<PAGE>
FORM S-4
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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.)
</TABLE>
------------------------
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. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE PROPOSED MAXIMUM AGGREGATE OFFERING
REGISTERED AMOUNT TO BE REGISTERED OFFERING PRICE PER NOTE PRICE (1)
<S> <C> <C> <C>
$158,088,000 aggregate
principal amount at
11 3/4% Series B Senior Discount Notes due maturity ($100,000,000
2006...................................... initial accreted value) $632.56 $100,000,000
Guarantees of the 11 3/4% Series B Senior
Discount Notes............................ N/A N/A N/A
<CAPTION>
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT OF REGISTRATION
REGISTERED FEE (1)
<S> <C>
11 3/4% Series B Senior Discount Notes due
2006...................................... $29,500
Guarantees of the 11 3/4% Series B Senior
Discount Notes............................ (2)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1).
(2) Pursuant to Rule 457(n), no separate filing fee will be paid for the
Guarantees.
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
</TABLE>
<PAGE>
SUBJECT TO COMPLETION DATED AUGUST 11, 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").
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 12 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 AUGUST [ ], 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.
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
i
<PAGE>
"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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and any definitive proxy or information statements filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the New Notes offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated herein by reference, or contained in this Prospectus, shall
be deemed to be modified or superseded for purposes of this Prospectus, to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. A COPY OF ANY AND ALL DOCUMENTS INCORPORATED
HEREIN BY REFERENCE (EXCLUDING EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED HEREIN BY REFERENCE) WILL BE PROVIDED WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROSPECTUS IS DELIVERED, UPON
ORAL OR WRITTEN REQUEST OF ANY SUCH PERSON BY FIRST CLASS MAIL OR OTHER EQUALLY
PROMPT MEANS AS PROMPTLY AS PRACTICABLE AFTER RECEIPT OF SUCH REQUEST. REQUESTS
SHOULD BE DIRECTED TO RADIO UNICA CORP., ATTN: STEVEN E. DAWSON, 8400 N.W. 52nd
STREET, SUITE 101, MIAMI, FLORIDA 31166, (305) 463-5000. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE EXPIRATION DATE, ANY SUCH
REQUEST SHOULD BE MADE BY , 1998.
ii
<PAGE>
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.
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"). 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
1
<PAGE>
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.
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
2
<PAGE>
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.
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 37 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.
3
<PAGE>
COMPANY-OPERATED STATIONS AND MARKETS
The following table sets forth certain information concerning the stations
operated by the Company and markets in which such stations operate.
<TABLE>
<CAPTION>
HISPANIC
POPULATION HISPANIC
RANK BY PURCHASE IN 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) $21.0 N/A 6,326 38.7%
KVCA(AM) Owned LMA
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>
MANAGEMENT AND INVESTORS
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. Under his leadership, Telemundo and Univision developed new programs
and discovered fresh talent that they successfully presented to the Hispanic
market. He was a significant creative force behind the development and
implementation of the TeleNoticias cable news service and played a key role in
Spanish-language media becoming an important part of the mainstream advertising
mix. Herbert M. Levin, the Company's President and Chief Operating Officer, has
30 years experience in Spanish-language radio, having owned and operated major
Spanish-language radio properties in Miami and New York. 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.
4
<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 sole 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 Confirmation (as defined
herein), to the Exchange Agent (as
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
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 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 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 Offer, the Company will accept for exchange
any and all Old Notes which are properly tendered in
the Exchange Offer
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
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 no-action letters issued to
third parties, 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.
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>
7
<PAGE>
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. 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 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
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
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 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).
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 are
subject to a number of important exceptions. See
"Description of the Notes--Certain Covenants."
Exchange Rights..................... Holders of New Notes are not 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."
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
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>
RISK FACTORS
Prospective participants in the Exchange Offer should consider carefully the
information set forth under the caption "Risk Factors" beginning on page 12 and
all other information set forth in this Prospectus before tendering their Old
Notes in the Exchange Offer.
10
<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) THREE MONTHS ENDED THREE MONTHS
THROUGH YEAR ENDED MARCH 31, YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, --------------------- DECEMBER 31, MARCH 31,
1996 1997 1997 1998 1997 1998
------------------ ------------ --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue....................... $ -- $ -- $ -- $ 561,583 $3,903,516 $ 1,069,263
Operating expenses................ 40,000 1,802,816 137,919 4,466,386 7,435,876 5,216,862
Operating loss.................... (40,000) (1,802,816) (137,919) (3,904,803) (3,532,360) (4,147,599)
Interest income (expense), net.... -- (12,765) -- 26,734 (12,585,480) (3,142,781)
Other income...................... -- -- -- 10,868 -- --
-------- ------------ --------- ---------- ------------ -------------
Loss before provision (benefit)
for income taxes................ (40,000) (1,815,581) (137,919) (3,867,201) (16,117,840) (7,290,380)
-------- ------------ --------- ---------- ------------ -------------
Provision (benefit) for income
taxes........................... -- -- -- -- (11,318) 800
-------- ------------ --------- ---------- ------------ -------------
Net loss.......................... $ (40,000) $(1,815,581) $(137,919) $(3,867,201) ($16,106,522) $(7,291,180)
-------- ------------ --------- ---------- ------------ -------------
-------- ------------ --------- ---------- ------------ -------------
Net loss applicable to common
shareholders.................... $ (40,000) $(1,935,071) $(137,919) $(4,348,913) ($17,749,357) $(8,153,728)
-------- ------------ --------- ---------- ------------ -------------
-------- ------------ --------- ---------- ------------ -------------
Net loss per common share
applicable to common
shareholders--basic and
diluted......................... $ (13.33) $ (356.10) $ (45.97) $ (223.97) $ (842.80) $ (232.68)
-------- ------------ --------- ---------- ------------ -------------
-------- ------------ --------- ---------- ------------ -------------
Weighted average common shares
outstanding--basic and
diluted......................... 3,000 5,434 3,000 19,417 21,060 35,043
-------- ------------ --------- ---------- ------------ -------------
-------- ------------ --------- ---------- ------------ -------------
OTHER FINANCIAL DATA:
Depreciation and amortization..... $ -- $ -- $ -- $ 252,244 $1,779,019 $ 680,795
EBITDA (1)........................ (40,000) (1,802,816) (137,919) (3,641,691) (1,753,341) (3,466,804)
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
AS OF
MARCH 31,
1998
-----------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................................................... $69,712,188
Working capital..................................................................................... 72,744,823
Total assets........................................................................................ 141,090,488
Long-term debt...................................................................................... 100,750,000
Series A redeemable cumulative preferred stock...................................................... 35,882,152
Stockholders' equity (deficit)...................................................................... (5,967,611)
</TABLE>
- ------------------------
(1) EBITDA represents income before income taxes plus, without duplication, (i)
depreciation and amortization and (ii) interest income (expense), net.
EBITDA is presented because it provides useful information regarding the
Company's ability to service debt. EBITDA should not be considered as an
alternative measure of operating results or cash flows from operations (as
determined in accordance with generally accepted accounting principles).
11
<PAGE>
RISK FACTORS
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS
The Company is highly leveraged. As of March 31, 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. 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, $137,919 and $3,867,201 for the period from September 12, 1996
(inception) through December 31, 1996, the year ended December 31, 1997 and the
three months ended March 31, 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 $7.3 million for the
year ended December 31, 1997 and the three months ended March 31, 1998,
respectively. The Company had net losses of $1.8 million for the year ended
December 31, 1997 and a net loss of approximately $3.9 million for the three
months ended March 31, 1998. The Company believes that losses
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<PAGE>
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.
Additional debt or equity financing may be required in order to complete
future 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
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<PAGE>
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.
There can be no assurance that there will not be changes in the current
regulatory scheme, the imposition of additional regulations or the creation of
new regulatory agencies, which changes could restrict or curtail the ability of
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 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
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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 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. The Company's failure to purchase the Notes
in such instance would result
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<PAGE>
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. 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 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.
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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 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.
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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 June 9, 1998, the Company entered into a stock purchase agreement with
the majority stockholder of Blaya, Inc. to purchase his remaining 50.1% voting
rights and 20% ownership interest in Blaya, Inc., in order to acquire 100%
ownership of KXYZ (AM) in Houston (the "Blaya Acquisition" and, together with
the Oro Acquisition, the One-on-One Acquisition and the Sinclair Acquisition,
the "Radio Station Acquisitions"). The FCC has granted its consent for the
transaction which is expected to close in August, 1998. 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 a total of 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."
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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
August 11, 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.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1998 (i) on an actual basis and (ii) on a pro forma basis for the
Transactions and the Old Notes Offering.
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------
<S> <C> <C>
ACTUAL PRO FORMA
------------- --------------
Cash and cash equivalents......................................................... $ 1,390,709 $ 69,712,188
------------- --------------
------------- --------------
Short-term debt:
Stockholder Notes(1)............................................................ $ 365,000 $ --
------------- --------------
Total short-term debt......................................................... $ 365,000 $ --
------------- --------------
------------- --------------
Long-term debt:
Revolving Credit Facility(2).................................................... $ -- $ --
Note Payable.................................................................... -- 750,000
Notes offered hereby............................................................ -- 100,000,000
------------- --------------
Total debt........................................................................ 365,000 100,750,000
------------- --------------
Series A redeemable cumulative preferred stock, $.01 par value, 450,000 shares
authorized, 200,475 and 355,175 shares issued and outstanding(1)................ 20,648,702 35,882,152
Stockholders' deficit:
Common stock, $.01 par value, 100,000 shares authorized 20,250 and 35,876 shares
issued and outstanding(1)..................................................... 203 359
Capital deficiency(1)........................................................... (398,905) (245,188)
Accumulated deficit............................................................. (5,722,782) (5,722,782)
------------- --------------
Total stockholders' deficit................................................... (6,121,484) (5,967,611)
------------- --------------
Total capitalization.............................................................. $ 14,892,218 $ 130,664,541
------------- --------------
------------- --------------
</TABLE>
- ------------------------
(1) On April 17, 1998, the Company converted $365,000 of the Stockholder Notes
and on June 30, 1998, $15.0 million of the Promissory Notes into shares of
Company Common Stock and Company Preferred Stock. See "Certain Relationships
and Related Transactions--Loans to the Company."
(2) 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.
20
<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 March 31, 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 three months ended March 31,
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 three months ended March 31, 1998 is based on unaudited statement of
operations of the Company for the three months ended March 31, 1998 and Oro's
unaudited statement of operations for the three months ended February 28, 1998.
The Unaudited Pro Forma Condensed Combined Balance Sheet has been derived from
the unaudited balance sheet of the Company as of March 31, 1998 and the
unaudited balance sheet of Oro as of February 28, 1998.
The Radio Station Acquisitions will be accounted for using the purchase
method of accounting. The total consideration of each such acquisition 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.
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. 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.
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
RADIO
RADIO PRO FORMA UNICA CORP.
UNICA CORP. ORO (1) ADJUSTMENTS PRO FORMA
----------- --------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $1,390,709 $ 2,135 $ -- $69,712,188
(36,378,521 (4)
104,700,000(7)
(2,135 (5)
Restricted cash........................................ 4,500,000 -- 100,000(5) 4,600,000
Accounts receivable, net............................... 1,117,827 400,887 (28,110 (8) 1,490,604
Prepaid expenses....................................... 804,809 50,067 854,876
Radio broadcasting rights.............................. 2,480,000 -- 2,480,000
----------- --------- ------------ -----------
Total current assets..................................... 10,293,345 453,089 68,391,234 79,137,668
Property and equipment, net.............................. 2,354,375 140,273 5,639,523(5) 8,969,499
835,328(8)
Note receivable from stockholder......................... 160,000 -- (160,000 (8) --
Investment in and advances to equity investee............ 6,350,868 -- (6,350,868 (8) --
Other assets, net........................................ 281,378 366,872 (358,467 (5) 5,339,783
5,050,000(7)
Broadcast licenses and other intangible assets, net...... -- 1,124,200 37,343,813(4) 47,643,538
500,000(5)
4,033,102(4)
(1,124,200 (5)
5,766,623(8)
----------- --------- ------------ -----------
Total assets............................................. 1$9,439,966 $2,084,434 $119,566,088 $141,090,488
----------- --------- ------------ -----------
----------- --------- ------------ -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable....................................... $ 907,593 $ 155,453 $ -- $ 1,063,046
Accrued expenses....................................... 601,090 626,493 1,022,501(5) 2,290,734
62,973(8)
(22,323 (9)
Radio broadcasting rights obligation................... 2,385,000 -- 2,385,000
Deferred revenue....................................... 654,065 -- 654,065
Notes payable to stockholders.......................... 365,000 -- --(7) --
(365,000 (9)
Current portion of long-term debt...................... 340,000 (340,000 (5) --
----------- --------- ------------ -----------
Total current liabilities................................ 4,912,748 1,121,946 358,151 6,392,845
Deferred tax liability................................... 4,033,102(5) 4,033,102
Long-term debt........................................... 3,943,875 6,000,000(4) 100,750,000
(3,943,875 (5)
94,750,000(7)
Commitments and contingencies
Company Preferred Stock.................................. 20,648,702 -- 383,450(9) 35,882,152
14,850,000 (10
Stockholders' deficit:
Company Common Stock................................... 203 6,000 (6,000 (6) 359
4(9)
152 (10
Additional paid-in capital (deficiency)................ (398,905) 994,000 (994,000 (6) (245,188)
3,869(9)
149,848 (10
Accumulated deficit.................................... (5,722,782) (3,981,387) 3,981,387(6) (5,722,782)
----------- --------- ------------ -----------
Total stockholders' deficit.............................. (6,121,484) (2,981,387) 3,135,260 (5,967,611)
----------- --------- ------------ -----------
Total liabilities and stockholders' deficit.............. 1$9,439,966 $2,084,434 $119,566,088 $141,090,488
----------- --------- ------------ -----------
----------- --------- ------------ -----------
</TABLE>
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
RADIO
RADIO PRO FORMA UNICA CORP.
UNICA CORP. ORO(2) ADJUSTMENTS PRO FORMA
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue......................................... $ 561,583 $ 507,680 $ -- $ 1,069,263
Operating expenses:
Direct operating expenses......................... 218,174 72,570 290,744
Selling, general and administrative expenses...... 1,740,450 414,355 2,154,805
Network expenses.................................. 1,622,166 -- (165,000 (8) 1,457,166
Corporate expenses................................ 633,352 -- 633,352
Depreciation and amortization..................... 252,244 21,129 384,117 (12 680,795
23,305(8)
------------- ---------- ------------- -------------
4,466,386 508,054 242,422 5,216,862
------------- ---------- ------------- -------------
Loss from operations................................ (3,904,803) (374) (242,422) (4,147,599)
Other income (expense):
Interest income (expense), net...................... 26,734 (84,695) (3,056,710 11) (3,142,781)
(28,110 (8)
Equity in earnings of equity investee............... 10,868 -- (10,868 (8) --
------------- ---------- ------------- -------------
Total other income (expense)........................ 37,602 (84,695) (3,095,688) (3,142,781)
------------- ---------- ------------- -------------
Income before provision for income taxes............ (3,867,201) (85,069) (3,338,110) (7,290,380)
Income tax provision................................ 800 800
------------- ---------- ------------- -------------
Net loss............................................ (3,867,201) (85,869) (3,338,110) (7,291,180)
Accrued dividends on Company Preferred Stock........ 481,712 -- 380,836 (13 862,548
------------- ---------- ------------- -------------
Net loss applicable to common stockholders.......... $ (4,348,913) $ (85,869) $ (3,718,946) $ (8,153,728)
------------- ---------- ------------- -------------
------------- ---------- ------------- -------------
Net loss per common share applicable to common
stockholders--basic and diluted................... $ (223.97) $ (232.68)
------------- -------------
------------- -------------
Weighted average common shares outstanding--basic
and diluted....................................... 19,417 35,043
------------- -------------
------------- -------------
</TABLE>
23
<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(3) 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 (12 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 11) (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 (13 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>
24
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(1) Represents Oro's financial position as of February 28, 1998.
(2) Represents Oro's results of operations for the three months ended
February 28, 1998.
(3) Represents Oro's results of operations for the twelve months ended
November 30, 1997.
(4) Reflects the allocation of the purchase price for the Oro Acquisition,
the One-on-One Acquisition and the Sinclair Acquisition, which were consummated
on April 30, 1998, May 13, 1998 and July 30, 1998, respectively:
<TABLE>
<CAPTION>
ORO ONE-ON-ONE SINCLAIR TOTAL
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Aggregate Purchase Price:
Cash................................................ $ 6,211,521 $ 9,167,000 $ 21,000,000 $ 36,378,521
Note payable........................................ 6,000,000 6,000,000
------------- ------------ ------------- -------------
Total............................................. 12,211,521 9,167,000 21,000,000 42,378,521
------------- ------------ ------------- -------------
Less:
Fair value of net tangible assets (liabilities)
acquired.......................................... (3,358,917) 490,850 3,869,673 1,001,606
Broadcast licenses.................................. 11,537,336 8,676,150 17,130,327 37,343,813
Goodwill.............................................. 4,033,102 -- -- 4,033,102
------------- ------------ ------------- -------------
12,211,521 9,167,000 21,000,000 42,378,521
------------- ------------ ------------- -------------
Balance............................................... $ -- $ -- $ -- $ --
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
</TABLE>
(5) Adjustments to record the estimated fair value of net tangible assets
(liabilities) acquired in the Oro Acquisition, One-on-One Acquisition, and
Sinclair Acquisition:
<TABLE>
<CAPTION>
ORO ONE-ON-ONE SINCLAIR TOTAL
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Book value of net tangible assets (liabilities)
acquired............................................ $ (2,981,387) $ (2,981,387)
Goodwill not purchased................................ (1,124,200) (1,124,200)
Cash not acquired..................................... (2,135) (2,135)
Restricted cash (escrow).............................. 100,000 100,000
Covenant not to compete............................... 500,000 500,000
Property and equipment................................ (21,000) 640,850 5,019,673 5,639,523
Other assets not acquired............................. (358,467) (358,467)
Current portion of long-term debt settled at
closing............................................. 340,000 340,000
Long-term debt settled at closing..................... 3,943,875 3,943,875
Other liabilities..................................... 277,499 (150,000) (1,150,000) (1,022,501)
Deferred tax liability................................ (4,033,102) (4,033,102)
------------- ------------ ------------- -------------
$ (3,358,917) $ 490,850 $ 3,869,673 $ 1,001,606
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
</TABLE>
(6) Elimination of Oro's historical stockholders' equity.
25
<PAGE>
(7) Reflects the adjustment to record the following:
<TABLE>
<S> <C> <C>
Promissory Notes................................................. $21,795,000
Repayment on Promissory Notes.................................... (6,795,000)
-----------
Promissory Notes converted into Company Preferred Stock and
Company Common Stock (See Note 10)............................. $15,000,000
Issuance of the Old Notes........................................ 100,000,000
Initial borrowings under the Revolving Credit Facility........... 14,000,000
Repayment on indebtedness related to the Oro Acquisition......... (5,250,000)
Repayment of borrowings under the Revolving Credit Facility...... (14,000,000)
-----------
Net increased borrowings......................................... 94,750,000
Costs associated with the Notes offerings and the Revolving
Credit Facility................................................ (5,050,000)
-----------
Net proceeds..................................................... $104,700,000
-----------
-----------
</TABLE>
(8) Reflects the adjustment to record the probable acquisition of the
remaining 50.1% of the voting rights and 20% of the ownership rights of Blaya,
Inc., in the Blaya Acquisition expected to close in August 1998.
<TABLE>
<S> <C>
Effect on Financial Condition:
Eliminate investment in and advances to equity investee...................... $(6,350,868)
Eliminate interest receivable from equity investee........................... (28,110)
Property and equipment....................................................... 835,328
Collection of note receivable from stockholder............................... (160,000)
Broadcast license............................................................ 5,766,623
Accrued expenses............................................................. (62,973)
-----------
$ --
-----------
-----------
Effect on Results of Operations:
Eliminate LMA charge......................................................... $ 165,000
Eliminate income in equity investee.......................................... (10,868)
Depreciation and amortization................................................ (23,305)
Eliminate interest income from equity investee............................... (28,110)
-----------
Net increase in income....................................................... $ 102,717
-----------
-----------
</TABLE>
(9) Reflects the adjustment to record the conversion of the Stockholder
Notes into 3,835 shares of Company Preferred Stock and 387 shares of Company
Common Stock as follows:
<TABLE>
<S> <C>
Stockholder Notes................................................................ $(365,000)
Accrued interest................................................................. (22,323)
Company Preferred Stock.......................................................... 383,450
Company Common Stock............................................................. 4
Additional paid-in capital....................................................... 3,869
---------
$ --
---------
---------
</TABLE>
26
<PAGE>
(10) Reflects the adjustments to record the conversion of $15 million of
Promissory Notes into 150,865 shares of Company Preferred Stock and 15,239
shares of Company Common Stock.
<TABLE>
<S> <C>
Promissory Notes............................................................... $(15,000,000)
Company Preferred Stock........................................................ 14,850,000
Company Common Stock........................................................... 152
Additional paid-in capital..................................................... 149,848
-----------
$ --
-----------
-----------
</TABLE>
(11) Represents the additional interest expense that would have been
incurred if the Notes had been outstanding for the entire period and the Company
had no outstanding balance under the Revolving Credit Facility.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1997 MARCH 31, 1998
------------- --------------
<S> <C> <C>
Interest expense on the Notes (*)................................................. $ 11,750,000 $ 2,937,500
Revolving Credit Facility unused commitment fee (*)............................... 100,000 25,000
Interest expense on the existing indebtedness..................................... (304,411) (76,103)
Debt issuance cost amortization................................................... 681,250 170,313
------------- --------------
Net increase in interest expense.................................................. $ 12,226,839 $ 3,056,710
------------- --------------
------------- --------------
</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.
(12) 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.
(13) Represents accrued dividends on the Company Preferred Stock into which
the Promissory Notes and the Stockholder Notes were converted (see Note 7).
These dividends have not been declared.
27
<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 three months ended
March 31, 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 three months ended March
31, 1997 and 1998 are unaudited. In the opinion of management, the consolidated
financial statements for, and as of the three months ended March 31, 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 three months ended March 31, 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) THREE MONTHS ENDED
THROUGH YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, --------------------------
1996 1997 1997 1998
------------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net revenue..................................... $ -- $ -- $ -- $ 561,583
Operating expenses.............................. 40,000 1,802,816 137,919 4,466,386
-------- ------------- ----------- -------------
Operating loss.................................. (40,000) (1,802,816) (137,919) (3,904,803)
Interest income (expense), net.................. -- (12,765) -- 26,734
Other income.................................... -- -- -- 10,868
-------- ------------- ----------- -------------
Loss before provision (benefit) for income
taxes......................................... (40,000) (1,815,581) (137,919) (3,867,201)
-------- ------------- ----------- -------------
Provision (benefit) for income taxes............ -- -- -- --
-------- ------------- ----------- -------------
Net loss........................................ $ (40,000) $ (1,815,581) $ (137,919) $ (3,867,201)
-------- ------------- ----------- -------------
-------- ------------- ----------- -------------
Net loss applicable to common shareholders...... $ (40,000) $ (1,935,071) $ (137,919) $ (4,348,913)
-------- ------------- ----------- -------------
-------- ------------- ----------- -------------
Net loss per common share applicable to common
shareholders - basic and diluted.............. $ (13.33) $ (356.10) $ (45.97) $ (223.97)
-------- ------------- ----------- -------------
-------- ------------- ----------- -------------
Weighted average common shares outstanding -
basic and diluted............................. 3,000 5,434 3,000 19,417
-------- ------------- ----------- -------------
-------- ------------- ----------- -------------
Other Financial Data:
Depreciation and amortization................... $ -- $ -- $ -- $ 252,244
EBITDA (1)...................................... (40,000) (1,802,816) (137,919) (3,641,691)
Ratio of earnings to fixed charges (2).......... -- -- -- --
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
DECEMBER 31,
--------------------------------- MARCH 31,
--------------------------
1996 1997 1998
------------------ ------------- -------------
1997
-----------
Balance Sheet Data:
Cash and cash equivalents....................... $ 5,000 $ 1,126,862 $ -- $ 1,390,709
Working capital................................. 5,000 1,047,193 11,081 5,380,597
Total assets.................................... 5,000 6,678,088 21,081 19,439,966
Long-term debt.................................. -- -- -- --
Series A redeemable cumulative preferred
stock......................................... -- 5,316,990 -- 20,648,702
Stockholders' equity (deficit).................. 5,000 (1,922,571) 21,081 (6,121,484)
</TABLE>
- ------------------------
(1) EBITDA represents income before income taxes plus, without duplication, (i)
depreciation and amortization and (ii) interest (income) expense, net.
EBITDA is presented because it provides useful information regarding the
Company's ability to service debt. EBITDA should not be considered as an
alternative measure of operating results or cash flows from operations (as
determined in accordance with generally accepted accounting principles).
(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 by $40,000, $1,815,581,
$137,919 and $3,867,201 for the period from September 12, 1996 (inception)
through December 31, 1996, the year ended December 31, 1997 and the three
months ended March 31, 1997 and 1998, respectively.
29
<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
THREE MONTHS ENDED MARCH 31, 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. 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"). Although EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles, EBITDA
is presented because it provides useful information regarding the Company's
ability to service debt. However, EBITDA should not be considered as an
alternative measure of operating results or cash flows from operations (as
determined in accordance with generally accepted accounting principles).
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1997
NET REVENUE. Net revenue during the three month period ended March 31, 1998
was $561,583 relating to sales of network advertising and sales of advertising
on the Company's stations operated under LMAs. 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 period ended March 31, 1997 and as a result had
no revenues.
OPERATING EXPENSES. Operating expenses for the three month period ended
March 31, 1998 were approximately $4.5 million as compared to approximately
$138,000 for the three months ended March 31, 1997. Operating expenses during
the three months ended March 31, 1998 related to the ongoing operations of the
business. Operating expenses during the three month period ended March 31, 1997
consisted of corporate costs incurred during the development stage.
Direct operating expenses for the three months ended March 31, 1998 related
to engineering and programming costs for the Company's stations operated under
LMAs. Selling, general and administrative
30
<PAGE>
expenses of approximately $1.7 million related to the operations of the
Company's stations operated under LMAs. Network expenses of approximately $1.6
million related to the operations of the Company's network including
engineering, programming, sales and administration. Corporate expenses for the
period March 31, 1998 of approximately $633,000 related to the costs of
executive management, legal and professional fees and other costs, an increase
of $495,433 over the comparable period in the prior year. Corporate expenses for
the three month period ended March 31, 1997 included legal and professional
fees, promotional costs and travel expenses incurred during the development
stage.
LOSS FROM OPERATIONS. Loss from operations for the three month period ended
March 31, 1998 was approximately $3.9 million as compared to approximately
$138,000 for the comparable period of the prior year. The increase in the loss
is a result of the increased costs associated with the commencement of
operations of the Company's network and stations operated under LMAs.
EBITDA. EBITDA was approximately $(3.6) million for the three months ended
March 31, 1998 and approximately $(138,000) for the three months ended March 31,
1997.
OTHER INCOME. Other income for the three month period ended March 31, 1998
included interest income of $26,734 and equity earnings of $10,868. Interest
income primarily relates to interest earned on amounts held in escrow related to
pending station acquisitions. Equity earnings is the Company's share of earnings
in Blaya, Inc., an equity investee, which owns KXYZ--Houston. The Company had no
other income or expense during the three month period ended March 31, 1997.
NET LOSS. The Company had a net loss of approximately $3.9 million related
to the three month period ended March 31, 1998 as compared to an approximately
$138,000 net loss for the comparable period of the prior year. The increase in
the net loss is a result of the increased costs associated with the operations
of the Company's network and stations operated under LMAs.
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.
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.
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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 development 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 Old Notes,
Promissory Notes, Company Common Stock and Company Preferred Stock to the
Company's principal shareholder.
The Company's primary sources of liquidity are the Revolving Credit Facility
and the net proceeds from the Old Notes Offering. As of , 1998, the
Company had approximately $ million of cash and no borrowings outstanding under
the Revolving Credit Facility. The Revolving Credit Facility is a senior secured
revolver with $20 million of available borrowings subject to certain conditions.
See "Description of Revolving Credit Facility."
Net cash used in operating activities was approximately $3.5 million for the
three month period ended March 31, 1998 as compared to approximately $148,000
for the three months ended March 31, 1997. The increase in cash used in
operating activities during the three month period ended March 31, 1998 is due
to the increased costs associated with the operations of the Company's network
and stations operated under LMAs. Net cash used in operating activities for the
years 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 three month period ended March
31, 1998 was approximately $11.2 million as the Company funded escrow accounts
related to acquisitions, made investments in and advances to an equity investee
and acquired property and equipment for its network and stations operated under
LMAs. 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 stations, leasehold improvements, computer
equipment and telecommunications equipment. For the three months ended March 31,
1998 capital expenditures were approximately $1.2 million and 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.
The Company believes that its current cash position 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. However, there can be
no assurance that such business strategy will be successfully implemented or
that the future cash flows of the Company will be sufficient to meet all of the
Company's obligations and commitments.
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BUSINESS
INTRODUCTION
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.
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-
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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.
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
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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 37 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 growth, high
Spanish-language retention among Hispanics, increasing Hispanic buying power and
greater advertiser spending on Spanish-language media.
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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").
OWNED AND OPERATED STATIONS
The Company owns radio stations in Los Angeles, Miami, San Francisco and
Houston.
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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 has contracted, and obtained FCC
approval, to acquire the remaining interest, which is expected to close in
August 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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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) WQBN(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%
Yuma/El Centro (CA) KICO(AM) 31 164 62.6% 0.5%
KQVO(FM)
Salt Lake City (UT) KCPX(AM) 34 139 6.2% 0.5%
Portland (OR) KWIP(AM) 35 133 5.0% 0.4%
West Palm Beach (FL) WSPS(AM) 36 133 9.1% 0.4%
Colorado Springs (CO) KXRE(AM) 37 128 17.5% 0.4%
Atlanta (GA) WAOS(AM) 41 111 2.5% 0.4%
WXEM(AM)
Detroit (MI) WKVD(FM) 43 110 2.3% 0.4%
Milwaukee (WI) WBJX(AM) 45 95 4.4% 0.3%
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 June 30, 1998, the Company had an additional 19 affiliated stations in
markets ranked 51 and higher. These markets collectively account for less than
2% of the Hispanic population.
40
<PAGE>
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 17 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 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 morning newscast, all of which focus on events of interest to
Hispanic audiences. 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 a three-hour news program 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.
ENTERTAINMENT. The Company produces an early and a late version of "Unica
en la Farandula," an hour-long show featuring 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 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
41
<PAGE>
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.
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
42
<PAGE>
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 June 30, 1998, the Company employed approximately 146 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 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.
43
<PAGE>
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 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
44
<PAGE>
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 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.
45
<PAGE>
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 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
46
<PAGE>
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.
47
<PAGE>
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
Herbert M. Levin..................................... 60 Chief Operating Officer, President and Director
Jose C. Cancela...................................... 40 President, Network
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
</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.
HERBERT M. LEVIN. Mr. Levin has been Chief Operating Officer, President and
a Director of the Company since August 1997. Mr. Levin has over 30 years of
radio experience. He is the former owner/ operator of S.R. Associates, Inc., a
communications company that operated a multi-tower facility in west Miami, and
has served as the Senior Vice President and part owner of Spanish-language radio
stations in New York and Miami. Mr. Levin was also the founder and majority
owner of Radio Suave, WSUA 1260 AM, Miami. In addition, Mr. Levin served for six
years as an adjunct Professor of Marketing at the Florida International
University's School of Business & Organizational Sciences.
JOSE C. CANCELA. Mr. Cancela has been President, Network of the Company
since July 1998. 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
48
<PAGE>
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 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.
NON-COMPETE AGREEMENTS
Joaquin F. Blaya, Herbert M. Levin 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
49
<PAGE>
resigned) they will not hire, offer to hire or entice away any of the Company's
officers, employees, affiliates or agents; and (iii) 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............................................ $ 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.
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.
50
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMPANY COMMON PERCENT OF TOTAL
STOCK OPTIONS GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN LAST PRICE EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR PER SHARE DATE
- -------------------------------------------- -------------------- --------------------- ------------- -----------
<S> <C> <C> <C> <C>
Joaquin F. Blaya............................ 695.6522 (a) $ 10.00 8/18/04
530.4015 (b) $ 10.00 8/18/04
507.2797 (c) $ 10.00 8/18/04
400.0000 (d) (e) 8/17/07(f)
457.1429 (d) (e) 8/17/07 (f)
--------------------
2,590.4763 33.8 %
Herbert M. Levin............................ 521.7391 (a) $ 10.00 8/18/04
336.4984 (b) $ 10.00 8/18/04
475.0958 (c) $ 10.00 8/18/04
373.3333 (d) (e) 8/17/07 (f)
350.4762 (d) (e) 8/17/07 (f)
--------------------
2,057.1428 26.8 %
Steven E. Dawson............................ 224.0000 (c) $ 10.00 8/18/04
228.2667 (d) (e) 8/17/07 (f)
157.2571 (d) (e) 8/17/07 (f)
--------------------
609.5238 7.9 %
Andrew C. Goldman........................... 347.8261 (a) $ 10.00 8/18/04
233.3233 (b) $ 10.00 8/18/04
50.8506 (c) $ 10.00 8/18/04
113.2444 (d) (e) 8/17/07 (f)
129.4222 (d) (e) 8/17/07 (f)
--------------------
874.6666 11.4 %
Blaine R. Decker............................ 133.3333 (c) $ 10.00 8/18/04
80.0000 (d) (e) 8/17/07 (f)
91.4290 (d) (e) 8/17/07 (f)
--------------------
304.7623 4.0 %
</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.
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 98.3 349,167.33 98.3 3,526,943 98.2
Joaquin F. Blaya................................. 1,120.90(e) 2.8 2,109.53 0.6 22,216 0.6
Herbert M. Levin................................. 869.42(f) 2.2 2,109.53 0.6 21,965 0.6
Andrew C. Goldman................................ 539.31(g) 1.4 971.74 0.2 10,257 0.3
Steven E. Dawson................................. 0(h) 0.0 0 0 0 0.0
Blaine R. Decker................................. 0(i) 0.0 0 0 0 0.0
John D. Santoleri (c) (d)........................ 35,269.43 98.3 349,167.33 98.3 3,526,943 98.2
All Directors and Officers as a Group............ 35,876.23 100.0 355,174.65 100.0 3,587,623 100.0
</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 is a
Managing Director and member of Warburg and a general partner of WP. As
such, Mr. Santoleri may 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 656.34 shares issuable upon exercise of Holdings' Options that are
currently exercisable or exercisable within sixty days of this Prospectus
and does not include 1,400.80 shares issuable upon exercise of Holdings'
Options that have not yet vested.
(g) 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.
(h) Does not include 609.52 shares issuable upon exercise of Holdings' Options
that have not yet vested.
(i) 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 bears interest at 9%, compounded quarterly and payable annually.
The promissory note is secured by substantially all of the assets of Blaya, Inc.
In June 1998, the Company entered into an agreement to acquire all of Mr.
Blaya's interest in Blaya, Inc. at a purchase price equal to Mr. Blaya's
investment in Blaya, Inc. The FCC has consented to the transaction which is
expected to close in August 1998.
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 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.
53
<PAGE>
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, 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.
54
<PAGE>
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
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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
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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 release to the Dow Jones News
Services 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 sole 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 any of
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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 oral or written notice thereof to the
holders of Old Notes. 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 sole 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 sole 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
sole 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 acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, 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
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contemplated by the Exchange Offer by any government or governmental 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 sole 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 sole 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) 651-8869
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 is a summary of the material terms and
provisions of the Notes. This summary does not purport to be a complete
description of the Notes and is subject to the detailed provisions of, and
qualified in its entirety by reference to, the Notes and the Indenture
(including the definitions contained therein). 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
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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 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;
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(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
(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
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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 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.
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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
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
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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 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
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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 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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<PAGE>
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,
98
<PAGE>
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.
99
<PAGE>
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.
100
<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.
101
<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
Interim Consolidated Balance Sheet (Unaudited) as of March 31, 1998...................................... F-17
Interim Consolidated Statement of Operations (Unaudited) for the three months ended March 31, 1997 and
1998................................................................................................... F-18
Interim Consolidated Statement of Cash Flows (Unaudited) for the three months ended March 31, 1997 and
1998................................................................................................... F-19
Notes to Interim Consolidated Financial Statements (Unaudited)........................................... F-20
13 RADIO CORPORATION
Report of Independent Certified Public Accountants....................................................... F-25
Balance Sheets as of December 31, 1996 and 1997.......................................................... F-26
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-27
Statements of Cash Flows for the pre-acquisition year ended December 31, 1996 and the post-acquisition
year ended December 31, 1997........................................................................... F-28
Notes to Consolidated Financial Statements............................................................... F-29
ORO SPANISH BROADCASTING, INC.
Independent Auditors' Report............................................................................. F-34
Independent Accountants' Report.......................................................................... F-35
Balance Sheets as of August 31, 1996 and 1997 and February 28, 1998...................................... F-36
Statements of Operations and Accumulated Deficit for the years ended August 31, 1996 and 1997 and for the
six months ended February 28, 1997 and 1998............................................................ F-37
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-38
Notes to Financial Statements............................................................................ F-39
</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
(the Predecessor Company), was merged into Radio Unica Corp. (Radio Unica), a
Delaware corporation, on August 7, 1997. As a result of the merger, the
investors of the Predecessor Company exchanged all of their shares in the
Predecessor Company for a proportionate interest in the shares of Radio Unica,
the surviving corporation. 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 a
company to review the carrying value of long-lived assets and certain
intangibles for impairment when events or changes in circumstances indicate that
the carrying amount of the asset may
F-7
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
not be recoverable. Based on current circumstances, the Company does not believe
that any impairment indicators are present.
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 the Predecessor Company 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.
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% of the ownership and voting
rights of Blaya, Inc., a newly formed company. 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 the form of a 10 year 9%
promissory note. These proceeds were used by the majority voting stockholder 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
F-10
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ADVANCES TO EQUITY INVESTEE (CONTINUED)
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.
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 the Predecessor Company with
and into the Company, the Predecessor Company'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.
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 related primarily to net operating
losses and to depreciation on fixed assets.
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 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.
F-11
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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>
F-12
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTION PLAN (CONTINUED)
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
broadcasting license, from Lotus, which is exercisable at any time from June 24,
2001 through and including September 30, 2001.
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.
F-13
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMITMENTS (CONTINUED)
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. YEAR 2000 ISSUES (UNAUDITED)
Some older computer programs were written using two digits rather than four
to define the applicable year. As a result, those computer programs have
time-sensitive software that recognize a date using "00" as the year 1900 rather
than the year 2000. This could cause a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
The Company is assessing the modifications or replacement of its software
that may be necessary for its computer systems to function properly with respect
to the dates in the year 2000 and thereafter. The Company does not believe that
the cost of either modifying existing software or converting to new software
will be significant or that the year 2000 issue will pose significant
operational problems for its computer systems.
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
F-14
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SUBSEQUENT EVENTS (CONTINUED)
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.
