<PAGE>
PROSPECTUS
DECEMBER 12, 1996
$170,000,000
JACOR COMMUNICATIONS COMPANY
GUARANTEED BY
[LOGO]
9 3/4% SENIOR SUBORDINATED NOTES DUE 2006
The Senior Subordinated Notes (the "Notes") are being offered (the
"Offering") by Jacor Communications Company ("JCC"), a wholly owned subsidiary
of Jacor Communications, Inc. ("Jacor"). The Notes are being offered in
connection with the Pending Transactions (as defined herein) and to repay a
portion of the outstanding indebtedness under the Credit Facility (as defined
herein). Consummation of the Offering is not contingent upon consummation of any
of the Pending Transactions.
The Notes will mature on December 15, 2006. Interest on the Notes is payable
semi-annually on June 15 and December 15 of each year, commencing June 15, 1997.
JCC will not be required to make any mandatory redemption or sinking fund
payment with respect to the Notes prior to maturity. The Notes will be
redeemable at the option of JCC, in whole or in part, at any time on or after
December 15, 2001 at the redemption prices set forth herein plus accrued and
unpaid interest, if any, to the date of redemption. In the event of a Change of
Control (as defined herein), JCC will be required to make an offer to repurchase
the Notes, at a price equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, to the date of repurchase. See
"Description of Notes--Certain Covenants--Repurchase of Notes at the Option of
the Holder Upon a Change of Control."
The Notes will be general unsecured obligations of JCC, subordinated in
right of payment to all Senior Debt (as defined herein) of JCC, including the
Credit Facility. As of September 30, 1996, JCC had outstanding an aggregate
principal amount of $400.0 million of Senior Debt. On a pro forma basis as of
September 30, 1996 after giving effect to this Offering and the application of
the net proceeds therefrom and the Citicasters Put (as defined herein), the
aggregate principal amount of Senior Debt of JCC would have been $400.0 million.
All subsidiaries of JCC (other than the Excluded Subsidiaries, as defined
herein), will become Subsidiary Guarantors (each as defined herein) if required
by the indenture governing the Notes. See "Description of Notes -- Certain
Covenants -- Subsidiary Guarantors" and "Description of Other Indebtedness
- --Credit Facility," "-- The 9 3/4% Notes" and "--The 10 1/8% Notes."
The Notes will be fully and unconditionally guaranteed on a senior
subordinated basis by Jacor and the Subsidiary Guarantors (the Subsidiary
Guarantors, together with Jacor, the "Guarantors") (limited only to the extent
necessary to avoid each such guarantee being considered a fraudulent conveyance
under applicable law) on a joint and several basis (the "Guarantees"). The
Guarantees will be general unsecured obligations of the Guarantors.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF THE RISKS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO THE DISCOUNTS AND PROCEEDS
PUBLIC(1) COMMISSIONS(2) TO JCC(3)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................................. 100.00% 2.80% 97.20%
Total.................................... $170,000,000 $4,760,000 $165,240,000
- --------------------------------------------------------------------------------------------
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE.
(2) JCC AND THE GUARANTORS HAVE AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST,
AND TO PROVIDE CONTRIBUTION WITH RESPECT TO, CERTAIN LIABILITIES, INCLUDING
LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE
"UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY JCC ESTIMATED AT $655,000.
The Notes are offered by the Underwriters when, as and if delivered to and
accepted by the Underwriters and subject to various prior conditions. The
Underwriters have reserved the right to withdraw, cancel or modify any such
offer and to reject orders in whole or in part. It is expected that delivery of
the Notes will be made in New York, New York on or about December 17, 1996, to
investors in book-entry form through the facilities of The Depositary Trust
Company against payment therefor in immediately available funds.
DONALDSON, LUFKIN & JENRETTE MERRILL LYNCH & CO.
SECURITIES CORPORATION
<PAGE>
The inside front cover consists of a map of the United States indicating the
cities in which the Company (as defined herein) will own and/or operate radio
and television stations. The map also indicates the number of stations owned
and/or operated by the Company in each city and the 1995 radio revenue rank, all
as shown in the table contained in the Prospectus Summary.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND THE
10 1/8% NOTES (AS DEFINED HEREIN) AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND
IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. UNLESS THE CONTEXT OTHERWISE
REQUIRES, THE TERM (I) "JACOR" REFERS TO JACOR COMMUNICATIONS, INC. AND ITS
SUBSIDIARIES, INCLUDING JCC, AND THEIR COMBINED OPERATIONS ON A HISTORICAL
BASIS; AND (II) "COMPANY" REFERS TO JACOR AND THE ENTITIES AND RADIO STATIONS TO
BE OWNED BY JACOR ON A COMBINED BASIS ASSUMING THE PENDING TRANSACTIONS ARE
CONSUMMATED AS CURRENTLY SET FORTH IN THE RESPECTIVE TRANSACTION AGREEMENTS. JCC
WAS FORMERLY KNOWN AS CITICASTERS INC. ("CITICASTERS") PRIOR TO CHANGING ITS
CORPORATE NAME TO "JACOR COMMUNICATIONS COMPANY" IN DECEMBER 1996. THE TERM
"PENDING TRANSACTIONS" REFERS TO THE PENDING ACQUISITIONS, DISPOSITIONS AND
MERGER DESCRIBED UNDER "TRANSACTIONS -- PENDING TRANSACTIONS." NOT ALL OF THE
PENDING TRANSACTIONS WILL BE CONSUMMATED PRIOR TO THE CLOSING OF THE OFFERING.
THE COMPANY
Jacor, upon consummation of the Pending Transactions, will be the second
largest radio group in the nation as measured by gross revenue and will own
and/or operate 101 radio stations and one television station in 24 broadcast
areas across the United States. Jacor's strategic objective is to be a leading
radio broadcaster by operating multiple radio station platforms in each of its
broadcast areas. The Company's broadcast areas are among the most attractive in
the country, demonstrating, as a group, radio revenue growth in excess of the
radio industry average over the last five years. In 1995, the Company would have
been the top billing radio group in 15 of its 24 broadcast areas and would have
had net revenue and broadcast cash flow of $383.9 million and $121.9 million,
respectively.
The following table sets forth certain information regarding the Company and
its broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA BROADCAST AREA DATA
------------------------------------ ----------------------------------
1995 RADIO 1995 1990-1995
RADIO AUDIENCE NO. OF STATIONS 1995 RADIO REVENUE
REVENUE SHARE ---------------- ARBITRON REVENUE CAGR
BROADCAST AREA RANK % AM FM TV RANK RANK %
- -------------------- ------- ------- ---- ---- ---- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles......... 5 3.4 1 1 -- 2 1 3.6
Atlanta............. 1 15.2 1 3 -- 12 10 9.2
San Diego(1)(2)..... 1 20.9 3 5 -- 15 16 5.5
St. Louis........... 5 9.4 1 2 -- 17 18 4.5
Tampa............... 1 33.3 2 5 -- 21 21 6.2
Denver(3)........... 1 33.1 4 4 -- 23 14 8.6
Portland............ 1 18.4 1 2 -- 24 23 8.4
Cincinnati(2)(3).... 1 32.4 2 3 1 25 20 7.4
Kansas City......... 1 21.5 1 3 -- 26 32 4.3
Columbus............ 1 24.7 2 5 -- 32 28 6.7
Salt Lake City(3)... 1 21.7 1 4 -- 35 33 9.3
Las Vegas........... 1 22.1 -- 4 -- 48 42 11.8
Louisville.......... 2 20.9 1 4 -- 49 45 5.8
Jacksonville........ 2 22.8 2 3 -- 53 46 7.9
Toledo.............. 1 35.8 2 3 -- 75 74 5.6
Sarasota/Bradenton... 1 10.4 1 2 -- 79 176 N/A
Charleston.......... 2 13.5 -- 2 -- 87 90 4.8
Des Moines.......... 1 19.9 1 1 -- 89 69 8.4
Lexington........... 1 39.2 2 4 -- 105 79 6.4
Boise............... 2 17.6 1 2 -- 130 104 9.5
Cedar Rapids........ 1 25.3 1 1 -- 197 127 4.9
Casper.............. 3 21.0 1 1 -- 263 249 N/A
Fort
Collins/Greeley(4)... N/A N/A 1 2 -- N/A N/A N/A
Venice/Englewood(4)... N/A N/A 1 2 -- N/A N/A N/A
</TABLE>
- ------------------------
(1) Excludes two radio stations located in Baja California, Mexico on which
Jacor provides programming to and sells air time for under an exclusive
sales agency agreement.
(2) Excludes KCBQ-AM in San Diego and WKRQ-FM in Cincinnati which the Company
will divest (see "Transactions").
(3) Excludes one station in Denver, three stations in Cincinnati and two
stations in Salt Lake City on which the Company sells or will sell
advertising time pursuant to joint sales agreements (see "Business -- Radio
Station Overview").
(4) The Fort Collins/Greeley and Venice/Englewood broadcast areas do not have
Arbitron ranks.
3
<PAGE>
BUSINESS STRATEGY
Jacor's strategic objective is to be a leading radio broadcaster in each of
its broadcast areas. Jacor intends to acquire individual radio stations or radio
groups that strengthen its strategic position and that maximize the operating
performance of its broadcast properties. Specifically, Jacor's business strategy
centers upon:
REVENUE LEADERSHIP. Jacor strives to maximize the audience ratings in each
of its broadcast areas in order to capture the largest share of the radio
advertising revenue and attract advertising away from other media in that
broadcast area. Jacor focuses on those locations where it believes it has the
potential to be a leading radio group. By operating multiple radio stations in
its broadcast areas, Jacor is able to operate its stations at lower costs,
supply more diverse programming and provide advertisers with the greatest access
to targeted demographic groups.
ACQUISITION AND DEVELOPMENT OF BROADCAST PROPERTIES. Jacor's acquisition
strategy focuses on acquiring both developed, cash flow producing stations and
underdeveloped "stick" properties (i.e., stations with insignificant ratings and
little or no positive broadcast cash flow) that complement its existing
portfolio and strengthen its overall strategic position. Jacor has been able to
improve the ratings of "stick" properties with increased marketing and focused
programming that complements its existing radio station formats. Additionally,
Jacor increases the revenues and cash flow of "stick" properties by encouraging
advertisers to buy advertising in a package with its more established stations.
The Company may enter new locations through acquisitions of radio groups that
have multiple station ownership in their respective broadcast areas. The Company
may also seek to acquire individual stations in new locations that it believes
are fragmented and where a revenue-leading position can be created through
additional acquisitions. The Company may exit locations it views as having
limited strategic appeal by selling or exchanging existing stations for stations
in other locations where the Company operates, or for stations in new locations.
Additionally, the Company may enter new locations situated near Jacor's core
broadcast areas. The Company believes that it will be able to leverage the costs
associated with the delivery of high quality, high cost programming of topical
interest throughout these geographical regions, which programming would not
otherwise be economically viable in such smaller broadcast areas. Utilizing this
strategy, Jacor has recently entered into agreements or closed transactions to
acquire radio stations in Venice/Englewood, Florida; Lexington, Kentucky;
Sarasota/Bradenton, Florida; Louisville, Kentucky; Casper, Wyoming; and Fort
Collins/Greeley, Colorado.
DIVERSE FORMAT EXPERTISE. Jacor management has developed programming
expertise over a broad range of radio formats. This management expertise enables
Jacor to specifically tailor the programming of each station in a broadcast area
in order to maximize Jacor's overall strategic position. Jacor utilizes
sophisticated research techniques to identify opportunities within each
broadcast area and programs its stations to provide complete coverage of a
demographic or format type. This strategy allows Jacor to deliver highly
effective access to a target demographic and to capture a higher percentage of
advertising revenues.
