events or certain portions thereof that are referenced on Exhibit
B (due to termination prior to or during any of the Scheduled Events), then the
Consideration Decrease Formula shall apply to calculate a Decrease Amount for
such events or portions thereof which are not broadcast by Grantee. Grantor
shall, within fifteen (15) calendar days after termination of this Agreement,
reimburse Grantee (by wire transfer to the account of Grantee in accordance with
instructions provided by Grantee or as otherwise directed by Grantee) for any
overpayments of Cash Consideration to Grantor (the refund amount shall in no
event exceed the Cash Consideration previously paid by Grantee to Grantor).
Grantee may also terminate this Agreement by written notice to Grantor if
Grantor makes any assignment for the benefit of creditors or any arrangement
pursuant to any bankruptcy law, or files or has filed against it any petition
under the bankruptcy or insolvency laws of any jurisdiction which is not set
aside within thirty (30) calendar days of the filing date, or shall have or
suffers a receiver or trustee to be appointed for its business or property, or
is adjudicated bankrupt or insolvent.
(b) Grantor may terminate this Agreement by written notice to Grantee if
(i) Grantee fails to make timely payments as required pursuant to Section 3(b),
but only if Grantee fails to cure such deficiency within seven (7) calendar days
of receiving Grantor's written notice regarding such failure to pay the amounts
due, (ii) Grantee fails to transmit the Matches or Events as required in Section
1(h) or fails to properly provide Grantor with its Barter Consideration as
provided for in Section 3(d), but only if Grantee fails to cure (or to commence
in good faith to cure in the event that cure will take longer than seven (7)
calendar days) such defaults within seven (7) calendar days of receiving
Grantor's written notice of any such defaults, and/or (iii) Grantee makes any
assignment for the benefit of creditors or any arrangement pursuant to any
bankruptcy law, or files or has filed against it any petition under the
bankruptcy or insolvency laws of any jurisdiction which is not set aside within
thirty (30) calendar days of the filing date, or shall have or suffers a
receiver or trustee to be appointed for its business or property, or is
adjudicated bankrupt or insolvent.
16
<PAGE>
9. MISCELLANEOUS.
(a) Intentionally Left Blank
(b) ARBITRATION. Disputes arising under this Agreement shall be resolved
by an arbitrator selected by agreement of the parties. Written notice of any
dispute shall be forwarded by the asserting party to the other party. If the
parties cannot, within ten (10) business days after delivery of the notice,
agree to an arbitrator, each shall select one arbitrator who, together, shall
select the one arbitrator who shall arbitrate the dispute. Any such arbitration
shall be resolved under the rules of the American Arbitration Association in
Miami, Florida. Arbitration shall be conducted in Miami, Florida and shall be
final and binding upon the parties. The costs of arbitration shall be shared
equally by the parties or as otherwise decided by the arbitrator.
(c) CHOICE OF LAW. This Agreement shall be governed by and construed
under the laws of the State of Florida excluding conflicts of law.
(d) PARAGRAPH HEADINGS. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
(e) COUNTERPARTS; FACSIMILE COPY. This Agreement may be signed in one or
more counterparts, all of which, together, shall constitute a fully executed
Agreement. A facsimile copy also may serve as an original.
(f) ENTIRE AGREEMENT; WAIVER; SEVERABILITY. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof.
All other previous agreements or writings are therefore superseded. Any waiver
of a party's breach of any provision of this Agreement shall not be taken,
construed, or held to be a waiver for any breach thereafter or any other
provision hereof.
(g) MODIFICATION; ASSIGNMENT. No modification of any terms of this
Agreement shall be effective unless in writing and signed by both parties to
this Agreement. This Agreement may not be assigned by either party without the
express written consent of the other, which consent shall not be unreasonably
withheld.
(h) SURVIVAL. The provisions set forth in Sections 3(f), 6, 7, 8(a), 9(b),
9(c) and 9(i) shall survive termination of this Agreement.