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.
F-15
<PAGE>
RADIO UNICA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SUBSEQUENT EVENTS (CONTINUED)
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-16
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $1,390,709
Restricted cash.............................................................. 4,500,000
Accounts receivable, net..................................................... 1,117,827
Prepaid expenses............................................................. 804,809
Radio broadcasting rights.................................................... 2,480,000
----------
Total current assets........................................................... 10,293,345
Property and equipment, net.................................................... 2,354,375
Note receivable from stockholder............................................... 160,000
Investment in and advances to equity investee.................................. 6,350,868
Other assets................................................................... 281,378
----------
$19,439,966
----------
----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................................. $ 907,593
Accrued expenses............................................................. 601,090
Radio broadcasting rights obligation......................................... 2,385,000
Deferred revenue............................................................. 654,065
Notes payable to stockholders................................................ 365,000
----------
Total current liabilities...................................................... 4,912,748
Commitments and contingencies
Series A redeemable cumulative preferred stock, $.01 par value, 450,000 shares
authorized, 200,475 shares issued and outstanding............................ 20,648,702
Stockholders' deficit:
Common stock $.01 par value; 100,000 shares authorized; 20,250 shares issued
and outstanding............................................................ 203
Capital deficiency........................................................... (398,905)
Accumulated deficit.......................................................... (5,722,782)
----------
Total stockholders' deficit.................................................... (6,121,484)
----------
$19,439,966
----------
----------
</TABLE>
See accompanying notes.
F-17
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
--------------------------
<S> <C> <C>
1997 1998
----------- -------------
Net revenue......................................................................... $ -- $ 561,583
Operating expenses:
Direct operating expenses......................................................... -- 218,174
Selling, general and administrative expenses...................................... -- 1,740,450
Network expenses.................................................................. -- 1,622,166
Corporate expenses................................................................ 137,919 633,352
Depreciation and amortization..................................................... -- 252,244
----------- -------------
137,919 4,466,386
----------- -------------
Loss from operations................................................................ (137,919) (3,904,803)
Other income:
Interest income, net.............................................................. -- 26,734
Equity in earnings of equity investee............................................. -- 10,868
----------- -------------
-- 37,602
----------- -------------
Net loss............................................................................ (137,919) (3,867,201)
Accrued dividends on Series A redeemable cumulative preferred stock................. -- 481,712
----------- -------------
Net loss applicable to common shareholders.......................................... $ (137,919) $ (4,348,913)
----------- -------------
----------- -------------
Net loss per common share applicable to common shareholders--basic and diluted...... $ (45.97) $ (223.97)
----------- -------------
----------- -------------
Weighted average common shares outstanding--basic and diluted....................... 3,000 19,417
----------- -------------
----------- -------------
</TABLE>
See accompanying notes.
F-18
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
<S> <C> <C>
1997 1998
----------- -------------
OPERATING ACTIVITIES
Net loss............................................................................ $ (137,919) $ (3,867,201)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization..................................................... -- 252,244
Provision for bad debts........................................................... -- 10,669
Equity in earnings of equity investee............................................. -- (10,868)
Change in assets and liabilities:
Accounts receivable............................................................. -- (1,128,496)
Prepaid expenses................................................................ -- (250,809)
Other assets.................................................................... (10,000) (156,147)
Accounts payable................................................................ -- 553,473
Accrued expenses................................................................ -- 421,541
Deferred revenue................................................................ -- 654,065
----------- -------------
Net cash used in operating activities............................................... (147,919) (3,521,529)
----------- -------------
INVESTING ACTIVITIES
Acquisition of property and equipment............................................... -- (1,214,624)
Restricted cash--escrow accounts.................................................... -- (4,500,000)
Investment in and advances to equity investee....................................... -- (5,340,000)
Note receivable from stockholder.................................................... -- (160,000)
----------- -------------
Net cash used in investing activities............................................... -- (11,214,624)
----------- -------------
FINANCING ACTIVITY
Proceeds from issuance of Series A redeemable cumulative preferred stock and common
stock............................................................................. 154,000 15,000,000
----------- -------------
Net cash provided by financing activity............................................. 154,000 15,000,000
----------- -------------
Increase in cash and cash equivalents............................................... 6,081 263,847
Cash and cash equivalents at beginning of period.................................... 5,000 1,126,862
----------- -------------
Cash and cash equivalents at end of period.......................................... $ 11,081 $ 1,390,709
----------- -------------
----------- -------------
</TABLE>
See accompanying notes.
F-19
<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) have been prepared 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 accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 1997 and 1998
are not necessarily indicative of the results that may be expected for the year
ending 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 futher information, refer to the Company's 1997
consolidated financial statements and notes thereto.
2. INVESTMENTS IN AND ADVANCES TO EQUITY INVESTEE
On October 27, 1997, the Company obtained 49.9% of the ownership and voting
rights of Blaya, Inc., a newly formed company. 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 investment in and
advances to equity investee. 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 the form of a 10 year 9%
promissory note. These proceeds were used by the majority voting stockholder 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 which 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
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
F-20
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. INVESTMENTS IN AND ADVANCES TO EQUITY INVESTEE (CONTINUED)
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 allocation of the purchase price is preliminary and
subject to change.
The pro forma unaudited results of operations of the Company for the three
months ended March 31, 1997 and 1998, assuming the TBA and equity investment in
Blaya, Inc. 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>
THREE MONTHS ENDED
MARCH 31,
--------------------------
<S> <C> <C>
1997 1998
----------- -------------
Net revenue....................................................... $ 309,223 $ 561,583
----------- -------------
----------- -------------
Net loss applicable to common shareholders........................ $ (259,683) $ (4,275,162)
----------- -------------
----------- -------------
Net loss per common share applicable to common shareholders- basic
and diluted..................................................... $ (86.56) $ (220.18)
----------- -------------
----------- -------------
</TABLE>
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 FCC has granted its
consent for the transaction, which is expected to close in August 1998.
3. 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
broadcasting license, from Lotus which is exercisable at any time from June 24,
2001 through and including September 30, 2001.
F-21
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. COMMITMENTS (CONTINUED)
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. As of March 31, 1998, 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 from February 1,
1998 to 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.
4. ISSUANCE OF CAPITAL STOCK
On January 5, 1998, Warburg, Pincus Ventures, L.P. (WPV) purchased 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%.
5. SUBSEQUENT EVENTS
PROMISSORY NOTES
In April and May 1998, the Company entered into three 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.
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.
F-22
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSEQUENT EVENTS (CONTINUED)
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 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 to
acquire the assets of the 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. The transaction closed on July 30, 1998.
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.
SENIOR DISCOUNT NOTES
On July 27, 1998, the Company issued Senior Discount Notes (gross proceeds
of $100 million) (the "Old Note Offering") in a private placement. The Company
used a portion of the net proceeds from such offering to repay advances under
the Senior Secured Revolving Credit Facility and to fund the $21 million
acquisition of KBLA(AM) in Los Angeles. The Company plans to use the remainder
of the net proceeds to fund future acquisitions and for general corporate
purposes.
SENIOR SECURED REVOLVING CREDIT FACILITY
On June 22, 1998, the Company entered into a commitment letter for a $20
million Senior Secured Revolving Credit Facility (the Revolver) with a bank to
refinance certain existing indebtedness, finance capital expenditures, fund
permitted acquisitions and finance working capital requirements. Availability
F-23
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSEQUENT EVENTS (CONTINUED)
under the Revolver was $18.5 million until the issuance of the Senior Discount
Notes, thereafter the Revolver shall be fully available. The Revolver would be
due the earlier of 91 days prior to when the first cash interest is due under
the Senior Discount Notes or September 30, 2002.
The Revolver is guaranteed by the Company and secured by substantially all
of the assets of the Company. Under the Revolver, the Company is required to
comply with certain financial covenants and is subject to limitation on
incurring indebtedness, capital expenditures and other distributions. Interest
on advances under the Revolver is based on either an adjusted LIBOR plus 2.5% or
Base Rate plus 1.25%.
REORGANIZATION OF THE COMPANY
In connection with the Old Notes Offering, the Company reorganized its
corporate structure. Under the reorganization, the Company became a wholly owned
subsidiary of a newly formed holding company, Radio Unica Holdings Corp., a
Delaware corporation (Holdings). Radio Unica Acquisition Co., a subsidiary of
Holdings, merged with and into the Company. The Company's stockholders received
shares of common stock and preferred stock of Holdings, bearing identical rights
and preferences to the shares of the Company's common and preferred stock, in
exchange for their shares of common stock and preferred stock of the Company.
Options previously granted by the Company were assumed by Holdings and will be
exercisable upon the same terms and conditions as under the Company's option
plan. As part of the reorganization, Holdings assumed the rights and obligations
of the Company in respect to the agreements described above with the Company's
stockholders. Holdings also entered into a stockholders' agreement with the
Company's stockholders, containing the same terms and conditions of the current
stockholders' agreement among the stockholders of the Company.
F-24
<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-25
<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:
Advances from Parent................................................................ 2,686,348 3,048,974
Accumulated deficit................................................................. -- (420,669)
------------ ------------
Total 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-26
<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-27
<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-28
<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-29
<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-30
<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. 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.
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.
4. 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>
F-31
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
4. PROPERTY AND EQUIPMENT (CONTINUED)
Depreciation expense for the year ended December 31, 1996 amounted to
$62,320.
5. 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>
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
F-32
<PAGE>
13 RADIO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
5. INCOME TAXES (CONTINUED)
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.
6. YEAR 2000 ISSUES (UNAUDITED)
Some older computer programs were written using two digits rather than four
to define the applicable year. As a result, those computer programs have
time-sensitive software that recognize a date using "00" as the year 1900 rather
than the year 2000. This could cause a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
The Company is assessing the modifications or replacement of its software
that may be necessary for its computer systems to function properly with respect
to the dates in the year 2000 and thereafter. The Company does not believe that
the cost of either modifying existing software or converting to new software
will be significant or that the year 2000 issue will pose significant
operational problems for its computer systems.
F-33
<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
November 18, 1997
F-34
<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
June 6, 1998
F-35
<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-36
<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-37
<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-38
<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-39
<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-40
<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
Periodically, the Company evaluates whether there has been impairment in the
carrying value of the long-lived assets, such as intangibles and property and
equipment, in accordance with generally accepted accounting principles.
Management believes that the long-lived assets in the accompanying balance sheet
are properly valued.
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-41
<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-42
<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-43
<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-44
<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-45
<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-46
<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.................................... 12
The Transactions................................ 18
Use of Proceeds................................. 19
Capitalization.................................. 20
Unaudited Pro Forma Combined
Financial Data................................ 21
Selected Historical Financial Data.............. 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 30
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.............................. 93
Plan of Distribution............................ 94
Legal Matters................................... 94
Experts......................................... 94
Index to Financial Statements................... F-1
</TABLE>
Until , 1998 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Notes, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in addition
to the obligation of the dealers to deliver a Prospectus when acting as
underwriters with respect to their unsold allotments or subscriptions.
$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
---------------------
AUGUST , 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.
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).
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).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
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.
10.13* Time Brokerage Agreement, dated as of April 27, 1998, by and between The Freedom Network, Inc. and the
Company.
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.
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)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
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).
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 (included on signature pages).
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>
- ------------------------
* To be filed by amendment.
(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
II-5
<PAGE>
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.
(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-6
<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 10th day of August, 1998.
<TABLE>
<S> <C> <C>
RADIO UNICA CORP.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
</TABLE>
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.
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 August 10th, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN
- ------------------------------ Chief Operating Officer, August 10, 1998
Herbert M. Levin President and Director
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
/s/ ANDREW C. GOLDMAN Executive Vice President,
- ------------------------------ Business Affairs and August 10, 1998
Andrew C. Goldman Director
/s/ JOHN D. SANTOLERI
- ------------------------------ Director August 10, 1998
John D. Santoleri
</TABLE>
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 10th day of August, 1998.
RADIO UNICA OF SAN FRANCISCO, INC.
By: /s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
ORO SPANISH BROADCASTING, INC.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF SAN FRANCISCO LICENSE CORP.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF MIAMI, INC.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998. Accounting Officer)
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF MIAMI LICENSE CORP.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF LOS ANGELES, INC.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF LOS ANGELES LICENSE CORP.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA OF SAN ANTONIO, INC.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA NETWORK, INC.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
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 10th day of August, 1998.
RADIO UNICA SALES CORP.
/s/ JOAQUIN F. BLAYA
-----------------------------------------
Name: Joaquin F. Blaya
TITLE: CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
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.
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 August 10th, 1998.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board and
/s/ JOAQUIN F. BLAYA Chief Executive Officer
- ------------------------------ (Principal Executive August 10, 1998
Joaquin F. Blaya Officer)
/s/ HERBERT M. LEVIN Chief Operating Officer,
- ------------------------------ President and Director August 10, 1998
Herbert M. Levin
Chief Financial Officer,
/s/ STEVEN E. DAWSON Secretary and Director
- ------------------------------ (Principal Financial and August 10, 1998
Steven E. Dawson Accounting Officer)
II-17
<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.
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").
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
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.
10.13* Time Brokerage Agreement, dated as of April 27, 1998, by and between The Freedom Network, Inc. and the
Company.
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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
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).
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 (included on signature pages).
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>
- ------------------------
* To be filed by amendment.
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
RADIO UNICA 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 1, 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 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: (A) The total number of shares of stock which this Corporation
shall have authority to issue is five hundred fifty thousand (550,000) shares,
of which four hundred fifty thousand (450,000) shares of the par value of $.01
per share shall be Preferred Stock and one hundred thousand (100,000) shares of
the par value of $.01 per share shall be Common Stock. The holders of shares of
Common Stock shall have one vote per share.
(B) The Board of Directors of this Corporation is hereby
expressly granted the authority by resolution or resolutions to establish and
issue the Preferred Stock in one or more series with such voting powers , full
or limited, or no voting powers, and with such designations, preferences and
relative, participating, optional or other special rights and with such
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the establishment and
issuance thereof adopted by the Board of Directors.
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 (1) 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.
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,
-2-
<PAGE>
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 August 1, 1997.
/s/ Martin H. Neidell
--------------------------------------
Martin H. Neidell, Incorporator
-3-
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS OF SERIES A
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
OF
RADIO UNICA CORP.
1. DESIGNATION. The designation of the series of Preferred Stock created
hereby is Series A Preferred Stock and the number of shares constituting such
series is 450,000 (the "Series A Preferred Stock").
2. RANK. The Series A Preferred Stock shall, with respect to dividend
rights, rights on redemption and rights on liquidation, winding up and
dissolution, rank prior to any other equity securities of the Corporation,
including all classes of Common Stock and any other series of Preferred Stock
established by the Board of Directors (all of such equity securities of the
Corporation to which the Series A Preferred Stock ranks prior are collectively
referred to herein as the "Junior Stock").
3. DIVIDENDS.
(i) The holders of Series A Preferred Stock shall be entitled to
receive in preference to the holders of any Junior Stock, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, cumulative dividends at the rate per annum of 10% of the
Accrued Liquidation Preference (as hereinafter defined) from time to time in
effect. Such dividends shall begin to accrue from and after the date of
issuance and shall be payable in equal semi-annual installments on a cumulative
basis, compounded quarterly, on the lst day of January and July in each year,
with the first such payment to be made January 1, 1998;
<PAGE>
provided, however, that effective January 1, 2005 and on each January 1
thereafter the dividends on the Series A Preferred Stock shall increase at the
rate per annum of 2% of the Accrued Liquidation Preference, but in no event
shall such dividend be more than the rate per annum of 20% of the Accrued
Liquidation Preference.
(ii) All dividends paid with respect to shares of the Series A
Preferred Stock pursuant to paragraph 3(i) hereof shall be paid pro rata (both
as to the amount of declaration and form of payment) to the holders entitled
thereto. Any dividend not paid shall be fully cumulative and shall accrue and
be compounded quarterly (whether or not declared), at the rate provided above.
(iii) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Stock or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Stock or any warrants,
rights, calls or options exercisable for or convertible into any of the Junior
Stock, or make any distribution in respect thereof, either directly or
indirectly, and whether in cash, obligations or shares of the Corporation or
other property (other than distributions or dividends in Junior Stock to the
holders of Junior Stock or repurchases of stock from former employees of the
Corporation), and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Junior
Stock or any warrants, rights, calls or options exercisable for or convertible
into any of the Junior Stock, unless prior to or concurrently with such
declaration, payment, setting apart for payment, purchase, redemption and/or
distribution, as the case may be, all accrued and unpaid dividends on shares of
the Series
-2-
<PAGE>
A Preferred Stock not paid on the dates provided for in paragraph 3(i) hereof
shall have been or are paid.
(iv) Each fractional share of Series A Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends accruing
with respect to each outstanding share of Series A Preferred Stock pursuant to
paragraph 3(i) hereof, and all such dividends with respect to such outstanding
fractional shares shall be fully cumulative and accrue (whether or not
declared), with interest at the rate set forth above, and shall be payable in
the same manner and at such times as provided for in paragraph 3(i) hereof with
respect to dividends on each outstanding share of Series A Preferred Stock.
4. LIQUIDATION PREFERENCE.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Series A Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders an amount in cash equal to $100.00 for each share outstanding, plus
an amount in cash equal to all accrued but unpaid dividends thereon to the date
fixed for liquidation, dissolution or winding up (the "Accrued Liquidation
Preference") before any payment shall be made or any assets distributed to the
holders of any of the Junior Stock. Except as provided in the preceding
sentence, holders of Series A Preferred Stock shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation. If the assets of the Corporation are not sufficient
to pay in full the Accrued Liquidation Preference to the holders of outstanding
shares of Series A Preferred Stock, then the holders of all such shares shall
share ratably in such distribution of assets in accordance with the
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<PAGE>
amount which would be payable on such distribution if the amounts to which the
holders of outstanding shares of Series A Preferred Stock are entitled were paid
in full.
(ii) For the purposes of this paragraph 4, the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets (including
stock of a subsidiary) of the Corporation or the consolidation or merger of the
Corporation with one or more other corporations shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary.
(iii) The Accrued Liquidation Preference with respect to each
outstanding fractional share of Series A Preferred Stock shall be equal to a
ratably proportionate amount of the Accrued Liquidation Preference with respect
to each outstanding share of Series A Preferred Stock.
REDEMPTION AT THE OPTION OF THE CORPORATION.
(i) The Series A Preferred Stock shall be redeemable, at the
option of the Corporation, in whole or in part, at any time or from time to
time, at a redemption price of $100.00 per share, together with accrued and
unpaid dividends thereon to the date fixed for redemption, to the extent the
Corporation shall have funds legally available for such payment.
(ii) Shares of Series A Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized and unissued shares of the class of Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of the Preferred Stock; provided, however, that no such issued and
reacquired shares of Series A Preferred Stock shall be reissued or sold as
Series A Preferred Stock unless reissued as a stock dividend on shares of Series
A Preferred Stock.
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<PAGE>
(iii) Notwithstanding the foregoing provisions of this paragraph 5,
unless the full cumulative dividends on all outstanding shares of Series A
Preferred Stock shall have been paid or contemporaneously are declared and paid
for all past dividend periods, none of the shares of Series A Preferred Stock
shall be redeemed unless all outstanding shares of Series A Preferred Stock are
simultaneously redeemed.
6. PROCEDURE FOR REDEMPTION.
6. In the event that fewer than all the outstanding shares of
Series A Preferred Stock are to be redeemed pursuant to paragraph 5, the number
of shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be redeemed on a pro rata basis.
(ii) In the event the Corporation shall redeem shares of Series A
Preferred Stock pursuant to paragraph 5, notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (a) the redemption
date; (b) the number of shares of Series A Preferred Stock to be redeemed and,
if less than all the shares held by such holder are to be redeemed from such
holder, the number of shares to be redeemed from such holder; (c) the redemption
price; (d) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (e) that dividends on the
shares to be redeemed will cease to accrue on such redemption date, unless the
Corporation shall fail to pay the redemption price as set forth herein.
(iii) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the
-5-
<PAGE>
redemption price of the shares called for redemption) dividends on the shares of
Series A Preferred Stock so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding and shall have the
status of authorized but unissued shares of Preferred Stock, unclassified as to
series, and shall not be reissued as shares of Series A Preferred Stock (unless
reissued as a stock dividend on Series A Preferred Stock), and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price and any accrued and unpaid dividends)
shall cease. Upon surrender in accordance with said notice of the certificates
for any shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption price
aforesaid. In the event fewer than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
7. REDEMPTION AT THE OPTION OF THE HOLDERS. (a) The holders of a
majority of the outstanding Series A Preferred Stock may elect to cause the
Corporation to redeem the outstanding Series A Preferred Stock upon the
occurrence of any of the following events:
(i) A consolidation or merger of the Corporation with or into
another entity where the holders of the capital stock of the Corporation
immediately prior to such merger or consolidation hold 50% or less of the
outstanding capital stock of the entity surviving such merger or consolidation
immediately after such transaction (based on voting power), or the sale of all
or substantially all of the Corporation's assets;
-6-
<PAGE>
(ii) The Corporation's sale of Common Stock in a bona fide firm
commitment underwriting pursuant to a registration statement filed with, and
declared effective by, the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended; or
(iii) August , 2007.
(b) The Corporation shall give the holders of Series A Preferred Stock at
least 30 days' notice prior to the scheduled occurrence of any of the events
specified in clauses (i) or (ii) (collectively, the "Liquidity Events"). Notice
of election to redeem shall be given to the holders of Series A Preferred Stock
at least five days prior to the scheduled Liquidity Events or by June 25, 2007
with respect to clause (iii). If the Liquidity Event arises pursuant to
clause (ii) and if the underwriters require that Series A Preferred Stock be
exchanged for Common Stock of the Corporation and not redeemed, then each share
of Series A Preferred Stock valued at the Accrued Liquidation Preference shall
be exchanged for a number of shares of Common Stock equal to the Accrued
Liquidation Preference divided by the midpoint of the proposed public offering
price range of a share of Common Stock less the underwriter's discount.
8. VOTING RIGHTS.
(i) Except as otherwise required by law, the holders of record of
shares of Series A Preferred Stock shall have the right to vote, together with
the holders of outstanding shares of Common Stock and not by classes, on all
matters on which holders of Common Stock shall have the right to vote. The
holders of Series A Preferred Stock shall have the right to cast 10 votes for
each share of Series A Preferred Stock.
(ii) So long as any shares of Series A Preferred Stock are
outstanding, the Corporation will not without the affirmative vote or consent of
the holders of a majority of the issued and outstanding Series A Preferred Stock
voting as a separate class create any class or
-7-
<PAGE>
series of shares ranking on a parity with or prior to the Series A Preferred
Stock either as to dividends or redemption or upon liquidation, or amend, alter
or repeal (whether by merger, consolidation or otherwise) the Corporation's
certificate of incorporation to adversely affect the voting powers, rights or
preferences of the Series A Preferred Stock.
(iii) The Corporation will not without the affirmative vote or
consent of the holders of a majority of the issued and outstanding Series A
Preferred Stock amend the terms or any provisions of the Series A Preferred
Stock.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Joaquin Blaya, its Chief Executive Officer and attested by Steve
Dawson, its Secretary, this 6th day of August, 1997.
RADIO UNICA CORP.
By: /s/ Joaquin Blaya
--------------------------------
Name: Joaquin Blaya
Title: Chief Executive Officer
Attest:
/s/ Steve Dawson
- -------------------------------
Name: Steve Dawson
Title: Secretary
-8-
<PAGE>
CERTIFICATE OF MERGER
OF
RADIO UNICA ACQUISITION CO.
WITH AND INTO
RADIO UNICA CORP.
PURSUANT TO SECTION 251 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
RADIO UNICA CORP., a Delaware corporation hereby certifies as follows:
FIRST: The name of the constituent corporations are "Radio Unica Corp.,"
and "Radio Unica Acquisition Co." Each constituent corporation is incorporated
under the laws of the State of Delaware.
SECOND: An Agreement of Merger dated June 30, 1998 has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with Section 251 of the General Corporation Law of
the State of Delaware.
THIRD: The name of the surviving corporation (the "Surviving Corporation")
is Radio Unica Corp.
FOURTH: The Certificate of Incorporation of Radio Unica Corp. in effect at
the date of the merger shall be the certificate of incorporation of the
Surviving Corporation except that Article FOURTH of the Certificate of
Incorporation shall be amended in its entirety to read as follows:
"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."
As so amended, the Certificate of Incorporation shall continue in full
force and effect until further amended in the manner prescribed by law.
FIFTH: An executed copy of the Agreement of Merger is on file at the
principal place of business of the Surviving Corporation located at 8400 N.W.
52nd Street, Suite 101, Miami, Florida 33166, and a copy of the Agreement of
Merger will be furnished by the Surviving Corporation, on request and without
cost, to any stockholder of any constituent corporation.
<PAGE>
IN WITNESS WHEREOF, Radio Unica Corp. has caused this certificate of merger
to be executed in its corporate name by its Chief Executive Officer and to be
attested by its Secretary on this 30th day of June, 1998.
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
-------------------------------------
Name: Joaquin F. Blaya
Title: Chief Executive Officer
Attest:
By: /s/ Steven E. Dawson
--------------------------------
Secretary
Steven E. Dawson
<PAGE>
Exhibit 4.1
Radio Unica Corp.
$158,088,000
113/4% Senior Discount Notes due 2006
PURCHASE AGREEMENT
------------------
July 22, 1998
CIBC OPPENHEIMER CORP.
BEAR, STEARNS & CO. INC.
c/o CIBC OPPENHEIMER CORP.
425 Lexington Avenue
3rd Floor
New York, New York 10017
Ladies and Gentlemen:
Radio Unica Corp., a Delaware corporation (the "Company"), and each of
the Company's subsidiaries set forth on the signature pages hereto (each, a
"Guarantor" and, collectively, the "Guarantors" and, together with the Company,
the "Issuers ") hereby confirm their agreement with you (the "Initial
Purchasers"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$158,088,000 aggregate principal amount at maturity of its 113/4% Senior
Discount Notes due 2006 (the "Notes"). The obligations of the Company under the
Indenture (defined below) and the Notes will be unconditionally guaranteed on a
senior unsecured basis (the "Guarantees"), on a joint and several basis, by each
Guarantor. The Notes and the Guarantees are to be issued pursuant to the
Indenture (the "Indenture"), dated as of July 27, 1998 among the Company, the
Guarantors and Wilmington Trust Company, as trustee (the " Trustee"). The Notes
and the Guarantees are hereinafter referred to collectively as the "Securities."
The Notes will be offered and sold to the Initial Purchasers without
such offers and sales being registered under the Securities Act of 1933, as
amended (together with the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder, the "Securities Act"), in
reliance on exemptions therefrom.
<PAGE>
-2-
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated July 2, 1998 (the "Preliminary
Memorandum") and a final offering memorandum dated July 22, 1998 (including the
documents annexed thereto, the "Final Memorandum"; the Preliminary Memorandum
and the Final Memorandum each herein being referred to as a "Memorandum"), each
setting forth or including a description of the terms of the Securities, the
terms of the offering of the Notes, a description of the Company and its
subsidiaries and any material developments relating to the Company and its
subsidiaries occurring after the date of the most recent historical financial
statements included therein. All references in this Agreement to financial
statements and schedules and other information which is "contained," "included"
or "stated" in any Memorandum (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is included in any Memorandum.
The Company and the Guarantors understand that the Initial Purchasers
propose to make an offering of the Notes only on the terms and in the manner set
forth in the Memorandum and Section 9 hereof as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, to persons
in the United States whom the Initial Purchasers reasonably believe to be
qualified institutional buyers ("QIBs") as defined in Rule 144A under the
Securities Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A, and outside the United States to certain persons
in reliance on Regulation S under the Securities Act.
The Initial Purchasers and their direct and indirect transferees of
the Notes will be entitled to the benefits of the Registration Rights Agreement
dated as of the Closing Date (as defined in Section 3 below) among the parties
hereto (the "Registration Rights Agreement") pursuant to which the Issuers have
agreed, among other things, to file (i) a registration statement (the
"Registration Statement") with the Commission registering the Notes or the
Exchange Notes (as defined in the Registration Rights Agreement) under the
Securities Act or (ii) a shelf registration statement pursuant to Rule 415 under
the Securities Act relating to the resale of the Notes by holders thereof or, if
applicable, relating to the resale of Private Exchange Notes (as defined in the
Registration Rights Agreement) by the Initial Purchasers pursuant to an exchange
of the Notes for Private Exchange Notes.
<PAGE>
-3-
The Securities, the Exchange Notes, the Private Exchange Notes, the
Indenture, the Registration Rights Agreement and this Agreement are herein
collectively referred to as the "Basic Documents".
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. The Issuers,
jointly and severally, represent and warrant to and agree with the Initial
Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section 2
do not apply to statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to
the Company in writing by the Initial Purchasers expressly for use in the
Preliminary Memorandum, the Final Memorandum or any amendment or supplement
thereto. The Preliminary Memorandum, the Final Memorandum and any
amendment or supplement thereto complied or will comply in all material
respects with the requirements of Rule 144A under the Securities Act.
(b) Each of the Company and its subsidiaries set forth in EXHIBIT A
hereto (the "Subsidiaries") has been duly incorporated and each of the
Company and the Subsidiaries is validly existing in good standing as a
corporation under the laws of its jurisdiction of incorporation, with the
requisite corporate power and authority to own its properties and conduct
its business as now conducted as described in the Final Memorandum and is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the general affairs, management,
business, condition (financial or other), properties, prospects or results
of operations of the Company and the Subsidiaries, taken as a whole (any
such event, a "Material Adverse Effect"); as of the Closing Date, the
Company will have the authorized, issued and outstanding capitalization set
forth in the Final Memoran-
<PAGE>
-4-
dum; except as set forth in EXHIBIT A hereto, the Company does not have any
subsidiaries or own directly or indirectly any of the capital stock or
other equity or long-term debt securities of or have any equity interest in
any other person; except as set forth in the Final Memorandum, all of the
outstanding shares of capital stock of the Company and the Subsidiaries
have been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights and are owned free and clear of all liens, encumbrances, equities
and restrictions on transferability (other than those imposed by the
Securities Act and the state securities or "Blue Sky" laws) or voting;
except as set forth in the Final Memorandum, all of the outstanding shares
of capital stock of the Subsidiaries are owned, directly or indirectly, by
the Company; except as set forth in the Final Memorandum, no options,
warrants or other rights to purchase from the Company or any Subsidiary,
agreements or other obligations of the Company or any Subsidiary to issue
or other rights to convert any obligation into, or exchange any securities
for, shares of capital stock of or ownership interests in the Company or
any Subsidiary are outstanding and no holder of securities of the Company
or any Subsidiary is entitled to have such securities registered under the
Registration Statement; and except as set forth in the Final Memorandum,
there is no agreement, understanding or arrangement among the Company or
any Subsidiary and each of their respective stockholders or any other
person relating to the ownership or disposition of any capital stock of the
Company or any Subsidiary or the election of directors of the Company or
any Subsidiary or the governance of the Company's or any Subsidiary's
affairs, and, if any, such agreements, understandings and arrangements will
not be breached or violated as a result of the execution and delivery of,
or the consummation of the transactions contemplated by, this Agreement or
the other Basic Documents.
(c) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Securities, the Exchange Notes and the Private Exchange Notes. The Notes,
the Exchange Notes and the Private Exchange Notes have each been duly and
validly authorized by the Company for issuance and, when executed by the
Company and authenticated by the Trustee in accordance with the provisions
of the Indenture, and, in the case of the Notes, delivered to and paid for
by the Initial Purchasers in accordance with the terms hereof,
<PAGE>
-5-
will have been duly executed, issued and delivered and will constitute
valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance
with their terms except that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally or (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought (regardless of
whether such enforcement is considered in a proceeding at law or in equity)
(collectively, the "Enforceability Exceptions"); the Guarantees endorsed on
the Notes and the guarantees to be endorsed on the Exchange Notes and the
Private Exchange Notes have each been duly and validly authorized by each
of the Guarantors and, when the Notes are executed by the Company and
authenticated by the Trustee in accordance with the provisions of the
Indenture, and delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Guarantors, entitled to the benefits of the Indenture and enforceable
against the Guarantors in accordance with their terms except that the
enforcement thereof may be limited by the Enforceability Exceptions; the
Securities are in the form contemplated by the Indenture.
(d) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture has been duly and validly authorized by the
Issuers and meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and, when
executed and delivered by the Issuers (assuming the due authorization,
execution and delivery by the Trustee), will constitute a valid and legally
binding agreement of the Issuers, enforceable against the Issuers in
accordance with its terms except that the enforcement thereof may be
limited by the Enforceability Exceptions.
(e) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly and validly authorized by the
Issuers and, when executed and delivered by the Issuers, will constitute a
valid and legally binding agreement of the Issuers, enforceable against the
Issuers in accordance with its terms
<PAGE>
-6-
except that the enforcement thereof may be limited by the Enforceability
Exceptions and except as any rights to indemnity or contribution hereunder
may be limited by federal and state securities laws and public policy
considerations.
(f) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement. The Registration Rights Agreement has been
duly and validly authorized by the Issuers and, when executed and delivered
by the Issuers, will constitute a valid and legally binding agreement of
the Issuers, enforceable against the Issuers in accordance with its terms
except that the enforcement thereof may be limited by the Enforceability
Exceptions and except as any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations. The Securities, the Indenture and the Registration Rights
Agreement conform in all material respects to the descriptions thereof in
the Final Memorandum.
(g) Except as disclosed in the Final Memorandum and assuming the
Securities are sold in the manner described in this Agreement, no consent,
approval, authorization, license, qualification, exemption or order of any
court or governmental agency or body or third party is required for the
performance of this Agreement, the Registration Rights Agreement, the
Securities or the Indenture by the Issuers or for the consummation by the
Issuers of any of the transactions contemplated hereby and thereby, or the
application of the proceeds of the issuance of the Securities as described
in the Final Memorandum, except for consents, approvals, authorizations,
licenses, qualifications, exemptions or orders the failure of which to
obtain would not, individually or in the aggregate, cause a Material
Adverse Effect and as has already been acquired or as may be required under
foreign or state securities or "Blue Sky" laws in connection with the
purchase and distribution of the Securities by the Initial Purchaser or the
Securities Act and the Trust Indenture Act in the case of the Registration
Rights Agreement; all such consents, approvals, authorizations, licenses,
qualifications, exemptions and orders set forth in the Final Memorandum
which are required to be obtained by the Closing Date have been or will be
prior to the Closing Date obtained or made, as the case may be, and are or
will be prior to the Closing Date in full force and effect and not the
subject of any pend-
<PAGE>
-7-
ing or, to the best knowledge of the Issuers, threatened attack by appeal
or direct proceeding or otherwise.
(h) None of the Company or the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational
document), (ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation applicable to it or any of its properties or
assets, which breach or violation would, individually or in the aggregate,
have a Material Adverse Effect, or (iii) in default (nor has any event
occurred which with notice or passage of time, or both, would constitute a
default) in the performance or observance of any obligation, agreement,
covenant or condition contained in this Agreement, the Registration Rights
Agreement, the Securities, the Indenture, or any other contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate or agreement or instrument to which it is a
party or to which it is subject, which default would, individually or in
the aggregate, have a Material Adverse Effect.
(i) The execution, delivery and performance by the Issuers of this
Agreement, the Registration Rights Agreement, the Securities and the
Indenture and the consummation by the Issuers of the transactions
contemplated hereby and thereby and by the Final Memorandum and the
fulfillment of the terms hereof and thereof will not (a) violate, conflict
with or constitute or result in a breach of or a default under (or an event
that, with notice or lapse of time, or both, would constitute a breach of
or a default under) any of (i) the terms or provisions of any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate or agreement or instrument to
which any of the Company or the Subsidiaries is a party or to which any of
their respective properties or assets are subject, (ii) the certificate of
incorporation or bylaws of any of the Company or the Subsidiaries (or
similar organizational document) or (iii) (assuming the Securities are sold
in the manner described in this Agreement and assuming compliance with all
applicable foreign or state securities or "Blue Sky" laws and with respect
to the Registration Rights Agreement, the Securities Act and the Trust
Indenture Act) any statute, judgment, decree, order, rule or regulation of
any court or governmental agency or other body applicable to the Company or
the Subsidiaries or any of their respective properties or assets or (b)
result in
<PAGE>
-8-
the imposition of any lien upon or with respect to any of the properties or
assets now owned or hereafter acquired by the Company or any of the
Subsidiaries, which violation, conflict, breach, default or lien would,
individually or in the aggregate, have a Material Adverse Effect.
(j) The audited consolidated financial statements of the Company and
the audited financial statements of 13 Radio Corporation and Oro Spanish
Broadcasting, Inc. included in the Final Memorandum present fairly the
consolidated financial position, results of operations and cash flows of
the Company on a consolidated basis and to the best knowledge of the
Company, after due inquiry, of 13 Radio Corporation and Oro Spanish
Broadcasting, Inc., at the dates and for the periods to which they relate
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis; the interim unaudited
consolidated financial statements included in the Final Memorandum present
fairly the consolidated financial position, results of operations and cash
flows of the Company at the dates and for the periods to which they relate
subject to year-end audit adjustments and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
with the audited consolidated financial statements of the Company included
therein; the summary and selected financial and statistical data included
in the Final Memorandum present fairly the information shown therein and
have been prepared and compiled on a basis consistent with the audited
financial statements included therein, except as otherwise stated therein;
and Ernst & Young LLP and Miller, Kaplan, Arase & Co., LLP, each of which
has examined certain of such financial statements as set forth in their
reports included in the Final Memorandum, is an independent public
accounting firm as required by the Securities Act.
(k) The unaudited pro forma combined financial statements and other
pro forma financial information (including the notes thereto) included in
the Final Memorandum (A) have been prepared in all material respects in
accordance with Rule 11-02 of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations of the Commission promulgated thereunder, the "Exchange Act")
and (B) have been properly computed on the bases described therein; and the
assumptions used in the preparation of the unaudited pro forma combined
financial statements and other pro
<PAGE>
-9-
forma financial information included in the Final Memorandum are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(l) Except as described in the Final Memorandum and except as
described on Schedule II hereto, there is not pending or, to the best
knowledge of the Issuers, threatened any action, suit, proceeding, inquiry
or investigation, governmental or otherwise, to which any of the Company or
the Subsidiaries is a party, or to which their respective properties or
assets are subject, before or brought by any court, arbitrator or
governmental agency or body, that, if determined adversely to the Company
or any such Subsidiary would, individually or in the aggregate, have a
Material Adverse Effect or that seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the application of the proceeds
therefrom or the other transactions described in the Final Memorandum.
(m) None of the Company or the Subsidiaries has, and, after giving
effect to the issuance and sale of the Securities, will not have, any
material liability for any prohibited transaction or funding deficiency or
any complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which any of the
Company or the Subsidiaries makes or ever has made a contribution and in
which any employee of any of the Company or the Subsidiaries is or has ever
been a participant. With respect to such plans, the Company and the
Subsidiaries are, and, after giving effect to the issuance and sale of the
Securities, will be, in compliance in all material respects with all
provisions of ERISA.