DISTINCT STATION PERSONALITIES. Jacor engages in a number of creative
programming and promotional efforts designed to create listener loyalty and
station brand awareness. Through these efforts, management seeks to cultivate a
distinct personality for each station based upon the unique characteristics of
each broadcast area. Jacor hires dynamic on-air personalities for key morning
and afternoon "drive times" and provides comprehensive news, traffic and weather
reports to create active listening by the audience. This commitment to
"foreground" or "high impact" programming has successfully generated significant
audience share.
One of the methods Jacor utilizes to develop the personality of its AM radio
stations is by broadcasting professional sporting events and related
programming. Currently, Jacor has the broadcast rights for the Cincinnati Reds,
Cincinnati Bengals, Colorado Rockies, Denver Broncos, Los Angeles Kings,
Portland Trail Blazers and San Diego Chargers. Sports broadcasting serves as a
key "magnet" for attracting audiences to a station and then introducing them to
other programming features, such as local and national news, entertaining talk,
and weather and traffic reports.
4
<PAGE>
STRONG AM STATIONS. Jacor is an industry leader in successfully operating
AM stations. While many radio groups primarily utilize network or simulcast
programming on their AM stations, Jacor also develops unique programming for its
AM stations to build strong listener loyalty and awareness. Utilizing this
operating focus and expertise, Jacor has developed its AM stations in Denver and
Cincinnati into the revenue and ratings leaders among both AM and FM stations in
their respective broadcast areas. Jacor's targeted AM programming adds to
Jacor's ability to increase its revenues and results in more complete coverage
of the listener base.
Although the cost structure of a large-scale AM station generally results in
lower operating margins than typical music-based FM stations, the majority of
Jacor's AM stations generate substantial levels of broadcast cash flow.
Historically, most other radio broadcast companies have not focused on their AM
operations to the same extent as Jacor. Accordingly, most of the AM stations to
be acquired meaningfully underperform Jacor's AM stations, and management
believes such stations have the potential to generate significant incremental
cash flow.
POWERFUL BROADCAST SIGNALS. A station's ability to maintain a leadership
position depends in part upon the strength of its broadcasting delivery system.
A powerful broadcast signal enhances delivery range and clarity, thereby
influencing listener preference and loyalty. Many of Jacor's stations'
broadcasting signals are among the strongest in their respective broadcast areas
reinforcing its leadership position. Jacor opportunistically upgrades the power
and quality of the signals of stations it acquires. Following the consummation
of the Pending Transactions, Jacor expects that relatively inexpensive technical
upgrades in certain broadcast areas will provide for significantly greater
signal presence.
RECENT DEVELOPMENTS
Since the enactment of the Telecommunications Act of 1996 (the "Telecom
Act") on February 8, 1996, Jacor has acquired 40 radio stations, two television
stations (one of which has subsequently been disposed of) and entered into an
exclusive sales agency agreement to provide programming to and sell air time for
two radio stations located in Baja California, Mexico. The aggregate
consideration provided by Jacor in these transactions was approximately $1.2
billion. Jacor has also disposed of three radio stations for approximately $7.0
million.
In addition, Jacor has entered into a number of binding agreements for
transactions that are currently pending. Jacor has contracted for the exchange
of its two radio stations in Phoenix for two radio stations in San Diego. Jacor
has also entered into binding agreements to purchase an additional 27 radio
stations for approximately $203.3 million (including $30.9 million already
advanced by Jacor to fund various escrow deposits, $16.1 million of which was
paid prior to September 30, 1996). Jacor has also entered into a merger
agreement pursuant to which it will acquire 18 radio stations and joint sales
agreements for two additional radio stations for consideration of 3.55 million
shares of Jacor's common stock, $.01 par value per share (the "Common Stock")
(subject to adjustment pursuant to the terms of the merger agreement), warrants
to acquire 500,000 shares of Common Stock at an exercise price of $40 per full
share, and up to $64.0 million in cash to be used to repay outstanding debt of
the company to be acquired. Jacor has also entered into a binding agreement to
sell two radio stations for approximately $45.0 million in cash. Finally, Jacor
has entered into letters of intent for the disposition of WKRQ-FM in Cincinnati
and KCBQ-AM in San Diego, but has not executed definitive agreements in
connection with such dispositions. For calendar 1995, the incremental net
revenues and broadcast cash flow from the Pending Transactions would have been
$73.2 million and $17.8 million, respectively.
Jacor is currently negotiating for additional acquisitions in its existing
locations and in new locations. Jacor is also engaged in preliminary discussions
with owners of numerous other radio stations, which may or may not result in
negotiations for additional acquisitions. Such transactions, if any, may involve
the payment of cash, shares of Common Stock and/or the exchange of the Company's
other broadcast properties. However, there can be no assurance that Jacor will
successfully complete all or any such transactions or what the consequences
thereof would be. For more information about Jacor's recent acquisitions and
dispositions, see "Transactions."
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........... $170.0 million in aggregate principal amount of 9 3/4%
Senior Subordinated Notes.
Maturity Date................ December 15, 2006.
Interest Payment Dates....... June 15 and December 15, commencing June 15, 1997.
Mandatory Redemption......... None.
Optional Redemption.......... The Notes will be redeemable, in whole or in part, at the
option of JCC on or after December 15, 2001, at the
redemption prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption. See
"Description of the Notes -- Optional Redemption."
Ranking...................... The Notes will be general unsecured obligations of JCC and
will be subordinated in right of payment to all existing and
future Senior Debt of JCC including the Credit Facility. As
of September 30, 1996, JCC had outstanding an aggregate
principal amount of $400.0 million of Senior Debt. On a pro
forma basis as of September 30, 1996, after giving effect to
the Citicasters Put and this Offering and the application of
the net proceeds therefrom, the aggregate principal amount
of Senior Debt of JCC would have been $400.0 million. See
"Transactions," "Description of Other Indebtedness -- The
Credit Facility" and "Description of Notes --
Subordination."
Guarantees................... The Notes will be fully and unconditionally guaranteed on a
senior subordinated basis by Jacor and the Subsidiary
Guarantors on a joint and several basis (limited only to the
extent necessary for each such Guarantee to not constitute a
fraudulent conveyance under applicable law). The Guarantees
will be general unsecured obligations of the Guarantors. See
"Description of Notes -- Subordination; -- Guarantees."
Change of Control Offer...... If a Change of Control occurs (including a change of control
of Jacor, for so long as JCC is a wholly owned subsidiary of
Jacor), JCC will be required to offer to repurchase all
outstanding Notes at a price equal to 101% of their
principal amount, plus accrued and unpaid interest, if any,
to the date of repurchase. There can be no assurance that
JCC will have sufficient funds to purchase all of the Notes
in the event of a Change of Control or that JCC would be
able to obtain financing for such purposes on favorable
terms, if at all. In addition, the Credit Facility restricts
JCC's ability to repurchase the Notes pursuant to a Change
of Control Offer. Furthermore, a Change of Control under the
Indenture will result in a default under the Credit
Facility. See "Description of the Notes -- Certain Covenants
-- Repurchase of the Notes at the Option of the Holder Upon
a Change of Control."
Certain Covenants............ The Indenture will impose certain limitations on the ability
of JCC and its subsidiaries to, among other things (i) incur
additional indebtedness; (ii) incur liens; (iii) pay
dividends or make certain other restricted payments; (iv)
consummate certain asset sales; (v) enter into certain
transactions with affiliates; (vi) incur indebtedness that
is subordinate in right of payment to any Senior Debt and
senior in right of payment to the Notes; (vii) impose
restrictions on the ability of a subsidiary to pay dividends
or make certain payments to JCC;
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
(viii) conduct business other than the ownership and
operation of radio and television broadcast stations and
related businesses; (ix) merge or consolidate with any other
person or (x) sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the assets
of JCC. With respect to an Asset Sale Offer (as defined
herein), JCC will not be permitted to commence an Asset Sale
Offer for the Notes until such time as an Asset Sale Offer
for the 9 3/4% Notes (as defined herein) and the 10 1/8%
Notes, in each case if required, has been completed. See
"Description of Notes -- Certain Covenants."
Use of Proceeds.............. The net proceeds from the Offering will be used in
connection with the Pending Transactions; to repay a portion
of the outstanding indebtedness under the Credit Facility;
and for general corporate purposes, including acquisition of
other broadcast properties and the repayment of other
indebtedness. See "Use of Proceeds."
</TABLE>
MARKET DATA AND CERTAIN DEFINITIONS
All rankings by revenue or billings that are contained in this Prospectus
are based on 1995 information contained in Duncan's Radio Market Guide (1996
ed.), Duncan's American Radio (Small Market Edition 1996), Duncan's American
Radio (Spring 1996), Duncan's Radio Group Directory (1996-1997 ed.) and/or
Broadcast Investment Analyst: Radio '96 Market Report. Except where otherwise
specified, all information concerning ratings and audience listening information
is derived from the Spring 1996 Arbitron Metro Area Ratings Survey (the "Spring
1996 Arbitron") and the Summer 1996 Arbitron Metro Area Ratings Survey (the
"Summer 1996 Arbitron"). All Designated Market Area ("DMA") information is
derived from the Nielsen Station Index, May 1996 ("Nielsen"). The term "LMAS"
means local marketing agreements which would be considered time brokerage
agreements for FCC purposes. The term "JSAS" means joint sales agreements
pursuant to which a company sells advertising time on stations owned by third
parties. A Jacor affiliate owns a 40% interest in a limited liability company
that purchased the assets formerly owned by Duncan American Radio, Inc. See
"Transactions."
7
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
(Dollars in thousands)
The following sets forth summary historical financial data for Jacor for the
three years ended December 31, 1995 and the nine month periods ended September
30, 1995 and 1996. The comparability of the historical consolidated financial
data has been significantly impacted by acquisitions and dispositions. The
information presented below is qualified in its entirety by, and should be read
in conjunction with, Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Consolidated Financial Statements and the
Notes thereto incorporated by reference from the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and the Company's Quarterly Reports on
Form 10-Q for the quarterly periods ended March 31, 1996, June 30, 1996 and
September 30, 1996.
<TABLE>
<CAPTION>
PRO FORMA
COMBINED(1)(2)
HISTORICAL ---------------------
---------------------------------------------------------- YEAR NINE
NINE MONTHS ENDED ENDED MONTHS
YEAR ENDED DECEMBER 31, SEPTEMBER 30, DECEMBER ENDED
---------------------------------- ---------------------- 31, SEPTEMBER
1993 1994 1995 1995 1996(3) 1995 30, 1996
---------- ---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Net revenue......................... $ 89,932 $ 107,010 $ 118,891 $ 87,176 $ 127,520 $303,469 $240,041
Broadcast operating expenses........ 69,520 80,468 87,290 65,241 91,694 195,744 162,949
Depreciation and amortization....... 10,223 9,698 9,483 6,783 10,601 46,840 35,239
Corporate general and administrative
expenses.......................... 3,564 3,361 3,501 2,564 4,080 6,655 5,559
Operating income.................... 6,625 13,483 18,617 12,588 21,145 54,230 36,294
Net income (loss)................... 1,438 7,852 10,965 7,768 4,737 (8,895) (4,694)
OTHER FINANCIAL DATA:
Broadcast cash flow(4).............. $ 20,412 $ 26,542 $ 31,601 $ 21,935 $ 35,826 $107,725 $ 77,092
Broadcast cash flow margin(5)....... 22.7% 24.8% 26.6% 25.2% 28.1% 35.5% 32.1%
EBITDA(4)........................... $ 16,848 $ 23,181 $ 28,100 $ 19,371 $ 31,746 $101,070 $ 71,533
Capital expenditures................ 1,495 2,221 4,969 3,664 7,506 19,677 12,436
Ratio of earnings to fixed
charges(6)........................ 1.9x 6.0x 5.7x 7.1x 2.0x -- --
PRO FORMA CREDIT RATIOS:(7)
Cash interest expense............... $ 59,387
Ratio of EBITDA to cash interest
expense........................... 1.7x
Ratio of long term debt (net of
cash) to EBITDA................... 5.7x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 38,659 $ 44,637 $ 24,436 $ 20,343 $ 84,602
Intangible assets................... 84,991 89,543 127,158 114,738 1,341,430
Total assets........................ 159,909 173,579 208,839 203,356 1,717,221
Long-term debt...................... -- -- 45,500 33,500 626,250
LYONs............................... -- -- -- -- 117,090
Total shareholders' equity.......... 140,413 149,044 139,073 141,991 528,255
</TABLE>
- ------------------------------
(1) The unaudited pro forma combined statement of operations data for the year
ended December 31, 1995 and nine months ended September 30, 1996 give effect
to each of the following transactions as if such transactions had been
completed January 1, 1995: (i) the Citicasters Merger (as defined herein),
(ii) the Noble Acquisition (as defined herein), (iii) Jacor's, Citicasters'
and Noble Broadcast Group, Inc.'s completed 1995 and January 1996 radio
station acquisitions, (iv) Jacor's February 1996 radio station disposition,
and (v) the related financing transactions completed in June 1996. The
unaudited pro forma combined information does not purport to present the
actual results of operations of Jacor had the transactions and events
assumed therein in fact occurred on the dates specified, nor is it
necessarily indicative of the results of operations that may be achieved in
the future.