17
<PAGE>
(i) CONFIDENTIALITY. Neither party to this Agreement shall disclose to any
third party any information regarding the terms of the Agreement (other than,
generally, the fact that Grantee has acquired the Radio Rights from Grantor or
the amount of Consideration paid by Grantee hereunder) or non-public information
regarding the other party's finances, business practices, trade secrets,
advertisers, customers or other proprietary information, unless required by law
or such information becomes public other than through breach of this Section
9(i) by the disclosing party.
(j) RECITALS. The recitals set forth above are hereby incorporated into
the terms of this Agreement.
(k) PRESS CONFERENCE. The parties will, promptly after execution of this
Agreement, hold a joint press conference in Miami, Florida (at a time and
location, and in a manner, mutually agreed to by the parties) to announce the
parties' relationship under this Agreement. It is contemplated that the press
conference will include appearances by soccer personalities, such as well-known
players and/or coaches. Any subsequent press conferences or media activities
with respect to promotion of the Radio Rights shall be in the sole discretion of
Grantee with the reasonable cooperation of Grantor at the request of Grantee.
(l) NOTICE. All notices or other communications hereunder shall be in
writing and shall be deemed to have been properly given if addressed to the
respective party to whom such notice relates as set forth below (or at such
different address as shall be specified by a party by notice given in the manner
herein provided) and transmitted by (i) registered or certified mail,
return-receipt requested, (ii) hand delivery, (iii) internationally recognized
courier service (such as Federal Express or DHL) or (iv) facsimile transmission.
Each notice or communication which is sent in the manner described above shall
be deemed sufficiently given, served, sent, received or delivered for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or (with respect to a facsimile transmission) the
answer back being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation. Notices shall be addressed as follows:
If to RUC:
Radio Unica Corp.
8400 N.W. 52nd Street, Suite 101
Miami, Florida 33166
Attention: Steven E. Dawson, Chief Financial Officer
18
<PAGE>
Telephone: 305-463-5020
Facsimile: 305-463-5022
lf to IFS:
Inter/Forever Sports, Inc.
801 Brickell Drive, Suite 1080
Miami, Florida 33131
Attention: Chief Executive Officer
Telephone: 305-377-2700
Facsimile: 305-377-0802
(m) Time Deadline. All time deadlines referenced herein shall be as of
5:00 p.m. (Miami, Florida time) on the relevant day.
10. RESTRICTIONS ON GRANTEE'S NEGOTIATIONS WITH ORIGINAL RIGHTS OWNERS. During
the Term of this Agreement, Grantee shall not negotiate for the purchase of
radio or other transmission rights for soccer or soccer-related events from any
of the Original Rights Owners; provided that Grantee may, following: (a) written
notice to Grantor of its interest in purchasing any such rights and (b)
non-delivery of written notice by Grantor to Grantee within twenty (20) calendar
days of delivery of such notice to Grantor, which written notice notifies
Grantee of the acquisition of such rights by Grantor (and Grantor's right to
re-sell the rights) and offers the rights to Grantee at a specified price and on
specified terms, subject to the terms governing the Option in Section 1 above),
negotiate for the purchase of said rights and purchase said rights from any of
said Original Rights Owners or any third party. Nothing contained in this
Section 10 shall restrict Grantee from negotiating with, or purchasing from, any
third party in the Re-Sale Business radio or other transmission rights which
such third party owns at the time Grantee becomes interested in purchasing said
rights.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
GRANTOR GRANTEE
INTER/FOREVER SPORTS, INC. RADIO UNICA CORP.