(n) Except as described in the Final Memorandum, the Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
that are necessary to conduct their business as described in the Final
Memorandum. None of the Company or the Subsidiaries has received any
notice of infringement of or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
that, if such assertion of infringement
<PAGE>
-10-
or conflict were sustained, would, individually or in the aggregate, have a
Material Adverse Effect.
(o) Except as described in the Final Memorandum, each of the Company
and the Subsidiaries possesses all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals presently required or necessary to own or lease, as the
case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in
the Final Memorandum ("Permits"), except where the failure to obtain such
Permits would not, individually or in the aggregate, have a Material
Adverse Effect; except as described in the Final Memorandum, each of the
Company and the Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such Permit; and none of the Company or the
Subsidiaries has received any notice of any proceeding relating to
revocation or termination of any such Permit, except as described in the
Final Memorandum and except where such revocation or termination would not,
individually or in the aggregate, have a Material Adverse Effect.
(p) Subsequent to the respective dates as of which information is
given in the Final Memorandum and except as described therein, (i) the
Company and the Subsidiaries have not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, in either case whether or not in the ordinary course of
business, (ii) the Company and the Subsidiaries have not purchased any of
their respective outstanding capital stock, or declared, paid or otherwise
made any dividend or distribution of any kind on any of their respective
capital stock or otherwise (other than, with respect to any of such
Subsidiaries, the purchase of, or dividend or distribution on, capital
stock owned by the Company) and (iii) there shall not have been any change
in the capital stock or long-term indebtedness of the Company or any of the
Subsidiaries.
<PAGE>
-11-
(q) There are no legal or governmental proceedings, nor are there any
contracts or other documents required by the Securities Act to be described
in a prospectus that are not described in the Final Memorandum. Except as
described in the Final Memorandum, none of the Company or the Subsidiaries
is in default under any of the contracts described in the Final Memorandum,
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except such
defaults or breaches as would not, individually or in the aggregate, have a
Material Adverse Effect.
(r) None of the Company or the Subsidiaries has taken or will take
any action that would cause this Agreement or the issuance or sale of the
Securities to violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System, in each case as in effect, or as the same may
hereafter be in effect, on the Closing Date.
(s) Each of the Company and the Subsidiaries has good and marketable
title to all real property described in the Final Memorandum as being owned
by it and good and marketable title to the leasehold estate in the real
property described therein as being leased by it, free and clear of all
liens, charges, encumbrances or restrictions, except, in each case, as
described in the Final Memorandum or such as would not, individually or in
the aggregate, have a Material Adverse Effect. All leases, contracts and
agreements, including those referred to in the Final Memorandum to which
the Company or any of the Subsidiaries is a party or by which any of them
is bound are valid and enforceable against the Company or any such
Subsidiary, are, to the knowledge of the Issuers, valid and enforceable
against the other party or parties thereto and are in full force and
effect, except where the failure to be valid and enforceable against the
other party or other parties thereto or to be in full force and effect
would not have a Material Adverse Effect.
(t) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and have paid all taxes shown to
be due on such returns; there is no tax deficiency that has been asserted
against the Company or any
<PAGE>
-12-
Subsidiary that would, individually or in the aggregate, have a Material
Adverse Effect.
(u) (i) Immediately after the consummation of the transactions
contemplated by this Agreement and, the other Basic Documents, the fair
value and present fair saleable value of the assets of each of the Company
and the Subsidiaries will exceed the sum of its stated liabilities and
identified contingent liabilities; and (ii) each of the Company and the
Subsidiaries is not, nor will it be, after giving effect to the execution,
delivery and performance of this Agreement and the other Basic Documents,
and the consummation of the other transactions contemplated hereby and
thereby, (a) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise insolvent.
(v) Except as disclosed in the Final Memorandum and except as would
not, individually or in the aggregate, have a Material Adverse Effect, (A)
each of the Company and the Subsidiaries is in compliance with all
applicable Environmental Laws, (B) each of the Company and the Subsidiaries
has made all filings and provided all notices required under any applicable
Environmental Law, and has all permits, authorizations and approvals
required under any applicable Environmental Laws and is in compliance with
their requirements, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information pending or,
to the best knowledge of the Issuers, threatened against the Company or any
of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any of the Subsidiaries, (E) neither the
Company nor any of the Subsidiaries has received notice that it has been
identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or any comparable state law, and (F) no property or facility of
the Company or any of the Subsidiaries is (i) listed or proposed for
listing on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to
<PAGE>
-13-
CERCLA, or on any comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule
of common law and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment
binding on any of the Company or the Subsidiaries, relating to pollution or
protection of the environment or health or safety or any chemical, material
or substance, that is subject to regulation thereunder. "Environmental
Claims" means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, notices of responsibility,
information requests, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
(w) None of the Company or the Subsidiaries is, or immediately after
the Closing Date will be, required to register as an "investment company"
or a company "controlled by" an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(x) None of the Company or the Subsidiaries or any of such entities'
directors, officers, employees, agents or controlling persons has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Securities Act or otherwise, in, or
that has constituted, stabilization or manipulation of the price of the
Securities.
(y) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
Act) directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of any "security" (as
defined in the Securities Act) which is or could be integrated with the
sale of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering of
the Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act. Assuming (i) the
<PAGE>
-14-
accuracy of the representations and warranties of the Initial Purchasers in
Section 9 hereof and (ii) the due performance by the Initial Purchasers of
the covenants and agreements set forth in Section 9 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchasers in the manner contemplated by this Agreement to
register any of the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act.
(z) No securities of any Issuer are of the same class (within the
meaning of Rule 144A under the Securities Act) as the Securities and listed
on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(aa) Except as set forth in the Final Memorandum, there is no strike,
labor dispute, slowdown or work stoppage by the employees of the Company or
any of the Subsidiaries which is pending or, to the best knowledge of the
Company or any of the Subsidiaries, threatened.
(bb) Each of the Company and the Subsidiaries carries insurance
(including self-insurance) in such amounts and covering such risks as in
its reasonable determination is adequate for the conduct of its business
and the value of its properties.
(cc) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(dd) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the registration
statements required to be filed by the Company pursuant to the Registration
Rights Agreement other than as expressly permitted thereby.
<PAGE>
-15-
(ee) The statistical and market and industry-related data included in
the Final Memorandum are based on or derived from sources which the Issuers
believe to be reliable and accurate or represent the Issuers' good faith
estimates that are made on the basis of data derived from such sources.
(ff) Except as stated in the Final Memorandum, the Company does not
know of any claims for services, either in the nature of a finder's fee or
financial advisory fee, with respect to the offering of the Securities and
the transactions contemplated by the Final Memorandum.
(gg) None of the Company, the Subsidiaries, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Securities Act ("Regulation S"))
with respect to the Securities and the Company, the Subsidiaries and their
respective Affiliates and any person acting on its or their behalf (other
than the Initial Purchasers) have acted in accordance with the offering
restrictions requirement of Regulation S.
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to the Initial Purchasers or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by the Issuers
to the Initial Purchasers as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees to
purchase from the Company, the Notes in the respective amounts set forth in
Schedule A hereto, at 63.256% of their principal amount.
One or more certificates in definitive form for the Notes and the
related Guarantees that the Initial Purchasers have agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Initial Purchasers request upon notice to the Company at least
48 hours prior to the Closing Date shall be delivered by or on behalf of the
Company, against payment by or on behalf of the Initial Purchasers, of the
purchase price therefor by wire transfer of immediately available funds to the
account of the
<PAGE>
-16-
Company previously designated by it in writing. Such delivery of and payment
for the Notes and the related Guarantees shall be made at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005, at 9:00 a.m. New
York time, on July 27, 1998, or at such date as the Initial Purchasers and the
Company may agree upon, such time and date of delivery against payment being
herein referred to as the "Closing Date." The Company will make such
certificate or certificates for the Notes and the related Guarantees available
for checking and packaging by the Initial Purchasers at the offices in New York,
New York of CIBC OPPENHEIMER CORP. at least 24 hours prior to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASERS. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. CERTAIN COVENANTS. The Issuers jointly and severally covenant
and agree with the Initial Purchasers that:
(i) The Issuers will not amend or supplement the Final Memorandum or
any amendment or supplement thereto unless the Initial Purchasers shall
have been advised and furnished a copy for a reasonable period of time
prior to the proposed amendment or supplement and the Initial Purchasers
shall have given its consent (which consent shall not be unreasonably
withheld). The Issuers will promptly, upon the reasonable request of the
Initial Purchasers or counsel for the Initial Purchasers, make any
amendments or supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary in connection with the resale of the
Securities by the Initial Purchasers.
(ii) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the
Securities by the Initial Purchasers; PROVIDED, HOWEVER, that in connection
therewith none of the Issuers shall be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or to take any other action that would subject it to general
service of process or to taxation in
<PAGE>
-17-
excess of a nominal amount in respect of doing business in any jurisdiction
in which it is not otherwise subject.
(iii) If, at any time prior to the completion of the resale by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event
shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for the Initial Purchasers, to amend or supplement the Final
Memorandum in order to make such Final Memorandum not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if for any other reason it shall be necessary to amend or
supplement the Final Memorandum in order to comply with applicable laws,
rules or regulations, the Issuers shall (subject to Section 5(i)) forthwith
amend or supplement such Final Memorandum at their own expense so that, as
so amended or supplemented, such Final Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading and will comply with all applicable laws, rules or regulations.
(iv) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of each
Preliminary Memorandum or Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(v) None of the Issuers or any of their respective Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) which could be
integrated with the sale of the Securities in a manner which would require
the registration under the Securities Act of the Securities.
(vi) For so long as any of the Securities remain outstanding, the
Company will furnish to the Initial Purchasers (a) as soon as available, a
copy of each report or other communication (financial or otherwise) of the
Company mailed to the Trustee or holders of the Securities or stockholders
or filed with the Commission or any national securities exchange on which
any class of securities of the Company may be listed, and (b) from time to
time such other information concerning the Issuers as the Initial
Purchasers may reasonably request.
<PAGE>
-18-
(vii) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(viii) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared by or are available
to the Company, a copy of any unaudited interim consolidated financial
statements of the Company and the Subsidiaries, for any period subsequent
to the period covered by the most recent financial statements appearing in
the Final Memorandum.
(ix) The Company will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) in connection with the offering of the Securities or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(x) For so long as any of the Securities remain outstanding, the
Company will make available at its expense, upon request, to any holder of
Securities and any prospective purchasers thereof the information specified
in Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(xi) The Issuers will use their reasonable best efforts to (i)
permit the Securities to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. (the "NASD") relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "Portal Market")
and (ii) permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(xii) In connection with Securities offered and sold in an offshore
transaction (as defined in Regulation S), the Issuers will not register any
transfer of such Securities not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Securities in the form of
definitive securities.
(xiii) If this Agreement shall be terminated by the Initial
Purchasers in accordance with Section 11(a)(i) or
<PAGE>
-19-
11(a)(v) hereof, the Company agrees to reimburse the Initial Purchasers for
all reasonable out-of-pocket expenses (including fees and expenses of
counsel for the Initial Purchasers) incurred by the Initial Purchasers in
connection herewith, but in no event will the Company be liable to the
Initial Purchasers for damages on account of loss of anticipated profits
from the sale of the Securities.
(xiv) The Issuers will use their commercially reasonable best
efforts to do and perform all things required to be done and performed by
them under this Agreement and the other Basic Documents prior to or after
the Closing Date and to satisfy all conditions precedent on their part to
the obligations of the Initial Purchasers to purchase and accept delivery
of the Securities.
6. EXPENSES. Notwithstanding any termination of this Agreement
(pursuant to Section 11 or otherwise), the Issuers jointly and severally agree
to pay the following costs and expenses and all other reasonable costs and
expenses incident to the performance by the Issuers of their obligations
hereunder: (i) the preparation, printing, typing, and reproduction of this
Agreement and of the other Basic Documents, any amendment or supplement to or
modification of any of the foregoing and any and all other documents furnished
pursuant hereto or thereto or in connection herewith or therewith; (ii) the
preparation, printing or reproduction of each Preliminary Memorandum, the Final
Memorandum and each amendment or supplement to any of them; (iii) the
preparation, printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of each
Preliminary Memorandum, the Final Memorandum and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Securities; (iv) the preparation, printing,
authentication, issuance and delivery of certificates for the Notes and the
related Guarantees, including any stamp taxes in connection with the original
issuance and sale of the Securities and Trustees' fees; (v) the reproduction and
delivery of the preliminary and supplemental "Blue Sky" memoranda and all other
agreements or documents reproduced and delivered in connection with the offering
of the Securities; (vi) the registration or qualification of the Securities for
offer and sale under the securities or Blue Sky laws of the several states
(including filing fees and the fees, expenses and disbursements of Cahill Gordon
& Reindel, counsel to the Initial Purchasers, relating to such registration and
qualification); (vii) the filing fees in connection with any filings required to
be made with the NASD (including the fees
<PAGE>
-20-
and disbursements of Cahill Gordon & Reindel, counsel to the Initial Purchasers,
in respect thereof and in connection with obtaining an opinion of the NASD
concerning the fairness of the terms and arrangements of the underwriting of the
Securities); (viii) one-half of the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Issuers; (x) fees and expenses of the Trustee including
fees and expenses of its counsel; (xi) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market; and (xii) any fees charged by investment rating agencies for the rating
of the Securities.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligation of the Initial Purchasers to purchase and pay for the Securities is
subject to the accuracy of the representations and warranties contained herein,
to the performance by the Issuers of their respective covenants and agreements
hereunder and to the following additional conditions unless waived in writing by
the Initial Purchasers:
(i) The Initial Purchasers shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Issuers, in form
and substance satisfactory to the Initial Purchasers and Cahill Gordon &
Reindel, counsel to the Initial Purchasers, dated the Closing Date. In
rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP, shall
have received and may rely upon such certificates and other documents and
information, including one or more opinions of local counsel reasonably
acceptable to the Initial Purchasers, as they may reasonably request to
pass upon such matters.
(ii) The Initial Purchasers shall have received an opinion, dated
the Closing Date, of Cahill Gordon & Reindel, counsel to the Initial
Purchasers, with respect to the sufficiency of certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchasers may require. In rendering such opinion, Cahill Gordon & Reindel
shall have received and may rely upon such certificates and other documents
and information as they may reasonably request to pass upon such matters.
In addition, in rendering their opinion, Cahill Gordon & Reindel may state
that their opinion is limited to matters of New York, Delaware corporate
and federal law.
<PAGE>
-21-
(iii) The Initial Purchasers shall have received from Ernst & Young
LLP, independent public accountants for the Issuers, a "comfort" letter
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers and Cahill Gordon &
Reindel, counsel to the Initial Purchasers.
(iv) The representations and warranties of the Issuers contained in
this Agreement shall be true and correct on and as of the Closing Date; the
Issuers shall have complied in all material respects with all agreements
and satisfied all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date.
(v) There shall not have been any change in the capital stock of
the Issuers or any material increase in the consolidated short-term or
long-term debt of the Company from that set forth or contemplated in the
Final Memorandum and (b) the Issuers shall not have any liabilities or
obligations, contingent or otherwise (whether or not in the ordinary course
of business), that are material to the Issuers, taken as a whole, other
than those reflected in the Final Memorandum.
(vi) None of the issuance and sale of the Securities pursuant to
this Agreement or any of the transactions contemplated by any of the other
Basic Documents shall be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued; and
there shall not have been any legal action, order, decree or other
administrative proceeding instituted or threatened against any of the
Issuers or against the Initial Purchasers relating to the issuance of the
Securities or the Initial Purchasers' activities in connection therewith or
any other transactions contemplated by this Agreement or the Final
Memorandum or the other Basic Documents.
(vii) Subsequent to the date of this Agreement and since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), there shall not
have occurred (i) any change, or any development involving a prospective
change, in or affecting the general affairs, management, business,
condition (financial or other), properties, prospects or results of
operations of the Issuers, taken as a whole, not contemplated by the Final
Memorandum would materially adversely affect the market for the Securities,
or (ii) any event or development re-
<PAGE>
-22-
lating to or involving any of the Issuers or any of the officers or
directors of the Issuers that makes any statement made in the Final
Memorandum untrue or that requires the making of any addition to or change
in the Final Memorandum in order to state a material fact required by any
applicable law, rule or regulation to be stated therein or necessary in
order to make the statements made therein not misleading.
(viii) The Initial Purchasers shall have received certificates, dated
the Closing Date and signed by the chief executive officer and the chief
financial officer of the Issuers, to the effect that:
a. All of the representations and warranties of the Issuers set
forth in this Agreement are true and correct as if made on and
as of the Closing Date and the Issuers have complied in all
material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied at or
prior to the Closing Date.
b. The issuance and sale of the Securities pursuant to this
Agreement or the Final Memorandum have not been enjoined
(temporarily or permanently) and no restraining order or other
injunctive order has been issued and there has not been any
legal action, order, decree or other administrative proceeding
instituted or, to the best knowledge of the Issuers,
threatened against the Issuers relating to the issuance of the
Securities or the Initial Purchasers' activities in connection
therewith or in connection with any other transactions
contemplated by this Agreement, the Final Memorandum or the
other Basic Documents.
c. Subsequent to the date of this Agreement and since the date of
the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the
date hereof), there has not occurred (i) any change, or any
development involving a prospective change, in or affecting
the general affairs, management, business, condition
(financial or other), properties, prospects or results of
operations of the Issuers, taken as a whole, not contemplated
by the Final Memorandum
<PAGE>
-23-
that would materially adversely affect the market for the
Securities, or (ii) any event or development relating to or
involving any of the Issuers or any of the respective officers
or directors of the Issuers that makes any statement made in
the Final Memorandum untrue or that requires the making of any
addition to or change in the Final Memorandum in order to
state a material fact required by any applicable law, rule or
regulation to be stated therein or necessary in order to make
the statements made therein not misleading.
d. (i) There has not been any change in the capital stock of the
Issuers nor any material increase in the consolidated
short-term or long-term debt of the Issuers from that set
forth or contemplated in the Final Memorandum and (ii) the
Issuers have no liabilities or obligations, contingent or
otherwise (whether or not in the ordinary course of business),
that are material to the Issuers, taken as a whole, other than
those reflected in the Final Memorandum.
e. At the Closing Date and after giving effect to the
consummation of the transactions contemplated by this
Agreement and, the other Basic Documents, there exists no
Default or Event of Default (as defined in the Indenture).
(ix) All proceedings taken in connection with the issuance of the
Securities and the transactions contemplated by this Agreement, the other
Basic Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchasers and counsel to the
Initial Purchasers. The Initial Purchasers and counsel to the Initial
Purchasers shall have received copies of such papers and documents as they
may reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
(x) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of
Rule 436(g) under the Securities Act, that (A) it is downgrading its rating
assigned to any debt securities of the Company, or (B) it is reviewing its
rating assigned to any debt securities of
<PAGE>
-24-
the Company with a view to possible downgrading, or with negative
implications, or direction not determined.
(xi) On or before the Closing Date, the Initial Purchasers shall
have received the Registration Rights Agreement executed by the Company and
such agreement shall be in full force and effect at all times from and
after the Closing Date.
(xii) The Issuer shall have furnished or caused to be furnished to
the Initial Purchasers such further certificates and documents as the
Initial Purchasers shall have reasonably requested.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel to the Initial Purchasers. The Issuer shall
furnish to the Initial Purchasers such conformed copies of such opinions,
certificates, letters, schedules, documents and instruments in such quantities
as the Initial Purchasers shall reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) Each Issuer jointly
and severally agrees to indemnify and hold harmless the Initial Purchasers, each
director, officer, employee or agent of the Initial Purchasers and each person,
if any, who controls the Initial Purchasers within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which the Initial Purchasers or such
director, officer, employee, agent or controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Preliminary Memorandum or the Final
Memorandum or any amendment or supplement thereto or (B) any of the Basic
Documents or any application or other document, or any amendment or
supplement thereto, executed by any Issuer or based upon written
information furnished by or on behalf of any Issuer filed in any
jurisdiction in order to qualify the Securities under the securities or
"Blue Sky" laws thereof
<PAGE>
-25-
or filed with the Commission or any securities association or securities
exchange (collectively, the "Documents"); or
(ii) the omission or alleged omission to state, in any Preliminary
Memorandum or the Final Memorandum or any amendment or supplement thereto,
or any of the Documents, a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and will reimburse, as
incurred, the Initial Purchasers and each such director, officer, employee,
agent or controlling person for any legal or other expenses reasonably
incurred by the Initial Purchasers or such director, officer, employee,
agent or controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with any such
loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that
none of the Issuers will be liable to the Initial Purchasers or any
director, officer, employee, agent or controlling person of the Initial
Purchasers to the extent that any such loss, claim, damages, liability,
expense or action arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Memorandum or the Final Memorandum or any amendment or
supplement thereto, or any Document, in reliance upon and in conformity
with written information furnished to the Issuers by or on behalf of the
Initial Purchasers specifically for use therein; and PROVIDED, FURTHER,
that none of the Issuers will be liable to the Initial Purchasers or any
director, officer, employee, agent or any person controlling the Initial
Purchasers with respect to any such untrue statement or omission made in
any Preliminary Memorandum that is corrected in the Final Memorandum (or
any amendment or supplement thereto) if the person asserting any such loss,
claim, damage, expense or liability purchased Securities from the Initial
Purchasers in reliance upon the Preliminary Memorandum but was not sent or
given a copy of the Final Memorandum (as amended or supplemented) that was
made available by the Issuers to the Initial Purchasers at or prior to the
written confirmation of the sale of the Securities to such person in any
case where such delivery of such Final Memorandum (as so amended or
supplemented) is required by the Securities Act, unless such failure to
deliver such Final Memorandum (as amended or supplemented) was a result of
noncompliance by the Issuers with Section 5(iv) of this Agreement. This
indemnity agreement will be in addition to any liability that the Issuers
may
<PAGE>
-26-
otherwise have to the indemnified parties. The Issuers further agree that
the indemnification, contribution and reimbursement commitments set forth
in this Section 8 shall apply whether or not the Initial Purchasers are a
formal party to any such lawsuits, claims or other proceedings. None of
the Issuers will, without the prior written consent of the Initial
Purchasers, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification by the Initial Purchasers may be sought hereunder
(whether or not the Initial Purchasers or any person who controls the
Initial Purchasers within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Initial Purchasers and each such director,
officer, employee, agent or controlling person from all liability arising
out of such claim, action, suit or proceeding.
(b) The Initial Purchasers, severally and not jointly, will indemnify
and hold harmless the Issuers, their respective directors, officers, employees
and agents and each person, if any, who controls any of the Issuers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which any of the Issuers
or any such director, officer, employee, agent or controlling person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Memorandum or the Final Memorandum or
any amendment or supplement thereto or any Document, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
was made in reliance upon and in conformity with written information furnished
to any of the Issuers by or on behalf of the Initial Purchasers specifically for
use therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by any of the Issuers or any such director, officer, employee, agent or
controlling person in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchasers may otherwise have
to the indemnified parties.
<PAGE>
-27-
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party except to the extent that
such omission results in the forfeiture by the indemnifying party of substantial
rights and defenses. In case any such action is brought against any indemnified
party, and such indemnified party notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the named
parties in any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to
those available to any such indemnifying party, then the indemnifying parties
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable out-of-pocket
costs of investigation, incurred by such indemnified party in connection with
the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, representing the indemnified parties
under such paragraph (a) or paragraph (b), as the case may be, who are parties
to such action or actions); (ii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying parties; or (iii) the indemnifying party shall
<PAGE>
-28-
have failed to assume the defense or retain counsel reasonably satisfactory to
the indemnified party. After such notice from the indemnifying parties to such
indemnified party (so long as the indemnified party shall have informed the
indemnifying parties of such action in accordance with this Section 8 on a
timely basis prior to the indemnified party seeking indemnification hereunder),
the indemnifying parties will not be liable under this Section 8 for the costs
and expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified party
waived its rights under this Section 8, in which case the indemnified party may
effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof), each indemnifying
party, in order to provide for just and equitable contribution, shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (i) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages, expenses or
liabilities (or actions in respect thereof). The relative benefits received by
the Issuers on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Securities (before deducting expenses) received by the Issuers bear to the
total discounts and commissions received by the Initial Purchasers. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or the Initial Purchasers on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The amount paid or payable by
a party as a re-
<PAGE>
-29-
sult of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses incurred by such party in
connection with investigating or defending any such claim. The Issuers and the
Initial Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Issuers on the one hand and the Initial Purchasers on the other hand were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to in the
first sentence of this paragraph (d). Notwithstanding any other provision of
this paragraph (d), the Initial Purchasers shall not be obligated to make
contributions hereunder that in the aggregate exceed the total discounts and
commissions received by the Initial Purchasers under this Agreement, less the
aggregate amount of any damages that the Initial Purchasers have otherwise been
required to pay by reason of the untrue or alleged untrue statements, and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each director, officer, employee or agent of and each person, if
any, who controls the Initial Purchasers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each director, officer, employee and
agent of any of the Issuers and each person, if any, who controls any of the
Issuers within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Issuers.
(e) Notwithstanding anything to the contrary in this Section 8, the
indemnification and contribution provisions of the Registration Rights Agreement
shall govern any claim with respect thereto.
9. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER. (a) Each
Initial Purchaser represents and warrants that it is a QIB. Each Initial
Purchaser agrees with the Issuers that (i) it has not and will not solicit
offers for, or offer or sell, the Securities by any form of general solicitation
or general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to, (A) in the
case of offers inside the United States, persons whom such Ini-
<PAGE>
-30-
tial Purchaser reasonably believes to be QIBs or, if any such person is buying
for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to such Initial
Purchaser that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A and, in each case,
in transactions under Rule 144A and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers," which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)); PROVIDED, HOWEVER, that, in the case of this clause (B), in
purchasing Securities such persons are deemed to have represented and agreed as
provided under the caption "Notice to Investors" contained in the Final
Memorandum.
(b) Each of the Initial Purchasers represents and warrants with
respect to offers and sales outside the United States that (i) it has and will
comply with all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Securities or has in its possession or
distributes any Memorandum or any such other material, in all cases at its own
expense; (ii) the Securities have not been and will not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Securities Act or pursuant to
an exemption from the registration requirements of the Securities Act; (iii) it
has offered the Securities and will offer and sell the Securities (A) as part of
its distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S and, accordingly, neither it nor any persons acting on
its behalf have engaged or will engage in any directed selling efforts (within
the meaning of Regulation S) with respect to the Securities, and any such
persons have complied and will comply with the offering restrictions requirement
of Regulation S; and (iv) it agrees that, at or prior to confirmation of sales
of the Securities, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered and sold within the United States or to, or for the ac-
<PAGE>
-31-
count or benefit of, U.S. persons (i) as part of the distribution of the
securities at any time or (ii) otherwise until 40 days after the later of
the commencement of the offering and the closing date of the offering,
except in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meaning
given to them in Regulation S."
Terms used in this Section 9 and not defined in this Agreement have the meanings
given to them in Regulation S.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, their
respective officers and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Issuers, any of their respective officers or directors, the
Initial Purchasers or any controlling person referred to in Section 8 hereof and
(ii) delivery of, payment for or disposition of the Securities. The respective
agreements, covenants, indemnities and other statements set forth in Sections 6
and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. TERMINATION. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchasers by notice to the Issuers given in the
event that the Issuers shall have failed, refused or been unable to satisfy all
conditions on their part to be performed or satisfied hereunder on or prior to
the Closing Date or if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained
any loss or interference with respect to their respective businesses or
properties from fire, flood, hurricane, earthquake, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchasers, has had or has a Material Adverse
Effect on the general affairs, management, business, condition (financial
or other), properties, prospects or results of operations of the Company
and the Subsidiaries, taken as a whole, or there shall have been any
material adverse change, or any development involving a prospective mate-
<PAGE>
-32-
rial adverse change (including without limitation a change in management or
control of the Company or any Subsidiary), in the general affairs,
management, business, condition (financial or other), properties, prospects
or results of operations of the Company and the Subsidiaries, taken as a
whole, except as described in or contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity
or emergency, or (C) any material change in the financial markets of the
United States that, in the case of (A), (B) or (C) above, in the sole
judgment of the Initial Purchasers, makes it impracticable or inadvisable
to proceed with the delivery of the Securities as contemplated by the Final
Memorandum, as amended as of the date hereof; or
(v) any securities of the Company or any of the Subsidiaries shall
have been downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. NOTICES. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be hand delivered, mailed by
first-class mail, couriered by next-day air courier or telecopied and confirmed
in writing to CIBC OPPENHEIMER CORP., 425 Lexington Avenue, 3rd Floor, New York,
New York 10017, Attention: Corporate Finance Department, and with a copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, Attention:
Roger Meltzer, Esq. If sent to any of the Issuers, shall be mailed, delivered
or telecopied
<PAGE>
-33-
and confirmed in writing, to Radio Unica Corp., 8400 N.W. 52nd Street, Suite
101, Miami, Florida, Attention: Chief Financial Officer, and with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP, 1440 New York Avenue, N.W.,
Washington, D.C. Attention: C. Kevin Barnette, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
13. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers and each of the Issuers and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Issuers contained in Section 8 of this Agreement shall
also be for the benefit of the directors, officers, employees and agents and any
person or persons who control the Initial Purchasers within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchasers contained in Section 8 of this Agreement
shall also be for the benefit of the directors, officers, employees and agents
of the Issuers and any person or persons who control any Issuer within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
No purchaser of Securities from the Initial Purchasers will be deemed a
successor because of such purchase.
14. NO WAIVER; MODIFICATIONS IN WRITING. No failure or delay on
the part of any Issuer or the Initial Purchasers in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any Issuer or the Initial Purchasers at law or
in equity or otherwise. No waiver of or consent to any departure by any Issuer
or the Initial Purchasers from any provision of this Agreement
<PAGE>
-34-
shall be effective unless signed in writing by the party entitled to the benefit
thereof, PROVIDED that notice of any such waiver shall be given to each party
hereto as set forth below. Except as otherwise provided herein, no amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by or on behalf of each of the Issuers and
the Initial Purchasers. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Issuers or the Initial Purchasers from the
terms of any provision of this Agreement shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on the
Issuers in any case shall entitle the Issuers to any other or further notice or
demand in similar or other circumstances.
15. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The statements
set forth in the last paragraph on the front cover page of the Final Memorandum;
the second sentence on page i of the Final Memorandum; the last two sentences of
the third paragraph; the third and fourth sentences of the fifth paragraph; and
the seventh and eighth paragraphs in each case under the heading "Plan of
Distribution" in the Final Memorandum (to the extent such statements relate to
the Initial Purchasers) constitute the only information furnished by the Initial
Purchasers to the Issuers for purposes of Section 8 hereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto with
respect to the subject matter hereof.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of the
Issuers hereunder shall be joint and several obligations of each of them.
<PAGE>
-35-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this Agreement shall constitute a binding agreement among the Issuers
and the Initial Purchasers.
Very truly yours,
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF SAN FRANCISCO INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
ORO SPANISH BROADCASTING, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF SAN FRANCISCO LICENSE CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
<PAGE>
RADIO UNICA OF MIAMI, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF MIAMI LICENSE CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF LOS ANGELES, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF LOS ANGELES LICENSE CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA OF SAN ANTONIO, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
<PAGE>
RADIO UNICA NETWORK, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
RADIO UNICA SALES CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief
Executive Officer
<PAGE>
The foregoing Agreement is
hereby confirmed and accepted as
of the date first above written.
CIBC OPPENHEIMER CORP.
By: /s/ Dan K. Schrupp
-----------------------------
Name: Dan Schrupp
Title: Director
BEAR, STEARNS & CO. INC.
By: /s/ Mark Goldstein
-----------------------------
Name: Mark Goldstein
Title: Managing Director
<PAGE>
EXHIBIT A
Subsidiaries
- ------------
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.
Radio Unica Sales Corp.
<PAGE>
SCHEDULE I
Principal Amount of Notes
Initial Purchaser At Maturity
- ----------------- -------------------------
CIBC Oppenheimer Corp. 118,566,000
Bear, Stearns & Co., Inc. 39,522,000
------------
Total 158,088,000
============
<PAGE>
SCHEDULE II
THREATENED LITIGATION
Counsel claiming to represent two purported unpaid creditors (Terence E. Crosby
and Timothy L. Crosby) of Rene De La Rosa ("RDLR") has asserted, among other
things, that such purported unpaid creditors have a security interest in the
stock of Oro Spanish Broadcasting, Inc. ("Oro"). The Company believes that,
under the purchase agreement between the Company and RDLR relating to the
Company's acquisition of Oro, the Company would be indemnified by RDLR for any
damages arising from such assertion.
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RADIO UNICA CORP.
------------------------
THE GUARANTORS named herein
------------------------
and
WILMINGTON TRUST COMPANY, as Trustee
INDENTURE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated as of July 27, 1998
$158,088,000 Principal Amount at Maturity
11 3/4% Senior Discount Notes due 2006
<PAGE>
- -----------------------
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE
TIA 7Indenture
Section Section
<S> <C> <C>
310 (a)(1)............................................... 7.10
(a)(2)............................................... 7.10
(a)(3)............................................... N.A.
(a)(4)............................................... N.A.
(b).................................................. 7.08; 7.10; 11.02
(b)(1)............................................... 7.10
(b)(9)............................................... 7.10
(c).................................................. N.A.
311 (a).................................................. 7.11
(b).................................................. 7.11
(c).................................................. N.A.
312 (a).................................................. 2.05
(b).................................................. 11.03
(c).................................................. 11.03
313 (a).................................................. 7.06
(b)(1)............................................... 7.06
(b)(2)............................................... 7.06
(c).................................................. 11.02
(d).................................................. 7.06
314 (a).................................................. 4.02; 4.04; 11.02
(b).................................................. N.A.
(c)(1)............................................... 11.04; 11.05
(c)(2)............................................... 11.04; 11.05
(c)(3)............................................... N.A.
(d).................................................. N.A.
(e).................................................. 11.05
(f).................................................. N.A.
315 (a).................................................. 7.01; 7.02
(b).................................................. 7.05; 11.02
(c).................................................. 7.01
(d).................................................. 6.05; 7.01; 7.02
(e).................................................. 6.11
316 (a) (last sentence).................................. 11.06
(a)(1)(A)............................................ 6.05
(a)(1)(B)............................................ 6.04
(a)(2)............................................... 8.02
(b).................................................. 6.07
(c).................................................. 8.04
317 (a)(1)............................................... 6.08
(a)(2)............................................... 6.09
(b).................................................. 7.12
318 (a).................................................. 11.01
</TABLE>
- ------------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemend to be a
part of the Indenture
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions.........................................................................1
SECTION 1.02. Other Definitions..................................................................24
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..................................25
SECTION 1.04. Rules of Construction..............................................................25
ARTICLE TWO
THE NOTES
SECTION 2.01. Amount of Notes....................................................................26
SECTION 2.02. Form and Dating....................................................................27
SECTION 2.03. Execution and Authentication.......................................................27
SECTION 2.04. Registrar and Paying Agent.........................................................28
SECTION 2.05. Paying Agent To Hold Money in Trust................................................29
SECTION 2.06. Noteholder Lists...................................................................29
SECTION 2.07. Transfer and Exchange..............................................................29
SECTION 2.08. Replacement Notes..................................................................30
SECTION 2.09. Outstanding Notes..................................................................31
SECTION 2.10. Treasury Notes.....................................................................31
SECTION 2.11. Temporary Notes....................................................................31
SECTION 2.12. Cancellation.......................................................................32
SECTION 2.13. Defaulted Interest.................................................................32
SECTION 2.14. CUSIP Number.......................................................................33
SECTION 2.15. Deposit of Moneys..................................................................33
SECTION 2.16. Book-Entry Provisions for Global Notes.............................................33
SECTION 2.17. Special Transfer Provisions........................................................36
SECTION 2.18. Computation of Interest............................................................38
ARTICLE THREE
REDEMPTION
SECTION 3.01. Election To Redeem; Notices to Trustee.............................................38
SECTION 3.02. Selection by Trustee of Notes To Be Redeemed.......................................38
i
<PAGE>
SECTION 3.03. Notice of Redemption...............................................................39
SECTION 3.04. Effect of Notice of Redemption.....................................................40
SECTION 3.05. Deposit of Redemption Price........................................................40
SECTION 3.06. Notes Redeemed in Part.............................................................41
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes...................................................................41
SECTION 4.02. Reports to Holders.................................................................41
SECTION 4.03. Waiver of Stay, Extension or Usury Laws............................................42
SECTION 4.04. Compliance Certificate.............................................................42
SECTION 4.05. Taxes..............................................................................43
SECTION 4.06. Limitation on Additional Indebtedness..............................................43
SECTION 4.07. Limitation on Restricted Payments..................................................44
SECTION 4.08 Limitation on Investments..........................................................46
SECTION 4.09. Limitations on Liens...............................................................47
SECTION 4.10. Limitation on Transactions with Affiliates.........................................47
SECTION 4.11. Limitation on Creation of Subsidiaries.............................................48
SECTION 4.12. Limitation on Certain Asset Sales..................................................48
SECTION 4.13 Limitation on Preferred Stock of Restricted Subsidiaries...........................50
SECTION 4.14. Limitation on Capital Stock of Restricted Subsidiaries.............................50
SECTION 4.15. Limitation on Sale and Lease-Back Transactions.....................................50
SECTION 4.16. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.............................................51
SECTION 4.17. Payments for Consent...............................................................51
SECTION 4.18. Legal Existence....................................................................52
SECTION 4.19. Change of Control Offer............................................................52
SECTION 4.20. Maintenance of Properties; Insurance; Books and
Records; Compliance with Law....................................................54
SECTION 4.21. Limitation on Conduct of Business..................................................55
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Consolidation, Amalgamation, Merger and Sale of Assets...............56
SECTION 5.02. Successor Person Substituted.......................................................57
ii
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default..................................................................57
SECTION 6.02. Acceleration.......................................................................59
SECTION 6.03. Other Remedies.....................................................................60
SECTION 6.04. Waiver of Past Defaults and Events of Default......................................60
SECTION 6.05. Control by Majority................................................................60
SECTION 6.06. Limitation on Suits................................................................61
SECTION 6.07. Rights of Holders To Receive Payment...............................................61
SECTION 6.08. Collection Suit by Trustee.........................................................61
SECTION 6.09. Trustee May File Proofs of Claim...................................................62
SECTION 6.10. Priorities.........................................................................62
SECTION 6.11. Undertaking for Costs..............................................................63
SECTION 6.12. Restoration of Rights and Remedies.................................................63
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee..................................................................63
SECTION 7.02. Rights of Trustee..................................................................65
SECTION 7.03. Individual Rights of Trustee.......................................................66
SECTION 7.04. Trustee's Disclaimer...............................................................66
SECTION 7.05. Notice of Defaults.................................................................66
SECTION 7.06. Reports by Trustee to Holders......................................................66
SECTION 7.07. Compensation and Indemnity.........................................................67
SECTION 7.08. Replacement of Trustee.............................................................68
SECTION 7.09. Successor Trustee by Consolidation, Merger, etc....................................69
SECTION 7.10. Eligibility; Disqualification......................................................69
SECTION 7.11. Preferential Collection of Claims Against Issuer...................................69
SECTION 7.12. Paying Agents......................................................................69
ARTICLE EIGHT
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 8.01. Without Consent of Holders.........................................................70
SECTION 8.02. With Consent of Holders............................................................71
SECTION 8.03. Compliance with Trust Indenture Act................................................72
iii
<PAGE>
SECTION 8.04. Revocation and Effect of Consents..................................................72
SECTION 8.05. Notation on or Exchange of Notes...................................................73
SECTION 8.06. Trustee To Sign Amendments, etc....................................................73
ARTICLE NINE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 9.01. Discharge of Indenture.............................................................74
SECTION 9.02. Legal Defeasance...................................................................74
SECTION 9.03. Covenant Defeasance................................................................75
SECTION 9.04. Conditions to Defeasance or Covenant Defeasance....................................75
SECTION 9.05. Deposited Money and U.S. Government Obligations To Be Held in Trust;
Other Miscellaneous Provisions..................................................77
SECTION 9.06. Reinstatement......................................................................78
SECTION 9.07. Moneys Held by Paying Agent........................................................78
SECTION 9.08. Moneys Held by Trustee.............................................................78
Section 9.09. Satisfaction and Discharge.........................................................79
ARTICLE TEN
GUARANTEE OF NOTES
SECTION 10.01. Guarantee..........................................................................80
SECTION 10.02. Execution and Delivery of Guarantee................................................82
SECTION 10.03. Additional Guarantors..............................................................82
SECTION 10.04. Release of Guarantor...............................................................83
SECTION 10.05. Waiver of Subrogation..............................................................83
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls.......................................................84
SECTION 11.02. Notices............................................................................84
SECTION 11.03. Communications by Holders with Other Holders.......................................86
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.................................86
SECTION 11.05. Statements Required in Certificate and Opinion.....................................87
SECTION 11.06. Rules by Trustee and Agents........................................................87
SECTION 11.07. Business Days; Legal Holidays......................................................87
SECTION 11.08. Governing Law......................................................................87
iv
<PAGE>
SECTION 11.09. Agent for Service; Submission to Jurisdiction; Waiver of Immunities................88
SECTION 11.10. No Adverse Interpretation of Other Agreements......................................89
SECTION 11.11. No Recourse Against Others.........................................................89
SECTION 11.12. Successors.........................................................................89
SECTION 11.13. Multiple Counterparts..............................................................89
SECTION 11.14. Table of Contents, Headings, etc...................................................90
SECTION 11.15. Separability.......................................................................90
EXHIBITS
Exhibit A. Form of Note......................................................................A-1
Exhibit B. Form of Legend for Rule 144A......................................................B-1
Exhibit C. Form of Legend for Regulation S Note..............................................C-1
Exhibit D. Form of Legend for Global Note....................................................D-1
Exhibit E. Form of Certificate to Be Delivered in Connection with Transfers to
Non-QIB Accredited Investors...................................................E-1
Exhibit F. Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S.......................................................F-1
Exhibit G. Form of Guarantee.................................................................G-1
</TABLE>
<PAGE>
INDENTURE, dated as of July 27, 1998, among RADIO UNICA CORP., a
corporation incorporated under the laws of Delaware, as issuer (the "Issuer"),
the Guarantors (as hereinafter defined) and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Issuer's 11 3/4% Senior
Discount Notes due 2006 (the "Senior Discount Notes").