(2) The unaudited pro forma combined statement of operations data for the year
ended December 31, 1995 and nine months ended September 30, 1996 does not
give effect to the completed acquisitions of WCTQ-FM and WAMR-AM in Venice,
Florida and WLAP-AM, WMXL-FM and WWYC-FM servicing Lexington, Kentucky.
These completed acquisitions would increase net revenue and broadcast cash
flow by $3,934 and $560, respectively, for the year ended December 31, 1995
and by $2,507 and $643, respectively, for the nine months ended September
30, 1996.
(3) The Noble Acquisition and the Citicasters Merger significantly affect
comparison of net revenues, operating expenses and broadcast cash flow for
the nine months ended September 1996 as compared to the nine months ended
September 1995.
(4) "Broadcast cash flow" means operating income before depreciation and
amortization, and corporate general and administrative expenses. "EBITDA"
means operating income before depreciation and amortization. Broadcast cash
flow and EBITDA should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity. Although these measures of performance are not
calculated in accordance with generally accepted accounting principles, they
are widely used in the broadcasting industry as a measure of a company's
operating performance because they assist in comparing station performance
on a consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors such
as historical cost bases. Broadcast cash flow also excludes the effect of
corporate general and administrative expenses, which generally do not relate
directly to station performance.
(5) Broadcast cash flow margin equals broadcast cash flow as a percentage of net
revenue.
(6) The ratio of earnings to fixed charges for the year ended December 31, 1991
was 1.1x. In 1992, fixed charges exceeded earnings by approximately $23.7
million. For the purpose of computing the ratio of earnings to fixed charges
as prescribed by the rules and regulations of the Securities and Exchange
Commission, earnings represent pretax income from continuing operations plus
fixed charges, less interest capitalized. Fixed charges represent interest
(including amounts capitalized), the portion of rent expenses deemed to be
interest and amortization of deferred financing costs. On a pro forma basis
for the year ended December 31, 1995 and the nine months ended September 30,
1996, the ratio of earnings to fixed charges resulted in a coverage
deficiency of $5.9 million and $5.7 million, respectively.
(7) The pro forma credit ratios reflect the cash and long term debt of Jacor as
of September 30, 1996 as adjusted to give effect to the Citicasters Put, the
Offering and the application of the net proceeds therefrom to reduce
outstanding indebtedness under the revolving credit facility component of
the Credit Facility to the extent permitted thereunder. See
"Capitalization."
8
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE, PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE PURCHASING THE NOTES OFFERED
HEREBY.
PENDING TRANSACTIONS. The consummation of each of the Pending Transactions
requires Federal Communications Commission ("FCC") approval with respect to the
transfer of the associated broadcast licenses. Jacor has filed or will file in
the ordinary course applications seeking FCC approval for the Pending
Transactions. In addition, the consummation of certain of the Pending
Transactions is subject to the expiration or termination of the applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"). Jacor recently received second requests for
information from the Antitrust Division of the Department of Justice (the
"Antitrust Division") relating to each of the Par Transaction and the Nationwide
Exchange (each as defined herein) which focus on Jacor's acquisition of radio
stations in San Diego. The applicable waiting period under the HSR Act for each
of the Par Transaction and the Nationwide Exchange will expire 20 days after all
of the parties in the applicable transaction substantially comply with the
second request relevant to that transaction, unless the parties agree to extend
the waiting period or the Antitrust Division seeks to, and is successful in its
efforts to, enjoin the applicable transaction. The parties have not yet
completed compliance with the recently-received second requests. There can be no
assurance that (i) the FCC will approve the transfer of the broadcast licenses
in connection with the Pending Transactions; (ii) the FCC or a court would
affirm the FCC consent to the Pending Transactions if such review is undertaken;
(iii) the HSR Act waiting periods with respect to the various Pending
Transactions will expire without objections being raised by either the Federal
Trade Commission ("FTC") or the Antitrust Division that would not be eliminated
without substantial changes to the terms of the applicable Pending Transactions;
or (iv) Jacor will be successful in consummating the various Pending
Transactions in a timely manner or on the terms described herein.
RISKS OF ACQUISITION STRATEGY. Jacor intends to pursue growth through the
opportunistic acquisition of broadcasting companies, radio station groups,
individual radio stations and entities that provide services to radio station
groups or individual radio stations. In this regard, Jacor routinely reviews
such acquisition opportunities. Jacor believes that currently there are
available a number of acquisition opportunities that would be complementary to
its business. Other than with respect to the Pending Transactions, Jacor
currently has no binding commitments to acquire any specific business or other
material assets. Jacor cannot predict whether it will be successful in pursuing
such acquisition opportunities or what the consequences of any such acquisition
would be.
The Pending Transactions will increase Jacor's broadcast station portfolio
by 40 radio stations. Jacor's acquisition strategy involves numerous risks,
including difficulties in the integration of operations and systems, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired stations. There can be no assurance
that Jacor's management will be able to manage effectively the resulting
business or that such acquisitions will benefit Jacor.
In addition to the expenditure of capital relating to the Pending
Transactions (see "Use of Proceeds"), future acquisitions also may involve the
expenditure of significant funds. Depending upon the nature, size and timing of
future acquisitions, Jacor may be required to raise additional financing. There
is no assurance that such additional financing will be available to Jacor on
acceptable terms.
INCREASED ANTITRUST SCRUTINY. Subsequent to the passage of the Telecom Act,
the radio broadcast industry has been subject to an increased amount of scrutiny
by the Antitrust Division. Such scrutiny caused Jacor to experience delays in
closing both the Citicasters Merger and the Noble Acquisition and to incur
increased transaction costs. The Company could experience similar delays and
increased costs in connection with future transactions, including one or more of
the Pending Transactions.
The Antitrust Division or the FTC could also compel changes in the proposed
terms of acquisitions. This is evidenced by Jacor's agreement with the Antitrust
Division in connection with the Citicasters Merger pursuant to which Jacor
agreed to divest WKRQ-FM in Cincinnati by February 1997 and to inform the
Antitrust Division of certain transactions in Cincinnati that would not
otherwise be reportable under the
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<PAGE>
HSR Act. Antitrust Division scrutiny also resulted in Jacor terminating its
agreement to finance the acquisition of WGRR-FM in Cincinnati by Tsunami
Communications, Inc., the entity with whom Jacor has a JSA for a Denver radio
station. Subsequent to such termination, Jacor received from the Antitrust
Division a civil investigative demand relating to the proposed transaction. In
November 1996, the Antitrust Division suspended Jacor's obligation to respond to
this civil investigative demand.
In addition, Jacor has received an industry-wide civil investigative demand
relating to JSAs pursuant to which the Antitrust Division is examining the
antitrust implications of such arrangements. Jacor anticipates that the
Antitrust Division's determinations of the permissibility of JSAs will depend on
the specific characteristics of the markets, stations and relationships being
reviewed. Jacor believes that its existing JSAs are appropriate under applicable
antitrust laws and that its JSAs are not material to its business as such
arrangements only account for approximately 1.0% of Jacor's revenues. Jacor is
in the process of responding to the civil investigative demand relating to JSAs
received from the Antitrust Division.
Although Jacor does not believe that antitrust considerations will adversely
affect Jacor's ability to successfully implement its business strategy, the
effects of the Antitrust Division's heightened level of scrutiny on the radio
broadcast industry and on Jacor are uncertain. There can be no assurance that
these concerns will not negatively impact Jacor.
FCC REGULATION OF BROADCASTING INDUSTRY. The broadcasting industry is
subject to extensive regulation by the FCC which, among other things, requires
approval for the issuance, renewal, transfer and assignment of broadcasting
station operating licenses, limits the number of broadcasting properties Jacor
may acquire and regulates the operations of broadcasting stations. Additionally,
in certain circumstances, the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules will operate to impose limitations on alien
ownership and voting of the capital stock of Jacor. The FCC is considering
changes to its rules in response to the Telecom Act and other industry
developments. There can be no assurance that any such rule changes will not
negatively impact Jacor's operations in the future.
The Company's business will be dependent upon maintaining its broadcasting
licenses issued by the FCC, which are issued currently for a maximum term of
five years for television and seven years for radio. The majority of the
Company's operating licenses expire at various times in 1996 and 1997. Although
it is rare for the FCC to deny a renewal application, there can be no assurance
that the pending or future renewal applications will be approved, or that such
renewals will not include conditions or qualifications that could adversely
affect the Company's operations. Moreover, governmental regulations and policies
may change over time and there can be no assurance that such changes would not
have a material adverse impact upon the Company's business, financial condition
and results of operations.
COMPETITION; BUSINESS RISKS. Broadcasting is a highly competitive business.
Jacor's radio and television stations compete for audiences and advertising
revenues with other radio and television stations, as well as with other media,
such as newspapers, magazines, cable television, outdoor advertising and direct
mail, within their respective geographic areas. Audience ratings and revenue
shares are subject to change and any adverse change in a particular geographic
area could have a material and adverse effect on the revenue of stations located
in that geographic area. Future operations are further subject to many variables
which could have an adverse effect upon Jacor's financial performance. These
variables include economic conditions, both generally and relative to the
broadcasting industry; shifts in population and other demographics; the level of
competition for advertising dollars with other radio stations, television
stations and other entertainment and communications media; fluctuations in
operating costs; technological changes and innovations; changes in labor
conditions; and changes in governmental regulations and policies and actions of
federal regulatory bodies. Although the Company believes that each of its
stations will be able to compete effectively in its respective broadcast area,
there can be no assurance that any such station will be able to maintain or
increase its current audience ratings and advertising revenues.
SUBSTANTIAL LEVERAGE AND LIMITED FINANCIAL FLEXIBILITY. The Pending
Transactions and this Offering may result in a higher level of indebtedness for
the Company. The Company's outstanding indebtedness may have the following
important consequences: (i) significant interest expense and principal repayment
obligations resulting in substantial annual fixed charges; (ii) significant
limitations on the Company's ability to obtain additional debt financing; and
(iii) increased vulnerability to adverse general economic and industry
10
<PAGE>
conditions. In addition, the Credit Facility has a number of financial
covenants, including interest coverage, debt service coverage and a maximum
ratio of debt to earnings before other expenses (income), interest, expenses,
taxes, depreciation and amortization.