By: /s/ Stefano Turconi By: /s/ Steven E. Dawson
------------------------------- --------------------------------
Name: Stefano Turconi Name: Steven E. Dawson
Title: Chief Executive Officer Title: Chief Financial Officer
and Secretary
19
<PAGE>
EXHIBIT A
SCHEDULED EVENTS
EVENT DATE
(1) Copa America July 1999
(2) Gold Cup February 2000
(3) Copa America July 2001
**note: (4) and (5) below are "World Cup Qualifying Events"
(4) CONMEBOL (Eliminatorias April 2000-November
al Mundial) 2000-2001
(5) CONCACAF (Eliminatorias April 2000-November
al Mundial 2000-2001
(6) Sub-20 CONCACAF November 1998 and
(1998 and 2000- November 2000-2001
2001 events)
(7) Sub-20 CONMEBOL January/February 1999
(1999 and 2001 and January/February
events) 2001
(8) (a) Sub-17 CONMEBOL
(1999 and 2001 events) March 1999 and year 2001
(b) Sub-17 CONCACAF
(1999 and 2001 events) January/February 1999 and year 2001
(9) CONMEBOL February 2000
Olympic
Qualifying Matches
(10) CONCACAF May 2000
Olympic
Qualifying Matches
20
<PAGE>
EXHIBIT B
CONSIDERATION DECREASE FORMULA
SCHEDULED EVENTS CONSIDERED FOR PURPOSES OF POTENTIAL CONSIDERATION DECREASE:
The Consideration Decrease Formula set forth below reflects the parties'
agreement as to the valuation of games during the specific Scheduled Events set
forth below for purposes only of calculating potential decreases in
Consideration (as defined in Section 3(a) of the Agreement). Set forth below
are the Scheduled Events with respect to which the Consideration Decrease
Formula applies.
Event/Year Minimum # of Games
---------- ------------------
1. Copa America, 1999 26 games
2. Copa America, 2001 26 games
3. Gold Cup, 2000 19 games
4. CONMEBOL and CONCACAF 2000 and 2001
Eliminatorias a Mundial** 80 games
**These are the events referenced in numbers (4) and (5) on Exhibit A
TOTAL: 151 games
---
The value for each of the above-referenced games shall be as follows for
purposes of determining the applicable Decrease Amount in the event that the
circumstances described in Section 3(c)(i) of the Agreement or Section 8 of the
Agreement apply:
(1) For scheduled first round games, $* per game
(2) For scheduled second round games; for subsequent round games (namely,
semi-finals and championship games); and for the final four (4) games of
any event, $* per game
By way of example, if the Copa America 1999 schedule indicates 12 first round
games, 8 second round games and 6 subsequent round games and the 6 subsequent
round games are cancelled, then the Decrease Amount will be: $* multiplied by
6 = $*.
In the event that a Decrease Amount becomes applicable, Grantee shall have the
right to apply such decrease amount in various ways in its discretion, as
described in Section 3(c) of the Agreement. Any reimbursements due to Grantee by
Grantor in the event that a Decrease Amount is applicable under Section 8 to
decrease Cash Consideration shall be made in cash.
21
<PAGE>
It is expressly understood and agreed that Grantee is paying consideration for
the Radio Rights for the Scheduled Events listed on Exhibit A, and for a first
option for other events as described in Section 1(a)(ii) of the Agreement to
which this Exhibit B is attached, although each such event is not referenced in
this Consideration Decrease Formula.
22
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated June 5, 1998 and June 12, 1998, in Amendment No.
2 to the Registration Statement (Form S-4 No. 333-61211) and related
Prospectus of Radio Unica Corp. for the registration of $158,088,000 aggregate
principal amount of its 11.75% Series B Senior Discount Notes due 2006.
/s/ Ernest & Young LLP
Miami, Florida
October 19, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report dated November 18, 1997, on our audits of the financial statements of Oro
Spanish Broadcasting, Inc. We also consent to the reference to our firm under
the caption "Experts".