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"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.
"Additional Interest" means additional interest on the Notes including
Assessed Damage Amounts which the Issuer and the Guarantors, jointly and
severally, agree to pay to the Holders pursuant to Section 4 of the Registration
Rights Agreement.
"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
<PAGE>
2
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.
"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 Section 4.10, beneficial
ownership of at least 10% of the voting securities of a Person, either directly
or indirectly, shall be deemed to be control.
"Agent" means the Registrar, any Paying Agent, or agent for service or
notices and demands.
"Assessed Damage Amounts" shall have the meaning set forth in the
Registration Rights Agreement.
"Asset Acquisition" means (a) an Investment by the Issuer or any
Restricted Subsidiary of the Issuer in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Issuer or any Restricted
Subsidiary of the Issuer, or shall be merged with or into the Issuer or any
Restricted Subsidiary of the Issuer or (b) the acquisition by the Issuer or any
Restricted Subsidiary of the Issuer of the assets of any Person (other than a
Restricted Subsidiary of the Issuer) 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 Issuer 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 Issuer or (b) any other property or assets of the Issuer or of any
Restricted Subsidiary thereof; provided that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Issuer 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 Issuer as permitted under Section 5.01,
(iii) sales or other dispositions of programming or advertising time, or
inventory, receivables and other
<PAGE>
3
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 Issuer or
its Restricted Subsidiaries.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Issuer or any Restricted Subsidiary of the Issuer 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 Issuer 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 Issuer or a Restricted Subsidiary of the Issuer 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 Issuer 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 Issuer or any Restricted Subsidiary
of the Issuer 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).
"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) of the first paragraph
of Section 4.12, and which have not yet been the basis for an Excess Proceeds
Offer in accordance with clause (iii)(c) of the first paragraph of Section 4.12.
"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.
<PAGE>
4
"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.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors of
the Issuer or a Guarantor, as appropriate, and to be in full force and effect,
and delivered to the Trustee.
"Business Day" has the meaning set forth in Section 11.07 hereof.
"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 S&P or 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
<PAGE>
5
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 Issuer,
(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 Issuer 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 Issuer or Holdings, (iv) there shall be
consummated any consolidation or merger of the Issuer or Holdings in which the
Common Stock of the Issuer or Holdings would be converted into cash, securities
or other property, other than a merger or consolidation of the Issuer or
Holdings in which the holders of the Common Stock of the Issuer or Holdings
outstanding immediately prior to the consolidation or merger 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 Issuer or Holdings (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Issuer 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 Issuer or Holdings.
"Commission" means the Securities and Exchange Commission.
"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,
<PAGE>
6
(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 Issuer) 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 incurrence 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 calculation (i) may give effect to projected quantifiable savings in
programming costs and sales personnel (consistent with the savings actually
achieved by the Issuer in connection with prior acquisitions) adopted, in good
faith, by the Issuer or one of its Restricted Subsidiaries through a Board
Resolution certified by an Officers' Certificate of the Issuer 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
<PAGE>
7
the Issuer. 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 in
accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at c/o Harris Trust Company of New York, 88 Pine Street, 19th Floor, Wall Street
Plaza, New York, New York 10005, attention: Corporate Trust Department.
<PAGE>
8
"Default" means any condition or event that is, or with the passage of
time or giving of any notice expressly required hereunder (or both) would be, an
Event of Default.
"Depository" means, with respect to the Notes issued in the form of one
or more Global Notes, The Depository Trust Company or another Person designated
as Depository by the Issuer, which Person must be a clearing agency registered
under the Exchange Act.
"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
described under Section 4.19 shall not be deemed to be Disqualified Capital
Stock solely by virtue of such provisions.
"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
<PAGE>
9
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 Issuer 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 Issuer or Holdings and with
respect to an initial public offering by Holdings, the net proceeds of such
Equity Offering are contributed to the Issuer 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 Issuer as common equity.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning provided in the Registration Rights
Agreement.
"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 Issuer acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Issuer 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.
"Guarantee" means the Guarantee relating to the Notes, the Exchange
Notes and the Private Exchange Notes.
<PAGE>
10
"Guarantors" means (i) each Subsidiary of the Issuer existing on the
Issue Date with assets or shareholders' equity in excess of $1,000 on the Issue
Date and (ii) each other Restricted Subsidiary of the Issuer formed, created or
acquired after the Issue Date.
"Holder", "holder" or "Noteholder" means the Person in whose name a
Note is registered on the Registrar's books.
"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
<PAGE>
11
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 Issuer 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 Issuer and (ii) which, in the judgment of the Board of Directors of the
Issuer, is otherwise independent and qualified to perform the task for which it
is to be engaged.
"Initial Purchasers" means CIBC Oppenheimer Corp. and Bear, Stearns &
Co. Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"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
<PAGE>
12
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 Section 4.07, (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 Issuer 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
Issuer or any Restricted Subsidiary of the Issuer 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 Issuer no
longer owns, directly or indirectly, greater than 50% of the outstanding Common
Stock of such Restricted Subsidiary, the Issuer 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 the date the Notes are first issued by the Issuer
and authenticated by the Trustee under the Indenture.
"Issuer" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.
"Issuer Request" means any written request signed in the name of the
Issuer by the Chairman of the Board of Directors, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer or the Treasurer
of the Issuer and attested to by the Secretary or any Assistant Secretary of the
Issuer.
"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
<PAGE>
13
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).
"Maturity Date" means August 1, 2006.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"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.
"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).
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
<PAGE>
14
"Notes" means the Senior Discount Notes, the Exchange Notes and the
Private Exchange Notes.
"Offering" means the offering of the Notes as described in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum dated July 22, 1998
pursuant to which the Notes issued on the Issue Date were offered.
"Officer", with respect to any Person (other than the Trustee), means
the Chairman of the Board of Directors, Chief Executive Officer, the President,
any Vice President and the Chief Financial Officer, the Treasurer or the
Secretary of such Person.
"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.
"Opinion of Counsel" means a written opinion reasonably satisfactory in
form and substance to the Trustee from legal counsel, which counsel is
reasonably acceptable to the Trustee, stating the matters required by Section
11.05 and delivered to the Trustee.
"Permitted Asset Swap" means any transfer of properties or assets by
the Issuer 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 Issuer 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
Issuer 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 Issuer 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 Issuer 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:
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15
(i) Indebtedness of the Issuer 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 Issuer or any Restricted Subsidiary
outstanding on the Issue Date;
(iv) Indebtedness of the Issuer to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Issuer or another
Restricted Subsidiary; provided that (A) if the Issuer 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 Issuer or a Restricted
Subsidiary of the Issuer and (II) any sale or transfer of any such
Indebtedness to a Person other than the Issuer or a Restricted Subsidiary
of the Issuer will be deemed to constitute an incurrence of Indebtedness by
the Issuer or such Restricted Subsidiary not permitted by this clause (iv);
(v) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Issuer 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 Issuer or any Restricted
Subsidiary which Indebtedness is otherwise permitted to be incurred in
accordance with the Indenture;
(x) Contingent obligations of the Issuer 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
<PAGE>
16
the Issuer and its Restricted Subsidiaries in connection with such Asset
Sale; and
(xi) additional Indebtedness of the Issuer not to exceed $10.0 million
in aggregate principal amount at any one time outstanding.
For purposes of determining compliance with Section 4.06, 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 Section 4.06 and
also meets the criteria of one or more of the categories of this definition
described in clauses (i) through (xi) above, the Issuer 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 Issuer , or by a Restricted Subsidiary thereof,
in the Company or a Restricted Subsidiary of the Issuer;
(ii) Investments by the Issuer, or by a Subsidiary thereof, in a
Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Issuer 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 Issuer 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 Issuer 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 Issuer or such Restricted Subsidiary solely as
partial consideration for the consummation of an Asset Sale that is
otherwise permitted under Section 4.12;
(vi) Interest Rate Agreements entered into in the ordinary course of
the Company's or its Restricted Subsidiaries' business;
<PAGE>
17
(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 Issuer or at
the time such corporation is merged into the Issuer 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
Issuer or merging into the Issuer 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 Issuer 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,
<PAGE>
18
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 Issuer 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 Issuer 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).
"Physical Notes" means certificated Notes in registered form in
substantially the form set forth in Exhibit A.
"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.
"principal amount" means principal amount at maturity.
"Private Exchange" has the meaning set forth in the Registration Rights
Agreement.
"Private Exchange Notes" has the meaning set forth in the Registration
Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Rule 144A Notes in the form set forth in Exhibit B.
"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.
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19
"Purchase Agreement" means the Securities Purchase Agreement dated July
22, 1998 by and among the Issuer, the Guarantors and the Initial Purchasers.
"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 Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"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.
"Redemption Date" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to the terms of the Notes.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness of the Issuer outstanding on the Issue Date
(including, without limitation, the Notes) or other Indebtedness permitted to be
incurred by the Issuer pursuant to the first paragraph of Section 4.06 or by the
Issuer 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
<PAGE>
20
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 Issuer may incur Refinancing Indebtedness to refund,
refinance or extend Indebtedness of any Wholly Owned Subsidiary of the Issuer.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of July 22, 1998 among the Issuer, the Guarantors and the Initial
Purchasers, as amended from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Related Business" means the business of the Issuer or any of its
Restricted Subsidiaries as conducted on the Issue Date or businesses similar or
ancillary thereto.
"Responsible Officer" when used with respect to the Trustee, means an
officer or assistant officer assigned to the corporate trust department of the
Trustee (or any successor group of the Trustee) with direct responsibility for
the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Note" means a Note that has the same meaning as "Restricted
Security" within the meaning of Rule 144(a)(3) promulgated under the Securities
Act; provided, that the Trustee shall be entitled to request and conclusively
rely upon an Opinion of Counsel with respect to whether any Note is a Restricted
Note.
"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 Issuer or any Restricted Subsidiary of the Issuer or any payment made to the
direct or indirect holders (in their capacities as such) of Capital Stock of the
Issuer or any Restricted Subsidiary of the Issuer (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 Issuer, dividends or distributions payable to the Issuer or
to a Wholly Owned Subsidiary of the Issuer), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Issuer or
any of its Restricted Subsidiaries (other than Capital Stock owned by the Issuer
or a Wholly Owned Subsidiary of the Issuer, 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 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
<PAGE>
21
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
Issuer to the Issuer or a Restricted Subsidiary of the Issuer. 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 Issuer other than an
Unrestricted Subsidiary and includes all of the direct or indirect Subsidiaries
of the Issuer existing as of the Issue Date. The Board of Directors of the
Issuer 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 Issuer could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06. 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.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Issuer or any Restricted Subsidiary of the
Issuer of any real or tangible personal property, which property has been or is
to be sold or transferred by the Issuer or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"Securities Act" means the Securities Act of 1933, as amended and the
rules and regulations of the Commission promulgated thereunder.
"Senior Credit Facility" means the Credit Agreement, dated as of July
8, 1998, among the Issuer, the guarantors party thereto, Canadian Imperial Bank
of Commerce, as agent and fronting lender, and the financial institutions party
thereto, as lenders, together with
<PAGE>
22
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 Issuer 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) of 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 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.
"Taxes" means any present or future tax, duty, levy, impost, assessment
or other government charge (including penalties, interest and any other
liabilities related thereto) imposed or levied by or on behalf of a Taxing
Authority.
"Taxing Authority" means any government or any political subdivision or
territory or possession of any government or any authority or agency therein or
thereof having power to tax.
<PAGE>
23
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Issuer 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 Issuer (including any newly acquired or newly formed
Subsidiary of the Issuer) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Issuer or any Restricted Subsidiary; provided, that neither the Issuer
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 Section 4.07 hereof. 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.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"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 Issuer.
<PAGE>
24
SECTION 1.02. Other Definitions.
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction"........................ 4.10
"Agent Members"................................ 2.16(a)
"Bankruptcy Law"............................... 6.01
"Business Day"................................. 11.07
"CEDEL"........................................ 2.16(a)
"Change of Control Offer"...................... 4.19(a)
"Change of Control Purchase Price"............. 4.19(a)
"Change of Control Payment Date"............... 4.19(a)
"Covenant Defeasance".......................... 9.03
"Custodian".................................... 6.01
"Euroclear".................................... 2.16(a)
"Events of Default"............................ 6.01
"Excess Proceeds Offer"........................ 4.12
"Global Notes"................................. 2.16(a)
"Legal Defeasance"............................. 9.02
"Legal Holiday"................................ 11.07
"Other Notes".................................. 2.02
"Paying Agent"................................. 2.04
"Registrar".................................... 2.04
"Regulation S Global Note"..................... 2.16(a)
"Regulation S Notes"........................... 2.02
"Rule 144A Notes".............................. 2.02
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes.
"indenture securityholder" means a Holder or Noteholder.
<PAGE>
25
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Issuer, the Guarantors
or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by Commission rule
have the meanings therein assigned to them.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and in the plural include
the singular;
(4) words used herein implying any gender shall apply to both genders;
(5) "herein" "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subsection;
(6) unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall
be prepared in accordance with GAAP, applied on a basis consistent with the
most recent audited consolidated financial statements of the Issuer;
(7) whenever in this Indenture there is mentioned, in any context,
principal, interest or any other amount payable under or with respect to
any Note, such mention shall be deemed to include mention of the payment of
Additional Interest to the extent that, in such context, Additional
Interest is, was or would be payable in respect thereof.
<PAGE>
26
ARTICLE TWO
THE NOTES
SECTION 2.01. Amount of Notes.
The Trustee shall authenticate Notes for original issue on the Issue
Date in the aggregate principal amount at maturity not to exceed $158,088,000
upon a written order of the Issuer in the form of an Officers' Certificate of
the Issuer. Such written order shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be authenticated.
Upon receipt of a Issuer Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer specified
in the Registration Rights Agreement is effective and that the conditions
precedent to a private exchange thereunder have been met, the Trustee shall
authenticate an additional series of Notes in an aggregate principal amount at
maturity not to exceed $158,088,000 for issuance in exchange for the Notes
tendered for exchange pursuant to such exchange offer registered under the
Securities Act or pursuant to a Private Exchange. Exchange Notes or Private
Exchange Notes may have such distinctive series designations and such changes in
the form thereof as are specified in the Issuer Request referred to in the
preceding sentence.
SECTION 2.02. Form and Dating.
The Notes and the Trustee's certificate of authentication with respect
thereto shall be substantially in the form set forth in Exhibit A, which is
incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule or usage to which the
Issuer is subject. Any such notations, legends or endorsements shall be
furnished to the Trustee in writing. Without limiting the generality of the
foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance
on Rule 144A ("Rule 144A Notes") shall bear the legend forth in Exhibit B, Notes
offered and sold in offshore transactions in reliance on Regulation S
("Regulation S Notes") shall bear the legend and include the form of assignment
set forth in Exhibit C, and Notes to Institutional Accredited Investors in
transactions exempt from registration under the Securities Act not made in
reliance on Rule 144A or Regulation S ("Other Notes") may be represented by a
Global Note or, if such an investor may not hold an interest in the Restricted
Global Note, a Physical Note, in each case, bearing the Private Placement
Legend. Each Note shall be dated the date of its authentication.
The terms and provisions contained in the Notes shall constitute, and
are expressly made, a part of this Indenture and, to the extent applicable, the
Issuer, the Guarantors
<PAGE>
27
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and agree to be bound thereby.
The Notes may be presented for registration of transfer and exchange at
the offices of the Registrar.
SECTION 2.03. Execution and Authentication.
Two Officers of the Issuer shall sign, or one Officer of the Issuer
shall sign and one Officer of the Issuer (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) shall attest to, the
Notes for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Issuer, and the Issuer shall deliver such Note to the Trustee
for cancellation as provided in Section 2.12, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuer to authenticate the Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuer and Affiliates of the Issuer.
Each Paying Agent is designated as an authenticating agent for purposes of this
Indenture.
The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 principal amount at maturity and any integral multiple
thereof.
<PAGE>
28
SECTION 2.04. Registrar and Paying Agent.
The Issuer shall maintain an office or agency (which shall be located
in the Borough of Manhattan in The City of New York, State of New York) where
Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Issuer, if any, in respect of the Notes and this Indenture may be
served. The Issuer hereby initially designates the office of Wilmington Trust
Company, c/o Harris Trust Company of New York, 88 Pine Street, 19th Floor, Wall
Street Plaza, New York, New York 10005, as their office or agency in the Borough
of Manhattan, The City of New York. The Registrar shall keep a register of the
Notes and of their transfer and exchange. The Issuer may have one or more
additional Paying Agents. The term "Paying Agent" includes any additional Paying
Agent. Neither the Issuer nor any Affiliate thereof may act as Paying Agent.
The Issuer shall enter into an appropriate agency agreement, which
shall incorporate the provisions of the TIA, with any Agent that is not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuer shall notify the Trustee of the
name and address of any such Agent. If the Issuer fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Issuer initially appoints the Corporate Trust Office of the Trustee
as Registrar, Paying Agent and Agent for service of notices and demands in
connection with the Notes and this Indenture.
SECTION 2.05. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes (whether such money has been
paid to it by the Issuer or any other obligor on the Notes or the Guarantors),
and the Issuer and the Paying Agent shall notify the Trustee of any default by
the Issuer (or any other obligor on the Notes) in making any such payment. Money
held in trust by the Paying Agent need not be segregated except as required by
law and in no event shall the Paying Agent be liable for any interest on any
money received by it hereunder. The Issuer at any time may require the Paying
Agent to pay all money held by it to the Trustee and account for any funds
disbursed and the Trustee may at any time during the continuance of any Event of
Default specified in Section 6.01 (1) or (2), upon written request to the Paying
Agent, require such Paying Agent to pay forthwith all money so held by it to the
Trustee and to account for any funds disbursed. Upon making such payment, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
<PAGE>
29
SECTION 2.06. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders. If the Trustee is not the Registrar, the Issuer shall furnish
to the Trustee at least five Business Days before each Interest Payment Date,
and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of the Noteholders.
SECTION 2.07. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar with a request from the Holder of such Notes to register a transfer or
to exchange them for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer as requested. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuer shall issue and execute and the Trustee
shall authenticate new Notes (and the Guarantors shall execute the guarantee
thereon) evidencing such transfer or exchange at the Registrar's request. No
service charge shall be made to the Noteholder for any registration of transfer
or exchange. The Issuer may require from the Noteholder payment of a sum
sufficient to cover any transfer taxes or other governmental charge that may be
imposed in relation to a transfer or exchange, but this provision shall not
apply to any exchange pursuant to Section 2.11, 3.06, 4.12, 4.19 or 8.05 (in
which events the Issuer shall be responsible for the payment of such taxes). The
Registrar shall not be required to exchange or register a transfer of any Note
for a period of 15 days immediately preceding the selection of Notes to be
redeemed or of any Note selected, called or being called for redemption except
the unredeemed portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of the beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Issuer and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable U.S. Federal or state securities law.
<PAGE>
30
Except as expressly provided herein, neither the Trustee nor the
Registrar shall have any duty to monitor the Issuer's compliance with or have
any responsibility with respect to the Issuer's compliance with any Federal or
state securities laws.
SECTION 2.08. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the Trustee, or
if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a
replacement Note (and the Guarantors shall execute the guarantee thereon) if the
Holder of such Note furnishes to the Issuer and the Trustee evidence reasonably
acceptable to them of the ownership and the destruction, loss or theft of such
Note and if the requirements of Section 8-405 of the New York Uniform Commercial
Code as in effect on the date of this Indenture are met. If required by the
Trustee or the Issuer, an indemnity bond shall be posted, sufficient in the
judgment of both to protect the Issuer, the Guarantors, the Trustee and any
Paying Agent from any loss that any of them may suffer if such Note is replaced.
The Issuer may charge such Holder for the Issuer's reasonable out-of-pocket
expenses in replacing such Note and the Trustee may charge the Issuer for the
Trustee's expenses (including, without limitation, attorneys' fees and
disbursements) in replacing such Note. Every replacement Note shall constitute a
contractual obligation of the Issuer.
SECTION 2.09. Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those cancelled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Article Nine,
on or after the date on which the conditions set forth in Sections 9.04 or 9.09
have been satisfied, those Notes theretofore authenticated and delivered by the
Trustee hereunder and (d) those described in this Section 2.09 as not
outstanding. Subject to Section 2.10, a Note does not cease to be outstanding
because the Issuer or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser in whose hands such Note is a
legal, valid and binding obligation of the Issuer.
If the Paying Agent holds, in its capacity as such, on the Maturity
Date or on any optional redemption date, money sufficient to pay all accrued
interest and Accreted Value or principal with respect to the Notes payable on
that date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such Notes
cease to be outstanding, Accreted Value ceases to accrete or interest on them
ceases to accrue, as the case may be.
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SECTION 2.10. Treasury Notes.
In determining whether the Holders of the required principal amount at
maturity of Notes have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Notes owned by the Issuer or any other Affiliate of
the Issuer shall be disregarded as though they were not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes as to which a Responsible Officer
of the Trustee has received an Officers' Certificate stating that such Notes are
so owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee established to the satisfaction of
the Trustee the pledgee's right so to act with respect to the Notes and that the
pledgee is not the Issuer, a Guarantor, any other obligor on the Notes or any of
their respective Affiliates.
SECTION 2.11. Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the Issuer
may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Issuer considers appropriate for temporary Notes. Without unreasonable
delay, the Issuer shall prepare and the Trustee shall authenticate definitive
Notes in exchange for temporary Notes. Until such exchange, temporary Notes
shall be entitled to the same rights, benefits and privileges as definitive
Notes.
SECTION 2.12. Cancellation.
The Issuer at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall (subject to the
record-retention requirements of the Exchange Act) destroy cancelled Notes and
deliver a certificate of destruction thereof to the Issuer. The Issuer may not
reissue or resell, or issue new Notes to replace, Notes that the Issuer has
redeemed or paid, or that have been delivered to the Trustee for cancellation.
SECTION 2.13. Defaulted Interest.
If the Issuer defaults on a payment of interest on the Notes, it shall
pay interest on overdue installments of interest, plus (to the extent permitted
by law) any interest payable on the defaulted interest, pursuant to Section 4.01
hereof, to the Persons who are Noteholders
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on a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix such special record date
and payment date in a manner satisfactory to the Trustee. At least 10 days
before such special record date, the Issuer shall mail to each Noteholder a
notice that states the special record date, the payment date and the amount of
interest on overdue interest, and interest payable on defaulted interest, if
any, to be paid. The Issuer shall fix such special record date and payment date
and provide the Trustee at least 20 days notice of the proposed amount of
interest on overdue interest and interest payable on defaulted interest, if any,
to be paid and the special payment date and at the same time the Issuers shall
deposit with the Trustee the aggregate amount of cash proposed to be paid in
respect of such interest and defaulted interest. The Issuer may make payment of
any defaulted interest in any other lawful manner not inconsistent with the
requirements (if applicable) of any securities exchange on which the Notes may
be listed and, upon such notice as may be required by such exchange, if, after
written notice given by the Issuer to the Trustee of the proposed payment
pursuant to this sentence, such manner of payment shall be deemed practicable by
the Trustee.
SECTION 2.14. CUSIP Number.
The Issuer in issuing the Notes may use a "CUSIP" number, and if so,
such CUSIP number shall be included in notices of redemption or exchange as a
convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuer shall promptly
notify the Trustee of any such CUSIP number used by the Issuer in connection
with the issuance of the Notes and of any change in the CUSIP number.
SECTION 2.15. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Issuer shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. The Accreted Value,
principal and interest on Global Notes shall be payable to the Depository or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the Global Notes represented thereby. The Accreted Value, principal and interest
on Physical Notes shall be payable, either in person or by mail, at the office
of the Paying Agent. The Issuer shall deliver an Officers' Certificate to the
Trustee at least 5 business days before any applicable Interest Payment Date
setting forth the amount of Additional Interest.
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SECTION 2.16. Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes initially shall be represented by one or more notes
in registered, global form without interest coupons (collectively, the "Rule
144A Global Notes"). Regulation S Notes initially shall be represented by one or
more notes in registered, global form without interest coupons (collectively,
the "Regulation S Global Note," and, together with the Rule 144A Global Note and
any other global notes representing Notes, the "Global Notes"). The Global Notes
shall bear legends as set forth in Exhibit D. The Global Notes initially shall
(i) be registered in the name of the Depository or the nominee of such
Depository, in each case for credit to an account of an Agent Member (or, in the
case of the Regulation S Global Notes, of Agent Members acting for Euroclear
System ("Euroclear") and Cedel Bank, S.A. ("CEDEL")), (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit B with respect to Rule 144A Global Notes and Exhibit C with respect to
Regulation S Global Notes.
Members of, or direct or indirect participants in, the Depository
("Agent Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of
the Issuer or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfer in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, a Global Note shall
be exchangeable for Physical Notes if (i) the Depository (x) notifies the Issuer
that it is unwilling or unable to continue as depository for such Global Note
and the Issuer thereupon fails to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Issuer, at its option, notifies the Trustee in writing that it elects to cause
the issuance of such Physical Notes or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Notes. In all cases, Physical
Notes delivered in exchange for any Global Note or beneficial interests therein
shall be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depository (in accordance with its customary
procedures).
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall
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(if one or more Physical Notes are to be issued) reflect on its books and
records the date and a decrease in the principal amount at maturity of the
Global Note in an amount equal to the principal amount at maturity of the
beneficial interest in the Global Note to be transferred, and the Issuer shall
execute, and the Trustee shall upon receipt of a written order from the Issuer
authenticate and make available for delivery, one or more Physical Notes of like
tenor and amount.
(d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuer shall execute
(and the Guarantors shall execute the Guarantee), and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in writing in exchange for its beneficial interest in the Global Notes, an equal
aggregate principal amount at maturity of Physical Notes of authorized
denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b), (c) or (d)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the Private Placement Legend or, in the case of the Regulation S
Global Note, the legend set forth in Exhibit C, in each case, unless the Issuer
determines otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the commencement of
the offering of the Notes represented by the Regulation S Global Note and the
issue date of such Notes (such period through and including such 40th day, the
"Restricted Period"), a beneficial interest in a Regulation S Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
corresponding Rule 144A Global Note only upon receipt by the Trustee of a
written certification from the transferor to the effect that such transfer is
being made (i)(a) to a Person whom the transferor reasonably believes is a
Qualified Institutional Buyer in a transaction meeting the requirements of Rule
144A or (b) pursuant to another exemption from the registration requirements
under the Securities Act which is accompanied by an opinion of counsel regarding
the availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.
(g) Beneficial interests in the Rule 144A Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such transfer occurs prior to the expiration of the Restricted Period, the
interest transferred will be held immediately thereafter through Agent Members
acting for Euroclear or CEDEL.
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(h) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note constituting
a Restricted Note, whether or not such Note bears the Private Placement
Legend, if (x) the requested transfer is after two years or more after the
Issue Date or such other date as such Note shall be freely transferable
under Rule 144 as certified in an Officers' Certificate or (y) (1) in the
case of a transfer to an Institutional Accredited Investor which is not a
QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit E hereto
or (2) in the case of a transfer to a Non-U.S. Person (including a QIB),
the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit F hereto; provided that in the case of
any transfer of a Note bearing the Private Placement Legend for a Note not
bearing the Private Placement Legend, the Registrar has received an
Officers' Certificate authorizing such transfer; and
(ii) if the proposed transferor is an Agent Member holding a beneficial
interest in a Global Note, upon receipt by the Registrar of (x) the
certificate, if any, required by paragraph (i) above and (y) instructions
given in accordance with the Depository's and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount at maturity of a Global Note in an amount equal
to the principal amount at maturity of the beneficial interest in a Global Note
to be transferred, and (b) the Registrar shall reflect on its
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books and records the date and an increase in the principal amount at maturity
of a Global Note in an amount equal to the principal amount at maturity of the
beneficial interest in the Global Note transferred or the Issuer shall execute
and the Trustee shall authenticate and make available for delivery one or more
Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed registration of transfer of a Note
constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on such
Holder's Physical Note stating, or has otherwise advised the Issuer and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on such Holder's Physical Note stating, or has otherwise
advised the Issuer and the Registrar in writing, that it is purchasing the
Physical Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuer as it has requested pursuant to Rule
144A or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to be
transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount at maturity of the
Global Note in an amount equal to the principal amount at maturity of the
Physical Notes to be transferred, and the Trustee shall cancel the Physical
Notes so transferred.
(c) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) it has received the Officers' Certificate
required by paragraph (a)(i) of this Section 2.17, (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act or (iii) such Note has been sold pur-
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suant to an effective registration statement under the Securities Act and the
Registrar has received an Officers' Certificate from the Issuer to such
effect.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for a period of two years copies of all
letters, notices and other written communications received pursuant to Section
2.16 or this Section 2.17. The Issuer shall have the right to inspect and make
copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable notice to the Registrar.
SECTION 2.18. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Election To Redeem; Notices to Trustee.
If the Issuer elects to redeem Notes pursuant to paragraph 5 of the
Notes, at least 45 days prior to the Redemption Date (unless a shorter notice
shall be agreed to in writing by the Trustee), the Issuer shall notify the
Trustee in writing of the Redemption Date, the principal amount at maturity of
Notes to be redeemed and the redemption price, and deliver to the Trustee an
Officers' Certificate stating that such redemption will comply with the
conditions contained in paragraph 5 of the Notes. Notice given to the Trustee
pursuant to this Section 3.01 may not be revoked after the time that notice is
given to Noteholders pursuant to Section 3.03. Any such notice may be cancelled
at any time prior to notice of such redemption being mailed to any Holder and
shall thereby be void and of no effect.
SECTION 3.02. Selection by Trustee of Notes To Be Redeemed.
In the event that fewer than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed, if the Notes are listed on a
national securities exchange, in accordance with the rules of such exchange or,
if the Notes are not so listed, either on a pro
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38
rata basis or by lot, or such other method as it shall deem fair and equitable;
provided, however, that the Issuer shall have previously notified the Trustee in
writing of any such exchange on which the Notes are listed, and provided,
further that if a partial redemption is made with the proceeds of an Equity
Offering, selection of the Notes or portion thereof for redemption shall be made
by the Trustee on a pro rata basis to the extent practical, unless such a method
is prohibited. The Trustee shall promptly notify the Issuer of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed. The Trustee may select
for redemption portions of the principal of the Notes that have denominations
larger than $1,000 principal amount at maturity. Notes and portions thereof the
Trustee selects shall be redeemed in amounts of $1,000 principal amount at
maturity or whole multiples of $1,000 principal amount at maturity. For all
purposes of this Indenture unless the context otherwise requires, provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a Redemption Date,
the Issuer shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.04 hereof.
The notice shall identify the Notes to be redeemed (including the CUSIP
numbers thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of premium and accrued
interest, if any, to be paid;
(3) if any Note is being redeemed in part, the portion of the principal
amount at maturity of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes in
principal amount at maturity equal to the unredeemed portion will be
issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(6) that unless the Issuer defaults in making the redemption payment,
Accreted Value will cease to accrete and interest on Notes called for
redemption ceases to accrue on and after the Redemption Date;
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39
(7) the provision of paragraph 5 of the Notes, as the case may be,
pursuant to which the Notes called for redemption are being redeemed; and
(8) the aggregate principal amount at maturity of Notes that are being
redeemed.
At the Issuer's written request made at least five Business Days prior
to the date on which notice is to be given, the Trustee shall give the notice of
redemption in the Issuer's name and at the Issuer's sole expense. In such event,
the Issuer shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is mailed,
Notes called for redemption become due and payable on the Redemption Date and at
the redemption price, including any premium, plus accrued and unpaid interest,
if any, to the Redemption Date. Upon surrender to the Paying Agent, such Notes
shall be paid at the redemption price, including any premium, plus accrued and
unpaid interest, if any, to the Redemption Date, provided that if the Redemption
Date is after a regular record date and on or prior to the Interest Payment
Date, the accrued and unpaid interest, if any, shall be payable to the Holder of
the redeemed Notes registered on the relevant record date, and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
SECTION 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each Redemption Date,
the Issuer shall deposit with the Paying Agent in immediately available funds
money sufficient to pay the redemption price of, including premium, if any, and
accrued and unpaid interest, if any, on all Notes to be redeemed on that date
other than Notes or portions thereof called for redemption on that date which
have been delivered by the Issuer to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of, including premium, if any, and accrued and unpaid interest,
if any, on Notes called for redemption shall have been made available in
accordance with the preceding paragraph, the Notes called for redemption will
cease to accrue interest or Accreted Value, as the case may be, and the only
right of the Holders of such Notes will be to receive payment of the redemption
price of and, subject to the first proviso in Section 3.04, accrued and unpaid
interest, if any, on such Notes to the Redemption Date. If any Note surrendered
for redemption shall
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not be so paid, then from the Redemption Date until such redemption payment is
made, Accreted Value or interest on the unpaid principal of the Note, as the
case may be, and any interest not paid on such unpaid principal, in each case,
will be paid at the rate and in the manner provided in the Notes.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for the Holder thereof a new Note equal in principal amount at
maturity to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Issuer shall pay the Accreted Value or principal of and interest
(including all Additional Interest as provided in the Registration Rights
Agreement on the Notes on the dates and in the manner provided in the Notes and
this Indenture. An installment of principal or interest shall be considered paid
on the date it is due if the Trustee or Paying Agent holds on that date money
designated for and sufficient to pay such installment.
The Issuer shall pay interest on overdue Accreted Value or principal
(including post-petition interest in a proceeding under any Bankruptcy Law), and
overdue interest, to the extent lawful, at the rate specified in the Notes to
the extent lawful.
SECTION 4.02. Reports to Holders.
(a) Whether or not required by the rules and regulations of the
Commission, the Issuer shall furnish to the Trustee and the Holders of the Notes
all annual and quarterly financial information that would be required to be
contained in a filing with the Commission on Forms 10-K, 10-Q and 8-K, as
applicable, if the Issuer were 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 financial information, a report
thereon by the Issuer's independent accountants; provided, that (x) such
quarterly financial information may be prepared in accordance with GAAP, (y)
such quarterly financial information shall be furnished within 60 days following
the end of each fiscal quarter of the Issuer and (z) such annual financial
information shall be furnished within 105 days following the end of the fiscal
year of the Issuer. In addition, whether or not required by the rules and
regulations of the
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41
Commission, the Issuer will file a copy of all such information and reports with
the Commission for public availability (unless the Commission will not accept
such a filing). In addition, the Issuer shall furnish to the Holders of the
Notes and to prospective investors, upon the requests of such Holders, any
information required to be delivered pursuant to Rule 144(d)(4) under the
Securities Act so long as the Notes are Restricted Securities. The Issuer will
also comply with the other provisions of TIA section 314(a).
(b) The Issuer shall, upon request, provide to any Holder of Notes or
any prospective transferee of any such Holder any information concerning the
Issuer (including financial statements) necessary in order to permit such Holder
to sell or transfer Notes in compliance with Rule 144A under the Securities Act;
provided, that the Issuer shall not be required to furnish such information in
connection with any request made on or after the date which is two years (or
such other date as the Notes shall be freely transferable pursuant to Rule 144)
from the later of (i) the date such Note (or any predecessor Note) was acquired
from the Issuer or (ii) the date such Note (or any predecessor Note) was last
acquired from an "affiliate" of the Issuer within the meaning of Rule 144 under
the Securities Act. The Issuer shall provide the Trustee a copy of any
information provided to holders under this Section 4.02.
SECTION 4.03. Waiver of Stay, Extension or Usury Laws.
The Issuer and the Guarantors covenant (to the extent that they may
lawfully do so) that they shall not at any time insist upon, or plead (as a
defense or otherwise) or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Issuer and the Guarantors from paying all or any
portion of the Accreted Value, principal of, premium, if any, and/or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) the Issuer and the
Guarantors hereby expressly waive all benefit or advantage of any such law, and
covenant that they will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.04. Compliance Certificate.