SHARE OWNERSHIP BY ZELL/CHILMARK. Zell/Chilmark Fund L.P. ("Zell/Chilmark")
currently holds approximately 42.7% of the outstanding Common Stock. The large
share ownership of Zell/Chilmark may have the effect of discouraging certain
types of transactions involving an actual or potential change of control of
Jacor, including transactions in which the holders of Common Stock might
otherwise receive a premium for their shares over then-current market prices.
By virtue of its current control of Jacor, Zell/Chilmark could sell large
amounts of Common Stock by causing Jacor to file a registration statement with
respect to such stock. In addition, Zell/Chilmark could sell its shares of
Common Stock without registration pursuant to Rule 144 under the Securities Act
of 1933, as amended (the "Securities Act"). Jacor can make no prediction as to
the effect, if any, that such sales of shares of Common Stock would have on the
prevailing market price. Sales of substantial amounts of Common Stock, or the
availability of such shares for sale, could adversely affect prevailing market
prices. Sales or transfers of Common Stock by Zell/Chilmark could result in
another person or entity becoming the controlling shareholder of Jacor.
KEY PERSONNEL. Jacor's business is dependent upon the performance of
certain key employees, including its Chief Executive Officer and its President.
Jacor employs several on-air personalities with significant loyal audiences in
their respective broadcast areas. Jacor generally enters into long-term
employment agreements with its key on-air talent to protect its interests in
those relationships, but there can be no assurance that all such on-air
personalities will remain with Jacor.
FORWARD-LOOKING STATEMENTS. This Prospectus sets forth or incorporates by
reference forward-looking statements within the meaning of Section 27A of the
Securities Act. Discussions containing such forward-looking statements may be
found in the material set forth under "Summary" and "Business," as well as
within the Prospectus generally. In addition, when used in this Prospectus, the
words "believes," "anticipates," "expects" and similar expressions are intended
to identify forward-looking statements. 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 above and the matters set forth or incorporated by reference
in this Prospectus generally. Jacor undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances. Jacor cautions the reader,
however, that this list of risk factors may not be exhaustive.
11
<PAGE>
TRANSACTIONS
RECENTLY COMPLETED ACQUISITIONS AND DISPOSITIONS
In February 1996, Jacor entered into an agreement to acquire Citicasters
through a merger of Citicasters with and into a wholly owned Jacor subsidiary
(the "Citicasters Merger"). Citicasters owned and/or operated 19 radio stations,
located in Atlanta, Phoenix, Tampa, Portland, Kansas City, Cincinnati,
Sacramento, Columbus and two television stations, one located in Tampa and one
in Cincinnati. The Citicasters Merger enhanced Jacor's existing station
portfolios in Atlanta, Tampa and Cincinnati and created new multiple radio
station platforms in Phoenix, Portland, Kansas City, Sacramento and Columbus.
Jacor consummated the Citicasters Merger in September 1996 for an approximate
aggregate value of $847.3 million, which included the purchase of all
outstanding shares of Citicasters common stock, the assumption of Citicasters
outstanding indebtedness and the issuance of warrants to purchase an aggregate
of 4,400,000 shares of Common Stock at an exercise price of $28.00 per full
share (the "Citicasters Warrants"). In order to complete the Citicasters Merger,
Jacor agreed with the Antitrust Division to divest WKRQ-FM in Cincinnati no
later than February 1997.
Also, in February 1996, Jacor entered into an agreement to acquire Noble
Broadcast Group, Inc. ("Noble"), which owned ten radio stations serving Denver,
St. Louis and Toledo, and the right to provide programming to and sell the air
time for one AM and one FM station serving the San Diego broadcast area (the
"Noble Acquisition"). The Noble Acquisition enhanced Jacor's existing portfolio
in Denver where it now owns eight stations, in addition to creating new multiple
station platforms in St. Louis and Toledo. Jacor consummated the Noble
Acquisition in July 1996 for an aggregate consideration of approximately $152.0
million in cash.
In February 1996, Jacor sold the business and certain operating assets of
radio stations WMYU-FM and WWST-FM in Knoxville. Jacor received approximately
$6.5 million in cash for this sale, generating a gain of approximately $2.5
million. In March 1996, Jacor entered into an agreement for the sale of the
assets of WBRD-AM in Tampa for approximately $0.5 million in cash. The sale of
WBRD-AM was completed in June 1996.
In March 1996, Jacor entered into an agreement to acquire the FCC licenses
of WCTQ-FM and WAMR-AM in Venice, Florida and to purchase certain real estate
and transmission facilities necessary to operate the stations. In June 1996,
Jacor consummated this acquisition for a purchase price of approximately $4.4
million.
In June 1996, Jacor entered into an agreement to acquire the FCC licenses of
WLAP-AM, WMXL-FM and WWYC-FM servicing Lexington, Kentucky and to purchase real
estate and transmission facilities necessary to operate the stations. In August
1996, Jacor consummated this acquisition for a purchase price of approximately
$14.0 million.
Also, in June 1996, Jacor agreed to finance the purchase by Critical Mass
Media, Inc. ("CMM") of a 40% interest in a newly formed limited liability
company that agreed to purchase for approximately $0.5 million the assets of
Duncan American Radio, Inc. CMM is a marketing research and radio consulting
business which is owned by a limited partnership of which Jacor is the 5%
general partner and a corporation wholly owned by Randy Michaels, the Chief
Executive Officer of Jacor, is the 95% limited partner. This transaction was
completed by Jacor in June 1996.
In September 1996, Jacor entered into a binding agreement with a subsidiary
of Gannett Co., Inc. ("Gannett") to effect an exchange of Jacor's Tampa
television station, WTSP-TV, acquired by Jacor in the Citicasters Merger, for
six of Gannett's radio stations (the "Gannett Exchange"). In December 1996,
Jacor and Gannett consummated the Gannett Exchange subject only to a possible
unwinding of the transaction in the event a final order from the FCC cannot be
obtained. The stations Jacor acquired are KIIS-FM and KIIS-AM in Los Angeles,
KSDO-AM and KKBH-FM in San Diego and WUSA-FM and WDAE-AM in Tampa-St. Petersburg
(the "Selected Gannett Radio Stations"). The Company will rename WUSA-FM to
WUKS-FM as Gannett retained the WUSA-FM call letters. The Gannett Exchange
enhanced Jacor's existing station portfolios in San Diego and Tampa and created
a new multiple radio station platform in the
12
<PAGE>
Los Angeles broadcast area. In connection with the closing of the Gannett
Exchange, Jacor and Gannett agreed that they will value the exchanged assets at
$170.0 million for tax purposes. Jacor believes that this transaction
constituted a tax-free like-kind exchange.
PENDING TRANSACTIONS
In May 1996, Jacor entered into an agreement with Enterprise Media of
Toledo, L.P. to acquire the FCC licenses of WIOT-FM and WCWA-AM in Toledo, Ohio
and to purchase real estate and transmission facilities necessary to operate the
stations. The purchase price for the assets is $13.0 million which amount has
been placed in escrow pending the closing of the transaction. Jacor has entered
into an LMA with respect to these stations. These stations will enhance Jacor's
existing radio station portfolio in the Toledo broadcast area.
In July 1996, Jacor entered into an agreement with New Wave Communications,
L.P. and New Wave Broadcasting, Inc. to acquire the FCC licenses of WSPB-AM,
WSRZ-FM and WYNF-FM in Sarasota, Florida and to purchase leasehold interests in
real estate and transmission facilities necessary to operate the stations. The
purchase price for the assets is $12.5 million, subject to a maximum purchase
price of $15.0 million based upon the timing of the closing.
In August 1996, Jacor entered into agreements with Sarasota-Charlotte
Broadcasting Corporation to acquire certain assets, a construction permit and
related real estate for radio station WEDD-FM in Englewood, Florida for an
aggregate of $0.8 million.
In October 1996, Jacor entered into a definitive merger agreement with
Regent Communications, Inc. ("Regent") whereby Regent will merge with and into
Jacor (the "Regent Merger"). Regent owns, operates or represents 20 radio
stations located in Kansas City, Salt Lake City, Las Vegas, Louisville and
Charleston, South Carolina. Of these 20 stations, Regent currently is operating
under an LMA with respect to two such stations subject to Regent's option to
purchase such stations and Regent is representing two such stations under JSAs
and has a definitive merger agreement to acquire another such station. Regent
entered into an LMA with Jacor such that Jacor commenced the activities
contemplated by the LMA with regard to the Regent stations on December 1, 1996
and Regent assigned to Jacor its existing LMAs and JSAs. In addition, the owner
of the station which Regent is to acquire pursuant to a definitive merger
agreement entered into an LMA with Jacor that became effective December 1, 1996.
The Regent Merger will enhance Jacor's existing station portfolio in Kansas City
and will create new multiple station platforms in the attractive high growth
Salt Lake City and Las Vegas broadcast areas. The merger consideration to be
paid by Jacor to the Regent stockholders consists of 3.55 million shares of
Common Stock (subject to adjustment pursuant to the terms of the merger
agreement), warrants to acquire an aggregate of 500,000 shares of Common Stock
at an exercise price of $40 per full share (the "Regent Warrants"), and up to
$64.0 million in cash to be used to repay outstanding Regent indebtedness. In
the event that the value of the Common Stock to be received by the Regent
stockholders is less than $116.0 million, at Jacor's option: (a) Jacor may make
up the difference by the delivery of additional shares of Common Stock; (b) pay
the difference in cash; or (c) pay all of the merger consideration in cash. The
HSR Act waiting period with respect to the Regent Merger expired on November 22,
1996.
In October 1996, Jacor also entered into binding agreements with Par
Broadcasting Company, Inc. and Par Broadcasting Company (collectively, "Par") to
purchase four radio stations in San Diego, KOGO-AM, KCBQ-AM, KIOZ-FM and
KKLQ-FM, for $72.0 million in cash (the "Par Transaction") and with
Entertainment Communications, Inc. ("Entercom") to sell two radio stations in
Sacramento, KSEG-FM and KRXQ-FM, for $45.0 million in cash (the "Entercom
Transaction"). Although these transactions are not directly contingent upon each
other, Jacor anticipates that these transactions will occur in a manner that
permits the transactions to be treated as a tax-free like-kind exchange. The HSR
Act waiting period with respect to the Entercom Transaction expired on December
1, 1996. Jacor has entered into an LMA with Entercom such that Entercom will
commence the activities contemplated by the LMA with regard to the Sacramento
stations on January 1, 1997. Par has entered into an LMA with Jacor such that
Jacor will commence the activities contemplated by the LMA with regard to the
San Diego stations upon the expiration or termination of the applicable waiting
period under the HSR Act. See "Risk Factors -- Pending Transactions."
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<PAGE>
In October 1996, Jacor entered into a binding agreement with Nationwide
Communications, Inc. ("Nationwide") whereby Jacor will exchange the assets of
its two radio stations in Phoenix, KSLX-AM and KSLX-FM, for the assets of
Nationwide's two radio stations in San Diego, KGB-FM and KPOP-AM (the
"Nationwide Exchange"). The assets to be exchanged are valued by Jacor and
Nationwide at approximately $45.0 million. Jacor anticipates that this
transaction will constitute a tax-free like-kind exchange. This transaction is
contingent upon the successful closing of Nationwide's agreement to purchase
KGB-FM and KPOP-AM from KGB, Inc. Nationwide has assigned to Jacor its rights
under an LMA with KGB, Inc. such that Jacor will commence the activities
contemplated by the LMA with regard to the San Diego stations upon the
expiration or termination of the applicable waiting period under the HSR Act.