/s/ Miller, Kaplan, Arase & Co., LLP
MILLER, KAPLAN, ARASE & CO., LLP
North Hollywood, California
October 19, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Joaquin F. Blaya and Steven E. Dawson, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (unless
revoked in writing) to sign any and all amendments (including post-effective
amendments thereto) to this Registration Statement to which this power of
attorney is attached, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney has been signed by the following persons in the
capacities indicated, on August 10th, 1998.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ JOAQUIN F. BLAYA Chairman of the Board August 10, 1998
- ------------------------- and Chief Executive
Joaquin F. Blaya Officer (Principal
Executive Officer)
/S/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------- President and Director August 10, 1998
/S/ STEVEN E. DAWSON Chief Financial Officer, August 10, 1998
- ------------------------- Secretary and Director
Steven E. Dawson (Principal Financial and
Accounting Officer)
<PAGE>
/S/ ANDREW C. GOLDMAN Executive Vice President, August 10, 1998
- ------------------------- Business Affairs and
Andrew C. Goldman Director
/S/ JOHN D. SANTOLERI Director August 10, 1998
- -------------------------
John D. Santoleri
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Joaquin F. Blaya and Steven E. Dawson, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (unless
revoked in writing) to sign the Registration Statement to which this power of
attorney is attached, and any and all amendments thereto (including post-
effective amendments thereto) and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting to such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as full to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This Power of Attorney has been signed by the following persons in the
capacities indicated, on October 16, 1998.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ SIDNEY LAPIDUS Director October 20, 1998
- -------------------------
Sidney Lapidus
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RADIO UNICA CORP FOR THE SIX MONTHS ENDED JUNE 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<NAME>RADIO UNICA CORP.
<CIK>0001067636
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 692,315
<SECURITIES> 0
<RECEIVABLES> 1,957,539
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,290,760
<PP&E> 4,342,651
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,514,087
<CURRENT-LIABILITIES> 10,888,265
<BONDS> 0
0
36,639,969
<COMMON> 359
<OTHER-SE> (13,103,241)
<TOTAL-LIABILITY-AND-EQUITY> 44,514,087
<SALES> 3,463,962
<TOTAL-REVENUES> 3,463,962
<CGS> 0
<TOTAL-COSTS> 13,797,053
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (10,483,559)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (569.71)
<EPS-DILUTED> (569.71)
</TABLE>
<PAGE>
EXHIBIT 99.1
FORM OF LETTER OF TRANSMITTAL
RADIO UNICA CORP.
Offer to Exchange
11 3/4% Senior Discount Notes Series B Due 2006
for any and all outstanding
11 3/4% Senior Discount Notes due 2006
Pursuant to the Prospectus Dated , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED (THE "EXPIRATION
DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
WILMINGTON TRUST COMPANY
By Registered or Certified Mail or Overnight Courier:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Operations
By Hand:
Wilmington Trust Company
c/o Harris Trust Co. of New York, as Agent
88 Pine Street, 19th Floor
Wall Street Plaza
New York, New York 10005
Attn: Corporate Trust Operations
By Facsimile:
(for Eligible Institutions only)
<PAGE>
(302) 651-1079
Confirm by telephone:
(302) 651-1562
Kristin Long
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated ,
1998 (the "Prospectus"), of Radio Unica Corp., a Delaware corporation (the
"Company" or "Radio Unica"), and this Letter of Transmittal (this "Letter"),
which together constitute the Company's offer (the "Exchange Offer") to exchange
an aggregate principal amount of maturity of up to $158,088,000 of the Company's
outstanding 11 3/4% Senior Discount Notes due 2006 (the "Old Notes") for an
equal principal amount at maturity of the Company's 11 3/4% Senior Discount
Notes Series B due 2006 (the "New Notes"). For each Old Note accepted for
exchange, the holder of such Old Note will receive a New Note having a principal
amount at maturity equal to that of the surrendered Old Note.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Prospectus.
The Company reserves the right, at its reasonable discretion, (i) to delay
the acceptance of any Old Notes, (ii) to extend the Exchange Offer, (iii) to
terminate the Exchange Offer and not accept any Old Notes if any of the
conditions set forth in the "The Exchange Offer-- Certain Conditions to the
Exchange Offer" section of the Prospectus shall not have occurred and shall not
have been waived by the Company, by giving oral (confirmed in writing) or
written notice of such delay, extension or termination to the Exchange Agent, or
(iv) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by a public announcement thereof. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment by means of a Prospectus
supplement that will be distributed to all holders of Old Notes, and the Company
will extend the Exchange Offer for a period of five
2
<PAGE>
to ten business days, depending upon the significance of the amendment and the
manner of disclosure to holders of Old Notes, if the Exchange Offer would
otherwise expire during such five to ten business day period. During any
extension of the Expiration Date, all Old Notes previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by the Company.
The Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
This Letter is to be completed by a holder of Old Notes if either: (i)
certificates for Old Notes are to be forwarded herewith or (ii) tenders are to
be made pursuant to the procedures for tender by book-entry transfer set forth
in the Prospectus under "Exchange Offer - Book-Entry Transfer" and an Agent's
Message is not delivered. Holders of Old Notes whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, may tender their Old Notes according
to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. (See
Instruction 1.) Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
3
<PAGE>
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount at
maturity of Old Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES 1 2 3
- -------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Certificate Aggregate Principal Amount at
Holder(s) (Please fill in, if blank) Number(s)* Principal Amount Maturity Tendered**
at Maturity of Old Note(s)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in
column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount at maturity of $1,000 and any integral
multiple thereof. See Instruction 1.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution___________________________________________
Account Number Transaction Code Number__________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)_________________________________________
Window Ticket Number (if any)___________________________________________
Date of Execution of Notice of Guaranteed Delivery______________________
Name of Institution which guaranteed delivery___________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number __________ Transaction Code Number __________
[ ] 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:________________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
4
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount at
maturity of Old Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor any such other
person is engaged in, or intends to engage in a distribution of such New Notes,
or has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and that neither the holder of such Old Notes
nor any such other person is an "affiliate" as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that the Exchange Offer is being made
based upon the Company's understanding of an interpretation by the staff of the
Securities and Exchange Commission (the "Commission"), that the New Notes issued
in exchange for the Old Notes pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by each holder thereof (other than a
broker-dealer who acquires such New Notes directly from the Company for resale
pursuant to Rule 144A under the Securities Act or any other available exemption
under the Securities Act or any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and such holder is not engaged in, and does not intend
to engage in, a distribution of such New Notes and has no arrangement with any
person to participate in the distribution of such New Notes. If a holder of Old
Notes is engaged in or intends to engage in a distribution of the New Notes or
has any arrangement or understanding with respect to the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such holder may not rely on
the applicable interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any secondary resale
5
<PAGE>
transaction. If the undersigned is a broker-dealer that will receive New Notes
for its own account in exchange for Old Notes, it represents that the Old Notes
to be exchanged for the New Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
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.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes".
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
6
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be issued in the name of and sent to someone other than the
person(s) whose signature(s) appear(s) on this Letter above, or if Old Notes
delivered by book-entry transfer which are not accepted for exchange are to be
returned by credit to an account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
Issue New Notes and/or Old Notes not tendered to:
Name(s):_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Please Type or Print)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Please Type or Print)
Address:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Including Zip Code)
(Complete accompanying Substitute Form W-9)
Credit unexchanged Old Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility
account set forth below.
- --------------------------------------------------------------------------------
(Book-Entry Transfer Facility Account Number, if applicable)
7
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be sent to someone other than the person(s) whose signature(s)
appear(s) on this Letter above or to such person(s) at an address other than
shown in the box entitled "Description of Old Notes" on this Letter above.
Mail New Notes and/or Old Notes not tendered to:
Name(s):_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Please Type or Print)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Please Type or Print)
Address:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Including Zip Code)
IMPORTANT: THIS LETTER (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A
BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
8
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _, 1998
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _x
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:_ _ _ _ _ _ _ _ _ _ _ _ _
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the Old
Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Please Type or Print)
Capacity: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Address:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Authorized Signature)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Title)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(Name and Firm)
Dated:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _, 1998
9
<PAGE>
INSTRUCTIONS
Radio Unica Corp.