(a) The Issuer shall deliver to the Trustee, within 105 days after the
end of each fiscal year and on or before 60 days after the end of the first,
second and third quarters of each fiscal year, an Officers' Certificate stating
that a review of the activities of the Issuer and its Subsidiaries during such
fiscal year or fiscal quarter, as the case may be, has been made under the
supervision of the signing Officers with a view to determining whether the
Issuer and the Guarantors have kept, observed, performed and fulfilled their
obligations under this
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Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, the Issuer and the
Guarantors have kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and are not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge and what action they are
taking or propose to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the Accreted Value, principal of or interest, if any, on
the Notes is prohibited or if such event has occurred, a description of the
event and what action the Issuer and the Guarantors is taking or propose to take
with respect thereto.
(b) The Issuer and the Guarantors shall, so long as any of the Notes
are outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Issuer and the Guarantors
are taking or propose to take with respect thereto.
(c) The Issuer's fiscal year currently ends on December 31. The Issuer
will provide written notice to the Trustee of any change in its fiscal year.
SECTION 4.05. Taxes.
The Issuer and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay prior to delinquency all material taxes, assessments, and
governmental levies except as contested in good faith and by appropriate
proceedings.
SECTION 4.06. Limitation on Additional Indebtedness.
The Issuer 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 Issuer may incur Indebtedness (and the
Issuer 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 Issuer'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 Issuer and its Restricted
Subsidiaries may incur Permitted Indebtedness; provided that the Issuer will not
incur any Permitted Indebtedness that ranks junior in right of payment to the
Notes that matures prior to the Stated Maturity
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43
of the Notes or has an Average Life shorter than the Notes; provided, further,
that the Issuer will not incur any Indebtedness owed to a Foreign Restricted
Subsidiary unless such Indebtedness is subordinated in right of payment to the
Issuer's obligations under the Notes.
The Issuer 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 Issuer 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 Issuer or
such Restricted Subsidiary, as the case may be.
SECTION 4.07. Limitation on Restricted Payments.
The Issuer 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 Issuer could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under Section 4.06 hereof; and
(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 Issuer's EBITDA from the Issue
Date to the date of determination minus 1.4 times the Issuer'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 Issuer 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 Issuer or (B)
any Indebtedness or other securities of the Issuer that are convertible
into or exercisable or exchangeable for Capital Stock (other than
Disqualified Capital Stock) of the Issuer, 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 Section 5 of
the Notes. For purposes of determining under this clause (c) the amount
expended for Restricted
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44
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 Section 4.07 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 Issuer or Indebtedness subordinated to the
Notes by conversion into, or by or in exchange for, shares of Capital Stock of
the Issuer (other than Disqualified Capital Stock), or out of the Net Proceeds
of the substantially concurrent sale (other than to a Subsidiary of the Issuer)
of other shares of Capital Stock of the Issuer (other than Disqualified Capital
Stock), (iii) the redemption, repayment or retirement of Indebtedness of the
Issuer 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 Issuer (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 Issuer by
conversion into, or by exchange for, shares of Disqualified Capital Stock of the
Issuer, or out of the Net Proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Issuer) of other shares of Disqualified Capital
Stock of the Issuer 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
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45
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 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
paragraph 5 of the Notes, (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 Issuer'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 Issuer
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 Issuer'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.
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46
SECTION 4..08 Limitation on Investments
The Issuer 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
Section 4.07 above, after the Issue Date.
SECTION 4.09. Limitations on Liens.
The Issuer 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 Issuer or any of its Restricted Subsidiaries or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary of the Issuer 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.
SECTION 4.10. Limitation on Transactions with Affiliates.
The Issuer 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 Issuer and
its Wholly Owned Subsidiaries; or (ii) the terms of such Affiliate Transaction
are fair and reasonable to the Issuer 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 Issuer 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 Issuer must obtain a resolution of
the Board of Directors of the Issuer 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 Issuer must obtain a favorable
written opinion as to the fairness to the Issuer from a financial point of view
of such transaction or transactions, as the case may be, from an Independent
Financial Advisor.
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47
The foregoing provisions will not apply to (i) any Restricted Payment
that is not prohibited by the provisions described under Section 4.07 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 Issuer or any Restricted
Subsidiary of the Issuer as determined in good faith by the Issuer'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.
SECTION 4.11. Limitation on Creation of Subsidiaries.
The Issuer 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
Issuer of one or more related businesses or assets, or (iii) an Unrestricted
Subsidiary; provided, however, that each Domestic 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, including, without limitation, a supplement or amendment to the
Indenture and opinions of counsel as to the enforceability of such guarantee),
pursuant to which each Domestic Restricted Subsidiary will become a Guarantor.
As of the Issue Date, the Issuer will have no Domestic Restricted Subsidiaries
other than the Guarantors.
SECTION 4.12. Limitation on Certain Asset Sales.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Issuer 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 Issuer, and evidenced by a Board Resolution);
(ii) not less than 85% of the consideration received by the Issuer 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 Issuer is undertaking a
Permitted Asset Swap; and (iii) the Asset Sale Proceeds received by the Issuer
or such Restricted Subsidiary are applied (a) first, to the extent the Issuer 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
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48
a permanent reduction of the commitments thereunder in an amount equal to the
principal amount so repaid; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Issuer
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 Issuer or any such Restricted Subsidiary as conducted on the
Issue Date; provided that (1) such investment occurs or the Issuer 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 Issuer 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 Issuer 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 Issuer is required to make an Excess Proceeds Offer, the Issuer
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 Issuer 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 Issuer and its Restricted Subsidiaries as an entirety to a Person
in a transaction permitted under Section 5.01 hereof, the successor Person will
be deemed to have sold the properties and assets of the Issuer 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 Issuer 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
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49
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 this Section 4.12, the Issuer will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section 4.12 by virtue thereof.
SECTION 4.13 Limitation on Preferred Stock of Restricted Subsidiaries
The Issuer will not permit any of its Restricted Subsidiaries to issue
any Preferred Stock (except Preferred Stock issued to the Issuer or a Wholly
Owned Subsidiary of the Issuer) or permit any Person (other than the Issuer or a
Wholly Owned Subsidiary of the Issuer) to hold any such Preferred Stock unless
the Issuer or such Restricted Subsidiary would be entitled to incur or assume
Indebtedness in compliance with Section 4.06 in an aggregate principal amount at
maturity equal to the aggregate liquidation value of the Preferred Stock to be
issued.
SECTION 4.14. Limitation on Capital Stock of Restricted Subsidiaries.
The Issuer will not (i) sell, pledge, hypothecate or otherwise convey
or dispose of any Capital Stock of a Restricted Subsidiary of the Issuer or (ii)
permit any of its Restricted Subsidiaries to issue any Capital Stock other than
(A) to the Issuer or a Wholly Owned Subsidiary of the Issuer, (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 Section 4.07 hereof and any
remaining Investment in such Unrestricted Subsidiary could be made at such time
in compliance with Section 4.08 hereof. The foregoing restrictions will not
apply to either (x) an Asset Sale made in compliance with Section 4.12 hereof or
the issuance of Preferred Stock in compliance with Section 4.13 hereof or (y) a
Permitted Lien.
SECTION 4.15. Limitation on Sale and Lease-Back Transactions.
The Issuer 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 Issuer and evidenced by a Board Resolution and
(ii) the Issuer could incur the Attributable Indebtedness in respect of such
Sale and Lease-Back Transaction in compliance with Section 4.06 above.
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50
SECTION 4.16. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
The Issuer 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 Issuer to (a)(i) pay dividends or make any other
distributions to the Issuer or any Restricted Subsidiary of the Issuer (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 Issuer or any Restricted Subsidiary of the Issuer, (b)
make loans or advances or capital contributions to the Issuer or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Issuer 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 Issuer 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 Issuer 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.
SECTION 4.17. Payments for Consent.
The Issuer 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.
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SECTION 4.18. Legal Existence.
Subject to Article 5 hereof, the Issuer shall do or cause to be done
all things necessary to preserve and keep in full force and effect its legal
existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Issuer and its
Restricted Subsidiaries; provided that the Issuer shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries if the Board of Directors
of the Issuer shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Issuer and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders.
SECTION 4.19. Change of Control Offer.
(a) Upon the occurrence of a Change of Control, the Issuer 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 below), 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.
(b) Within 20 days of the occurrence of a Change of Control, the Issuer
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
Section 4.19 and that all Notes tendered will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date (which
shall 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;
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(4) that, unless the Issuer 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 new 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
(9) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Issuer 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 Change of Control 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 Issuer. The Paying Agent will
promptly mail to each holder of Notes so accepted payment in an amount equal to
the Change of Control Purchase Price for such Notes, and the Issuer 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
denominations of $1,000 principal amount at maturity and integral multiples
thereof.
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
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53
any Change of Control, the Issuer 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
Issuer 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 Issuer's failure to comply with the covenant described in the
preceding sentence constitutes an Event of Default under Section 6.01(3) if not
cured within 60 days after the notice of such clause.
If the Issuer 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 Issuer 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 Issuer will not consummate any such offer or distribution
with respect to such subordinated indebtedness or Preferred Stock until such
time as the Issuer will have paid the Change of Control Purchase Price in full
to the holders of Notes that have accepted the Issuer's Change of Control Offer
and will otherwise have consummated the Change of Control Offer made to holders
of the Notes and the Issuer 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 Issuer 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 this Section
4.19, the Issuer will comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under this Section 4.19
by virtue thereof.
SECTION 4.20. Maintenance of Properties; Insurance; Books and
Records; Compliance with Law.
(a) The Issuer will, and will cause each of its Restricted Subsidiaries
to, at all times cause all properties used or useful in the conduct of their
business to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all necessary equipment,
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as in its judgment may be necessary,
so that the business carried on in connection therewith may be properly
conducted at all times unless the failure to so maintain or supply such
properties or to make such repairs,
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renewals, replacements, betterments and improvements (together with all other
such failures) would not have a material adverse effect on the financial
condition or results of operations of the Issuer and its Subsidiaries, taken as
a whole; provided, however, that nothing in this Section 4.20 shall prohibit the
Issuer or any Subsidiary from discontinuing the operation or maintenance of any
of such properties, or disposing of any of them, if such discontinuance or
disposal is in the good faith judgment of the Board of Directors of the Issuer
or the Subsidiary concerned or of an officer (or other agent employed by the
Issuer or of its Subsidiaries) of the Issuer or any of its Subsidiaries having
managerial responsibility for such property, as the case may be, desirable in
the conduct of the business of the Issuer or such Subsidiary, as the case may
be, and is not disadvantageous in any material respect to the Holders.
(b) The Issuer will maintain, and will cause to be maintained for each
of its Restricted Subsidiaries, insurance (including appropriate self insurance)
covering such risks as in the good faith judgment of the Issuer are usually and
customarily insured against by corporations similarly situated, in such amounts
as in the good faith judgment of the Issuer are customary for corporations
similarly situated and with such deductibles and by such methods as are
customary for corporations similarly situated unless the failure to maintain
such insurance (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of the Issuer
and its Subsidiaries, taken as a whole.
(c) The Issuer will, and will cause each of its Domestic Restricted
Subsidiaries to, keep proper books of record and account, in all material
respects, in accordance with GAAP consistently applied to the Issuer and its
Domestic Restricted Subsidiaries taken as a whole.
(d) The Issuer will, and will cause each of its Subsidiaries to, comply
with all statutes, laws, ordinances or government rules and regulations to which
they are subject, except for non-compliances that would not have a material
adverse effect on the financial condition or results of operations of the Issuer
and its Subsidiaries taken as a whole.
SECTION 4.21. Limitation on Conduct of Business.
The Issuer 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 Issuer and its Restricted Subsidiaries are
engaged on the Issue Date.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Consolidation, Amalgamation, Merger
and Sale of Assets.
(a) The Issuer 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 Issuer shall be the continuing
Person, or the Person (if other than the Issuer) formed by such consolidation or
into which the Issuer is merged or to which the properties and assets of the
Issuer, are sold, assigned, transferred, leased, conveyed or otherwise disposed
of is a corporation or limited liability company 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
Issuer under this Indenture and the Notes; and the obligations hereunder and
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 Issuer or such Person, as the case may be, is at
least equal to the Consolidated Net Worth of the Issuer 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 Issuer
or such Person, as the case may be, could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06 above;
provided, that a Person that is a Guarantor may merge into or amalgamate with
the Issuer or another Person that is a Guarantor and the Issuer and Holdings may
merge into or amalgamate with each other without complying with this clause
(iv).
(b) In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Issuer 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 Section 5.01 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 Issuer, the Capital Stock of which
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constitutes all or substantially all of the properties and assets of the Issuer,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Issuer.
SECTION 5.02. Successor Person Substituted.
Upon any consolidation amalgamation or merger, or any transfer of all
or substantially all of the assets of the Issuer in accordance with Section 5.01
above, the successor corporation formed by such consolidation or amalgamation or
into which the Issuer is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such successor
corporation had been named as the Issuer herein, and thereafter the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Notes.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
The following events are "Events of Default":
(1) default in payment of any Accreted Value, principal of, or premium,
if any, on the Notes whether at maturity, upon redemption or otherwise;
(2) default for 30 days in payment of any interest on the Notes;
(3) default by the Issuer or any Restricted Subsidiary in the
observation or performance of the covenants set forth in Sections 4.19 and
5.01 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;
(4) default by the Issuer or any Restricted Subsidiary of the Issuer in
the observance or performance of any other covenant in the Notes or this
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;
(5) default in the payment at final maturity of an aggregate amount of
$3,500,000 or more with respect to any Indebtedness of the Issuer 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
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holders of such Indebtedness within 60 days after written notice from the
Trustee or any Noteholder pursuant to Section 11.02 of the Indenture, or
such acceleration is not rescinded or annulled within 30 days after written
notice from the Trustee or any Noteholder as provided in Section 11.02 of
the Indenture;
(6) 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 Issuer 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;
(7) 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 this Indenture); and
(8) the Issuer or any Significant Restricted Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due; or
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Issuer or any Significant Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Issuer or any Significant
Restricted Subsidiary or for all or substantially all of the property
of the Issuer or any Restricted Subsidiary, or
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(C) orders the liquidation of the Issuer or any Significant
Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
The Trustee may withhold notice to the Holders of the Notes of any
Default (except in payment of Accreted Value, 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 Trustee shall not be charged with
knowledge of any Default, Event of Default, Change of Control or Asset Sale or
Default in payment of Additional Interest unless written notice thereof shall
have been given to a Responsible Officer at the corporate trust office of the
Trustee by the Issuer or any Holder.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default described in
Section 6.01(8) or (9)) shall 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 by written notice to the Issuer and the Trustee may
declare to be immediately due and payable 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 if such
declaration is made after August 1, 2002, and the same will become immediately
due 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,
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 this 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) if the Issuer 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 (6) of Section 6.01 hereof, the Trustee shall have received an
Officers' Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto. In case an Event of Default specified in
Section 6.01 (8) and (9), the Accreted Value (if such Event of Default occurs on
or prior to
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August 1, 2002) or principal and all premium, if any, and interest (if such
Event of Default occurs after August 1, 2002) with respect to all of the Notes
shall be due and payable immediately without any declaration or other act on the
part of the Trustee or the holders of the Notes.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
Accreted Value, principal of, or premium, if any, and interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture and
may take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law. Any costs associated with actions taken by the Trustee
under this Section 6.03 shall be reimbursed to the Trustee by the Issuer.
SECTION 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount at maturity of the Notes then outstanding have the
right to waive any existing Default or Event of Default or compliance with any
provision of this Indenture or the Notes. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount at maturity of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with any law or this Indenture or
that the Trustee determines may be unduly prejudicial to the rights of another
Noteholder not taking part in such direction or if the Trustee, determines that
the action so directed may not lawfully be taken or may involve it in personal
liability; provided
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that the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction.
SECTION 6.06. Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount at
maturity of the Notes then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer and if requested provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer, and, if requested, provision of,
indemnity; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
aggregate principal amount at maturity of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of Accreted Value or principal of, or
premium, if any, and interest on a Note (including Additional Interest) on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of Accreted Value or principal,
premium or interest specified in Section 6.01(1) or (2) hereof occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Issuer or the Guarantors (or any other obligor on
the Notes) for the whole amount of unpaid Accreted
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Value or principal and accrued interest remaining unpaid, together with interest
on overdue Accreted Value or principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each case
at the rate set forth in the Notes to the extent lawful, and such further
amounts as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof) and the Noteholders allowed in any
judicial proceedings relative to the Issuer or the Guarantors (or any other
obligor upon the Notes), its creditors or its property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same after deduction of its
charges and expenses to the extent that any such charges and expenses are not
paid out of the estate in any such proceedings and any custodian in any such
judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceedings.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
Accreted Value or principal, premium, if any, and interest (including
Additional Interest, if any) ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes; and
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THIRD: to the Issuer or, to the extent the Trustee collects any amount
from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount at maturity of the Notes then outstanding.
SECTION 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuer, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Officer of
the Trustee has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use under
circumstances in the conduct of such person's own affairs.
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(b) Except during the continuance of an Event of Default actually known
to a Responsible Officer of the Trustee:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture but, in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform on their face to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Sections 6.02 and 6.05 of this Indenture.
(4) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights, powers or duties or to take or omit to
take any action under this Indenture or take any action at the request or
direction of Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not receive an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which may be incurred by it in connection
with such performance.
(d) Whether or not therein expressly so provided, paragraphs (a), (b),
(c) and (e) of this Section 7.01 shall govern every provision of this Indenture
that in any way relates to the Trustee.
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(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it in its sole discretion
against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by the law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both, which shall
conform to the provisions of Section 11.05 hereof. The Trustee shall be
protected and shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or opinion.
(3) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed by
it with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within
its rights or powers; provided that the Trustee's conduct does not
constitute gross negligence or bad faith.
(5) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may make loans to, accept deposits from, perform
services for or otherwise deal with the Issuer or any Guarantor, or any
Affiliates thereof, with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11 hereof.
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SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes or any Guarantee, it
shall not be accountable for the Issuer's or any Guarantor's use of the proceeds
from the sale of Notes or any money paid to the Issuer or any Guaranty pursuant
to the terms of this Indenture and it shall not be responsible for any statement
in the Notes, Guarantee or this Indenture other than its certificate of
authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is actually known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the Accreted Value or the principal of, or premium, if any, or interest on any
Note or a default in the observance or performance of any of the obligations of
the Issuer under Article Five, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determine(s) that
withholding the notice is in the best interest of the Noteholders.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA ss. 313(a), within 60 days after July 27 of any
year, commencing July 27, 1999 the Trustee shall mail to each Noteholder a brief
report dated as of such July 27 that complies with TIA ss. 313(a). The Trustee
also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA ss. 313(c) and TIA ss. 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail to
all Holders of Notes, as the names and addresses of such Holders appear on the
Registrar's books.
A copy of each report at the time of its mailing to Noteholders shall
be filed with the Commission and each stock exchange on which the Notes are
listed. The Issuer shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
SECTION 7.07. Compensation and Indemnity.
The Issuer and the Guarantors shall pay to the Trustee and Agents from
time to time such compensation for its services hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) which shall be agreed from time to time by the
Issuer and Trustee in writing. The Issuer and the Guarantors shall reimburse the
Trustee and Agents upon request for all reasonable disbursements, expenses and
advances incurred or made by it in connection with its duties under this
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Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Issuer and the Guarantors shall indemnify each of the Trustee and
any predecessor Trustee for, and hold each of them harmless against, any and all
loss, damage, claim, liability or expense, including without limitation taxes
(other than taxes based on the income of the Trustee or such Agent) and
reasonable attorneys' fees and expenses incurred by each of them arising out of
or in connection with the acceptance, administration or performance of its
duties under this Indenture including the reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder (including, without limitation, settlement
costs). The Trustee or Agent shall notify the Issuer and the Guarantors in
writing promptly of any claim asserted against the Trustee or Agent for which it
may seek indemnity. However, the failure by the Trustee or Agent to so notify
the Issuer and the Guarantors shall not relieve the Issuer and Guarantors of
their obligations hereunder except to the extent the Issuer and the Guarantors
are prejudiced thereby.
Notwithstanding the foregoing, the Issuer and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To secure
the payment obligations of the Issuer and the Guarantors in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee except such money or property held in trust to pay
principal of and interest on particular Notes. The obligations of the Issuer and
the Guarantors under this Section 7.07 to compensate and indemnify the Trustee,
Agents and each predecessor Trustee and to pay or reimburse the Trustee, Agents
and each predecessor Trustee for expenses, disbursements and advances shall be
joint and several liabilities of the Issuer and each of the Guarantors and shall
survive the resignation or removal of the Trustee and the satisfaction,
discharge or other termination of this Indenture, including any termination or
rejection hereof under any Bankruptcy Law.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(8) or (9) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include any
trustee appointed pursuant to Article 7.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Issuer and the Guarantors in
writing. The Holders of a majority in principal amount of the outstanding Notes
may remove the
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Trustee by notifying the Issuer and the removed Trustee in writing and may
appoint a successor Trustee with the Issuer's written consent, which consent
shall not be unreasonably withheld. The Issuer may remove the Trustee at its
election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall notify the holders of such
event and promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount at
maturity of the Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuer.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in principal amount at maturity of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Noteholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Issuer obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Consolidation, Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another corporation,
subject to Section 7.10
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hereof, the successor corporation without any further act shall be the successor
Trustee; provided such entity shall be otherwise qualified and eligible under
this Article 7.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2) in every respect. The Trustee
(together with its corporate parent) shall have a combined capital and surplus
of at least $100,000,000 as set forth in the most recent applicable published
annual report of condition. The Trustee shall comply with TIA ss. 310(b),
including the provision in ss. 310(b)(1).
SECTION 7.11. Preferential Collection of Claims Against Issuer.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
SECTION 7.12. Paying Agents.
The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:
(A) that it will hold all sums held by it as agent for the payment of Accreted
Value or principal of, or premium, if any, or interest on, the Notes (whether
such sums have been paid to it by the Issuer or by any obligor on the Notes) in
trust for the benefit of Holders of the Notes or the Trustee;
(B) that it will at any time during the continuance of any Event of
Default, upon written request from the Trustee, deliver to the Trustee all
sums so held in trust by it together with a full accounting thereof; and
(C) that it will give the Trustee written notice within three (3)
Business Days of any failure of the Issuer (or by any obligor on the Notes)
in the payment of any installment of Accreted Value or principal of,
premium, if any, or interest on, the Notes when the same shall be due and
payable.
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ARTICLE EIGHT
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 8.01. Without Consent of Holders.
The Issuer and the Guarantors, when authorized by a Board Resolution of
each of them, and the Trustee may amend, waive or supplement this Indenture or
the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to comply with any requirements of the Commission under the TIA;
(4) to cure any ambiguity, defect or inconsistency;
(5) in reliance on an Opinion of Counsel, to make any other change that
does not adversely affect the rights of any Noteholders hereunder;
(6) to add a Guarantor; or
(7) to provide for the issuance of the Exchange Notes or the Private
Exchange Notes in accordance with Section 2.01 in a manner that does not
adversely affect the rights of any Noteholder.
The Trustee is hereby authorized to join with the Issuer and the
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
SECTION 8.02. With Consent of Holders.
The Issuer and the Guarantors (each when authorized by a Board
Resolution) may direct the Trustee to modify or supplement this Indenture or the
Notes with the written consent of the Holders of at least a majority in
aggregate principal amount at maturity of the outstanding Notes. The Holders of
not less than a majority in aggregate principal amount at maturity of the
outstanding Notes may waive compliance in a particular instance by the Issuer
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or Guarantors with any provision of this Indenture or the Notes. Subject to
Section 8.04, without the consent of each Noteholder affected, however, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may not:
(1) reduce the amount of Notes whose holders must consent to an
amendment, supplement or waiver to this Indenture;
(2) reduce the rate of or change the time for payment of interest,
including defaulted interest, on any Note;
(3) reduce the Accreted Value, 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;
(4) make any Note payable in money other than that stated in the Note
or change the place of payment from New York, New York;
(5) waive a default on the payment of Accreted Value, the principal
amount at maturity of, interest on, or redemption payment with respect to
any Note;
(6) make any change in provisions of this Indenture protecting the
right of each holder of Notes to receive payment of Accreted Value or
principal 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
(7) modify or change any provision of this Indenture or the related
definitions affecting the ranking of the Notes or any Guarantee in a manner
which adversely affects the holders of Notes.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Issuer shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the written request of the Issuer, accompanied by a Board
Resolution of the Issuer and each Guarantor authorizing the execution of any
such supplemental indenture, and upon the receipt by the Trustee of evidence
reasonably satisfactory to the Trustee of the consent of the Noteholders as
aforesaid and upon receipt by the Trustee of the documents described in Section
8.06 hereof, the Trustee shall join with the Issuer and the Guarantors in the
execution of such supplemental indenture unless such supplemental indenture
affects the
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Trustee's own rights, duties or immunities under this Indenture, in which case
the Trustee may, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
SECTION 8.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall
comply with the TIA as then in effect.
SECTION 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may revoke
the consent as to his Note or portion of a Note, if the Trustee receives the
written notice of revocation before the date the amendment, supplement, waiver
or other action becomes effective.
The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (7) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
SECTION 8.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a Note, the
Trustee (in accordance with the specific written direction of the Issuer) shall
request the
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Holder of the Note (in accordance with the specific written direction of the
Issuer) to deliver it to the Trustee. In such case, the Trustee shall place an
appropriate notation on the Note about the changed terms and return it to the
Holder. Alternatively, if the Issuer or the Trustee so determines, the Issuer in
exchange for the Note shall issue, the Guarantors shall endorse, and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION 8.06. Trustee To Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel stating, in addition to
the matters required by Section 11.04, that such amendment, supplement or waiver
is authorized or permitted by this Indenture and is a legal, valid and binding
obligation of the Issuer and Guarantors, enforceable against the Issuer and
Guarantors in accordance with its terms (subject to customary exceptions).
ARTICLE NINE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 9.01. Discharge of Indenture.
The Issuer and the Guarantors may terminate their obligations under the
Notes, the Guarantees and this Indenture, except the obligations referred to in
the last paragraph of this Section 9.01, if there shall have been cancelled by
the Trustee or delivered to the Trustee for cancellation all Notes theretofore
authenticated and delivered (other than any Notes that are asserted to have been
destroyed, lost or stolen and that shall have been replaced as provided in
Section 2.08 hereof) and the Issuer has paid all sums payable by them hereunder
or deposited all required sums with the Trustee.
After such delivery, the Trustee upon Issuer Request shall acknowledge
in writing the discharge of the Issuer's and the Guarantors' obligations under
the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer in Sections 7.07, 9.05 and 9.06 hereof shall survive.
SECTION 9.02. Legal Defeasance.
The Issuer may at its option, by Board Resolution of the Issuer, be
discharged from its obligations with respect to the Notes and the Guarantors
discharged from their obligations under the Guarantees on the date the
conditions set forth in Section 9.04 below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Issuer
shall be deemed to have paid and discharged the entire indebtedness represented
by the Notes and to have satisfied all its other obligations under such Notes
and this Indenture insofar as such Notes are concerned (and the Trustee, at the
expense of the Issuer, shall, subject to Section 9.06 hereof, execute
instruments in form and substance reasonably satisfactory to the Trustee and
Issuer acknowledging the same), except for the following which shall survive
until otherwise terminated or discharged hereunder: (A) the rights of Holders of
outstanding Notes to receive solely from the trust funds described in Section
9.04 hereof and as more fully set forth in such Section, payments in respect of
the Accreted Value or principal of, premium, if any, and interest on such Notes
when such payments are due, (B) the Issuer's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, and 4.20 hereof,
(C) the rights, powers, trusts, duties, and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.07 hereof) and (D) this Article 9. Subject to compliance with this Article 9,
the Issuer may exercise its option under this Section 9.02 with respect to the
Notes notwithstanding the prior exercise of its option under Section 9.03 below
with respect to the Notes.
SECTION 9.03. Covenant Defeasance.
At the option of the Issuer, pursuant to a Board Resolution of the
Issuer, the Issuer and the Guarantors shall be released from their respective
obligations under Sections 4.02 through 4.19 and 4.21, inclusive, and clauses
(a)(ii), (iii) and (iv) of Section 5.01 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 9.04 hereof are
satisfied (hereinafter, "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that the Issuer and the Guarantors may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section or portion thereof, whether directly or
indirectly by reason of any reference elsewhere herein to any such specified
Section or portion thereof or by reason of any reference in any such specified
Section or portion thereof to any other provision herein or in any other
document, but the remainder of this Indenture and the Notes shall be unaffected
thereby.
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SECTION 9.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section 9.02 or
Section 9.03 hereof to the outstanding Notes:
(1) the Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 hereof who shall agree to comply with the provisions of
this Article 9 applicable to it) pursuant to an irrevocable trust and
security agreement in form and substance satisfactory to the Trustee as
funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders of the Notes, (A) United States dollars and/or (B)
non-callable U.S. Government Obligations which through the scheduled
payment of principal at maturity and interest in respect thereof in
accordance with their terms will provide, not later than the due date of
any payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally-recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, the Accreted Value of,
premium, if any, and accrued interest on the outstanding Notes at the
maturity date of such Accreted Value, premium, if any, or interest, or on
dates for payment and redemption of such Accreted Value, premium, if any,
and interest in accordance with the terms of this Indenture and of the
Notes;
(2) no Event of Default or Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit, or shall have
occurred and be continuing at any time during the period ending on the 91st
day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Issuer in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest for purposes of the TIA with respect
to any securities of the Issuer;
(4) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute default under this Indenture or any
other material agreement or instrument to which the Issuer or any of its
Subsidiaries is a party or by which the Issuer or any of its Subsidiaries
is bound;
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(5) the Issuer shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register
as an investment Issuer under the Investment Issuer Act of 1940, as
amended;
(6) in the case of an election under Section 9.02 above, the Issuer
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that or (ii) there has been a change
in any applicable Federal income tax law with the effect that, and such
opinion shall confirm that, the Holders of the outstanding Notes or Persons
in their positions will not recognize income, gain or loss for United
States Federal income tax purposes solely as a result of such Legal
Defeasance and will be subject to United States Federal income tax on the
same amounts, in the same manner, including as a result of prepayment, and
at the same times as would have been the case if such deposit, Legal
Defeasance and discharge had not occurred;
(7) in the case of an election under Section 9.03 hereof, the Issuer
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the outstanding Notes will not recognize income, gain
or loss for United States Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to United States Federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(8) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under
Section 9.02 above or the Covenant Defeasance under Section 9.03 hereof (as
the case may be) have been complied with;
(9) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Issuer with the intent of preferring the Holders of the Notes over any
other creditors of the Issuer or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Issuer or others;
(10) the Issuer shall have delivered to the Trustee on Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable Bankruptcy
Law; and
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(11) the Issuer shall have paid or duly provided for payment under
terms mutually satisfactory to the Issuer and the Trustee all amounts then
due to the Trustee pursuant to Section 7.07 hereof.
SECTION 9.05. Deposited Money and U.S. Government Obligations To
Be Held in Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent, to the Holders of such Notes, of
all sums due and to become due thereon in respect of principal, premium, if any,
and accrued interest, but such money need not be segregated from other funds
except to the extent required by law.
The Issuer and the Guarantors shall (on a joint and several basis) pay
and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
9.04 hereof or the principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuer from time to time upon a Issuer Request any
money or U.S. Government Obligations held by it as provided in Section 9.04
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuer's and each Guarantor's obligations under this
Indenture, the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 9 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 9.01 hereof; provided that if the Issuer
or the Guarantors have made any payment of principal of, premium, if any, or
accrued interest on any Notes because of the reinstatement of their obligations,
the Issuer or the Guarantors, as the case may
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be, shall be subrogated to the rights of the Holders of such Notes to receive
such payment from the money or U.S. Government Obligations held by the Trustee
or Paying Agent.
SECTION 9.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon written demand of the Issuer, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.04 hereof, to the
Issuer upon an Issuer Request (or, if such moneys had been deposited by the
Guarantors, to such Guarantors), and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
SECTION 9.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Issuer or the Guarantors in trust for the payment of the principal of, or
premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which the
principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Issuer (or, if
appropriate, the Guarantors) upon a Issuer Request, or if such moneys are then
held by the Issuer or the Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Issuer and
the Guarantors for the payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
that the Trustee or any such Paying Agent, before being required to make any
such repayment, may, at the expense of the Issuer and the Guarantors, either
mail to each Noteholder affected, at the address shown in the register of the
Notes maintained by the Registrar pursuant to Section 2.04 hereof, or cause to
be published once a week for two successive weeks, in a newspaper published in
the English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Issuer. After payment to the
Issuer or the Guarantors or the release of any money held in trust by the Issuer
or any Guarantors, as the case may be, Noteholders entitled to the money must
look only to the Issuer and the Guarantors for payment as general creditors
unless applicable abandoned property law designates another Person.
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Section 9.09. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in this Indenture) as to all outstanding
Notes when:
(1) either (a) all the Notes, theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid
and Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust) have been delivered to the Trustee
for cancellation or (b) all Notes not theretofore delivered to the Trustee
for cancellation have become due and payable and the Issuer has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for Accreted Value
or principal amount of maturity of, premium, if any, and interest on the
Notes, as the case may be, to the date of deposit together with irrevocable
instructions from the Issuer directing the Trustee to apply such funds to
the payment thereof at maturity or redemption, as the case may be;
(2) the Issuer has paid all other sums payable under this Indenture by
the Issuer; and
(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel stating that all conditions precedent under this
Indenture relating to the satisfaction and discharge of this Indenture have
been complied with.
ARTICLE TEN
GUARANTEE OF NOTES
SECTION 10.01. Guarantee.
Subject to the provisions of this Article 10 each Guarantor hereby
jointly and severally, fully and unconditionally guarantees, on a senior
unsecured basis, to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Issuer or
any other Guarantors to the Holders or the Trustee hereunder or thereunder,
that: (a) the Accreted Value or principal of, interest and Additional Interest,
if any, on and with respect to the Notes will be duly and punctually paid in
full when due, whether at maturity, by acceleration or otherwise, and interest
on the overdue Accreted Value or principal and (to the extent
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permitted by law) interest or Additional Interest, if any, on or Assessed Damage
Amounts, if any, with respect to the Notes and all other obligations of the
Issuer or the Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.7 hereof) will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, 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. Failing payment when due of
any amount so guaranteed, or failing performance of any other obligation of the
Issuer to the Holders, for whatever reason, each Guarantor will be obligated to
pay, or to perform or cause the performance of, the same immediately. An Event
of Default under this Indenture or the Notes shall constitute an event of
default under this Guarantee, and shall entitle the Holders of Notes or the
Trustee to accelerate the obligations of the Guarantors hereunder in the same
manner and to the same extent as the obligations of the Issuer.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Issuer, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each of the Guarantors hereby waives the benefit of
diligence, presentment, demand for payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest, notice and all demands whatsoever
and covenants that its Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and this
Guarantee. This Guarantee is a guarantee of payment and not of collection. If
any Holder or the Trustee is required by any court or otherwise to return to the
Issuer or to any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Issuer or such Guarantor, any amount
paid by the Issuer or such Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders of Notes and the Trustee, on the other hand, (a) subject
to this Article 10, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (b) in the
event of any acceleration of such obligations as provided in Article 6 hereof,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee.
<PAGE>
80
This Guarantee shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Issuer for liquidation
or reorganization, should the Issuer become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Issuer's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Notes are pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee on the Notes, whether as a "voidable preference," "fraudulent
transfer" or otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Notes shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employee or incorporator.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections 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
this 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 net assets of each Guarantor, determined in accordance with
GAAP.
SECTION 10.02. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form included in Exhibit G hereto, shall be endorsed on each Note authenticated
and delivered by the Trustee and such Guarantee shall be executed by either
manual or facsimile signature of an Officer or an Officer of a general partner,
as the case may be, of each Guarantor. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
<PAGE>
81
If an officer of a Guarantor whose signature is on this Indenture or a
Guarantee no longer holds that office at the time the Trustee authenticate the
Note on which such Guarantee is endorsed or at any time thereafter, such
Guarantor's Guarantee of such Note shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 10.03. Additional Guarantors.
The Issuer covenants and agrees that it shall cause any Person which
becomes a Restricted Subsidiary (other than a Foreign Restricted Subsidiary) to
execute a supplemental indenture and any other documentation requested by the
Trustee satisfactory in form and substance to the Trustee pursuant to which such
Restricted Subsidiary shall guarantee the obligations of the Issuer under the
Notes and this Indenture in accordance with this Article 10 with the same effect
and to the same extent as if such Person had been named herein as a Guarantor.
SECTION 10.04. Release of Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if:
(i) the Guarantor has sold all of its assets or the Issuer and its
Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor
owned by them, in each case in a transaction in compliance with the terms
of this Indenture (including Sections 4.12, 4.14 and 5.01); provided that
the Asset Sale Proceeds of such sale are applied in accordance with this
Indenture;
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Issuer or another
Guarantor in a transaction in compliance with the terms of this Indenture
(including Section 5.01); or
(iii) the Guarantor is designated an Unrestricted Subsidiary in
compliance with the terms of this Indenture (including Section 4.07);
and in each such case, the Issuer 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 transactions have been complied
with.
<PAGE>
82
The Trustee shall execute any documents reasonably requested by the
Issuer or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Notes and under this Article
10.
SECTION 10.05. Waiver of Subrogation.
So long as the Guarantees remain outstanding, each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Issuer that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under the Guarantee and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Issuer, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Issuer, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or Note on account of such claim or other rights. If
any amount shall be paid to any Guarantor in violation of the preceding sentence
and the Notes shall not have been paid in full, such amount shall have been
deemed to have been paid to such Guarantor for the benefit of, and held in trust
for the benefit of, the Holders of the Notes, and shall forthwith be paid to the
Trustee for the benefit of such Holders to be credited and applied upon the
Notes, whether matured or unmatured, in accordance with the terms of this
Indenture. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 10.06 is knowingly made in contemplation of
such benefits.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
SECTION 11.02. Notices.
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
<PAGE>
83
If to the Issuer or any Guarantor:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, FL 33166
Attention: Chief Financial Officer
Fax Number: (305) 463-5022
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
Attention: C. Kevin Barnette, Esq.
Fax Number: (202) 393-5760
If to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 10890
Attention: Corporate Trust Administration
Fax Number: (302) 651-8882
Copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Michele D. Ross, Esq.
Fax Number: (212) 715-8000
<PAGE>
84
<PAGE>
85
Such notices or communications shall be effective when received and
shall be sufficiently given if so given within the time prescribed in this
Indenture.
The Issuer, the Guarantors or the Trustee by written notice to the
others may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first-class mail, postage prepaid, at his address shown on the register
kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication to a Noteholder is mailed in the manner provided above,
it shall be deemed duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 11.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Issuer, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuer or any Guarantor to the
Trustee to take any action under this Indenture, the Issuer or such Guarantor
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
<PAGE>
86
SECTION 11.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance by or on behalf
of the Issuer or any Guarantor with a condition or covenant provided for in this
Indenture shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it or he has made
such examination or investigation as is necessary to enable it or him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with, provided, however, that
with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or meetings of
Noteholders. The Registrar and Paying Agent may make reasonable rules for their
functions.
SECTION 11.07. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York
or the State of Delaware. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE AND THE NOTES 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
CONFLICTS OF LAW.