Jacor has entered into an LMA with Nationwide such that Nationwide will commence
the activities contemplated by the LMA with regard to the Phoenix stations upon
the expiration or termination of the applicable waiting period under the HSR
Act. In connection with entering into the agreements with Nationwide, Jacor also
announced that it intends to sell KCBQ-AM in San Diego, upon its acquisition
from Par, to EXCL Communications, Inc. ("EXCL"). No binding agreement has yet
been entered into with EXCL. Together, the Par Transaction, the Nationwide
Exchange and the contemplated sale of KCBQ-AM will enhance Jacor's existing
radio station portfolio in San Diego, where Jacor will then own eight stations.
See "Risk Factors -- Pending Transactions."
In October 1996, Jacor entered into three separate binding agreements with
three unaffiliated radio broadcast companies whereby Jacor will acquire the FCC
licenses and assets of a total of nine radio stations. These agreements are with
Palmer Broadcasting Limited Partnership to acquire WHO-AM and KLYF-FM in Des
Moines and WMT-AM and WMT-FM in Cedar Rapids for a purchase price of $52.5
million in cash (the "Palmer Transaction"); with Clear Channel Radio, Inc. to
purchase KTWO-AM, KMGW-FM and the Wyoming Radio Network, in Casper, Wyoming for
a purchase price of $1.9 million in cash; and with Colfax Communications to
acquire KIDO-AM and KLTB-FM in Boise, Idaho and KARO-FM in Caldwell, Idaho for a
purchase price of $11.0 million in cash. Jacor received early termination of the
HSR Act waiting period with respect to the Palmer Transaction on November 18,
1996.
In November 1996, Jacor entered into a binding agreement with Stanford
Capital Communications, Inc. ("Stanford") to acquire the FCC licenses and
operating assets of radio stations WKQQ-FM in Lexington, Kentucky and WXZZ-FM
and WTKT-AM in Georgetown, Kentucky (the "Stanford Transaction"). The purchase
price for the assets is $24.0 million in cash, of which $1.2 million has been
placed in escrow pending the closing of the transaction. In addition, Jacor was
assigned an option to purchase certain real estate for $0.1 million in cash. The
Stanford Transaction is contingent upon the successful closing of Stanford's
agreement to purchase WKQQ-FM, WXZZ-FM and WTKT-AM from Village Communications,
Inc. ("Village"). Stanford has assigned to Jacor its rights under an LMA with
Village such that Jacor will commence the activities contemplated by the LMA
upon the expiration or termination of the applicable waiting period under the
HSR Act.
In December 1996, Jacor entered into four separate binding agreements with
unaffiliated parties whereby Jacor will acquire the FCC licenses and assets of a
total of six radio stations. Jacor will acquire (i) WAHC-FM, licensed to
Circleville, Ohio, and WAKS-FM, licensed to Marysville, Ohio, from Tel Lease,
Inc.; (ii) KGLL-FM in Greeley, Colorado from Duchossois Communications Company
of Colorado, Inc. (the "Duchossois Transaction"); (iii) KCOL-AM and KPAW-FM in
Fort Collins, Colorado from University Broadcasting Company, L.P. (the
"University Transaction"); and (iv) WJCM-AM in Sebring, Florida from Rumbuat
Management, Inc. Jacor does not currently intend to continue operating the
Florida radio station. The aggregate purchase price for the six radio stations
is approximately $15.7 million, of which approximately $4.0 million has been
placed in escrow pending the closing of the transactions. The closing of each of
the Duchossois Transaction and the University Transaction is contingent upon the
closing of the other of such two transactions. Jacor has entered into an LMA
with Tel Lease, Inc. such that Jacor commenced the activities contemplated by
the LMA with regard to WAHC-FM and WAKS-FM on December 7, 1996.
All of the Pending Transactions are subject to various conditions, including
approval by the FCC. The Par Transaction, the Nationwide Exchange and the
Stanford Transaction are further subject to termination or expiration of the
applicable waiting periods under the HSR Act. See "Risk Factors -- Pending
Transactions" and "-- Increased Antitrust Scrutiny."
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USE OF PROCEEDS
The net proceeds (after deducting estimated expenses and underwriting
discounts and commissions) to JCC from the sale of the Notes offered hereby are
estimated to be $164.6 million. Jacor intends to use the net proceeds from the
Offering (i) to finance the remaining purchase price of the Pending
Transactions; (ii) to repay a portion of the outstanding indebtedness under the
Credit Facility; and (iii) for general corporate purposes, including acquisition
of other broadcast properties and repayment of other indebtedness.
In June 1996, Jacor entered into a credit facility (the "Credit Facility")
with certain banks and other financial institutions. The Credit Facility
provides availability of $600.0 million of loans in three components: (i) a
revolving credit facility of up to $200.0 million with mandatory semi-annual
commitment reductions beginning March 18, 1999 and a final maturity date of
September 18, 2003; (ii) a term loan of $300.0 million with scheduled
semi-annual reductions beginning March 18, 1998 and a final maturity date of
September 18, 2003; and (iii) a tranche B term loan of $100.0 million with
scheduled semi-annual reductions beginning March 18, 1999 and a final maturity
date of September 18, 2004.
The Credit Facility bears interest at a rate that fluctuates with a bank
base rate and/or the Eurodollar rate per annum, and at October 31, 1996 this
rate was 7.73%. Jacor borrowed monies under the Credit Facility to (i) finance a
portion of the cash consideration paid in the Citicasters Merger, and (ii) fund
$100 million of the repurchase price of the 9 3/4% Senior Subordinated Notes due
2004 issued by JCC (the "9 3/4% Notes"). The Citicasters Merger constituted a
change in control for the purposes of the indenture under which the 9 3/4% Notes
were issued and Jacor was required to make an offer to repurchase such notes at
101% of their aggregate principal amount. The holders of $106.9 million in
principal amount of the 9 3/4% Notes elected in October 1996 to sell their
9 3/4% Notes to Jacor pursuant to Jacor's repurchase offer.
In November 1996, Jacor entered into discussions to expand the availability
under the Credit Facility from up to $600.0 million to up to $750.0 million,
among other things. Jacor is discussing with the lenders that the components of
the increased Credit Facility consist of a revolving credit faciity with an
availability of up to $450.0 million, a $200.0 million seven-year amortizing
term loan and a $100.0 million up to eight-year amortizing term loan. There can
be no assurance that the availability under the Credit Facility will be
increased or that the components of the Credit Facility will be revised.
Consummation of the Offering is not subject to an expansion or revision of the
Credit Facility or consummation of any of the Pending Transactions.
15
<PAGE>
CAPITALIZATION
The following sets forth the capitalization of Jacor on an actual basis as
of September 30, 1996 and as adjusted to give effect to the Citicasters Put (as
defined below), the Offering and the application of the net proceeds therefrom.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------
PRO FORMA AS
ACTUAL ADJUSTED
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash(1)............................................................................... $ 52,821 $ 107,552
------------ ------------
------------ ------------
Long-term debt, including current portion:(2)
Credit Facility(1)(3)............................................................. $ 400,000 $ 400,000
9 3/4% Senior Subordinated Notes due 2006......................................... -- 170,000
10 1/8% Senior Subordinated Notes due 2006........................................ 100,000 100,000
9 3/4% Senior Subordinated Notes due 2004(3)...................................... 125,000 18,125
Liquid Yield Option Notes due 2011(4)............................................. 117,090 117,090
------------ ------------
Total long-term debt.......................................................... 742,090 805,215
------------ ------------
Shareholders' equity:
Common Stock, $.01 par value(5)................................................... 312 312
Additional paid-in capital........................................................ 430,307 430,307
Citicasters Warrants.............................................................. 72,644 72,644
Retained earnings................................................................. 24,992 24,992
------------ ------------
Total shareholders' equity.................................................... 528,255 528,255
------------ ------------
Total capitalization.................................................................. $ 1,270,345 $ 1,333,470
------------ ------------
------------ ------------
</TABLE>
- ------------------------------
(1) Jacor has entered into discussions to revise its Credit Facility to
increase the revolving credit facility component to up to $450.0 million
and to decrease the term loan facility components to an aggregate of $300.0
million. Jacor believes such revision, if finalized, would permit the
Company to utilize excess cash to reduce outstanding indebtedness under the
Credit Facility by repaying indebtedness under the increased revolving
credit facility without creating a permanent reduction in availability. Pro
forma indebtedness reflecting the proposed revisions to the Credit Facility
would result in borrowings under the Credit Facility of $300.0 million and
total long-term debt of $705.2 million.
(2) See Notes 4 and 5 of Notes to Jacor's consolidated financial statements
which are incorporated herein by reference from Jacor's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996 for additional
information regarding the components and terms of Jacor's long-term debt.
(3) As a result of a change of control covenant in the 9 3/4% Notes, the
holders thereof, upon consummation of the Citicasters Merger, had the
option to require Jacor to repurchase the 9 3/4% Notes at 101% of the
principal amount thereof. Upon such repurchase offer, the holders of
approximately $106.9 million of 9 3/4% Notes exercised such option on
October 18, 1996 (the "Citicasters Put"). Jacor funded such purchase with
excess cash and $100.0 million of additional borrowings under the Credit
Facility.
(4) The LYONs are convertible at any time on or prior to maturity into Common
Stock at a conversion rate of 13.412 shares per LYON, and are not
redeemable by Jacor prior to June 12, 2001 and are subject to mandatory
redemption at the option of the holders on June 12, 2001 and June 12, 2006.
No cash interest or similar payment is required in connection with the
LYONs. The LYONs are obligations of Jacor Communications, Inc. but not of
JCC. See "Description of Other Indebtedness -- The LYONs".
(5) Excludes (i) options outstanding on the date hereof to purchase
approximately 2,030,000 shares of Common Stock at a weighted average
exercise price of $11.84, which options have been granted to (a) employees
under Jacor's 1993 Stock Option Plan and 1995 Employee Stock Purchase Plan,
and (b) Jacor's non-employee directors, (ii) the Citicasters Warrants,
(iii) the Regent Warrants, (iv) units granted to Jacor's non-employee
directors in July 1996 to acquire 14,960 shares of Common Stock and (v)
units granted to certain Jacor executive officers in November 1996 to
acquire 22,488 shares of Common Stock.
16
<PAGE>
BUSINESS
GENERAL
Jacor, upon consummation of the Pending Transactions, will be the second
largest radio group in the nation as measured by gross revenue and will own
and/or operate 101 radio stations and one television station in 24 broadcast
areas across the United States. Jacor's strategic objective is to be a leading
radio broadcaster by operating multiple radio station platforms in each of its
broadcast areas. The Company's broadcast areas are among the most attractive in
the country, demonstrating, as a group, radio revenue growth in excess of the
radio industry average over the last five years. In 1995, the Company would have
been the top billing radio group in 15 of its 24 broadcast areas and would have
had net revenue and broadcast cash flow of $383.9 million and $121.9 million,
respectively.
Jacor's principal executive offices are currently located at 1300 PNC
Center, 201 East Fifth Street, Cincinnati, Ohio 45202 and its telephone number
is (513) 621-1300. By December 31, 1996, Jacor will relocate its principal
executive offices to 50 East RiverCenter Boulevard, 12th Floor, Covington,
Kentucky 41011 and its telephone number will be (606) 655-2267.