Forming Part of the Terms and Conditions of the Offer to Exchange
11 3/4% Senior Discount Notes Series B Due 2006 ("New Notes"),
which have been registered under the Securities Act of
1933, as amended, for any and all outstanding
11 3/4% Senior Discount Notes Due 2006 ("Old Notes").
1. Delivery of this Letter and Old Notes; Guaranteed Delivery Procedures.
This Letter is to be completed by holders of Old Notes if certificates are
to be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in the "Exchange Offer -
Book-Entry Transfers" Section of the Prospectus (unless an Agent's Message is
delivered in lieu hereof). Certificates for all physically tendered Old Notes,
or Book-Entry Confirmation, as the case may be, as well as a properly completed
and duly executed Letter of Transmittal or an Agent's Message and any other
documents required by this Letter, must be received by the Exchange Agent at the
address set forth herein on or prior to the Expiration Date, or the tendering
holder must comply with the guaranteed delivery procedures set forth below. Old
Notes tendered hereby must be in denominations of $1,000 principal amount at
maturity and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined in the Prospectus), (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange, Inc. ("NYSE") trading days
10
<PAGE>
after the date of execution of the Notice of Guaranteed Delivery, the
certificates of all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation and Agent's Message, as the case may be, and any
other documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, must be received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders of Old Notes who tender by
book-entry transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount at maturity of Old Notes to be tendered in the box above entitled
"Description of Old Notes--Principal Amount at Maturity Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. Signatures of this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
Only a registered holder of Old Notes or a person who has received a bond
power or proxy from a registered holder may tender such Old Notes in the
Exchange Offer.
Each signature on this Letter must be guaranteed unless the Old Notes
surrendered for exchange pursuant hereto are tendered (i) by a registered holder
of Old Notes who has not completed the box entitled "Special Issuance
Instructions" or
11
<PAGE>
the box entitled "Special Delivery Instructions" on this Letter or (ii) for the
account of an Eligible Institution (as defined in the Prospectus). In the event
that a signature on this Letter is required to be guaranteed, such guarantee
must by an Eligible Institution. If the Old Notes are registered in the name of
a person other than the person signing this Letter, the Old Notes surrendered
for exchange must be endorsed by, or accompanied by, a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its reasonable discretion, duly executed by the registered holder
thereof with the signature thereon guaranteed by an Eligible Institution.
If this Letter is signed by a person or persons other than the registered
holder or holders, such Old Notes must be endorsed by the registered holder
thereof with signature guaranteed by an Eligible Institution or accompanied by
appropriate powers of attorney with signature guaranteed by an Eligible
Institution, in either case signed exactly as the name or names of the
registered holder or holders that appear on the Old Notes.
If this Letter or any Old Notes or powers of attorney are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing and, unless waived by the Company, proper
evidence satisfactory to the Company of its authority so to act must be
submitted with this Letter.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. A holder of
Old Notes tendering Old Notes by book-entry transfer may request that Old Notes
not exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder of Old Notes may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be returned to the
name or address of the person signing this Letter.
12
<PAGE>
5. Tax Identification Number.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which, in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery of
New Notes to such tendering holder may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
13
<PAGE>
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Old Notes to it or its order pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will
be billed directly to such tendering holder.
Except as provided in this Instruction 6, it is not necessary for transfer
tax stamps to be affixed to the Old Notes.
7. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or
delivery of an Agent's Message, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
14
<PAGE>
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. Withdrawals.
Tenders of the Old Notes may be withdrawn at any time prior to the
Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at the address indicated
above. Any such notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount at maturity of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If the Old
Notes have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures for such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of Old Notes tendered by book-entry transfer procedures described above, such
Old Notes will be credited to an account maintained with the Book-Entry Transfer
Facility for the Old Notes) as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Notes
may be retendered by following the procedures described in these instructions.