<PAGE>
87
SECTION 11.09. Agent for Service; Submission to Jurisdiction;
Waiver of Immunities.
By the execution and delivery of this Indenture, each of the Issuer and
each Guarantor (i) acknowledges that it has, by separate written instrument,
designated and appointed CT Corporation as its authorized agent upon which
process may be served in any suit, action or proceeding arising out of or
relating to the Notes or this Indenture that may be instituted in any Federal or
State court in the State of New York, Borough of Manhattan, or brought under
Federal or State securities laws or brought by the Trustee (whether in its
individual capacity or in its capacity as Trustee hereunder), and acknowledges
that CT Corporation has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit, action or proceeding, and (iii)
agrees that service of process upon CT Corporation and written notice of said
service to it (mailed or delivered to its Executive Director at its principal
office as specified in Section 11.2), shall be deemed in every respect effective
service of process upon it in any such suit or proceeding. The Issuer and each
Guarantor further agree to take any and all action, including the execution and
filing of any and all such documents and instruments as may be necessary to
continue such designation and appointment of CT Corporation, in full force and
effect so long as this Indenture shall be in full force and effect; provided
that the Issuer may and shall (to the extent CT Corporation ceases to be able to
be served on the basis contemplated herein), by written notice to the Trustee,
designate such additional or alternative agents for service of process under
this Section 11.09 that (i) maintains an office located in the Borough of
Manhattan, The City of New York in the State of New York, (ii) are either (x)
counsel for the Issuer or (y) a corporate service company which acts as agent
for service of process for other Persons in the ordinary course of its business
and (iii) agrees to act as agent for service of process in accordance with this
Section 11.7. Such notice shall identify the name of such agent for process and
the address of such agent for process in the Borough of Manhattan, The City of
New York, State of New York. Upon the request of any Holder, the Trustee shall
deliver such information to such Holder. Notwithstanding the foregoing, there
shall, at all times, be at least one agent for service of process for the Issuer
and the Guarantors, if any, appointed and acting in accordance with this Section
11.09.
To the extent that the Issuer or any Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, the Issuer and each Guarantor hereby irrevocably waives such immunity
in respect of its obligations under this Indenture and the Securities, to the
extent permitted by law.
<PAGE>
88
SECTION 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Issuer or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
SECTION 11.11. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if any, or
interest, including Additional Interest, on any of the Notes, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Issuer or any Guarantor in this
Indenture or in any supplemental indenture, or in any of the Notes, or because
of the creation of any Indebtedness represented thereby, shall be had against
any stockholder, officer, director or employee, as such, past, present or
future, of the Issuer or of any successor corporation or against the property or
assets of any such stockholder, officer, employee or director, either directly
or through the Issuer or any Guarantor, or any successor corporation thereof,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the Notes are solely obligations of the
Issuer and the Guarantors, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, any stockholder, officer, employee or
director of the Issuer or any Guarantor, or any successor corporation thereof,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or the Notes or implied therefrom, and that any and all such personal liability
of, and any and all claims against every stockholder, officer, employee and
director, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the
Notes. It is understood that this limitation on recourse is made expressly for
the benefit of any such shareholder, employee, officer or director and may be
enforced by any of them.
SECTION 11.12. Successors.
All agreements of the Issuer and the Guarantors in this Indenture and
the Notes shall bind their respective successors. All agreements of the Trustee,
any additional trustee and any Paying Agents in this Indenture shall bind its or
their respective successors.
SECTION 11.13. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
<PAGE>
89
SECTION 11.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 11.15. Separability.
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed all as of the date and year first written above.
RADIO UNICA CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF SAN FRANCISCO INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
ORO SPANISH BROADCASTING, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF SAN FRANCISCO
LICENSE CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
<PAGE>
RADIO UNICA OF MIAMI, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF MIAMI LICENSE CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF LOS ANGELES, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF LOS ANGELES LICENSE
CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA OF SAN ANTONIO, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
<PAGE>
RADIO UNICA NETWORK, INC.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
RADIO UNICA SALES CORP.
By: /s/ Joaquin F. Blaya
------------------------------
Name: Joaquin F. Blaya
Title:Chairman and Chief
Executive Officer
WILMINGTON TRUST COMPANY, as Trustee
By: /s/ James J. McGinley
------------------------------
Name: James J. McGinley
Title: Authorized Signer
<PAGE>
Exhibit A
Form of New Note
RADIO UNICA CORP.
11 3/4% SENIOR DISCOUNT NOTE DUE 2006
This Note is issued with original issue discount for purposes of
Section 1271 et seq. of the Internal Revenue Code. For each $1,000 of principal
amount at maturity of this Note, the issue price is $632.56 and the amount of
original issue discount is $367.44. The issue date of this Security is July 27,
1998 and the yield to maturity is 11 3/4%.
Number CUSIP
Radio Unica Corp., a Delaware Corporation (the "Issuer," which term
includes any successor corporation), for value received promises to pay to or
registered assigns the principal sum of , on August 1, 2006.
Interest Payment Dates: August 1 and February 1, commencing August 1,
2002
Record Dates: July 15 and January 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
RADIO UNICA CORPORATION
By:
------------------------------------------
Name: Herbert M. Levin
Title: President and Chief Executive
Officer
By:
------------------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
Certificate of Authentication
This is one of the 11 3/4% Senior Discount Notes due 2006 referred to
in the within-mentioned Indenture.
Dated: July 27, 1998
WILMINGTON TRUST COMPANY, as Trustee
By:
------------------------------------------
Authorized Signatory
A-2
<PAGE>
RADIO UNICA CORPORATION
11 3/4% SENIOR DISCOUNT NOTE DUE 2006
1. Interest. RADIO UNICA CORPORATION, a Delaware corporation (the
"Issuer"), promises to pay cash interest on the principal amount of this Note
semiannually on August 1 and February 1 of each year (each an "Interest Payment
Date"), commencing on August 1, 2002, at the rate of 11 3/4% per annum. The
Accreted Value of the Notes shall increase in the manner provided in the
Indenture. Interest and Accreted Value will be computed on the basis of a
360-day year of twelve 30-day months. Cash interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no cash
interest has been paid, from August 1, 2002.
The principal of this Note shall not bear or accrue cash interest until
August 1, 2002 except in the case of a default in payment of Accreted Value or
principal and/or premium, if any, upon acceleration, redemption or purchase and,
in such case, the overdue Accreted Value or principal and any overdue premium,
as applicable, shall bear cash interest at the rate of 11 3/4%per annum
(compounded semiannually on each August 1 and February 1) (to the extent that
the payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or duly provided for. To the extent, but
only to the extent, interest on amounts in default constituting original issue
discount prior to August 1, 2002 is not permitted by law, original issue
discount shall continue to accrete until paid or duly provided for. On or after
August 1, 2002, interest on overdue principal and premium, if any, and, to the
extent permitted by law, on overdue installments of interest will accrue, until
the principal and premium, if any, and overdue installments of interest are paid
or duly provided for, at the rate of 11 3/4% per annum.
2. Method of Payment. The Issuer will pay interest hereon (except
defaulted interest) to the Persons who are registered Holders at the close of
business on July 15 or January 15 next preceding the interest payment date
(whether or not a Business Day). Holders must surrender Notes to a Paying Agent
to collect principal payments. The Issuer will pay Accreted Value or principal,
premium, and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts; provided
however, that the Issuers may pay Accreted Value or principal, premium, if any,
and interest by check payable in such money. The Issuer may mail an interest
check to the Holder's registered address.
3. Paying Agent and Registrar. Initially, Wilmington Trust Company, a
Delaware banking corporation (the "Trustee") will act as a Paying Agent and
Registrar. The Issuer may change any Paying Agent or Registrar without notice.
Neither the Issuer nor any of its Affiliates may act as Paying Agent or
Registrar.
A-3
<PAGE>
4. Indenture. The Issuer issued the Notes under an Indenture dated as
of July 27, 1998 (the "Indenture") among the Issuer, the Guarantors (as defined
in the Indenture) and the Trustee. This is one of an issue of Notes of the
Issuer issued, or to be issued, under the Indenture. 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 (15 U.S. Code ss.ss. 77aaa-77bbbb),
as amended from time to time. The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of them.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Notes are obligations of the Issuer
limited in aggregate principal amount at maturity to $158,088,000.
5. Optional Redemption. The Issuer, at its option, may redeem the
Notes, in whole at any time or in part, from time to time at any time on or
after August 1, 2002 upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount at maturity
thereof), set forth below, together, in each case, with accrued and unpaid
interest to the Redemption Date, if redeemed during the twelve-month period
beginning on August 1 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002................................................................. 105.875%
2003................................................................. 102.938%
2004 and thereafter.................................................. 100.000%
</TABLE>
Notwithstanding the foregoing, prior to August 1, 2001 the Issuer may
redeem up to 35% of the aggregate principal amount at maturity of Notes at any
time and from time to time out of the Net Proceeds of one or more Equity
Offerings prior to August 1, 2001 at a Redemption Price equal to 111.75% of the
Accreted Value thereof; provided that at least $65.0 million of the aggregate
initial Accreted Value of Notes originally issued remains 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 shall 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 shall deem 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 shall appear on the
register maintained by the Registrar of the Notes. On and after any Redemption
Date, Accreted Value will cease to accrete and interest will cease to accrue on
the Notes or portions thereof called for redemption unless the Issuer shall fail
to redeem any such Note.
A-4
<PAGE>
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at his registered address. On and after the Redemption
Date, unless the Issuer defaults in making the redemption payment, Accreted
Value will cease to accrete or interest will cease to accrue, as the case may
be, on Notes or portions thereof called for redemption.
7. Offers to Purchase. The Indenture provides that upon the occurrence
of a Change of Control or an Asset Sale and subject to further limitations
contained therein, the Issuer shall make an offer to purchase outstanding Notes
in accordance with the procedures set forth in the Indenture.
8. Registration Rights. Pursuant to a Registration Rights Agreement
among the Issuer, the Guarantors, and CIBC Oppenheimer Corp. and Bear Stearns &
Co. Inc., as Initial Purchasers of the Notes, the Issuer will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for notes of a separate series issued under
the Indenture (or a trust indenture substantially identical to the Indenture in
accordance with the terms of the Registration Rights Agreement) which have been
registered under the Securities Act, in like principal amount and having
substantially identical terms as the Notes. The Holders shall be entitled to
receive certain additional interest payments in the event such exchange offer is
not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 principal amount at maturity and
integral multiples of $1,000 principal amount at maturity. A Holder may transfer
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay to it any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Notes or portion of a Note selected for redemption, or register the transfer of
or exchange any Notes for a period of 15 days before a mailing of notice of
redemption.
10. Persons Deemed Owners. The registered Holder of this Note may be
treated as the owner of this Note for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee will pay the money back to the
Issuer at its written request. After that, Holders entitled to the money must
look to the Issuer for payment as general creditors unless an "abandoned
property" law designates another Person.
12. Amendment, Supplement, Waiver, Etc. The Issuer, the Guarantors and
the Trustee (if a party thereto) may, without the consent of the Holders of any
outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes,
A-5
<PAGE>
including, among other things, curing ambiguities, defects or inconsistencies,
maintaining the qualification of the Indenture under the Trust Indenture Act of
1939, as amended, and making any change that does not materially and adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Issuer, the Guarantors and the Trustee
with the consent of the Holders of not less than a majority of the aggregate
principal amount at maturity of the outstanding Notes, subject to certain
exceptions requiring the consent of the Holders of the particular Notes to be
affected.
13. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Issuer and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Capital
Stock or certain Indebtedness, repurchase stock to make certain Investments,
create or incur liens, enter into transactions with Affiliates, issue stock of
Subsidiaries of the Issuer, enter into sale and leaseback transactions and on
the ability of the Issuer or any Guarantor to merge or consolidate with any
other Person or transfer all or substantially all of the Issuer's assets. Such
limitations are subject to a number of important qualifications and exceptions.
Pursuant to Section 4.04 of the Indenture, the Issuer must annually report to
the Trustee on compliance with such limitations.
14. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article Five of the Indenture, the
predecessor corporation will, except as provided in Article Five, be released
from those obligations.
15. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(8) or (9) of
the Indenture with respect to the Issuer or any of its Significant Restricted
Subsidiaries) occurs and is continuing, then the Trustee or the Holders of not
less than 25% in aggregate principal amount at maturity of the then outstanding
Notes may, by written notice to the Trustee and the Issuer, and the Trustee upon
the request of the Holders of not less than 25% in aggregate principal amount at
maturity of the outstanding Notes shall, declare all Accreted Value (if such
declaration is made on or prior to August 1, 2002) or principal of and accrued
interest (if such declaration is made after August 1, 2002) on all Notes to be
immediately due and payable and such amounts shall become immediately due and
payable. If an Event of Default specified in Section 6.01(8) or (9) of the
Indenture occurs with respect to the Issuer or any of its Significant Restricted
Subsidiaries, the Accreted Value or principal amount at maturity of and interest
on, as applicable, all Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. Holders may not enforce the Indenture, the Notes or the Guarantors
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount at maturity of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders
A-6
<PAGE>
notice of any continuing default (except a default in payment of Accreted Value
or principal, premium, if any, or interest or a default in the observance or
performance of any of the obligations of the Issuer under Article Five of the
Indenture) if it determines that withholding notice is in their best interests.
16. Trustee Dealings with Issuer. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its
Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No director, officer, employee
incorporator or stockholder of the Issuer or any Guarantor shall have any
liability for any obligations of the Issuer or the Guarantors under the Notes,
the Indenture or the Guarantees or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.
18. Discharge. The Issuer's obligations pursuant to the Indenture will
be discharged, except for obligations pursuant to certain sections thereof,
subject to the terms of the Indenture, upon the payment of all the Notes or upon
the irrevocable deposit with the Trustee of United States dollars or U.S.
Government Obligations sufficient to pay when due principal of and interest on
the Notes to maturity or redemption, as the case may be.
19. Guarantees. The Note will be entitled to the benefits of certain
Guarantees made for the benefit of the Holders. Reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
20. Authentication. This Note shall not be valid until the Trustee
manually signs the certificate of authentication on the other side of this Note.
21. Governing Law. THIS NOTE 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 Trustee, the Issuer, the Guarantor and the Holders 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 the Indenture or the Notes.
22. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants
by the entireties), JT TEN (= joint tenants with right of survivorship and not
as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
A-7
<PAGE>
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
RADIO UNICA CORPORATION
8400 N.W. 52nd Street
Suite 101
Miami, Fl 33166
Attention: Chief Financial Officer
A-8
<PAGE>
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: Your Signature:
------------------------ --------------------------------
(Sign exactly as your name
appears on the face of this Note)
A-9
<PAGE>
- ---------------------------
Signature Guaranteed*:
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Issuer pursuant to Section 4.12 or Section 4.19 of the Indenture, check the
appropriate box:
/ / Section 4.12 / / Section 4.19
If you want to have only part of the Note purchased by the Issuer
pursuant to Section 4.12 or Section 4.19 of the Indenture, state the principal
amount at maturity you elect to have purchased:
$
-------------------------
(multiple of $1,000)
Date:
- --------------------------
Your Signature:
------------------------------------
(Sign exactly as your name appears on the face
of this Note)
- ---------------------------
Signature Guaranteed*
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-11
<PAGE>
Exhibit B
Form of Legend for
144A Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT EXHIBIT B OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES
THAT (1) IT WILL NOT PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE
AND THE LAST DATE ON WHICH THE ISSUER, OR ANY AFFILIATE OF THE ISSUER, WAS THE
OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (D) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE ISSUER AND THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) AND (2) IT
WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR
TO THE RESALE RESTRICTION TERMINATION DATE, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
B-1
<PAGE>
EXHIBIT C
Form of Legend and
Assignment Language for Regulation S Note
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
[Assignment language on following pages]
C-1
<PAGE>
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: Your Signature:
---------------------- ---------------------------------
(Sign exactly as your name
appears on the face of this Note)
C-2
<PAGE>
- ---------------------------
Signature Guaranteed*:
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
---------------------- ------------------------------------------------
NOTICE: To be executed by
an executive officer
C-3
<PAGE>
EXHIBIT D
Form of Legend for
Global Notes
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE>
EXHIBIT E
Form of Certificate
(Accredited Investors)
[Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
Wilmington Trust Company
Radio Unica Corp.
c/o Wilmington Trust Company
Attention:
Re: Radio Unica Corp., a corporation organized under
the laws of Delaware (the "Issuer")
11 3/4% Senior Discount Notes due 2006 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm
that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of July 27, 1998 relating to the Notes and we agree
to be bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act or any other applicable securities laws, and that
the Notes may not be offered, sold, pledged or otherwise transferred
except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so
only (i) to the Issuer or any subsidiary thereof, (ii) in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A), (iii) to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you a
signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes, (iv) outside the
United States to persons other than U.S. persons in offshore
transactions meeting the requirements of Rule 904 of Regulation S under
the Securities Act, (v) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if applicable) or (vi)
pursuant to an effective registration statement, and we further agree
to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as
stated herein.
E-1
<PAGE>
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Issuer such certifications,
legal opinions and other information as you and the Issuer may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting each are able to bear the economic risk of our or their
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ]
---------------------------------
E-2
<PAGE>
EXHIBIT F
Form of Certificate
(Regulation S)
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
----------, ----
Wilmington Trust Company
Radio Unica Corp.
c/o Wilmington Trust Company
Attention:
Re: Radio Unica Corp., a corporation organized under
the laws of Delaware (the "Issuer")
11 3/4% Senior Discount Notes due 2006 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $158,088,000 aggregate
principal amount at maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a U.S. person
or to a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
F-1
<PAGE>
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Transferee]
By:
--------------------------------
F-2
<PAGE>
EXHIBIT G
Form of Guarantee
GUARANTEE
Each of the undersigned (the "Guarantors") hereby jointly and sev
erally unconditionally guarantees, to the extent set forth in the Indenture
dated as of July 27, 1998 by and among Radio Unica Corporation, as issuer, the
Guarantors, as guarantors, and The 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
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 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.
[Signatures on Following Pages]
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to
be signed by a duly authorized officer.
RADIO UNICA OF SAN FRANCISCO INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
ORO SPANISH BROADCASTING, INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF SAN FRANCISCO
LICENSE CORP.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF MIAMI, INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF MIAMI LICENSE CORP.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
<PAGE>
RADIO UNICA OF LOS ANGELES, INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF LOS ANGELES LICENSE
CORP.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA OF SAN ANTONIO, INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA NETWORK, INC.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
RADIO UNICA SALES CORP.
By:
---------------------------------
Name: Steven E. Dawson
Title: Chief Financial Officer
<PAGE>
Exhibit 10.7
SECURITIES PURCHASE AGREEMENT
BY
AND
AMONG
RADIO UNICA CORP.
AND
THE INVESTORS
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; INITIAL INVESTMENT DATE . . . . . . . . . . . . . . 2
SECTION 1.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. MERGER; AUTHORIZATION AND DESIGNATION OF PREFERRED
SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. SALE OF SHARES. . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.5. INITIAL FUNDING . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.6. PURCHASE PRICE FOR SHARES . . . . . . . . . . . . . . . . 5
SECTION 1.7. WORLD CUP FUNDING . . . . . . . . . . . . . . . . . . . . 5
SECTION 2. ADDITIONAL FUNDING . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.1 ADDITIONAL COMMITMENT. . . . . . . . . . . . . . . . . . . 6
SECTION 3. CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.1 CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 REPAYMENT OF PROMISSORY NOTE . . . . . . . . . . . . . . . 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . 8
SECTION 4.1. ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.2. CHARTER DOCUMENTS . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.3. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.4. AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.5. LACK OF BUSINESS. . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.6. CONFLICTING AGREEMENTS. . . . . . . . . . . . . . . . . . 10
SECTION 4.7. DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTORS . . . 11
SECTION 5.1. INVESTMENT INTENT . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. RESTRICTED SECURITIES . . . . . . . . . . . . . . . . . . 12
Section 5.3. FCC QUALIFICATION . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. AFFIRMATIVE COVENANTS OF THE COMPANY . . . . . . . . . . . . . . 13
SECTION 6.1. ACCOUNTING SYSTEM . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.2. PERIODIC REPORTS; BUDGETS . . . . . . . . . . . . . . . . 13
SECTION 6.3. CERTIFICATES OF COMPLIANCE. . . . . . . . . . . . . . . . 16
SECTION 6.4. OTHER REPORTS AND INSPECTION. . . . . . . . . . . . . . . 17
SECTION 6.5. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.6. LICENSES. . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.7. MATERIAL CHANGES. . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.8. COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . 19
SECTION 6.9. AGREEMENTS WITH EMPLOYEES . . . . . . . . . . . . . . . . 19
SECTION 6.10. BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . 20
SECTION 6.11. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
SECTION 6.12. COMPENSATION AND AUDIT COMMITTEES. . . . . . . . . . . . 21
SECTION 6.13. AGREEMENTS WITH STOCKHOLDERS . . . . . . . . . . . . . . 22
SECTION 6.14. CONFLICTING AGREEMENTS . . . . . . . . . . . . . . . . . 22
SECTION 7. NEGATIVE COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . 23
SECTION 7.1. MERGER; SALE OF ASSETS. . . . . . . . . . . . . . . . . . 23
SECTION 7.2. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.3. STOCK REPURCHASES . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.4. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.5. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.6. CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . . . . 24
SECTION 7.7. ACQUISITIONS; SUBSIDIARIES. . . . . . . . . . . . . . . . 25
SECTION 7.8. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.9. ISSUANCE OF SHARES. . . . . . . . . . . . . . . . . . . . 25
SECTION 7.10. EXECUTIVE OFFICERS.. . . . . . . . . . . . . . . . . . . 26
SECTION 7.11. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . 26
SECTION 7.12. LIENS AND ENCUMBRANCES . . . . . . . . . . . . . . . . . 26
SECTION 7.13. ACCOUNTANTS AND LEGAL COUNSEL. . . . . . . . . . . . . . 27
SECTION 7.14. BUDGETS. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8. CONDITIONS TO OBLIGATIONS OF THE COMPANY ON CLOSING DATE . . . . 27
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 27
SECTION 8.2. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8.3. MANAGEMENT STOCK. . . . . . . . . . . . . . . . . . . . . 28
Section 9. CONDITIONS TO OBLIGATIONS OF THE INVESTORS ON CLOSING DATE . . . 28
SECTION 9.1. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 28
SECTION 9.2. PERFORMANCE OF COVENANTS. . . . . . . . . . . . . . . . . 28
SECTION 9.3. OPINION OF COUNSEL TO THE COMPANY . . . . . . . . . . . . 29
SECTION 9.4. OFFICER'S AND OTHER CERTIFICATES. . . . . . . . . . . . . 29
SECTION 9.5. LEGAL ACTION. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.6. AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.7. OPERATING BUDGET. . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.8. PURCHASE AGREEMENTS . . . . . . . . . . . . . . . . . . . 31
SECTION 9.9. PROGRAM AGREEMENT . . . . . . . . . . . . . . . . . . . . 31
SECTION 10. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.1. REQUIRED REGISTRATION. . . . . . . . . . . . . . . . . . 31
SECTION 10.2. PROCEDURE FOR REGISTRATION . . . . . . . . . . . . . . . 33
SECTION 10.3. INCIDENTAL REGISTRATION. . . . . . . . . . . . . . . . . 35
SECTION 10.4. INDEMNIFICATION BY THE COMPANY . . . . . . . . . . . . . 38
SECTION 10.5. INDEMNIFICATION BY SELLING INVESTORS . . . . . . . . . . 39
SECTION 10.6. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.7 NOTIFICATION BY SELLING INVESTORS . . . . . . . . . . . . 42
SECTION 10.8. NOTIFICATION BY COMPANY. . . . . . . . . . . . . . . . . 43
SECTION 10.9. COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . 44
SECTION 10.10. RULE 144 REPORTING. . . . . . . . . . . . . . . . . . . 45
<PAGE>
SECTION 11. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 12. RIGHT OF FIRST REFUSAL. . . . . . . . . . . . . . . . . . . . . 47
SECTION 13. CONDUCT PRIOR TO THE CLOSING DATE . . . . . . . . . . . . . . . 49
SECTION 13.1. INVESTIGATION. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 13.2. FCC APPLICATION. . . . . . . . . . . . . . . . . . . . . 51
SECTION 14. NO BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 15. SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . 52
SECTION 16. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 16.1. AFFILIATE. . . . . . . . . . . . . . . . . . . . . . . . 52
Section 16.2. ASSOCIATE. . . . . . . . . . . . . . . . . . . . . . . . 52
Section 16.3. CEO. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 16.4. COMMISSION . . . . . . . . . . . . . . . . . . . . . . . 53
Section 16.5. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . 53
Section 16.6. NEW SECURITIES . . . . . . . . . . . . . . . . . . . . . 53
Section 16.7. PUBLIC OFFERING. . . . . . . . . . . . . . . . . . . . . 53
Section 16.8. SENIOR EXECUTIVES. . . . . . . . . . . . . . . . . . . . 54
Section 16.9. REGISTRABLE SECURITIES . . . . . . . . . . . . . . . . . 54
Section 16.10. SECURITIES ACT. . . . . . . . . . . . . . . . . . . . . 54
Section 16.11. SECURITIES EXCHANGE ACT . . . . . . . . . . . . . . . . 54
SECTION 17. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . 54
SECTION 17.1. CONSTRUCTION AND ENFORCEMENT . . . . . . . . . . . . . . 55
SECTION 17.2. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 17.3. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 17.4. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . 58
SECTION 17.5. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . 59
SECTION 17.6. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 17.7. REPRODUCTION OF DOCUMENTS. . . . . . . . . . . . . . . . 59
EXHIBITS
EXHIBIT A Certificate of Incorporation of Surviving Company
Exhibit B By-Laws of Surviving Company
EXHIBIT C Certificate of Designations
EXHIBIT D Form of Non-Competition Agreement
EXHIBIT E Form of Stockholder's Agreement
<PAGE>
SCHEDULES
Schedule A Investors and Purchase Commitments
Schedule 1.3 List of Holders of Equity Securities of the Surviving Company
Schedule 4.3 List of Holders of Equity Securities
Schedule 4.5 Business, Agreements and Liabilities of the Company
Schedule 7.9 List of Management Options
<PAGE>
AGREEMENT
This Securities Purchase Agreement (the "Agreement"), dated as of the 11th
day of August, 1997, by and among Radio Unica Corp., a Florida corporation (the
"Company"), Warburg, Pincus Ventures, L.P., a Delaware limited partnership
("Warburg"), and the investors named on Schedule A attached hereto (such
investors and Warburg being collectively referred to herein as the "Investors").
W I T N E S S E T H :
WHEREAS, the Company desires to develop in the United States a Spanish
language radio network consisting of owned and operated radio stations and
affiliates (the "Network");
WHEREAS, the Investors desire to invest the capital required to develop the
Network;
WHEREAS, the Company has been established as a vehicle to form the Network;
and
WHEREAS, the Company desires to issue and sell to the Investors, and the
Investors desire to purchase from the Company, shares of Preferred Stock (the
"Preferred Shares") of the Surviving Company (as hereinafter defined) and shares
of Common Stock (the "Common Shares") of the Surviving Company (the Preferred
Shares and Common Shares are collectively referred to herein as the "Shares") as
set forth on Schedule A;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
Section 1. DEFINITIONS; INITIAL INVESTMENT DATE.
Section 1.1. DEFINITIONS. Certain terms as used in this
Agreement are defined in Section 16 hereof and reference is hereby made to such
Section. From and after the Merger (as hereinafter defined), when used herein,
the term the "Company" shall also include Radio Unica Corp., a Delaware
corporation, into which the Company shall be merged on or prior to the Initial
Investment Date (as hereinafter defined).
Section 1.2. ACQUISITIONS. The Company will use its
reasonable best efforts to find radio stations to be acquired by the Company or
to become affiliated with the Network and will inform the Investors of, and will
give the Investors the opportunity to advise on, each such potential acquisition
at the earliest feasible time and will keep the Investors fully informed
throughout the acquisition process.
Section 1.3. MERGER; AUTHORIZATION AND DESIGNATION OF
PREFERRED SHARES. Immediately prior to the Initial Investment Date, the Company
shall be merged (the "Merger") with and into Radio Unica Corp., a Delaware
corporation, which Delaware corporation shall be the surviving entity (the
"Surviving Company") and which shall have the Certificate of Incorporation and
By-Laws in the forms attached
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hereto as Exhibits A and B, respectively. In connection with the Merger, the
stockholders of the Company immediately prior to the Merger shall be given
credit for their $500,000 investment in the Company so that after the Merger,
the stockholders of the Company, the amount of cash invested by each and the
number of Shares owned by each of them shall be as set forth on Schedule 1.3
attached hereto. On or before the Initial Investment Date, the Surviving
Company shall cause to be filed with the Secretary of State of Delaware a
certificate of designations (the "Certificate") in the form attached hereto as
Exhibit C setting forth the designations, preferences, and relative,
participating, optional and other special rights of the Preferred Shares.
Section 1.4. SALE OF SHARES. Subject to the terms and
conditions hereof, on the Closing Date the Company hereby agrees to issue and
sell to the Investors at the times and from time to time as set forth herein an
aggregate of 207,900 Preferred Shares and 21,000 Common Shares (less (i) any
Shares purchased by Warburg pursuant to Section 1.5 hereof and (ii) the Shares
acquired by the stockholders of the Company pursuant to the Merger as set forth
on Schedule 1.3) for an aggregate purchase price of $21,000,000, with the number
of Shares to be purchased by each Investor set forth opposite such Investor's
name on Schedule A. Warburg agrees to purchase an aggregate of 198,000
Preferred Shares and 20,000 Common Shares, less any Shares acquired by other
Investors, which Shares will be
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purchased by Warburg (a) as set forth in Section 1.5 hereof and (b) on and after
the Closing Date, in such amounts and from time to time as will be sufficient to
fund the Company's operations as set forth in the budget furnished by the CEO of
the Company pursuant to Section 9.7 hereof, provided that the Company is
operating in accordance with such budget. If the Company enters into binding
commitments to acquire the radio stations referenced in Section 9.8 hereof, then
each Investor agrees to provide its funds as set forth in this Section 1.4, and
if any Investor fails to do so, the Company shall be entitled to specific
performance with respect to requiring such Investor to meet such funding
requirements and any such Investor shall be liable for any damages resulting
therefrom.
Section 1.5. INITIAL FUNDING. Prior to the Closing Date and
on or prior to August 7, 1997 (the "Initial Investment Date"), Warburg agrees to
purchase from the Surviving Company an aggregate of 19,800 Preferred Shares and
2,000 Common Shares for an aggregate purchase price of $2,000,000. As
conditions to the Initial Investment Date, (i) the Merger shall have been
effectuated, (ii) the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on the Initial
Investment Date, (iii) each of the Senior Executives shall have entered into a
Non-Competition Agreement with the Company, in the form of Exhibit D
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attached hereto and (iv) the Stockholder's Agreement shall have been entered
into and shall be satisfactory to the Investors.
Section 1.6. PURCHASE PRICE FOR SHARES. The purchase price
to be paid by the Investors for each Preferred Share is $100 and for each Common
Share is $10. The purchase price will be payable by wire transfer of funds or
by delivery to the Surviving Company of certified or bank cashiers' checks by
the Investors.
Section 1.7. WORLD CUP FUNDING. Prior to the date hereof, in
connection with the Company entering into the Radio Broadcasting Rights
Agreement ("Broadcast Agreement") with Univision Network Limited Partnership,
Warburg loaned to the Company the principal amount of $265,000 and has obtained
for the benefit of the Company a letter of credit in the amount of $2,385,000.
If the Closing hereunder occurs, than the Company agrees to repay all amounts
loaned to it by Warburg and to replace the letter of credit with a new one
issued for the benefit of the Company. If the Closing hereunder does not occur
prior to October 31, 1997, (A) then each of Joaquin Blaya, Andrew Goldman,
Herbert Levin and Barrett Alley (collectively, the "Syndication Principals"),
jointly and severally, agrees to reimburse Warburg for 50% of (a) all amounts
advanced for the benefit of the Company, (b) any amounts which may be drawn down
under the letter of credit and (c) any costs and expenses incurred by Warburg in
connection therewith and (B) the Company
5
<PAGE>
shall syndicate the rights acquired pursuant to the Broadcast Agreement and
shall pay 50% of the net proceeds to Warburg and 122% of the net proceeds to
each of the Syndication Principals.
Section 2. ADDITIONAL FUNDING.
Section 2.1. ADDITIONAL COMMITMENT. At the request of the
CEO of the Company made at any time on or prior to three (3) years from the date
hereof, Warburg, in the exercise of its sole discretion, shall have the option
to purchase an additional 198,000 Preferred Shares and 20,000 Common Shares (the
"Additional Shares") (in addition to those purchased pursuant to Sections 1.4
and 1.5 hereof) on the same terms as provided in Section 1.6 hereof. Each of
the other Investors and the Senior Executives of the Company shall have the
right to acquire its pro rata share (based on the original shares and vested
options owned by the Other Investors) of the Additional Shares on the same terms
and conditions.
Section 3. CLOSING DATE.
Section 3.1. CLOSING DATE. Subject to satisfaction of the
conditions set forth in Sections 8 and 9 hereof, the closing of the transactions
(except for the Initial Investment Date which shall occur as set forth in
Section 1.5) contemplated by this Agreement (the "Closing") shall take place at
the offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New
York 10038, or such other place as shall be mutually agreed by the parties, at
10:00 a.m. local time on such
6
<PAGE>
date or time as shall be mutually agreed to by the parties to this Agreement
(the "Closing Date"), but in any event not later than February 7, 1998.
Section 3.2. REPAYMENT OF PROMISSORY NOTE. From the proceeds
of the Closing, the principal of and interest on the $100,000 loan made by
Joaquin Blaya, Herbert Levin, Andrew Goldman and Barrett Alley to the Company
shall be repaid in its entirety; PROVIDED, HOWEVER, that the Company may repay
principal and interest on such loan after October 31, 1997 if Warburg shall have
been paid all amounts required pursuant to the third sentence of Section 1.7 as
of such date.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to the Investors as follows:
Section 4.1. ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its State of
Incorporation. The Company has all requisite corporate power and authority
necessary to conduct its business as it is now being conducted or as proposed to
be conducted.
Section 4.2. CHARTER DOCUMENTS. The Company has heretofore
delivered to counsel for the Investors true, correct and complete copies of the
Company's Articles of Incorporation and By-Laws, each as in full force and
effect on the date hereof. There will be no changes made to such Articles of
Incorporation
7
<PAGE>
or By-Laws between the date hereof and the Closing Date, except as contemplated
by the Merger and Exhibit C hereto.
Section 4.3. CAPITALIZATION. As of the Initial Investment
Date, the Company's authorized capitalization consists of 100,000 shares of
Common Stock, par value $.01 per share, and 450,000 shares of Preferred Stock,
par value $.01 per share. The issuance of the Preferred Shares and the Common
Shares pursuant to the provisions of this Agreement have been duly and validly
authorized. No further approval or authorization of the stockholders or the
directors of the Company or of any governmental authority or agency will be
required for the issuance and sale of the Shares as contemplated by this
Agreement. Except for the rights granted pursuant to Sections 2.1 and 12
hereof, no stockholder of the Company or any other person is entitled to any
preemptive rights with respect to the purchase or sale of any securities by the
Company. When issued and sold to the Investors, the Preferred Shares and Common
Shares will be duly and validly issued, fully paid and non-assessable, will be
free and clear of any liens, pledges or encumbrances and the Preferred Shares
will have the designations, preferences and relative, participating, optional
and other special rights as set forth in the Certificate. Except as set forth
in Schedule 7.9, there are no outstanding options, warrants or other rights,
commitments or arrangements, written or oral, to which the Company is a party or
by which the Company is bound, to purchase
8
<PAGE>
or otherwise acquire any authorized but unissued shares of capital stock of the
Company or any security directly or indirectly convertible into or exchangeable
or exercisable for any capital stock of the Company. A true and complete list
of the holders of all issued and outstanding equity securities of the Company on
the Closing Date hereof is set forth on Schedule 4.3 attached hereto.
Section 4.4. AUTHORIZATION. The Company has the full
corporate power and authority to enter into this Agreement and to perform all of
its obligations hereunder. The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all necessary corporate
action. This Agreement constitutes a legal, valid and binding obligation of the
Company enforceable in accordance with its terms.
Section 4.5. AGREEMENTS. Schedule 4.5 attached hereto lists
all of the material agreements to which the Company is a party. Each of such
agreements is in full force and effect without any defaults thereunder.
Section 4.6. CONFLICTING AGREEMENTS. Neither the Company nor
any member of the Senior Executives of the Company is a party to or bound by any
agreement, contract or commitment, or subject to any restrictions (including
non-compete restrictions) in connection with any previous or current employment
and, in the case of any confidentiality agreement, contract, commitment or
9
<PAGE>
restriction, which conflict with this Agreement or any agreement executed or to
be executed in connection herewith.
Section 4.7. DISCLOSURE. To the best knowledge of the
Company and the Senior Executives, neither this Agreement, nor any of the
schedules, exhibits, written statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. To the best knowledge of the Company and the Senior
Executives, there exists no fact or circumstance which, to the knowledge of the
Company or the Senior Executives, adversely affects or will adversely affect the
business, properties or assets, or condition, financial or otherwise, of the
Company, both at the present and as proposed.
Section 4.7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INVESTORS. Each of the Investors severally hereby represents and warrants to,
and agrees with, the Company as follows:
Section 5.1. INVESTMENT INTENT. Each Investor is acquiring
the Preferred Shares and Common Shares for its own account and not with a
present view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act. The Investors consent to the placement of the
following
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legend on each certificate representing the Preferred Shares and Common Shares:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR SOLD
UNLESS (i) A REGISTRATION STATEMENT UNDER SUCH ACT IS THEN IN EFFECT
WITH RESPECT THERETO, (ii) A WRITTEN OPINION FROM COUNSEL FOR THE
ISSUER OR MESSRS. STROOCK & STROOCK & LAVAN LLP OR OTHER COUNSEL FOR
THE HOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO
THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED OR (iii) A 'NO
ACTION' LETTER OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER
OR SALE."
Section 5.2. RESTRICTED SECURITIES. Each Investor
understands that the Preferred Shares and the Common Shares will not be
registered under the Securities Act for the reason that the sale provided for in
this Agreement is exempt pursuant to Section 4 of the Securities Act and that
the reliance of the Company on such exemption is predicated in part on the
Investors' representations set forth herein. Each Investor represents that it
is experienced in evaluating companies such as the Company, is able to fend for
itself, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment, and has the
ability to suffer the total loss of its investment.
Each Investor understands that the Preferred Shares and Common Shares may
not be sold, transferred or otherwise disposed of without registration under the
Securities Act or an exemption
11
<PAGE>
therefrom and that in the absence of an effective registration statement
covering the Preferred Shares or Common Shares or an available exemption from
registration under the Securities Act, the Preferred Shares and Common Shares
must be held indefinitely. The benefits of Rule 144 promulgated under the
Securities Act are not presently available, the Company has not covenanted to
make the benefits of such Rule available, and the Company has no present plans
to make the benefits of such Rule available.