The following table sets forth certain information regarding the Company and
its broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA BROADCAST AREA DATA
------------------------------------ ----------------------------------
1995 RADIO 1995 1990-1995
RADIO AUDIENCE NO. OF STATIONS 1995 RADIO REVENUE
REVENUE SHARE ---------------- ARBITRON REVENUE CAGR
BROADCAST AREA RANK % AM FM TV RANK RANK %
- -------------------- ------- ------- ---- ---- ---- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles......... 5 3.4 1 1 -- 2 1 3.6
Atlanta............. 1 15.2 1 3 -- 12 10 9.2
San Diego(1)(2)..... 1 20.9 3 5 -- 15 16 5.5
St. Louis........... 5 9.4 1 2 -- 17 18 4.5
Tampa............... 1 33.3 2 5 -- 21 21 6.2
Denver(3)........... 1 33.1 4 4 -- 23 14 8.6
Portland............ 1 18.4 1 2 -- 24 23 8.4
Cincinnati(2)(3).... 1 32.4 2 3 1 25 20 7.4
Kansas City......... 1 21.5 1 3 -- 26 32 4.3
Columbus............ 1 24.7 2 5 -- 32 28 6.7
Salt Lake City(3)... 1 21.7 1 4 -- 35 33 9.3
Las Vegas........... 1 22.1 -- 4 -- 48 42 11.8
Louisville.......... 2 20.9 1 4 -- 49 45 5.8
Jacksonville........ 2 22.8 2 3 -- 53 46 7.9
Toledo.............. 1 35.8 2 3 -- 75 74 5.6
Sarasota/Bradenton... 1 10.4 1 2 -- 79 176 N/A
Charleston.......... 2 13.5 -- 2 -- 87 90 4.8
Des Moines.......... 1 19.9 1 1 -- 89 69 8.4
Lexington........... 1 39.2 2 4 -- 105 79 6.4
Boise............... 2 17.6 1 2 -- 130 104 9.5
Cedar Rapids........ 1 25.3 1 1 -- 197 127 4.9
Casper.............. 3 21.0 1 1 -- 263 249 N/A
Fort
Collins/Greeley(4)... N/A N/A 1 2 -- N/A N/A N/A
Venice/Englewood(4)... N/A N/A 1 2 -- N/A N/A N/A
</TABLE>
- ------------------------
(1) Excludes two radio stations located in Baja California, Mexico on which
Jacor provides programming to and sells air time for under an exclusive
sales agency agreement.
(2) Excludes KCBQ-AM in San Diego and WKRQ-FM in Cincinnati which the Company
will divest (see "Transactions").
(3) Excludes one station in Denver, three stations in Cincinnati and two
stations in Salt Lake City on which the Company sells or will sell
advertising time pursuant to joint sales agreements (see "Business -- Radio
Station Overview").
(4) The Fort Collins/Greeley and Venice/Englewood broadcast areas do not have
Arbitron ranks.
17
<PAGE>
BUSINESS STRATEGY
Jacor's strategic objective is to be a leading radio broadcaster in each of
its broadcast areas. Jacor intends to acquire individual radio stations or radio
groups that strengthen its strategic position and that maximize the operating
performance of its broadcast properties. Specifically, Jacor's business strategy
centers upon:
REVENUE LEADERSHIP. Jacor strives to maximize the audience ratings in each
of its broadcast areas in order to capture the largest share of the radio
advertising revenue and attract advertising away from other media in that
broadcast area. Jacor focuses on those locations where it believes it has the
potential to be a leading radio group. By operating multiple radio stations in
its broadcast areas, Jacor is able to operate its stations at lower costs,
supply more diverse programming and provide advertisers with the greatest access
to targeted demographic groups.
ACQUISITION AND DEVELOPMENT OF BROADCAST PROPERTIES. Jacor's acquisition
strategy focuses on acquiring both developed, cash flow producing stations and
underdeveloped "stick" properties (i.e., stations with insignificant ratings and
little or no positive broadcast cash flow) that complement its existing
portfolio and strengthen its overall strategic position. Jacor has been able to
improve the ratings of "stick" properties with increased marketing and focused
programming that complements its existing radio station formats. Additionally,
Jacor increases the revenues and cash flow of "stick" properties by encouraging
advertisers to buy advertising in a package with its more established stations.
The Company may enter new locations through acquisitions of radio groups that
have multiple station ownership in their respective broadcast areas. The Company
may also seek to acquire individual stations in new locations that it believes
are fragmented and where a revenue-leading position can be created through
additional acquisitions. The Company may exit locations it views as having
limited strategic appeal by selling or exchanging existing stations for stations
in other locations where the Company operates, or for stations in new locations.
Additionally, the Company may enter new locations situated near Jacor's core
broadcast areas. The Company believes that it will be able to leverage the costs
associated with the delivery of high quality, high cast programming of topical
interest throughout these geographical regions, which programming would not
otherwise be economically viable in such smaller broadcast areas. Utilizing this
strategy, Jacor has recently entered into agreements or closed transactions to
acquire radio stations in Venice/Englewood, Florida; Lexington, Kentucky;
Sarasota/Bradenton, Florida; Casper, Wyoming; and Fort Collins/Greeley,
Colorado.
DIVERSE FORMAT EXPERTISE. Jacor management has developed programming
expertise over a broad range of radio formats. This management expertise enables
Jacor to specifically tailor the programming of each station in a broadcast area
in order to maximize Jacor's overall strategic position. Jacor utilizes
sophisticated research techniques to identify opportunities within each
broadcast area and programs its stations to provide complete coverage of a
demographic or format type. This strategy allows Jacor to deliver highly
effective access to a target demographic and to capture a higher percentage of
advertising revenues.
DISTINCT STATION PERSONALITIES. Jacor engages in a number of creative
programming and promotional efforts designed to create listener loyalty and
station brand awareness. Through these efforts, management seeks to cultivate a
distinct personality for each station based upon the unique characteristics of
each broadcast area. Jacor hires dynamic on-air personalities for key morning
and afternoon "drive times" and provides comprehensive news, traffic and weather
reports to create active listening by the audience. This commitment to
"foreground" or "high impact" programming has successfully generated significant
audience share.
One of the methods Jacor utilizes to develop the personality of its AM radio
stations is by broadcasting professional sporting events and related
programming. Currently, Jacor has the broadcast rights for the Cincinnati Reds,
Cincinnati Bengals, Colorado Rockies, Denver Broncos, Los Angeles Kings,
Portland Trail Blazers and San Diego Chargers. Sports broadcasting serves as a
key "magnet" for attracting audiences to a station and then introducing them to
other programming features, such as local and national news, entertaining talk,
and weather and traffic reports.
STRONG AM STATIONS. Jacor is an industry leader in successfully operating
AM stations. While many radio groups primarily utilize network or simulcast
programming on their AM stations, Jacor also develops
18
<PAGE>
unique programming for its AM stations to build strong listener loyalty and
awareness. Utilizing this operating focus and expertise, Jacor has developed its
AM stations in Denver and Cincinnati into the revenue and ratings leaders among
both AM and FM stations in their respective broadcast areas. Jacor's targeted AM
programming adds to Jacor's ability to increase its revenues and results in more
complete coverage of the listener base.
Although the cost structure of a large-scale AM station generally results in
lower operating margins than typical music-based FM stations, the majority of
Jacor's AM stations generate substantial levels of broadcast cash flow.
Historically, most other radio broadcast companies have not focused on their AM
operations to the same extent as Jacor. Accordingly, most of the AM stations to
be acquired meaningfully underperform Jacor's AM stations, and management
believes such stations have the potential to generate significant incremental
cash flow.
POWERFUL BROADCAST SIGNALS. A station's ability to maintain a leadership
position depends in part upon the strength of its broadcasting delivery system.
A powerful broadcast signal enhances delivery range and clarity, thereby
influencing listener preference and loyalty. Many of Jacor's stations'
broadcasting signals are among the strongest in their respective broadcast areas
reinforcing its leadership position. Jacor opportunistically upgrades the power
and quality of the signals of stations it acquires. Following the consummation
of the Pending Transactions, Jacor expects that relatively inexpensive technical
upgrades in certain broadcast areas will provide for significantly greater
signal presence.
RADIO STATION OVERVIEW
The following table sets forth certain information regarding the 101 radio
stations that will be owned and/or operated by the Company upon completion of
the Pending Transactions.
<TABLE>
<CAPTION>
TARGET
PENDING 1995 COMBINED DEMOGRAPHIC
BROADCAST AREA/ ACQUISITION RADIO REVENUE TARGET SHARE %/
STATION (P) RANK FORMAT DEMOGRAPHIC RANK
- ------------------- -------------- -------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
LOS ANGELES 5
KIIS-FM Contemporary Hit Radio Adults 18-34 4.5/6
KIIS-AM Contemporary Hit Radio Adults 18-34 --
ATLANTA 1
WPCH-FM Adult Contemporary Women 25-54 9.2/3
WGST-AM/FM(1) News Talk Men 25-54 5.0/8
WKLS-FM Album Oriented Rock Men 18-34 13.0/1
DENVER(2) 1
KOA-AM News Talk Men 25-54 10.9/2
KRFX-FM Classic Rock Men 25-54 12.4/1
KBPI-FM Rock Alternative Men 18-34 13.4/2
KTLK-AM Talk Adults 35-64 2.4/13
KHIH-FM Jazz Adults 25-54 4.9/8
KHOW-AM Talk Adults 25-54 2.2/13
KBCO-AM Talk Adults 25-54 --
KBCO-FM Album Oriented Rock Adults 25-54 5.7/7
SAN DIEGO(3)(4) 1
KHTS-FM Rhythmic Hits Adults 18-34 2.5/11
KSDO-AM News Talk Men 25-54 4.5/8
KKBH-FM Adult Contemporary Women 25-54 2.8/9
KOGO-AM P Talk Adults 25-54 1.4/22
KKLQ-FM P Contemporary Hit Radio Adults 18-34 4.0/7
KIOZ-FM P Album Oriented Rock Men 18-34 7.9/3
KGB-FM P Classic Rock Men 25-54 5.9/1
KPOP-AM P Nostalgia Adults 35-64 1.5/20
ST. LOUIS 5
KMJM-FM Urban Adult Contemporary Adults 25-54 5.3/6
KATZ-FM Black Oldies Adults 25-54 2.1/16
KATZ-AM Urban Talk Adults 35-64 1.6/19
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
TARGET
PENDING 1995 COMBINED DEMOGRAPHIC
BROADCAST AREA/ ACQUISITION RADIO REVENUE TARGET SHARE %/
STATION (P) RANK FORMAT DEMOGRAPHIC RANK
- ------------------- -------------- -------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CINCINNATI(2)(4) 1
WLW-AM News Talk Men 25-54 13.5/2
WEBN-FM Album Oriented Rock Men 18-34 28.2/1
WOFX-FM Classic Rock Men 25-54 5.7/5
WCKY-AM Talk Adults 35-64 6.8/4
WWNK-FM Adult Contemporary Women 25-54 5.8/5
TAMPA 1
WFLA-AM News Talk Adults 35-64 6.6/5
WFLZ-FM Contemporary Hit Radio Adults 18-34 15.2/1
WDUV-FM Beautiful/EZ Adults 35+ 9.4/1
WXTB-FM Album Oriented Rock Men 18-34 19.2/1
WTBT-FM Classic Rock Men 18-34 5.3/6
WUKS-FM(5) Hot Adult Contemporary Women 18-34 10.3/2
WDAE-AM Hot Adult Contemporary Women 18-34 --
PORTLAND 1
KEX-AM News Talk Adults 35-64 5.3/6
KKCW-FM Adult Contemporary Women 25-54 12.1/1
KKRZ-FM Contemporary Hit Radio Women 18-34 14.6/1
COLUMBUS 1
WTVN-AM Adult Contemporary/Talk Adults 35-64 8.3/3
WLVQ-FM Album Oriented Rock Men 18-34 13.0/2
WHOK-FM Country Adults 25-54 3.8/9
WLLD-FM Country Adults 25-54 2.2/12
WLOH-AM News Adults 35-64 --
WAKS-FM P Classic Rock Men 25-54 3.2/10
WAHC-FM P Oldies/70's Men 25-54 1.6/14
KANSAS CITY 1
WDAF-AM Country Adults 35-64 7.7/3
KYYS-FM Album Oriented Rock Men 18-34 11.4/3
KMXV-FM P Contemporary Hit Radio Adults 18-34 9.1/4
KUDL-FM P Adult Contemporary Women 25-54 8.9/1
SALT LAKE CITY(2) 1
KALL-AM P Talk Adults 35-64 5.5/5