15
<PAGE>
11. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
16
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: ___________
- --------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN TIN:_________________________
Form W-9 IN THE BOX AT RIGHT AND CERTIFY (Social Security Number or
BY SIGNING AND DATING BELOW. Employer Identification
Number)
- --------------------------------------------------------------------------------
Department of Part 2 -- TIN Applied For
the Treasury
- --------------------------------------------------------------------------------
Internal CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Revenue
Service
Payor's Request (1) the number shown on this form is my correct Taxpayer
For Taxpayer Identification Number (or I am waiting for a number to be
Identification issued to me).
Number
("TIN") and
Certification
(2) I am not subject to backup withholding either because:
(a) I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends,
or (c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) any other information provided on this form is true and
correct.
--------------------------------- ------------------
Signature Date
- --------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify
under penalties of perjury that a taxpayer identification number has not been
issued to me, and either (a) I have mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to
mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number by the time of the exchange, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ---------------------------------------- ------------------------------------
Signature Date
17
<PAGE>
EXHIBIT 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY FOR
RADIO UNICA CORP.
This form must be used to accept the offer for outstanding 11 3/4%
Senior Discount Notes due 2006 (the "Old Notes") of Radio Unica Corp. (the
"Company") in exchange for the Company's 11 3/4% Senior Discount Notes Series B
due 2006 (the "New Notes") made pursuant to the Prospectus, dated __, 1998 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal") if certificates for Old Notes are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach Wilmington Trust Company
(the "Exchange Agent") prior to 5:00 P.M., New York City time, on the Expiration
Date of the Exchange Offer. This form may be delivered by telegram, telex,
facsimile transmission, mail or hand delivery to the Exchange Agent as set forth
below. In addition, in order to utilize the guaranteed delivery procedure to
tender Old Notes pursuant to the Exchange Offer, a completed, signed and dated
Letter of Transmittal must also be received by the Exchange Agent prior to 5:00
P.M., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
Delivery to: WILMINGTON TRUST COMPANY
By Registered or Certified Mail or Overnight Courier:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Operations
By Hand:
Wilmington Trust Company
c/o Harris Trust Co. of New York, as Agent
88 Pine Street, 19th Floor
Wall Street Plaza
New York, New York 10005
Attn: Corporate Trust Operations
By Facsimile:
(for Eligible Institutions only)
(302) 651-1079
Confirm by telephone:
(302) 651-1562
Kristin Long
Delivery of this instrument to an address other than set forth above will
not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount at maturity of Old Notes set forth below pursuant
to the guaranteed delivery procedure described in "The Exchange Offer -
Guaranteed Delivery Procedures" section of the Prospectus.
Principal Amount at Maturity of Old Notes Tendered:(1)
$
--------------------------------------
Certificate Nos. (if available): If Old Notes will be delivered
by book-entry transfer to The
Depository Trust Company,
provide account
- --------------------------------------- number.
Total Principal Amount at Maturity Represented by
Old Notes Certificate(s)
$ Account Number
-------------------------------------- ---------------
- --------------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH
OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVE, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X
----------------------------------------- ------------------------------
X
----------------------------------------- ------------------------------
SIGNATURE(S) OF OWNER(S) DATE
OR AUTHORIZED SIGNATORY
AREA CODE AND TELEPHONE NUMBER:
------------------------
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(s) AND ADDRESS(es)
Name(s)
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Capacity:
--------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
--------------------------------------------------------------------
- ----------------------------
(1) Must be in denominations of principal amount at maturity of $1,000 and any
integral multiple thereof.
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States or otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (each, an "Eligible Institution") hereby guarantees
that, within three New York Stock Exchange ("NYSE") trading days from the date
of this Notice of Guaranteed Delivery, the certificates of all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation
and Agent's Message, as the case may be, and other documents required by the
Letter of Transmittal will be deposited by the undersigned with the Exchange
Agent.
Name of Firm:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
-----------------------------------------------------------------
Area Code and Telephone No.:
---------------------------------------------------
- --------------------------------------------------------------------------------
Authorized Signature
Name:
----------------------------------------------------------------------
Title:
----------------------------------------------------------------------
Date:
----------------------------------------------------------------------
DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF
CERTIFICATES OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS.