Section 5.3. FCC QUALIFICATION. Each Investor does not know
of any fact that would, because of such Investor's ownership in the Company,
under existing law and existing rules, regulations and practices of the Federal
Communications Commission ("FCC"), disqualify the Company or not enable the
Company to obtain FCC licenses to own and operate radio stations.
Section 6. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
covenants and agrees with Warburg as long as it owns more than 5% of the
Preferred Shares (a "Substantial Investor") that as long as any Preferred Shares
are issued and outstanding:
Section 6.1. ACCOUNTING SYSTEM. It will maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles consistently applied.
Section 6.2. PERIODIC REPORTS; BUDGETS.
(a) It will furnish to each Substantial Investor as
soon as practicable, and in any event within 90 days
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after the end of each fiscal year of the Company, an annual report of the
Company, including an audited balance sheet as at the end of such fiscal year
and audited statements of income, cash flows and stockholders equity for such
fiscal year, setting forth in each case in comparative form corresponding
figures for the preceding fiscal year and for the budget for the fiscal year
just completed (provided, however, that information as to the budgeted figures
will not be audited), all of which will be correct and complete and will fairly
present the financial condition of the Company at the date shown and the results
of its operations for the period then ended. Such financial statements shall be
accompanied by the report thereon of nationally recognized independent public
accountants satisfactory to Warburg to the effect that such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior years (except as otherwise specified in
such report). The Company will use its best efforts to conduct its business so
that such report of the independent public accountants will not contain any
qualifications as to the scope of the audit, the continuance of the Company, or
with respect to the Company's compliance with generally accepted accounting
principles consistently applied, except for changes in methods of accounting in
which such accountants concur.
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(b) It will furnish to each Substantial Investor, as
soon as practicable and in any event within 45 days after the end of each
calendar quarter, a quarterly report of the Company consisting of an unaudited
balance sheet as at the end of such quarter and unaudited statements of income,
cash flows and stockholders equity for such quarter and for the fiscal year to
date, setting forth in each case in comparative form the corresponding figures
for the preceding year and for the budget. The reports for each calendar
quarter shall include a narrative discussion prepared by the Company describing
the business and operations of the Company during the preceding calendar
quarter.
(c) It will furnish to each Substantial Investor, as
soon as practicable and in any event within 30 days after the end of each
calendar month, a monthly report of the Company consisting of an unaudited
balance sheet as at the end of such month and unaudited statements of income,
cash flows and stockholders equity for such month, setting forth in each case in
comparative form the corresponding figures for the preceding year. The reports
for each calendar month shall include a narrative discussion prepared by the
Company describing the business and operations of the Company during the
preceding calendar month.
(d) It will furnish to each Investor, as soon as
practicable and in any event not less than 30 days prior to the end of each
fiscal year of the Company, (x) an
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annual operating budget for the Company prepared by the Senior Executives for
(i) the succeeding fiscal year, containing projections of profit and loss, cash
flow and ending balance sheets for each quarter of such fiscal year and (ii) the
succeeding three fiscal years, containing projections of profit and loss, cash
flow and ending balance sheets for each of such years and (y) an annual capital
budget for the Company prepared by the Senior Executives for each of the
succeeding two years. Promptly upon preparation thereof, the Company will
furnish to each Substantial Investor any other budgets that the Senior
Executives of the Company may prepare and any revisions of such previously
furnished budgets.
(e) It will furnish to each Substantial Investor,
promptly after receipt, each audit response letter, accountant's management
letter and other reports submitted to the Company by its independent public
accountants or attorneys in connection with an annual or interim audit of the
books of the Company.
Section 6.3. CERTIFICATES OF COMPLIANCE. Concurrently with
the furnishing of each report pursuant to Section 6.2(a) hereof, it will furnish
to each Substantial Investor a certificate of an officer stating that to the
best of such officer's knowledge the Company is not in default under, and has
not breached, any agreements or obligations, including, without limitation, this
Agreement, or if any such default or
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breach exists, specifying the nature thereof and what actions the Company has
taken and proposes to take with respect thereto. Concurrently with the
furnishing of the reports pursuant to Section 6.2(a) hereof, the Company will
cause to be furnished to each Substantial Investor a statement of the
independent public accountants of the Company to the effect that they have
caused the provisions of this Agreement to be reviewed and that in the course of
their audit of the Company nothing has come to their attention to lead them to
believe that any default hereunder exists or, if such is not the case,
specifying such default or possible default and the nature thereof. The Company
covenants that promptly after the knowledge or notice of the occurrence of any
default hereunder or any default under or breach of any material agreement or
any other material adverse event or circumstance affecting the Company, it will
deliver to each Substantial Investor a certificate of an officer specifying in
detail the nature and period of existence thereof, and what actions the Company
has taken and proposes to take with respect thereto.
Section 6.4. OTHER REPORTS AND INSPECTION. It will furnish
to each Substantial Investor, as soon as practicable after issuance, copies of
any financial statements or reports prepared by the Company for or otherwise
furnished to its stockholders, the Commission or any other person or entity. It
will furnish promptly to each Substantial Investor such other
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documents, reports and financial data as such Substantial Investor may
reasonably request. It will, upon reasonable prior notice, make available to
each Substantial Investor or such Substantial Investor's representatives or
designees during normal business hours (a) all assets, properties and business
records of the Company for inspection and copying and (b) the directors,
officers and employees of the Company for interviews concerning the business,
affairs and finances of the Company.
Section 6.5. INSURANCE. It will maintain valid policies of
worker's compensation insurance and such other insurance with financially sound
insurers with respect to its properties and business of the kinds and in amounts
not less than is customarily obtained by corporations engaged in the same or
similar businesses. The activities and operations of the Company will be
conducted in a manner so as to conform to all applicable provisions of such
insurance policies.
Section 6.6. LICENSES. It will obtain and keep in full force
and effect all licenses, permits and other authorizations from governmental
authorities (including from the FCC) which shall be necessary to the conduct of
its business.
Section 6.7. MATERIAL CHANGES. It will promptly notify each
Substantial Investor of any known material adverse change in the business,
properties, assets or condition, financial or otherwise, of the Company, and of
any known litigation or governmental proceeding pending or, to the best
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knowledge of the Company, threatened against the Company or against any officer
or key employee of the Company.
Section 6.8. COMPLIANCE WITH LAW. It will comply with all
applicable statutes, rules and regulations of the United States, of the states
thereof and their counties, municipalities and other subdivisions and of any
other jurisdiction applicable to the Company, and will do all things necessary
to preserve, renew and keep in full force and effect and in good standing its
corporate existence and authority necessary to continue its business.
Section 6.9. AGREEMENTS WITH EMPLOYEES. The Company will
cause all significant employees of the Company to enter into agreements,
substantially in form of Exhibit D attached hereto, relating to
(a) non-disclosure of confidential information, (b) restrictions on employing
employees of the Company and (c) for key employees designated by the Company's
Board of Directors, restrictions on competing against the Company. The Company
will avail itself of all rights and remedies under all of the foregoing
agreements.
Section 6.10. BOARD OF DIRECTORS. Commencing on the Closing
Date, the Company and the Investors will use their reasonable best efforts to
have the Company's Board of Directors consist of six persons, who shall be
designated jointly by Warburg and the CEO; provided, however, that Warburg shall
have the right, in the exercise of its sole discretion, at any time or
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from time to time, to designate a majority of the directors; provided, further,
however, that if Warburg designates a majority of the directors it agrees that
without the consent of the CEO not to make any material change in the nature of
the business conducted by the Company or have the Company engage in a different
business. The Investors agree to vote their Common Shares or Preferred Shares
to (a) effectuate the election of the persons nominated as directors in
accordance with the foregoing provisions and (b) amend the By-Laws of the
Company as may be necessary or advisable to effectuate the agreements contained
in this Section 6.10. The rights of the CEO under this Section 6.10 shall
terminate when such member is no longer employed by the Company. The Investors
will use their reasonable best efforts to cause the By-Laws of the Company to
contain provisions indemnifying the Company's directors to the fullest extent
permitted under applicable law. The Board of Directors shall hold regular
meetings at least once every three months. The Company will reimburse members
of its Board of Directors for their reasonable out-of-pocket expenses incurred
to attend meetings of the Board of Directors or any Committee thereof and will
pay reasonable compensation to outside directors.
Section 6.11. USE OF PROCEEDS. The Company will use the
proceeds from the sale of the shares for acquisitions of radio stations for the
Network, funding operations of the Company, general working capital purposes and
for payment of
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expenses incurred in the organization and operations of the Company prior to the
Closing Date, in accordance with the budget furnished pursuant to Section 9.7
hereof.
Section 6.12. COMPENSATION AND AUDIT COMMITTEES. The Company
will, beginning upon Warburg's request and at all times thereafter, maintain a
Compensation Committee and an Audit Committee of the Board of Directors of the
Company. At least a majority of the members of each such committee shall
consist of directors who are not Senior Executives of the Company. Based on
proposals submitted to it by the CEO, the Compensation Committee shall make
recommendations to the Board of Directors regarding all matters of compensation,
including stock awards for employees of the Company, except for options which
have been agreed to or awarded prior to the Closing Date.
Section 6.13. AGREEMENTS WITH STOCKHOLDERS. Until the Company
shall have completed its initial Public Offering, all persons who are or who
become stockholders or holders of options of the Company shall enter into a
stockholder's agreement, substantially in the form of Exhibit E hereto (the
"Stockholder's Agreement"), pursuant to which such stockholders shall agree:
(a) that for a period of at least 180 days after the effective date of the
Company's initial Public Offering such stockholders will not, directly or
indirectly, sell, offer to sell or otherwise dispose of securities of the
Company other than securities which are included and sold in such
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initial Public Offering; and (b) to grant to the Company and to the Investors a
right of first refusal with respect to any securities of the Company which such
stockholders propose to sell or otherwise dispose of.
Section 6.14. CONFLICTING AGREEMENTS. The Company will not
enter into any agreement which, by its terms, might restrict the performance of
the Company's obligations under this Agreement or the Preferred Shares or any of
the other agreements attached as exhibits hereto, including, but not limited to,
registration rights or the payment of dividends on the Preferred Shares.
Section 6.14. NEGATIVE COVENANTS OF THE COMPANY. The Company
covenants and agrees with the Investors that as long as any Preferred Shares are
issued and outstanding, without the prior approval of Warburg (it being
understood that the affirmative vote or consent of a director of the Company
employed by Warburg shall constitute such consent), it will not do any of the
following:
Section 7.1. MERGER; SALE OF ASSETS. Except for the Merger,
the Company will not, and will cause each subsidiary not to, become a party to
any merger or consolidation, or sell, lease or otherwise dispose of any of its
assets, other than sales and leases of assets in the ordinary course of business
and other than the replacement of outmoded or damaged equipment with new
equipment. The Company will not, and will cause each subsidiary
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not to, voluntarily dissolve, liquidate, wind up or carry out any partial
liquidation.
Section 7.2. BUSINESS The Company will not, and will cause
each subsidiary not to, engage in any business other than the ownership or
operation of the Network, including all matters related to or incidental
thereto, such as ownership and acquisition of radio stations and programming,
production and sale of programs, radio advertising production and sale, and
production of special events.
Section 7.3. STOCK REPURCHASES. Except as provided in this
Agreement, the Company will not, and will cause each subsidiary not to, purchase
or redeem any shares of its capital stock other than pursuant to agreements with
officers or employees of the Company or such subsidiary relating to repurchase
of stock after termination of employment.
Section 7.4. DIVIDENDS. Except for the payment of dividends
on the Preferred Shares, the Company will not, and will cause each subsidiary
not to, declare or pay any dividend or make any distribution in cash or property
to the stockholders of the Company or such subsidiary.
Section 7.5. INDEBTEDNESS. The Company will not, and will
cause each subsidiary not to, create, incur or assume or otherwise become or
remain liable with respect to Indebtedness; provided, however, that the Company
may enter into commitments of up to an aggregate of $200,000 in any fiscal year.
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Section 7.6. CAPITAL EXPENDITURES. The Company will not, and
will cause each subsidiary not to, make or commit to make or incur liabilities
or commit to incur liabilities for any cash capital expenditures in any one year
in excess of that set forth on the budget prepared pursuant to Section 6.2(c)
hereof.
Section 7.7. ACQUISITIONS; SUBSIDIARIES. The Company will
not, and will cause each subsidiary not to, acquire any properties, assets or
stock of another entity, whether by means of acquisition of assets or stock, by
merger or otherwise, except for the acquisition of assets in the ordinary course
of business. The Company will not, and will cause each subsidiary not to,
acquire or organize any subsidiary
Section 7.7. AMENDMENTS. The Company will not, and will
cause each subsidiary not to, amend its Articles of Incorporation or By-Laws.
Section 7.9. ISSUANCE OF SHARES. The Company will not, and
will cause each subsidiary not to, authorize, create or issue any series or
shares of capital stock (or options, warrants or other rights to purchase or
acquire any capital stock or any security convertible into or exchangeable or
exercisable for any capital stock), or adopt or otherwise institute any stock
option or stock purchase plan for, or otherwise issue any stock or options to,
employees, consultants or directors of the Company except that the Company may
(a)
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authorize a Stock Option Plan providing for the issuance of options to purchase
up to 20,000 shares of Common Stock, which plan must be approved by the Board of
Directors and (b) issue options which have been agreed to prior to the Closing
Date as set forth on Schedule 7.9 attached hereto.
Section 7.10. EXECUTIVE OFFICERS. The Company will not, and
will cause each subsidiary not to, hire or fire any the Chief Executive Officer,
the Chief Financial Officer or the Chief Operating Officer or set or change the
compensation thereof.
Section 7.11. TRANSACTIONS WITH AFFILIATES. The Company will
not, and will cause each subsidiary not to, engage in any transaction with, nor
enter into any contract, agreement or other arrangement providing for, nor amend
any existing agreement relating to, the employment of, furnishing of services
by, rental of real or personal property from, or otherwise requiring payments
to, any officer, director or stockholder of the Company or any Affiliate or
Associate of such persons or entities, except for employment agreements with
employees and normal employee benefits.
Section 7.12. LIENS AND ENCUMBRANCES. The Company will not,
and will cause each subsidiary not to, create, incur or suffer to exist any
mortgage, pledge, lien, security interest, charge or other encumbrance on any of
its assets, except as provided for in the Budget.
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Section 7.13. ACCOUNTANTS AND LEGAL COUNSEL. The Company will
not, and will cause each subsidiary not to, engage or discharge its independent
certified public accountants or legal counsel.
Section 7.14. BUDGETS. The CEO will not set or revise any
operating or capital budgets; PROVIDED, HOWEVER, that the CEO shall be permitted
to propose all operating and capital budgets and any revisions thereto.
Section 8. CONDITIONS TO OBLIGATIONS OF THE COMPANY ON CLOSING
DATE. The obligations of the Company under this Agreement with respect to the
Closing Date are subject to the satisfaction of the following conditions on or
prior to the Closing Date, any of which may be waived in whole or in part by the
Company:
Section 8.1. REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Investors contained in this Agreement
shall be true and correct in all material respects on the Closing Date with the
same force and effect as if made on the Closing Date.
Section 8.2. CONSIDERATION. The funds to be provided on the
Closing Date as set forth in Section 1.6 hereof shall have been provided by the
Investors to the Company.
Section 8.3. MANAGEMENT STOCK. The Senior Executives of the
Company shall have acquired an aggregate of 500 Common Shares and an aggregate
of 4,950 Preferred Shares.
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Section 9. CONDITIONS TO OBLIGATIONS OF THE INVESTORS ON CLOSING
DATE. The obligations of the Investors under this Agreement with respect to the
Closing Date are subject to the satisfaction of the following conditions on or
prior to the Closing Date, any of which may be waived in whole or in part by the
Investors:
Section 9.1. REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Company contained in this Agreement shall
be true and correct on the Closing Date with the same effect as if made on the
Closing Date.
Section 9.2. PERFORMANCE OF COVENANTS. All of the covenants
and agreements of the Company contained in this Agreement and required to be
performed on or before the Closing Date shall have been performed in all
respects to the satisfaction of the Investors.
Section 9.3. OPINION OF COUNSEL TO THE COMPANY. On the
Closing Date, the Investors shall have received an opinion of counsel to the
Company with respect to matters customarily opined to by United States lawyers
in a transaction of this type, addressed to the Investors, in form and substance
satisfactory to the Investors and to counsel to the Investors, Stroock & Stroock
& Lavan LLP.
Section 9.4. OFFICER'S AND OTHER CERTIFICATES. The Company
shall have delivered to the Investors the following:
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(a) copies of the resolutions adopted by the Company's
Board of Directors and the stockholders of the Company authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, certified by the Secretary of the Company as being in full
force and effect on the Closing Date;
(b) a certified copy of the Certificate of
Incorporation of the Surviving Company, and the Certificate, each as filed or to
be filed with the Secretary of State of Delaware;
(c) a certificate, dated as of a recent date, of the
Secretary of State of Delaware attesting as to the good standing of and the
payment of taxes by the Surviving Company in such State;
(d) a copy of the Surviving Company's By-laws,
certified to by the Secretary of the Surviving Company as being in full force
and effect on the Closing Date;
(e) stock certificates representing the Preferred
Shares and Common Shares purchased hereunder; and
(f) such other certificates or documents as the
Investors or their counsel may reasonably request relating to the transactions
contemplated hereby.
Section 9.5 LEGAL ACTION. There shall not have been instituted
or threatened any legal proceeding seeking to prohibit or threaten the
consummation of the transactions
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contemplated by this Agreement. None of the parties hereto shall be prohibited
by any order, writ, injunction or decree of any governmental body of competent
jurisdiction from consummating the transactions contemplated by this Agreement.
Section 9.6. AGREEMENTS. The Stockholder's Agreement shall
have been entered into and shall be satisfactory to the Investors.
Section 9.7. OPERATING BUDGET. The initial operating budget
referred to in Section 6.2(d) hereof shall have been prepared by the CEO and
shall be satisfactory to Warburg in its sole discretion and the Company shall be
operating in accordance with such budget.
Section 9.8. PURCHASE AGREEMENTS. The Company shall have
entered into either definitive purchase agreements, or binding option
agreements, for the acquisition of radio stations serving the Los Angeles and
either Miami or Houston markets.
Section 9.9. PROGRAM AGREEMENT. One or more agreements,
relating to the purchase of programming and/or talent shall have been entered
into by the Company and shall be satisfactory to the Investors.
Section 10. REGISTRATION RIGHTS.
Section 10.1. REQUIRED REGISTRATION. The Company may not make
an initial registration of any of its securities under the Securities Act
without the prior consent of Warburg. If at any time or from time to time
Warburg shall decide to sell
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or otherwise dispose of Registrable Securities of the Company then owned by
Warburg, Warburg may give written notice to the Company of the proposed
disposition, specifying the number of Registrable Securities so to be sold or
disposed of and requesting that the Company prepare and file a registration
statement (which may be a shelf registration statement) under the Securities Act
covering such Registrable Securities. The Company shall, within 10 days
thereafter, give written notice to the other Investors of such request and each
of the other Investors shall have the option, for a period of 10 days after
receipt by it of such notice from the Company, to include its Registrable
Securities in such registration statement. The Company shall use its reasonable
best efforts to cause an appropriate registration statement (the "Registration
Statement") covering such Registrable Securities to be filed with the Commission
and to become effective as soon as reasonably practicable and to remain
effective until the completion of the distribution of the Registrable Securities
to be offered or sold. (The holders whose Registrable Securities are included
in a Registration Statement are hereinafter referred to as the "Selling
Investors"). The Company shall bear all of the Costs and Expenses of such
Registration Statements. In addition to the foregoing and without regard to
there first having been filed the Registration Statements provided for in the
foregoing provisions of this Section 10.1, Warburg will be entitled to demand,
and the Company
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will use its reasonable best efforts to cause to become and remain effective, an
unlimited number of Registration Statements on Form S-3 (or any similar
short-form Registration Statement), including Registration Statements for the
offering of securities on a delayed or continuous basis, at the Company's Cost
and Expense, when the Company is eligible to use the same. The Company will use
its reasonable best efforts to utilize a short-form registration statement for
which the Company qualifies.
Section 10.2. PROCEDURE FOR REGISTRATION. In connection with
the filing of a Registration Statement pursuant to Section 10.1 hereof, and in
supplementation and not in limitation of the provisions hereof, the Company
shall:
(a) Notify the Selling Investors as to the filing of
the Registration Statement and of all amendments or supplements thereto filed
prior to the effective date of such Registration Statement;
(b) Notify the Selling Investors, promptly after the
Company shall receive notice thereof, of the time when such Registration
Statement became effective or when any amendment or supplement to any prospectus
forming a part of such Registration Statement has been filed;
(c) Notify the Selling Investors promptly of any
request by the Commission for the amending or supplementing of such Registration
Statement or prospectus or for additional information;
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(d) Prepare and promptly file with the Commission and
promptly notify the Selling Investors of the filing of any amendments or
supplements to such Registration Statement or prospectus as may be necessary to
correct any statements or omissions if, at any time when a prospectus relating
to the Registrable Securities is required to be delivered under the Securities
Act, any event with respect to the Company shall have occurred as a result of
which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading; and, in addition,
prepare and file with the Commission, promptly upon the Selling Investors'
written request, any amendments or supplements to such Registration Statement or
prospectus which may be reasonably necessary or advisable in connection with the
distribution of the Registrable Securities;
(e) Prepare, promptly upon request of the Selling
Investors or any underwriters for the Selling Investors, such amendment or
amendments to such Registration Statement and such prospectus or prospectuses as
may be reasonably necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act;
(f) Advise the Selling Investors promptly after the
Company shall receive notice or obtain knowledge of the issuance of any stop
order by the Commission
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suspending the effectiveness of any such Registration Statement or amendment
thereto or of the initiation or threatening of any proceeding for that purpose,
and promptly use its reasonable best efforts to prevent the issuance of any stop
order or obtain its withdrawal promptly if such stop order should be issued;
(g) Use its reasonable best efforts to qualify, as
soon as reasonably practicable, the Registrable Securities for sale under the
securities or blue-sky laws of such states and jurisdictions within the United
States as shall be reasonably requested by the Selling Investors; provided, that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business, to become subject to taxation or to file a
consent to service of process generally in any of the aforesaid states or
jurisdictions;
(h) Furnish the Selling Investors, as soon as
available, copies of any Registration Statement and each preliminary or final
prospectus, or supplement or amendment required to be prepared pursuant hereto,
all in such quantities as the Selling Investors may, from time to time,
reasonably request; and
(i) If requested by the Selling Investors, enter into
an agreement with the underwriters of the Registrable Securities being
registered containing customary provisions and reflecting the foregoing.
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Section 10.3. INCIDENTAL REGISTRATION. If at any time the
Company shall propose the filing of a Registration Statement on an appropriate
form under the Securities Act of any securities of the Company being offered for
cash, otherwise than pursuant to Section 10.1 hereof and other than a
registration statement on Forms S-8 or S-4 or any equivalent form then in
effect, then the Company shall give the holders of Registrable Securities notice
of such proposed registration and shall include in any Registration Statement
relating to such securities all or a portion of the Registrable Securities then
owned by such holders, which such holders shall request (such holders to be
considered Selling Investors), by notice given by such holders to the Company
within 30 days after the giving of such notice by the Company, to be so
included. In the event of the inclusion of Registrable Securities pursuant to
this Section 10.3, the Company shall bear all of the Costs and Expenses of such
registration; provided, however, that the Selling Investors shall pay, pro rata
based upon the number of Registrable Securities included therein, the
underwriters discounts and compensation attributable to the inclusion of such
Registrable Securities. In the event the distribution of securities of the
Company covered by a Registration Statement referred to in this Section 10.3 is
to be underwritten, then the Company's obligation to include Registrable
Securities in such Registration Statement shall be
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subject, at the option of the Company, to the following further conditions:
(a) The distribution for the account of the Selling
Investors shall be underwritten by the same underwriters who are underwriting
the distribution of the securities for the account of the Company and/or any
other persons whose securities are covered by such Registration Statement, and
the Selling Investors will enter into an agreement with such underwriters
containing customary provisions;
If the underwriting agreement entered into with the
aforesaid underwriters contains restrictions upon the sale of securities of the
Company, other than the securities which are to be included in the proposed
distribution, for a period not exceeding 180 days from the effective date of the
Registration Statement, then such restrictions will be binding upon the Selling
Investors and, if requested by the Company, the Selling Investors will enter
into a written agreement to that effect;
(c) If the registration is an underwritten
registration and the managing underwriter of such offering delivers a written
opinion to the Selling Investors stating that the aggregate amount of securities
of the Company which the Selling Investors and the Company propose to include in
such Registration Statement would adversely affect the marketing of the
securities or the proceeds of the offering payable to the
Company, then the number of Selling Investors' securities to be included will be
reduced pro rata on the basis of the number of shares owned by the Selling
Investors, or there will be no inclusion of Selling Investors' securities in the
registration statement and proposed distribution, in accordance with such
statement by the underwriters; and
(d) If the registration is the initial Public Offering
for the Company, holders of Registrable Securities will only be entitled to
include their securities in such registration if Warburg includes any of its
securities therein and then only on a pro rata basis with Warburg.
Section 10.4 INDEMNIFICATION BY THE COMPANY. The Company will
indemnify and hold harmless each Selling Investor, any underwriter (as defined
in the Securities Act) for such Selling Investor, each partner, officer and
director of such Selling Investor, and each person, if any, who controls such
Selling Investor or such underwriter within the meaning of the Securities Act
(but, in the case of an underwriter or a controlling person, only if such
underwriter or controlling person indemnifies the persons mentioned in
subdivision (b) of Section 10.5 hereof in the manner set forth therein), against
any losses, claims,
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damages or liabilities, joint or several, to which such Selling Investor or any
such underwriter, partner, officer, director or controlling person becomes
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) are caused by any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary prospectus (if used prior to the effective date of the Registration
Statement), or contained, on the effective date thereof, in any Registration
Statement under which Registrable Securities were registered under the
Securities Act, the prospectus contained therein, or any amendment or supplement
thereto, or arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Company will reimburse such
Selling Investor and any such underwriter, partner, officer, director or
controlling person for any legal or other expenses reasonably incurred by such
Selling Investor, or any such partner, officer, director, underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable to any such persons in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of such person expressly for inclusion in any of the
foregoing documents.
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Section 10.5. INDEMNIFICATION BY SELLING INVESTORS. Each
Selling Investor shall:
(a) Furnish in writing all information to the Company
concerning itself and its holdings of securities of the Company as shall be
required in connection with the preparation and filing of any Registration
Statement covering any Registrable Securities; and
(b) Indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed a Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act and any underwriter (as defined in the Securities Act) for the
Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, controlling person or underwriter may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) are caused by any untrue
or alleged untrue statement of any material fact contained in any preliminary
prospectus (if used prior to the effective date of the Registration Statement)
or contained on the effective date thereof, in any Registration Statement under
which Registrable Securities were registered under the Securities Act, the
prospectus contained therein, or any amendment or supplement thereto, or arising
out of or based upon the omission or alleged omission to state therein a
material fact required to be stated
37
<PAGE>
therein or necessary to make the statements therein not misleading; in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished in writing to the Company by such
Selling Investor expressly for inclusion in any of the foregoing documents, and
such Selling Investor shall reimburse the Company and any such underwriter,
officer, director or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. Notwithstanding the foregoing provisions of this
Section 10.5, no Selling Investor shall be required to indemnify the Company or
any such underwriter, officer, director or controlling persons for any amount in
excess of the amount of the proceeds received by such Selling Investor.
Section 10.6 CONTRIBUTION. In order to provide for just and
equitable contribution to joint liability under the Securities Act in any case
in which either (a) any Selling Investor or other person or entity entitled to
indemnification under this Agreement, makes a claim for indemnification pursuant
to Section 10.4 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last
38
<PAGE>
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that Section 10.4 provides for indemnification in such
case, or (b) contribution under the Securities Act may be required on the part
of any such Selling Investor or other person in circumstances for which
indemnification is provided under Section 10.4; then, and in each such case, the
Company and such Selling Investor will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that such Selling Investor or other person is
responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by the Registration
Statement bears to the public offering price of all securities offered in such
Registration Statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (i) no such Selling Investor
or other person will be required to contribute any amount in excess of the
public offering price of all such Registrable Securities offered by it pursuant
to such Registration Statement; and (ii) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 12(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
Section 10.7. NOTIFICATION BY SELLING INVESTORS. Each Selling
Investor and each other person indemnified pursuant
39
<PAGE>
to Section 10.4 hereof will, in the event it receives notice of the commencement
of any action against it which is based upon an alleged act or omission which,
if proven, would result in the Company's having to indemnify it pursuant to
Section 10.4 hereof, promptly notify the Company, in writing, of the
commencement of such action and permit the Company, if the Company so notifies
such Selling Investor within 10 days after receipt by the Company of notice of
the commencement of the action, to participate in and to assume the defense of
such action with counsel reasonably satisfactory to such Selling Investor or
such other indemnified person, as the case may be; provided, however, that such
Selling Investor shall be entitled to retain its own counsel at the Company's
expense if it believes there exists a potential for conflict of interest between
the Company and such Selling Investor. The omission to notify the Company
promptly of the commencement of any such action shall not relieve the Company of
any liability to indemnify such Selling Investor or such other indemnified
person, as the case may be, under Section 10.4 hereof, except to the extent the
Company shall suffer any loss by reason of such failure to give notice and shall
not relieve the Company of any other liabilities which it may have under this or
any other agreement.
Section 10.8. NOTIFICATION BY COMPANY. The Company agrees
that, in the event it receives notice of the commencement of any action against
it which is based upon an
40
<PAGE>
alleged act or omission which, if proven, would result in any Selling Investor
having to indemnify the Company pursuant to subdivision (b) of Section 10.5
hereof, the Company will promptly notify such Selling Investor in writing of the
commencement of such action and permit such Selling Investor, if such Selling
Investor so notifies the Company within 10 days after receipt by it of notice of
the commencement of the action, to participate in and to assume the defense of
such action with counsel reasonably satisfactory to the Company. The omission
to notify such Selling Investor promptly of the commencement of any such action
will not relieve such Selling Investor of liability to indemnify the Company
under subdivision (b) of Section 10.5 hereof, except to the extent that such
Selling Investor suffers any loss by reason of such failure to give notice and
shall not relieve such Selling Investor of any other liabilities which it may
have under this or any other agreement.
Section 10.9. COSTS AND EXPENSES. As used in this Agreement,
"Costs and Expenses" shall include all reasonable and customary costs and
expenses relating to the Registration Statement involved, including but not
limited to registration, filing and qualification fees, blue-sky expenses,
printing expenses, reasonable fees and disbursements of counsel to the Company
and Stroock & Stroock & Lavan LLP, counsel for the Selling Investors (or such
other counsel as the Selling Investors may designate, provided, however, that no
more than one such
41
<PAGE>
counsel for the Selling Investors will be so designated on any occasion), and
accounting fees; provided however, that underwriting discounts and commissions
and reimbursable underwriters' expenses will be borne pro rata by the holders of
the securities included in the Registration Statement.
Section 10.10. RULE 144 REPORTING. After the Company becomes
subject to the reporting requirements of Sections 13 or 15(d) of the Securities
Exchange Act, and with a view to making available the benefits of certain rules
and regulations of the Commission which may permit the sale of the Common Shares
without registration, the Company agrees to:
(a) Cause public information with respect to the
Company to be available, as set forth in Rule 144 or any comparable rule or
regulation under the Securities Act, at all times;
(b) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Securities Exchange Act; and
(c) Furnish to each holder of Registrable Securities
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 and of the Securities Act and the
Securities Exchange Act.
42
<PAGE>
Section 11. EXPENSES. The Company agrees to pay, and save the
Investors harmless against liability for the payment of, (a) the reasonable and
customary fees and expenses of the Investors arising in connection with the
negotiation, execution and consummation of this Agreement and the transactions
contemplated hereby, including due diligence fees and expenses and reasonable
fees and expenses of Stroock & Stroock & Lavan LLP, counsel to the Investors;
(b) the reasonable and customary fees and expenses (including, without
limitation, attorneys' fees) incurred with respect to any amendments or waivers
requested by the Company (whether or not the same become effective) under or in
respect of this Agreement and the transactions contemplated hereby; and (c) the
reasonable and customary fees and expenses (including, without limitation,
attorneys' fees) incurred in respect of the enforcement by the Investors of the
rights granted to the Investors under this Agreement and the transactions
contemplated hereby; provided, however, that no director's, consulting,
investment banking or similar fees will be paid by the Company to Warburg, and
provided, further, that if the transactions contemplated by this Agreement shall
not have closed by the date set forth in the last clause of Section 3.1 hereof,
each of the Company and each Investors, severally and not jointly, shall be
responsible for fees and expenses incurred by it.
Section 12. RIGHT OF FIRST REFUSAL.
43
<PAGE>
(a) The Company agrees that until there is a Public
Offering of its securities, it will not offer or sell any New Securities (except
for New Securities issued in connection with acquisitions approved by the Board
of Directors) unless it first offers to the Investors the right to purchase a
portion of such New Securities of the Company in accordance with, and subject
to, the provisions of this Section 12(a). The Company shall immediately notify
the Investors of the terms or the proposed terms for the sale of such New
Securities, which must be pursuant to a bona fide cash offer, by the Company
(the "Company's Notice"). If the Investors (the "Purchasing Parties") wish to
purchase such New Securities pursuant to the Company's Notice, they shall notify
the Company by written notice within 15 days after receipt of the Company's
Notice how many of such shares they desire to purchase. The Purchasing Parties
shall be entitled to purchase up to that number of shares of New Securities
specified in their notice; provided, however, that if such number exceeds the
total offered, then they shall be entitled to purchase a pro rata number which
is equal to the total number of New Securities subject to the offer multiplied
by a fraction, the numerator of which is the number of Common Shares owned by
such Purchasing Party, and the denominator of which is the total number of
Common Shares of the Company owned by all Purchasing Parties; provided, however,
that if a Purchasing Party elects to purchase less than its pro rata interest,
the portion
44
<PAGE>
of its pro rata interest not purchased by it may be purchased by the Purchasing
Parties who desire to acquire in excess of their pro rata interest on a pro rata
basis or as determined by such Purchasing Parties. To the extent the Investors
do not elect to purchase all of such New Securities, the Company shall have up
to 90 days to complete the sale of any New Securities offered to but not
purchased by the Investors upon the same terms specified in the Company's
Notice. If the Company later changes the terms of the sale in any material
respect, the Company shall first reoffer such New Securities to the Investors
pursuant to the procedure set forth above. Any New Securities which are offered
or sold (or issued) by the Company shall, unless otherwise consented to in
writing by the Investors, be offered and sold (or issued) to any purchaser only
for cash.
(b) In the event that such terms and conditions of a
bona fide offer do not provide for the purchaser to have any registration
rights, the Company agrees with the Investors that in the event the Investors
acquire any New Securities pursuant to paragraph (a) above, such New Securities
shall be deemed Registrable Securities for the purposes of Section 10 hereof.
(c) The closing of the purchase of shares pursuant to
this Section 12 shall occur at the principal office of the Company (i) on the
fifth business day after the expiration of 15 days after receipt of the
Company's Notice if
45
<PAGE>
the Investors purchase all such New Securities, (ii) concurrently with the
closing of the sale of New Securities if the Investors do not purchase all such
New Securities, or (iii) at such other time as the Investors and the Company may
mutually determine. At the closing, the Company shall deliver to the Investors
the certificate or certificates representing such shares, free and clear of all
liens and encumbrances whatsoever (other than those imposed by this Agreement),
and the Investors shall pay to the Company, by wire transfer of federal funds or
by delivery of a certified or bank cashier's check, the amount of the purchase
price for the shares of New Securities purchased by the Investors pursuant to
this Section 12.
Section 13. CONDUCT PRIOR TO THE CLOSING DATE.
Section 13.1. INVESTIGATION. Warburg, its counsel,
accountants, employees or other representatives may, prior to the Closing Date,
make such investigations of the properties and operations of the Company and
such audit of the financial condition of the Company for such purposes as it
deems necessary or advisable in connection with the transactions contemplated
hereby; such investigation shall not, however, affect the representations and
warranties of the Company hereunder. The Company agrees to permit Warburg and
its counsel, accountants, employees or other representatives to have, after the
date hereof, full access during normal business hours to the premises and to all
books and records of the Company and Warburg
46
<PAGE>
shall have the right to make copies thereof and excerpts therefrom, and the
Company will furnish Warburg with such financial and operating data and other
information with respect to the business and properties of the Company as
Warburg may, from time to time, reasonably request. The Company agrees to
permit Warburg and its counsel, accountants, employees or other representatives
to communicate with and visit suppliers, customers and others having business
relations with the Company. The Company acknowledges that the rights set forth
in this Section 13 are essential to Warburg as a means of evaluating the assets
and business of the Company and agrees that in no event will it make any claim
of any kind as a result of the exercise by Warburg of such rights and hereby
waives any and all rights it may have to make such claims. Warburg will have
the right to be involved in all due diligence matters relating to any
acquisition and Warburg shall have the right, at the Company's expense, to
retain agents, consultants, accountants, attorneys and other representatives to
assist in the due diligence process. The provisions of this Section 13.1 are
subject to the provisions and conditions contained in any confidentiality
agreements to which the Company is or becomes a party.
Section 13.2. FCC APPLICATION. If applicable, the Company
and/or the Investors shall prepare and file in a timely fashion, one or more
applications (the "Applications") for orders from the FCC (the "FCC Orders")
granting approval of the
47
<PAGE>
change of control of the Company with respect to any FCC broadcasting licenses,
as contemplated by this Agreement. The Company and the Investors shall
diligently submit any additional information requested by the FCC with respect
to any Application, and shall take all reasonable steps that are necessary and
proper to the expeditious prosecution of the Applications to a favorable
conclusion. The Investors shall obtain and provide to the Company information
that is reasonably available to the Investors in response to requests from the
Company in connection with the Applications.
Section 14. NO BROKERS. Each of the Company, on the one hand,
and the Investors, on the other hand, severally represents and warrants to the
other that there was no broker or finder connected with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his representing or being retained by the Investors, the
Investors severally agree to indemnify and save harmless the Company in respect
of such claim. In the event of a claim by any broker or finder based upon his
representing or being retained by the Company, the Company agrees to indemnify
and save harmless the Investors in respect of such claim.
Section 15. SURVIVAL OF REPRESENTATIONS. All representations,
warranties, covenants and agreements contained in this Agreement or in any
document, exhibit, schedule or certificate delivered in connection herewith
shall survive the
48
<PAGE>
execution and delivery of this Agreement and the Closing Date and any
investigation at any time made by the Investors or on their behalf.
Section 16. DEFINITIONS. For purposes of this Agreement, the
following terms have the respective meanings set forth below:
Section 16.1. "AFFILIATE" has the meaning such term is given
in Rule 405 promulgated under the Securities Act.
Section 16.2. "ASSOCIATE" has the meaning such term is given
in Rule 405 promulgated under the Securities Act.
Section 16.3. "CEO" means Joaquin Blaya so long as he shall be
Chief Executive Officer of the Company and thereafter, the Chief Executive
Officer of the Company.
Section 16.4. "COMMISSION" means the Securities and Exchange
Commission.