KODJ-FM P Oldies Women 25-54 10.9/2
KKAT-FM P Country Adults 25-54 4.8/7
KURR-FM P New Rock Men 18-34 5.5/5
KZHT-FM P Contemporary Hit Radio Women 18-34 5.3/8
LAS VEGAS 1
KFMS-FM P Country Adults 25-54 6.2/4
KWNR-FM P Country Adults 25-54 7.5/1
KBGO-FM(1) P Oldies Women 25-54 4.6/8
KSNE-FM P Adult Contemporary Women 25-54 10.8/1
LOUISVILLE 2
WDJX-FM P Contemporary Hit Radio Adults 18-34 11.6/2
WFIA-AM P Religion Adults 25-54 --
WVEZ-FM P Adult Contemporary Women 25-54 7.7/2
WSFR-FM P Classic Rock Men 25-54 6.4/4
WSJW-FM(1) P Jazz Adults 25-54 5.2/8
JACKSONVILLE 2
WJBT-FM Urban Adults 18-34 10.5/3
WQIK-FM Country Adults 25-54 9.5/2
WSOL-FM Adult Urban Adults 25-54 5.6/8
WZAZ-AM Urban Talk Adults 35-64 2.9/12
WJGR-AM Talk Adults 25-54 0.9/18
DES MOINES 1
WHO-AM P News Talk Men 25-54 17.7/1
KLYF-FM P Adult Contemporary Women 25-54 11.5/2
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
TARGET
PENDING 1995 COMBINED DEMOGRAPHIC
BROADCAST AREA/ ACQUISITION RADIO REVENUE TARGET SHARE %/
STATION (P) RANK FORMAT DEMOGRAPHIC RANK
- ------------------- -------------- -------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
TOLEDO 1
WSPD-AM News Talk Adult 35-64 7.4/5
WVKS-FM Contemporary Hit Radio Adults 18-34 17.4/1
WRVF-FM Adult Contemporary Women 25-54 12.2/3
WIOT-FM P Album Oriented Rock Men 18-34 21.5/1
WCWA-AM P Nostalgia Adults 35-64 2.5/10
LEXINGTON(6) 1
WMXL-FM Hot Adult Contemporary Women 18-34 13.9/3
WWYC-FM Country Adults 25-54 7.9/4
WLAP-AM Sports Men 25-54 2.5/10
WKQQ-FM P Album Oriented Rock Men 18-34 24.5/1
WXZZ-FM P Rock Alternative Men 18-34 11.8/2T
WTKT-AM P Rythm and Blues Adults 35-64 2.6/11
CHARLESTON, S.C. 2
WEZL-FM P Country Adults 25-54 9.0/1
WXLY-FM P Oldies Women 25-54 8.7/1
BOISE(6) 2
KIDO-AM P News Talk Adults 25-54 8.1/2
KARO-FM P Classic Rock Men 25-54 4.8/7
KLTB-FM P Oldies Adults 25-54 5.8/6
CEDAR RAPIDS(6) 1
WMT-AM P Full Service Adults 35-64 11.3/4
WMT-FM P Adult Contemporary Women 25-54 17.7/3
SARASOTA/ 1
BRADENTON(6)
WSRZ-FM P Oldies Women 25-54 7.1/2
WYNF-FM P Classic Rock Men 25-54 11.1/1
WSPB-AM P Business News Men 35-64 --
CASPER(6) 3
KTWO-AM P Full Service/Country Adults 35-64 14.6/3
KMGW-FM P Adult Contemporary Women 25-54 12.0/2
FORT COLLINS/ N/A
GREELEY(7)
KCOL-AM P News Talk Adults 35-64 --
KPAW-FM P Oldies/Adult Contemporary Adults 25-54 --
KGLL-FM P Country Adults 25-54 --
VENICE/ENGLEWOOD(7) N/A
WAMR-AM Talk Adults 25-54 --
WCTQ-FM Country Adults 25-54 --
WEDD-FM P -- -- --
</TABLE>
- ------------------------------
(1) The Company provides programming and sells air time for the FM station
pursuant to a LMA.
(2) Excludes stations WAQZ-FM, WAZU-AM and WSAI-AM in Cincinnati and KTCL-FM in
Denver on which Jacor sells advertising time for pursuant to JSAs and
KBKK-FM and KRKR-FM in Salt Lake City on which Regent sells advertising time
for pursuant to JSAs.
(3) Excludes XTRA-FM and XTRA-AM, stations Jacor provides programming to and
sells air time for under an exclusive sales agency agreement.
(4) Excludes KCBQ-AM in San Diego and WKRQ-FM in Cincinnati which the Company
will divest (see "Transactions").
(5) Formerly known as WUSA-FM. Jacor acquired the licenses and operating assets
of WUSA-FM in the Gannett Exchange while Gannett retained the call letters.
(6) Share and rank information is derived from the Spring 1996 Arbitron.
(7) The Fort Collins/Greeley and Venice/Englewood broadcast areas do not have
Arbitron ranks.
TELEVISION
Jacor owns a television station in the Cincinnati broadcast area where it
currently owns and operates multiple radio stations. By operating a television
station in the broadcast area where Jacor has a significant radio presence,
Jacor expects to realize significant operating efficiencies including shared
news departments
21
<PAGE>
and reduction of administrative overhead. Jacor currently operates this
television station under a temporary waiver of an FCC rule that restricts
ownership of television and radio stations in the same market. This waiver will
continue until at least six months after the FCC completes a pending rulemaking
proceeding in which it is considering whether to substantially liberalize this
rule.
The following table sets forth certain information regarding the Cincinnati
television station and the broadcast area in which it operates:
<TABLE>
<CAPTION>
STATION RANK(1)
NATIONAL TV ---------------------
BROADCAST HOUSEHOLDS ADULTS
AREA IN DMA(1) TV AGED
BROADCAST AREA/STATION RANK(1) (000S) HOUSEHOLDS 25-54
- ------------------------------ ----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
Cincinnati/WKRC 29 793 3 1T
<CAPTION>
COMMERCIAL
STATIONS IN
BROADCAST
AREA CABLE
----------------- SUBSCRIBER NETWORK
BROADCAST AREA/STATION VHF UHF % AFFILIATION
- ------------------------------ ------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Cincinnati/WKRC 3 2 61 CBS
</TABLE>
- ------------------------------
(1) Rankings for Designated Market Area ("DMA"), 6:00 a.m. to 2:00 a.m.,
Sunday-Saturday for "TV Households" and "Adults aged 25-54." "T" designates
tied. This market information is from Nielsen.
ENERGY AND ENVIRONMENTAL MATTERS
Jacor's source of energy used in its broadcasting operations is electricity.
No limitations have been placed on the availability of electrical power, and
management believes its energy sources are adequate. Management believes that
Jacor is currently in material compliance with all statutory and administrative
requirements as related to environmental quality and pollution control.
22
<PAGE>
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture") to be dated as of
December 17, 1996, by and among JCC, the Guarantors and The Bank of New York, as
trustee (the "Trustee"). The terms of the Indenture are also governed by certain
provisions contained in the Trust Indenture Act of 1939, as amended. The
following summaries of certain provisions of the Indenture are summaries only,
do not purport to be complete and are qualified in their entirety by reference
to all of the provisions of the Indenture. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Indenture.
Wherever particular provisions of the Indenture are referred to in this summary,
such provisions are incorporated by reference as a part of the statements made
and such statements are qualified in their entirety by such reference. The form
of the Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. A copy of the form of Indenture is available
upon request.
GENERAL
The Notes will be senior subordinated, unsecured, general obligations of
JCC, limited in aggregate principal amount to $170.0 million. The Notes will be
subordinate in right of payment to certain other debt obligations of JCC. The
Notes will be jointly and severally irrevocably and unconditionally guaranteed
on a senior subordinated basis by the Guarantors. The obligations of each
Guarantor under its guarantee, however, will be limited in a manner intended to
avoid such guarantee being deemed a fraudulent conveyance under applicable law.
See "Fraudulent Transfer Considerations" below. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on December 15, 2006. The Notes will bear interest at
the rate per annum stated on the cover page hereof from the date of issuance or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on June 15 and December 15 of each year,
commencing June 15, 1997 , to the persons in whose names such Notes are
registered at the close of business on the June 1 or December 1 immediately
preceding such Interest Payment Date. Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the
office or agency of JCC maintained for such purpose, which office or agency
shall be maintained in the Borough of Manhattan, The City of New York. At the
option of JCC, payment of interest may be made by check mailed to the Holders of
the Notes at the addresses set forth upon the registry books of the Registrar.
No service charge will be made for any registration of transfer or exchange of
Notes, but JCC may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise designated
by JCC, JCC's office or agency will be the corporate trust office of the Trustee
presently located at the office of the Trustee in the Borough of Manhattan, The
City of New York.
SUBORDINATION
The Notes and the Guarantees will be general, unsecured obligations of JCC
and the Guarantors, respectively, subordinated in right of payment to all Senior
Debt of JCC and the Guarantors, as applicable, including the Credit Facility. As
of September 30, 1996, JCC had outstanding an aggregate principal amount of
$400.0 million of secured Senior Debt and $225.0 million of senior subordinated
indebtedness ($100.0 million of 10 1/8% Notes and $125.0 million of 9 3/4%
Notes). On a pro forma basis, as of September 30, 1996, after giving effect to
the Citicasters Put and this Offering and the application of the proceeds from
this Offering, JCC would have had outstanding an aggregate of $400.0 million of
secured Senior Debt and $288.1 million of senior subordinated indebtedness
($170.0 million of Notes, $100.0 million of 10 1/8% Notes and $18.1 million of
9 3/4% Notes) and Jacor would have had outstanding an aggregate of approximately
$117.1 million of LYONS (as defined herein) which would be effectively
subordinate to the Notes in right of payment.
The Indenture provides that no payment (including any payment which may be
payable to any Holder by reason of the subordination of any other indebtedness
or other obligations to, or guarantee of, the Notes) or distribution (by set-off
or otherwise) may be made by or on behalf of JCC or a Guarantor, as applicable,
on account of the principal of, premium, if any, or interest on the Notes
(including any repurchases of Notes)
23
<PAGE>
or any other amounts with respect thereto, or on account of the redemption
provisions of the Notes, for cash or property (other than Junior Securities, as
defined herein), (i) upon the maturity of any Senior Debt of JCC or such
Guarantor by lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of, premium, if any, and the interest on, and all other
amounts with respect to, such Senior Debt are first paid in full in cash or
otherwise to the extent each of the holders of Senior Debt accept satisfaction
of amounts due to such holder by settlement in other than cash, or (ii) in the
event of default in the payment of any principal of, premium, if any, or
interest on, or any other amounts with respect to, Senior Debt of JCC or such
Guarantor when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (each of the foregoing, a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
Upon (i) the happening of a default (other than a Payment Default) that
permits the holders of Senior Debt (or a percentage thereof) to declare such
Senior Debt to be due and payable and (ii) written notice of such default given
to JCC and the Trustee by the Representative under the Credit Facility or the
holders of an aggregate of at least $25.0 million principal amount outstanding
of any other Senior Debt or their representative at such holders' direction (a
"Payment Notice"), then, unless and until such default has been cured or waived
or otherwise has ceased to exist, no payment (including any payment which may be
payable to any Holder by reason of the subordination of any other indebtedness
or other obligations to, or guarantee of, the Notes) or distribution (by set-off
or otherwise) may be made by or on behalf of JCC or any Guarantor which is an
obligor under such Senior Debt on account of the principal of, premium, if any,
or interest on the Notes (including any repurchases of any of the Notes), or any
other amount with respect thereto, or on account of the redemption provisions of
the Notes, in any such case, other than payments made with Junior Securities.