Section 16.5. "INDEBTEDNESS" means all obligations for money
borrowed, contingent or otherwise, which in accordance with generally accepted
accounting principles should be classified on the obligor's balance sheet as
liabilities, but in any event including liabilities secured by any mortgage,
pledge, lien or other security interest existing on property owned or acquired
by the obligor, whether or not the liability secured thereby shall have been
assumed, all guarantees of such Indebtedness and all guarantees and other
contingent obligations in respect of the Indebtedness of others.
49
<PAGE>
Section 16.6. "NEW SECURITIES" means shares of Common Stock of
the Company, or any security which is convertible into or exchangeable for
Common Stock, or any right, option or warrant to acquire any Common Stock of the
Company, except for shares or options issued in accordance with Section 7.9.
Section 16.7. "PUBLIC OFFERING" means a distribution of
securities in an underwritten public offering to the general public pursuant to
a Registration Statement filed with and declared effective by the Commission
pursuant to the Securities Act.
Section 16.8. "SENIOR EXECUTIVES" means (i) the CEO, (ii)
Herbert Levin, so long as he shall remain the Chief Operating Officer of the
Company, and thereafter the Chief Operating Officer of the Company and (iii)
Steve Dawson, so long as he shall remain the Chief Financial Officer of the
Company, and thereafter the Chief Financial Officer of the Company.
Section 16.9. "REGISTRABLE SECURITIES" means (a) any Common
Shares issued or to be issued pursuant to this Agreement and (b) any other
securities issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares referred to in subsection (a)
above.
Section 16.10. "SECURITIES ACT" means the Securities Act of
1933, as amended, or any similar Federal law then in force.
50
<PAGE>
Section 16.11. "SECURITIES EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended, or any similar Federal law then in force.
Section 17. MISCELLANEOUS PROVISIONS.
Section 17.1. CONSTRUCTION AND ENFORCEMENT. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING ANY EFFECT TO PRINCIPLES
OF CONFLICTS OF LAWS. The Company agrees that it will not assert against any
partner of the Investors (or against any partner, officer, director, employee or
agent of the Investors or any of their Affiliates) any claim it may have under
this Agreement by reason of any failure or alleged failure by the Investors to
meet its obligations hereunder. The parties hereto agree and intend that the
proper and exclusive forum for the litigation of any disputes or controversies
arising out of, or related to, this Agreement shall be the courts of the State
of New York and of any Federal Court located in the City of New York. The
Company agrees that it will not commence or move to transfer any action or
proceeding, arising out of or relating to this Agreement, in or to any court
other than one located in the City and State of New York. The Company
irrevocably consents to the service of process of any of the aforesaid courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Company at the address provided herein,
51
<PAGE>
such service to become effective 30 days after such mailing. Nothing contained
in this Section shall affect the right of the Investors to serve process in any
other manner permitted by law or commence legal proceedings or otherwise proceed
against the Company in any other jurisdiction. In the event the Company should
commence or maintain any action arising out of or related to this Agreement in a
forum other than the courts of the City and State of New York, the Investors
shall be entitled to request the dismissal of such action, and the Company
stipulates that such action shall be dismissed.
Section 17.2. NOTICES. All notices hereunder shall be in
writing and shall be deemed to have been given at the time when hand delivered,
when received if sent by telecopier or by same day or overnight recognized
commercial courier service, or three days after being mailed by certified mail,
addressed to the address below stated of the party to which notice is given, or
to such changed address as such party may have fixed by notice:
To the Company:
Radio Unica Corp.
2 Alhambra Plaza
Suite 508
Coral Gables, Florida 33134
Attn: Joaquin Blaya
-with a copy to-
52
<PAGE>
Arazoza, Comas, de Torres & Fernandez-Fraga, P.A.
101 Madera Avenue
Coral Gables, Florida 33134
Attn: Gaston J. Comas
To Warburg:
Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Attn: John D. Santoleri
-with a copy to-
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Martin H. Neidell
To the Investors other than Warburg:
As set forth on Schedule A or if not set forth
on such schedule, in care of the Company.
provided, however, that any notice of change of address shall be effective only
upon receipt.
Section 17.3. ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Company, the Investors and the respective
successors and permitted assigns of the Investors. The Company may not assign
any of its rights or obligations under this Agreement without the prior written
consent of Warburg. The Investors may assign all or any part of their rights
and obligations hereunder to any person or entity who acquires any Preferred
Shares or Common Shares owned by the Investors. Any such assignment shall not
operate to release Warburg or any Investor from its liabilities and obligations
under this Agreement. No assignment may be made to any person or
53
<PAGE>
entity which would cause the Company to fail to continue to meet the FCC
requirements for ownership of any radio stations, unless the prior approval from
the FCC shall have been obtained. A person to whom all or a part of an
Investor's rights are so assigned shall become a party to this Agreement,
entitled to all the rights and benefits hereunder. The rights and powers of the
Investors hereunder are granted to the Investors as owner of the Preferred
Shares and Common Shares. Any subsequent owner of any Preferred Shares or
Common Shares, whether becoming such by transfer, assignment, operation of law
or otherwise, shall be deemed to be an Investor hereunder, shall have the same
rights and powers which an Investor owning such securities has hereunder, and
shall be entitled to exercise them in full and no transfer or assignment shall
divest such Investor or any subsequent owner of such rights and powers until
such Investor or subsequent owner no longer owns any Preferred Shares or Common
Shares. Whenever reference is made to Warburg or an Investor in this Agreement,
such reference shall include their Affiliates and Associates and any assignees
of their rights hereunder; provided, however, that if Warburg assigns less than
all its Preferred Shares or Common Shares, then any rights contained herein
which are applicable to Warburg shall remain solely Warburg's right unless it
notifies the Company to the contrary, in which case such rights will be solely
exercisable by the transferee.
54
<PAGE>
Section 17.3. AMENDMENTS AND WAIVERS. This Agreement and all
exhibits and schedules hereto set forth the entire understanding of the parties
with respect to the transactions contemplated hereby. This Agreement may be
amended, the Company may take any action herein prohibited or omit to take
action herein required to be performed by it, and any breach of or compliance
with any covenant, agreement, warranty or representation may be waived, only if
the Company has obtained the written consent or waiver of Warburg.
Section 17.5. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 17.6. HEADINGS. The headings in this Agreement are
for reference purposes only and shall not constitute a part hereof.
Section 17.7. REPRODUCTION OF DOCUMENTS. This Agreement and
all documents relating hereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by the Investors on the Closing Date, and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Investors, may be reproduced by the Investors by any photographic, photostatic,
microfilm, micro-card, miniature photographic, electronic or other similar
process and the
55
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Investors may destroy any original document so reproduced. All parties hereto
agree and stipulate that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by the Investors in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
RADIO UNICA CORP.
By: /S/ Joaquin Blaya
-------------------------------
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /S/ John D. Santoleri
-------------------------------
Partner
/S/ Joaquin Blaya
----------------------------------
Joaquin Blaya
/S/ Herbert Levin
----------------------------------
Herbert Levin
/S/ Andrew Goldman
----------------------------------
Andrew Goldman
/S/ Alan Stess
----------------------------------
Alan Stess
/S/ Barrett Alley
----------------------------------
Barrett Alley
57
<PAGE>
SCHEDULE A
Number of Shares Number of Shares
Investors of Common Stock of Preferred Stock
- --------- ---------------- ------------------
Warburg, Pincus Ventures, L.P. 20,000 198,000
Joaquin Blaya 172.5 1,707.75
Herbert Levin 172.5 1,707.75
Andrew Goldman 80 792
Alan Stess 50 495
Barrett Alley 25 247.5
<PAGE>
SCHEDULE 1.3
Purchased
Preferred Common
Cash Shares Shares
Investment @ $100/SHR @ $10/SHR
---------- ---------- ---------
Joaquin Blaya $172,500.00 1,707.75 172.5000
Herb Levin $172,500.00 1,707.75 172.5000
Andrew Goldman $80,000.00 792.00 80.0000
Alan Stess $50,000.00 495.00 50.0000
Barrett Alley $25,000.00 247.50 25.0000
Omar Marshant $0.00 0.00 0.0000
Steve Dawson $0.00 0.00 0.0000
Pedro Sevcec $0.00 0.00 0.0000
Others $0.00 0.00 0.0000
Totals $500,000.00 4,950.00 500.000
2
<PAGE>
SCHEDULE 4.3
Purchased
Preferred Common
Cash Shares Shares
Investment @ $100/SHR @ $10/SHR
---------- ---------- ---------
Warburg, Pincus
Ventures, L.P. $2,000,000.00 19,850.00 2,000.0000
Joaquin Blaya $172,500.00 1,707.75 172.5000
Herb Levin $172,500.00 1,707.75 172.5000
Andrew Goldman $80,000.00 792.00 80.0000
Alan Stess $50,000.00 495.00 50.0000
Barrett Alley $25,000.00 247.50 25.0000
Omar Marshant $0.00 0.00 0.0000
Steve Dawson $0.00 0.00 0.0000
Pedro Sevcec $0.00 0.00 0.0000
Others $0.00 0.00 0.0000
Totals $2,500,000.00 24,800.00 2,500.000
3
<PAGE>
SCHEDULE 4.5
1. Lease Agreement by and between Promenade Towers and Radio Unica Corp. dated
March 1, 1997.
2. Agreements between talent listed below and Radio Unica Corp.
a) Pedro Sevcec, dated June 1, 1997
b) Maria Regina Avila, dated April 9, 1997
c) Jose Cartagena, dated December 20, 1996
d) Aliza A. Lifshitz, M.D., dated December 17, 1996
e) Mary Rodriguez Portas, dated December 11, 1996
f) Manfred Rosenow, dated November 9, 1996
3. Contract with David Shaw, Building Contractor, dated May 27, 1997.
4. Promissory Note between Warburg, Pincus and Radio Unica for $265,000, dated
July 24, 1997.
5. Promissory Note between shareholders J. Blaya, H. Levin, A. Goldman and B.
Alley and Radio Unica Corp. for $100,000, dated July 15, 1997.
4
<PAGE>
SCHEDULE 7.9
<TABLE>
<CAPTION>
Immediately Time Performance IRR 30 IRR 40
Vested Vested Vested Vested Vested
Options Options Options Options Options
@ $10/SHR @ $10/SHR @ $10/SHR @ X/SHR @ Y/SHR
----------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Joaquin Blaya 695.6522 530.4015 507.2797 400.0000 457.1429
Herb Levin 521.7391 336.4984 475.0958 373.3333 350.4762
Andrew Goldman 347.8261 233.3233 50.8506 113.2444 129.4222
Alan Stess 86.9565 35.6488 77.3946 84.4444 81.2698
Barrett Alley 86.9565 35.6488 77.3946 84.4444 81.2698
Omar Marshant 0.0000 30.6513 36.0153 22.9333 26.2095
Steve Dawson 0.0000 0.0000 224.0000 228.2667 157.2571
Pedro Sevcec 57.9710 3.3317 138.6973 48.8889 55.8730
Others 57.9710 127.1631 558.8659 422.2222 692.8254
Totals 1,855.0724 1,332.667 2,145.594 1,777.778 2,031.746
</TABLE>
5
<PAGE>
Exhibit 10.8
SUPPLEMENT TO SECURITIES PURCHASE AGREEMENT
This Supplement dated as of the ____ day of June, 1998, by and among Radio
Unica Corp., a Delaware corporation which is successor by merger to Radio Unica
Corp., a Florida corporation (the "Company"), Radio Unica Holdings Corp., a
Delaware corporation ("Holdings"), Warburg, Pincus Ventures, L.P., a Delaware
limited partnership ("Warburg"), and the other parties signatory hereto (the
"Investors").
W I T N E S S E T H :
WHEREAS, the Company, Warburg and the Investors are parties to a Securities
Purchase Agreement dated August 11, 1997 (the "Purchase Agreement");
WHEREAS, an Agreement of Merger (the "Merger Agreement") dated as of the
date hereof, has been entered into by and among the Company, Holdings and Radio
Unica Acquisition Co. pursuant to which the Company will become a wholly-owned
subsidiary of Holdings;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereby agree as follows:
1. Effective on the effective date of the Merger Agreement, the Purchase
Agreement is hereby amended to provide that all references contained therein to
the Company shall be deemed references to Holdings and all affirmative and
negative covenants and other provisions which reference the Company shall be
deemed references to Holdings.
2. Except as amended hereby, the Purchase Agreement shall remain
unmodified and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Supplement as of the
day and year first above written.
RADIO UNICA CORP.
By: /s/ Joaquin Blaya
------------------------
RADIO UNICA HOLDINGS CORP.
By: /s/ Joaquin Blaya
------------------------
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ John D. Santoleri
-------------------------
/s/ Joaquin Blaya
----------------------------
Joaquin Blaya
/s/ Herbert Levin
----------------------------
Herbert Levin
/s/ Andrew Goldman
----------------------------
Andrew Goldman
/s/ Alan Stess
----------------------------
Alan Stess
/s/ Barnett Alley
----------------------------
Barnett Alley
2
<PAGE>
Exhibit 10.9
STOCKHOLDER'S AGREEMENT
This Stockholder's Agreement (the "Agreement"), dated as of the 30th day of
June, 1998, by and among Radio Unica Holdings Corp., a Delaware corporation (the
"Company"), Warburg, Pincus Ventures, L.P., a Delaware limited partnership (the
"Investor"), Joaquin Blaya and Herbert Levin (the "Founders") and the persons
listed on Schedule A attached hereto who are or will be receiving shares of
Common Stock or Preferred Stock of the Company (such persons, including the
Founders, being collectively referred to herein as the "Stockholders").
W I T N E S S E T H :
WHEREAS, each Stockholder and the Investor are presently the owners of the
outstanding shares of Preferred Stock of the Company (the "Preferred Shares")
and shares of Common Stock of the Company (the "Common Shares," and together
with the Preferred Shares, the "Securities"), listed opposite its name on
Schedule A attached hereto; and
WHEREAS, each Stockholder would like to grant to the Company, and then to
the Investor and the Founders, a right of first refusal with respect to any
Securities of the Company which the Stockholder proposes to sell or otherwise
dispose of, and make certain other agreements contained herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, terms and conditions set forth herein, the parties hereby agree as
follows:
1. RESTRICTIONS ON TRANSFER OF SECURITIES.
(a) Until the Company's initial distribution of securities in an
underwritten public offering to the general public pursuant to a registration
statement filed with
<PAGE>
and declared effective by the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, which results in aggregate gross proceeds to
the Company of at least $21 million (the "Public Offering"), each Stockholder
hereby agrees not to sell, assign, dispose of, transfer, pledge or hypothecate
any Securities, whether by operation of law or otherwise, except as expressly
permitted by this Agreement.
(b) Notwithstanding the provisions of subsection (a) above, if
subsequent to five years from the date hereof any Stockholder (the "Selling
Stockholder") desires to sell, assign, transfer or otherwise dispose of any
Securities (the "Offered Securities"), such Selling Stockholder shall first
obtain a bona fide written offer for such disposition (which must be for cash)
from an independent and unrelated third party. Upon receipt of such offer, the
Selling Stockholder shall deliver to the Company, to the Investor and to the
Founders written notice (the "Notice") setting forth the terms and conditions
for the disposition, and the name and address of the person making such offer,
together with a copy of the offer. The Company shall have the option to
purchase all, but not less than all, of the Offered Securities upon the same
terms and conditions set forth in the Notice. Such option shall be exercised by
written notice (the "Company Notice") delivered by the Company to the Selling
Stockholder and to the Investor and the Founders within 30 days after receipt by
the Company of the Notice, which Notice shall specify the time (not more than 30
days after the date thereof) and a place of closing. If the Company does not
exercise such option with respect to all the Offered Securities, the Investor
and the Founders shall have the option to purchase all, but not less than all,
of the Offered Securities upon the same terms and conditions set forth in the
Notice; provided, however, that if the aggregate amount of Securities desired to
be purchased by the Investor and the Founders exceeds the total amount of
Offered Securities, then the Investor and any Founders who desire to
2
<PAGE>
so purchase (the "Purchasing Parties") shall be entitled to purchase a pro rata
number of such Offered Securities which is equal to the number of Offered
Securities multiplied by a fraction, the numerator of which is the number of
Common Shares owned by such Purchasing Party and the denominator of which is the
total number of Common Shares owned by all Purchasing Parties; provided,
further, that if a Purchasing Party elects to purchase less than its pro rata
interest, the portion of its pro rata interest not purchased by it shall be
purchased by the Purchasing Parties who desire to acquire in excess of their pro
rata interests on a pro rata basis or as determined by all Purchasing Parties.
Such option shall be exercised by written notice delivered to the Selling
Stockholder within 20 days after expiration of the 30 day period. The closing
of a purchase by the Purchasing Parties shall occur at the principal executive
offices of the Company on the 45th business day after the expiration of the 20
day period. At closing, payment shall be made to the Selling Stockholder by
certified or bank cashier's check made payable to the order of the Selling
Stockholder, or by wire transfer of immediately available funds, against
delivery by the Selling Stockholder of certificates representing the Offered
Securities, duly endorsed for transfer, free and clear of all liens and
encumbrances. If the Company, the Investor and the Founders shall not elect to
acquire all the Offered Securities, the Selling Stockholder may make a
disposition of the Offered Securities, but only to the person making the bona
fide offer on terms and conditions no more favorable to such person than those
contained in the Notice; provided, however, that such disposition must occur
within 90 days after the expiration of the 20 day period and the acquirer must
agree to be bound by all the provisions of this Agreement, including this
paragraph 1. If such disposition has not been consummated within such period,
the Offered Securities shall again become subject to all of the restrictions of
this Agreement.
3
<PAGE>
(c) The provisions of subsection (b) above shall not apply to sales,
assignments, transfers or dispositions of the Securities to a Stockholder's
spouse or lineal descendants (or trusts for their benefit); provided, however,
that the transferee agrees in writing to be bound by the provisions of this
Agreement; and provided, further, however, that this will not eliminate the
Company's buy-back rights or obligations relating to stock of an employee upon
termination of employment.
2. SALES BY THE INVESTOR.
(a) Until the earlier of (i) five years from the date hereof or (ii)
the consummation of the Company's initial Public Offering, if the Investor shall
decide to sell, assign, transfer or otherwise dispose of any Common Shares or
Preferred Shares of the Company (other than to an Affiliate (as such term is
defined in the Purchase Agreement) or partner), then the Investor shall give
prior notice thereof to the Founders and shall obtain from the purchasers of its
Securities a right for the Founders to sell to such purchaser, concurrently with
the sale by it and on the same terms, a pro rata number of its shares which is
equal to the number of Common Shares or Preferred Shares, as applicable, owned
by the Founders multiplied by a fraction, the numerator of which is the number
of Common Shares or Preferred Shares which the Investor proposes to sell and the
denominator of which is the total number of Common Shares or Preferred Shares
owned by the Investor. The Founders shall have the option to include their
Securities in such sale by giving written notice to the Investor within 20 days
after receipt of notice from the Investor. If any Founder exercises the
foregoing rights, the Investor shall not sell its Securities unless the pro rata
portion of such Founder's Securities are included in such sale; provided,
however, that if the purchaser does not wish to purchase all such Securities,
then the Securities to be included in the sale shall be pro rata between the
Investor and any Founders.
4
<PAGE>
(b) If the Investor decides to sell all of its Securities as part of
a plan to sell the Company as a whole, the Investor shall have the right to
require the Stockholders to sell, and the Stockholders shall be obligated to
sell, all Securities then owned by them upon the same terms and conditions,
concurrently therewith and for the same pro rata consideration as the Investor.
3. TERMINATION OF EMPLOYMENT. Until the consummation of the Company's
initial Public Offering:
(a) If the employment of any Stockholder who is an employee of the
Company with the Company terminates for any reason, including, but not limited
to, death, retirement, resignation or termination with or without cause (the
date of termination being referred to herein as the "Termination Date"), the
Company, the Investor and the Founders (unless such Founder is the terminated
employee) shall have the option to purchase all of the Securities owned by such
Stockholder. If the employment is terminated due to death, disability,
resignation or otherwise without cause, the terminated Stockholder shall the
option to cause the Company to purchase all of the Securities owned by such
Stockholder. The purchase price per share for the Securities owned by the
Stockholder which have vested in accordance with their terms shall be equal to
the greater of book value (as shown on the books of the Company as of the last
day of the fiscal quarter immediately prior to the Termination Date) per share
or fair market value per share as determined by a "top tier" investment banking
firm selected by the Company in the exercise of its reasonable judgment (the
determination of the purchase price as set forth above shall be final and
binding on the parties, notwithstanding anything to the contrary contained
below). If the employment of a Stockholder is terminated by the Company for
Cause (as defined in the Company's Stock Option Plan), or if such Securities
have not yet vested in
5
<PAGE>
accordance with their terms, then the purchase price shall be equal to the price
paid by the Stockholder for such Securities.
The Company shall have the option to purchase all, but not less than
all, of such Securities by notifying the Stockholder in writing within 90 days
after the Termination Date. The Stockholder shall have the option to require
the Company to purchase all , but not less than all, of such Securities by
notifying the Company within 90 days after the Termination Date. The notice
shall state the number of Securities which the Company desires to purchase or
the Stockholder desires to sell and the time (not more than 30 days after the
date thereof) and a place of closing. If the Company does not elect to exercise
its option with respect to all the Securities, the Company shall notify the
Investor and the Founders (unless such Founder is the terminated employee) of
its election not to exercise such option and the Investor and the Founders shall
have the option to purchase all or a portion of the Securities. If the Investor
and the Founders wish to exercise such option, they shall notify the Company and
the Stockholder within 20 days after receipt of notice from the Company (or if
no notice is received, within 20 days after expiration of the 90 day period) of
the number of Securities which the Investor and the Founders elect to purchase.
The Investor and the Founders shall be entitled to purchase the number of
Securities specified in their notice or if such number exceeds the amount
offered, their pro rata share as determined pursuant to paragraph 1(b) hereof.
The closing of the purchase by the Investor and/or the Founders shall occur at
the principal executive offices of the Company on the 10th business day after
the expiration of the 20 day period. At closing, payment shall be made by
certified or bank cashier's check made payable to the order of such Stockholder,
or by wire transfer of immediately available funds, against delivery by such
Stockholder of certificates representing the Securities, duly endorsed for
transfer, free and clear of all liens and encumbrances. If the
6
<PAGE>
Company, the Investor and the Founders shall not elect to acquire all of such
Stockholder's Securities, or if the Stockholder shall not elect to sell its
Securities to the Company, the Securities shall continue to remain subject to
all the provisions of this Agreement, including but not limited to the
provisions of paragraphs 1 and 2 hereof.
(b) If a Stockholder files a voluntary petition in bankruptcy or a
petition for the appointment of a receiver, or makes an assignment for the
benefit of creditors, or such proceedings are filed or instituted against the
Stockholder, or if any person obtains an attachment or other legal or equitable
interest in any of the Securities owned by the Stockholder, and if in the event
of any of the aforesaid involuntary acts (insofar as the Stockholder is
concerned) the same are not dismissed, nullified or removed within 60 days after
institution thereof, the Stockholder shall so notify the Company, the Investor
and the Founders and the Company, the Investor and the Founders (unless such
Founder is the party involved in such proceeding) shall forthwith have the right
(but not the obligation) to purchase all of the Securities owned by the
Stockholder at the price and in the manner provided for in paragraph 3(a)
hereof. If the Company shall elect not to purchase all of such Securities, such
Securities shall be offered to the Investor and the Founders at the price and in
the same manner as provided for in paragraph 3(a) hereof.
4. ADDITIONAL RESALE RESTRICTION. Each Stockholder and the Investor
hereby agree that in connection with the initial Public Offering of the Company,
they will agree to be bound by all restrictions contained in any underwriting
agreement entered into with the Company's underwriters, including restrictions
upon the sale of securities of the Company for a period not exceeding 180 days
from the effective date of any registration statement, and will
7
<PAGE>
enter into any written agreements and do such further acts as may be requested
by the underwriters.
5. ELECTION OF DIRECTORS. Each of the Stockholders and the Investor
agrees to vote all Securities owned by it to have the Board of Directors consist
of the persons nominated in accordance with the provisions of Section 6.10 of
the Purchase Agreement.
6. LEGEND. All certificates representing the Securities shall have
endorsed thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDER'S AGREEMENT DATED AS OF
JUNE 30, 1998 AMONG RADIO UNICA HOLDINGS CORP. AND ITS STOCKHOLDERS
WHICH PROVIDES FOR, AMONG OTHER MATTERS, ELECTION OF DIRECTORS, A
RIGHT OF FIRST REFUSAL ON THE SALE OF SUCH SECURITIES AND A LIMITATION
ON RESALE OF SUCH SECURITIES FOLLOWING A PUBLIC OFFERING OF THE
COMPANY'S SECURITIES. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF RADIO UNICA HOLDINGS CORP."
7. DIVIDENDS. If, during the term of this Agreement, there is a dividend
of any security, stock split or other change in the character or amount of any
of the Company's outstanding securities, then in such event any and all new,
substituted or additional securities to which the Investor or a Stockholder is
entitled by reason of their ownership of Securities shall, upon issuance, be
immediately subject to the provisions of this Agreement and shall be deemed
included in the term "Securities" for all purposes of this Agreement with the
same force and effect as the Securities presently subject to this Agreement and
with respect to which such new, substituted or additional securities were
distributed.
8
<PAGE>
8. MISCELLANEOUS PROVISIONS.
8.1 CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING ANY EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
8.2 NOTICES. All notices hereunder shall be in writing and shall be
deemed to have been given at the time when hand delivered, when received if sent
by telecopier or by same day or overnight recognized commercial courier service,
or three days after being mailed by certified mail, addressed to the address
below stated of the party to which notice is given, or to such changed address
as such party may have fixed by notice:
To the Company:
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
-with a copy to-
To the Investor:
Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Attn: John D. Santoleri
-with a copy to-
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Martin H. Neidell
To the Stockholders:
9
<PAGE>
At the addresses set forth on Schedule A or if there is no address set
forth on such Schedule:
c/o Radio Unica Holdings Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
provided, however, that any notice of change of address shall be effective only
upon receipt.
8.3 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the Company, the Investor, the Stockholders and the successors
and permitted assigns of the Investor and Stockholders. Except as otherwise
permitted hereby, neither the Company nor any Stockholder may assign this
Agreement or any rights granted hereunder without the prior written consent of
the Investor. No assignment may be made to any person or entity which would
cause the Company to fail to continue to meet the FCC requirements for ownership
of any radio station unless the prior approval from the FCC shall have been
obtained. The Investor may sell, transfer or otherwise dispose of all or any
part of its Securities as provided herein and in connection therewith its rights
and obligations hereunder; provided, however, that if the Investor disposes of
less than all of its Securities, then any rights contained herein which are
applicable to the Investor shall remain solely such Investor's right unless it
notifies the Company to the contrary. A person who acquires all or a part of
the Investor's Securities shall become a party to this Agreement, entitled to
all the rights and benefits hereunder and if all of the Securities owned by the
Investor have been sold, the Investor shall be released from its obligations
hereunder. If a Founder's Securities are sold hereunder, the acquirer shall not
acquire any of the Founder's rights to require the Company to purchase its
Securities under this Agreement.
10
<PAGE>
8.4 AMENDMENTS AND WAIVERS. This Agreement and the schedule hereto
set forth the entire understanding of the parties with respect to the
transactions contemplated hereby. This Agreement may be amended, the Company
may take any action herein prohibited or omit to take action herein required to
be performed by it, and any breach of or compliance with any covenant,
agreement, warranty or representation may be waived, only if the written consent
or waiver of the Stockholders who own at least a majority of the shares of
Common Stock and of the Investor have been obtained. Upon any person or entity
becoming a stockholder of the Company subsequent to the date hereof, such person
or entity shall enter into this Agreement as a "Stockholder" and Schedule A
shall be revised to reflect the foregoing.
8.5 VIOLATION OF AGREEMENT. The Company may refuse for any purpose
to recognize as a shareholder of the Company any transferee who receives any
Securities contrary to the provisions of this Agreement, and the Company may
retain and or recover all dividends on such Securities which were paid or
payable subsequent to the date on which the prohibited transfer was made or
attempted. In addition to any other legal or equitable remedies which a party
may have hereunder, such party may enforce its rights by specific performance to
the extent permitted by law.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
8.7 HEADINGS. The headings in this Agreement are for reference
purposes only and shall not constitute a part hereof.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
RADIO UNICA HOLDINGS CORP.
By: /S/ Joaquin Blaya
--------------------------
Name:
Title:
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /S/ John D. Santoleri
--------------------------
Partner
/S/ Joaquin Blaya
-----------------------------
Joaquin Blaya
/S/ Herbert Levin
-----------------------------
Herbert Levin
/S/ Andrew Goldman
-----------------------------
Andrew Goldman
/S/ Alan Stess
-----------------------------
Alan Stess
/S/ Barrett Alley
-----------------------------
Barrett Alley
12
<PAGE>
SCHEDULE A
Number of Number of Preferred
Name and Address of Stockholder Common Shares Shares
- ------------------------------- ------------- -------------------
Andrew Goldman 80 792
19 Highland Way
Scarsdale, New York 10583-1609
Alan Stess 50 495
[address]
Barrett Alley 25 247.5
[address]
<PAGE>
Exhibit 21.1
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
SUBSIDIARIES ORGANIZATION
------------ -----------------
<S> <C>
Oro Spanish California
Broadcasting, Inc.
Radio Unica of San Delaware
Francisco, Inc.
Radio Unica of San Delaware
Francisco License
Corp.
Radio Unica of Delaware
Miami, Inc.
Radio Unica of Miami Delaware
License Corp.
Radio Unica of Los Delaware
Angeles, Inc.
Radio Unica of Los Delaware
Angeles License
Corp.
Radio Unica of San Delaware
Antonio, Inc.
Radio Unica Network, Delaware
Inc.
Radio Unica Sales Florida
Corp.
</TABLE>
<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 the Registration
Statement (Form S-4 No. 33-00000) 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/ Ernst & Young LLP
Miami, Florida
August 10, 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
August 10, 1998
<PAGE>
Exhibit 25.1
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
RADIO UNICA CORP.
AND OTHER REGISTRANTS*
(Exact name of obligor as specified in its charter)
Delaware 65-0776004
(State of incorporation) (I.R.S. employer identification no.)
8400 N.W. 52nd Street
Suite 101
San Francisco, California 33166
(Address of principal executive offices) (Zip Code)
11-3/4% Series B Senior Discount Notes due 2006
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not
an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington
Trust Company to commence business and the authorization
of Wilmington Trust Company to exercise corporate trust
powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 10th day of August, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ W. Chris Sponenberg By:/s/ Emmett R. Harmon
--------------------------- ---------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on May 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington, County
of New Castle; the name of its resident agent is WILMINGTON TRUST
COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains and
operates branch offices in the City of Newark, New Castle County,
Delaware, the Town of Newport, New Castle County, Delaware, at
Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New
Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or
agencies of the government of the State of Delaware empowered to
confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to
the same extent as natural persons might or could do and in any part
of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of law
or equity and to make and use a common seal, and alter the seal
at pleasure, to hold, purchase, convey, mortgage or otherwise
deal in real and personal estate and property, and to appoint
such officers and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent with
the Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to receive
deposits of money, or securities for money, to buy gold and
silver bullion and foreign coins, to buy and sell bills of
exchange, and generally to use, exercise and enjoy all the
powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of
the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of such
property, real or personal, against any claim or claims, adverse
to his interest therein, and to prepare and give certificates of
title for any lands or premises in the State of Delaware, or
elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators, guardians,
public officers, courts, receivers, assignees, trustees, and from
all fiduciaries, and from all other persons and individuals, and
from all corporations whether state, municipal, corporate or
private, and to rent boxes, safes, vaults and other receptacles
for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or
underwriting the stock, bonds or other obligations of any
corporation, association, state or municipality, and may receive
and manage any sinking fund therefor on such terms as may be
agreed upon between the two parties, and in like manner may act
as Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
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(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding places
of responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any trust, office, duty,
contract or agreement, either by itself or in conjunction with
any other person, or persons, corporation, or corporations, or in
like manner become surety upon any bond, recognizance,
obligation, judgment, suit, order, or decree to be entered in any
court of record within the State of Delaware or elsewhere, or
which may now or hereafter be required by any law, judge, officer
or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity in the receiving, holding, managing, and
disposing of any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian or bailee by any persons, corporations,
court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any
person, corporation, court, officer or authority such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security
for the performance of the duties devolving upon it by such
appointment.
(10) And for its care, management and trouble, and the exercise
of any of its powers hereby given, or for the performance of any
of the duties which it may undertake or be called upon to
perform, or for the assumption of any responsibility the said
Corporation may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or
of any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for,
and dispose of interest, dividends and income upon and from any
of the bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property, any and
all the rights, powers and privileges of individual
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owners thereof, including the right to vote thereon; to invest
and deal in and with any of the moneys of the Corporation upon
such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by pledges or
deeds of trust or mortgages of or upon the whole or any part of
the property held or owned by the Corporation, and to sell and
pledge such bonds, as and when the Board of Directors shall
determine, and in the promotion of its said corporate business of
investment and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge, mortgage and
convey real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of
the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation, and
to pay for the same in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the whole or
any part of the property so purchased; to conduct in any lawful
manner the whole or any part of any business so acquired, and to
exercise all the powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and
to lease, sell, exchange, transfer, or in any manner whatever
dispose of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent
as natural persons might or could do, to purchase or otherwise
acquire, to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every class and
description, in any State, District, Territory or Colony of the
United States, and in any foreign country or place.
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(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any
other clause of this or any other paragraph in this charter, but
that the objects, purposes and powers specified in each of the
clauses of this paragraph shall be regarded as independent
objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock");
and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding;
and, subject to the provisions of subparagraph 1 of Paragraph (c) of
this Article FOURTH, the Board of Directors of the Corporation is
hereby expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of a particular series of
Preferred Stock, the voting powers and the designations, preferences
and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of the
Board of Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall
be paid, the extent of the preference or relation, if any, of
such dividends to the dividends payable
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on any other class or classes, or series of the same or other
class of stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares
of any other class or classes or of any series of the same or any
other class or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and the
time or times at which, and the terms and conditions on which,
Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under
such circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall have
been met and after the Corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums as
sinking funds or redemption or purchase accounts (fixed in accordance
with the provisions of section (b) of this Article FOURTH), and
subject further to any conditions which may be fixed in accordance
with the provisions of section (b) of this Article FOURTH, then and
not otherwise the holders of Common Stock shall be entitled to receive
such dividends as may be declared from time to time by the Board of
Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b) of
this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common Stock
shall be entitled to
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receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted by
the Board of Directors pursuant to section (b) of this Article
FOURTH, each holder of Common Stock shall have one vote in
respect of each share of Common Stock held on all matters voted
upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class
or series of stock or of other securities of the Corporation shall
have any preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of any class or
series to be issued by reason of any increase of the authorized
capital stock of the Corporation of any class or series, or bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the Corporation of any
class or series, or carrying any right to purchase stock of any class
or series, but any such unissued stock, additional authorized issue of
shares of any class or series of stock or securities convertible into
or exchangeable for stock, or carrying any right to purchase stock,
may be issued and disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or associations,
whether such holders or others, and upon such terms as may be deemed
advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any
or all other series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the number
of directors constituting the whole Board shall be twenty-four until
otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of
the second class shall be elected to hold office for a term expiring
at the second succeeding annual meeting and directors of the third
class shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Any vacancies in the Board of Directors
for any reason, and any newly created directorships resulting from any
increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen
and until his successor shall be elected and qualified. No decrease
in the number of directors shall shorten the term of any incumbent
director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
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Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called for
that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than 14
days nor more than 50 days prior to any meeting of the stockholders
called for the election of directors; provided, however, that if less
than 21 days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the
Secretary of the Corporation not later than the close of the seventh
day following the day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by the Board
of Directors shall be given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment
of such nominee and (iii) the number of shares of stock of the
Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power
to authorize the seal of the Corporation to be affixed to all papers
which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by
a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any other
corporation (whether or not itself an Interested Stockholder),
which, after such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
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(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate fair
market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to
any one or more of clauses (A) through (E) of paragraph 1 of
the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such affirmative
vote as is required by law and any other provisions of the
Charter or Act of Incorporation of By-Laws if such business
combination has been approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on such
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business combination, or immediately prior to the consummation of any
such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within
two years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have
occurred in the course of a transaction or series of transactions
not involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or indirectly,
or
(B) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
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(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the
definition of Investment Stockholder set forth in paragraph (2) of
this section (c), the term "Subsidiary" shall mean only a corporation
of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis
of information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4)
whether the assets subject to any business combination or the
consideration received for the issuance or transfer of securities
by the Corporation, or any Subsidiary has an aggregate fair
market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class) shall
be required to amend, alter or repeal any provision of Articles FIFTH,
THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter or Act of
Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a Director, except to the extent such exemption
from liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or may hereafter
be amended.
(b) Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or
omission occurring prior to the time of such repeal or
modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or
<PAGE>
at the call of the Chairman of the Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine
2
<PAGE>
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall direct
the disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.
3
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none of
whom shall be an officer of the Company, and shall hold office at the pleasure
of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE>
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected
by the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, 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 absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board of
5
<PAGE>
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE>
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any
7
<PAGE>
dividend, or to any allotment or rights, or to exercise any rights in respect of
any change, conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which record date shall
not be more than 60 nor less than 10 days proceeding the date of any meeting of
stockholders or the date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE>
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as members
of committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
claimant
9
<PAGE>
was not entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE>
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 10, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has
not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- ----------------
Name of Bank
City
in the State of DELAWARE, at the close of business on March 31, 1998.
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins. . . . . . . 180,015
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve 3,834,603
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . 134,016
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies. . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . 99,777
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
EQUITY CAPITAL
Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital. . . . 6,189,443
</TABLE>
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RADIO UNICA CORP. FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001067636
<NAME> RADIO UNICA CORP.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,126,862
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,330,862
<PP&E> 1,221,995
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,678,088
<CURRENT-LIABILITIES> 3,283,669
<BONDS> 0
0
5,316,990
<COMMON> 53
<OTHER-SE> (1,922,624)
<TOTAL-LIABILITY-AND-EQUITY> 6,678,088
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,802,816
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,765
<INCOME-PRETAX> (1,815,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,815,581)
<EPS-PRIMARY> (356.10)
<EPS-DILUTED> (356.10)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RADIO UNICA CORP. FOR THE QUARTER ENDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001067636
<NAME> RADIO UNICA CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,390,709
<SECURITIES> 0
<RECEIVABLES> 1,117,827
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,293,345
<PP&E> 2,354,375
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,439,966
<CURRENT-LIABILITIES> 4,912,748
<BONDS> 0
0
20,648,702
<COMMON> 203
<OTHER-SE> (6,121,687)
<TOTAL-LIABILITY-AND-EQUITY> 19,439,966
<SALES> 561,583
<TOTAL-REVENUES> 561,583
<CGS> 0
<TOTAL-COSTS> 4,466,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,867,201)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,867,201)
<EPS-PRIMARY> (223.97)
<EPS-DILUTED> (223.97)
</TABLE>