Notwithstanding the foregoing, unless the Senior Debt in respect of which such
default exists has been declared due and payable in its entirety within 179 days
after the Payment Notice is delivered as set forth above (the "Payment Blockage
Period") (and such declaration has not been rescinded or waived), at the end of
the Payment Blockage Period (and assuming that no Payment Default exists), JCC
and the Guarantors shall not be prohibited by the subordination provisions from
paying all sums then due and not paid to the Holders of the Notes during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Notes. Any number of Payment Notices may
be given; PROVIDED, HOWEVER, that (i) not more than one Payment Notice shall be
given within a period of any 360 consecutive days, and (ii) no default that
existed upon the date of delivery of such Payment Notice (whether or not such
default is on the same issue of Senior Debt) shall be made the basis for the
commencement of any other Payment Blockage Period.
Upon any distribution of assets of JCC or any Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of JCC
or a Guarantor, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities, (i) the holders of all
Senior Debt of JCC or such Guarantor, as applicable, will first be entitled to
receive payment in full of all amounts of Senior Debt in cash or otherwise to
the extent each of such holders accepts satisfaction of amounts due by
settlement in other than cash before the Holders are entitled to receive any
payment (including any payment which may be payable to any Holder by reason of
the subordination of any other indebtedness or other obligations to, or
guarantee of, the Notes) or distribution on account of principal of, premium, if
any, and interest on, or any other amounts with respect to, the Notes (other
than Junior Securities) and (ii) any payment or distribution of assets of JCC or
such Guarantor of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities) to which the Holders or
the Trustee on behalf of the Holders would be entitled (by set-off or otherwise)
except for the subordination provisions contained in the Indenture, will be paid
by the liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of such Senior Debt or their representative
to the extent necessary to make payment in full on all such Senior Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Debt.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of JCC or any Guarantor (other than Junior Securities)
shall be received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held
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in trust for the benefit of the holders of such Senior Debt, and shall be paid
or delivered by the Trustee or such Holders, as the case may be, to the holders
of such Senior Debt remaining unpaid or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Debt may have been issued,
ratably according to the aggregate principal amounts remaining unpaid on account
of such Senior Debt held or represented by each, for application to the payment
of all such Senior Debt remaining unpaid, to the extent necessary to pay all
such Senior Debt in full in cash or otherwise to the extent each of the holders
of such Senior Debt accept satisfaction of amounts due by settlement in other
than cash after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt. The Indenture will contain other customary
subordination provisions, including rights of subrogation and rights to file
claims in bankruptcy.
As among JCC, the Guarantors and the Holders, no provision contained in the
Indenture or the Notes will affect the obligations of JCC and the Guarantors,
which are absolute and unconditional, to pay, when due, principal of, premium,
if any, and interest on the Notes. The subordination provisions of the Indenture
and the Notes will not prevent the occurrence of any Default or Event of Default
under the Indenture or limit the rights of the Trustee or any Holder to pursue
any other rights or remedies with respect to the Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of JCC or any of
the Guarantors or a marshalling of assets or liabilities of JCC or any of the
Guarantors, holders of the Notes may receive ratably less than other creditors.
JCC conducts operations through its subsidiaries. Accordingly, JCC's ability
to meet its cash obligations will be dependent upon the ability of its
subsidiaries to make cash distributions to JCC. Furthermore, any right of JCC to
receive the assets of any such subsidiary upon such subsidiary's liquidation or
reorganization effectively will be subordinated by operation of law to the
claims of such subsidiary's creditors (including trade creditors) and holders of
such subsidiary's preferred stock, except to the extent that JCC is itself
recognized as a creditor or preferred stockholder of such subsidiary, in which
case the claims of JCC would still be subordinate to any indebtedness or
preferred stock of such subsidiary senior in right of payment to that held by
JCC.
FRAUDULENT TRANSFER CONSIDERATIONS
Generally, under various state and federal fraudulent transfer or fraudulent
conveyance laws (collectively, the "Fraudulent Transfer Laws"), a Guarantor's
obligations under the Guarantee of the Notes could be avoided if a court in a
lawsuit by an unpaid creditor of a Guarantor or a representative of such
creditors (such as a trustee in bankruptcy or JCC as debtor-in-possession) were
to find that (i) the Guarantor did not receive reasonably equivalent value or
fair consideration in exchange for the obligation created by the Notes and (ii)
at the time of the issuance of the Notes, the Guarantor (A) was insolvent or
became insolvent as a result of the incurrence of the obligations represented by
the Notes, (B) was engaged, or was about to be engaged, in a business or
transaction for which the property remaining with it was an unreasonably small
capital or for which its unencumbered assets constituted unreasonably small
capital, or (C) intended to incur, or believed that it would incur, debts beyond
its ability to pay as such debts matured.
A court could conclude that a Guarantor did not receive reasonably
equivalent value or fair consideration to the extent that such Guarantor's
liability on its guarantee exceeds the economic benefits that it receives in the
Offering. Were a court to so find, the court could avoid the Guarantor's
obligation under its guarantee and direct the return of amounts paid thereunder
if one or more of the conditions set forth in subparagraphs (ii)(A), (B), or (C)
above were also met as to such Guarantor. Management believes, however, that the
Guarantees have been structured so as to minimize the likelihood that a court
would find that the Guarantor did not receive reasonably equivalent value or
fair consideration for its Guarantee (the "Savings Clause"). No assurance,
however, can be given that a court would uphold such a fraudulent transfer
Savings Clause. Moreover, there can be no assurance that a court would not limit
a Guarantee to an amount equal to the Notes proceeds actually received by any
given Guarantor.
The determination of insolvency for purposes of the Fraudulent Transfer Laws
may vary depending upon the law of the jurisdiction being applied. Generally,
however, an entity is insolvent if (i) the sum of its
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debts (including unliquidated or contingent debts) is greater than all of its
property, at a fair valuation or (ii) 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.
Additionally, under certain state Fraudulent Transfer Laws, an entity is
presumed to be insolvent if it is generally not paying its debts as they become
due.
Furthermore, a court could avoid JCC's obligations under the Notes and the
Guarantors' obligations under their respective Guarantees without regard to the
solvency, capitalization and other conditions described in clauses (ii)(A), (B),
and (C) above if it finds that the obligations created by the Notes or the
Guarantees were incurred with actual intent to hinder, delay, or defraud now
existing or future creditors. If the obligations under the Notes were to be
avoided, there can be no assurance that the recoveries under the Guarantees
would be sufficient to pay the outstanding amounts due and owing under the
Notes. Moreover, if the obligations of one or more Guarantors were to be
avoided, there can be no assurance that the remaining Guarantees would be
sufficient to ensure payment in full on the Notes.
OPTIONAL REDEMPTION
Except as set forth below, JCC will not have the right to redeem any Notes
prior to December 15, 2001. The Notes will be redeemable at the option of JCC,
in whole or in part, at any time on or after December 15, 2001, upon not less
than 30 days nor more than 60 days notice to each holder of Notes, at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the 12-month period commencing December 15 of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest thereon
to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2001............................................................................. 104.875%
2002............................................................................. 103.250%
2003............................................................................. 101.625%
2004 and thereafter.............................................................. 100.000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. Any notice which relates to a Note to be
redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the Notes or portions
thereof called for redemption, unless JCC defaults in the payment thereof.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by JCC (the "Change of
Control Offer"), to require JCC to repurchase all or any part of such Holder's
Notes (PROVIDED, that the principal amount of such Notes must be $1,000 or an
integral multiple thereof) on a date (the "Change of Control Purchase Date")
that is no later than 35 Business Days after the occurrence of such Change of
Control, at a cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the Change of Control Purchase Date. The Change of Control Offer shall
be made within 10 Business Days following a Change of Control and shall
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<PAGE>
remain open for 20 Business Days following its commencement (the "Change of
Control Offer Period"). Upon expiration of the Change of Control Offer Period,
JCC promptly shall purchase all Notes properly tendered in response to the
Change of Control Offer.
As used herein, (a) prior to the earlier of (x) the maturity of the 9 3/4%
Notes, (y) the date upon which defeasance of the 9 3/4% Notes becomes effective,
and (z) the date on which there are no longer any 9 3/4% Notes outstanding under
the terms of the governing indenture (each a "9 3/4% Note Event"), a "Change of
Control" means any transaction or series of transactions in which any of the
following occurs: (i) any person or group (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Sections 13(d) and 14(d) of the Exchange Act), other than Zell/Chilmark or any
of its Affiliates, becomes the direct or indirect "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of (A) greater than 50% of the total
voting power (on a fully diluted basis as if all convertible securities had been
converted) entitled to vote in the election of directors of JCC or CitiCo, or
the surviving person (if other than the Company), or (B) greater than 20% of the
total voting power (on a fully diluted basis as if all convertible securities
had been converted) entitled to vote in the election of directors of JCC or
CitiCo, or the surviving person (if other than JCC), and such person or group
has the ability to elect, directly or indirectly, a majority of the members of
the Board of Directors of JCC; or (ii) JCC or CitiCo consolidates with or merges
into another person, another person consolidates with or merges into JCC or
CitiCo, JCC or CitiCo issues shares of its Capital Stock or all or substantially
all of the assets of JCC or CitiCo are sold, assigned, conveyed, transferred,
leased or otherwise disposed of to any person as an entirety or substantially as
an entirety in one transaction or a series of related transactions and the
effect of such consolidation, merger, issuance or sale is as described in clause
(i) above. Notwithstanding the foregoing, no Change of Control shall be deemed
to have occurred by virtue of (I) JCC or any of its employee benefit or stock
plans filing (or being required to file after the lapse of time) a Schedule 13D
or 14D-1 (or any successor or similar schedule, form or report under the
Exchange Act) or (II) the purchase by one or more underwriters of Capital Stock
of JCC in connection with a Public Offering; and (b) upon and following a 9 3/4%
Note Event, a "Change of Control" will mean (i) any merger or consolidation of
JCC with or into any person or any sale, transfer or other conveyance, whether
direct or indirect, of all or substantially all of any of the assets of JCC, on
a consolidated basis, in one transaction or a series of related transactions,
if, immediately after giving effect to such transaction(s), any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable) (other than an Excluded Person) is or
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate normally entitled to vote in the election of
directors, managers, or trustees, as applicable, of the transferee(s) or
surviving entity or entities, (ii) any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) (other than an Excluded Person) is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total voting power in
the aggregate of all classes of Capital Stock of JCC then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of JCC (together with
any new directors whose election by such Board or whose nomination for election
by the shareholders of JCC was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of JCC then in
office.
On or before the Change of Control Purchase Date, JCC will (i) accept for
payment Notes or portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent cash sufficient to pay the
Change of Control Purchase Price (together with accrued and unpaid interest) of
all Notes so tendered and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by JCC. The Paying Agent promptly will pay the Holders of Notes
so accepted an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest), and the Trustee promptly will authenticate
and deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so accepted will be
delivered promptly by JCC to the Holder thereof. JCC publicly will announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
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<PAGE>
A change of control under the indenture which governs each of the Notes, the
9 3/4% Notes, the 10 1/8% Notes and the LYONs will result in a default under the
Credit Facility. Additionally, unless JCC is successful in seeking consents from
its lenders under the Credit Facility to permit change of control repurchase
offers for each of the Notes, the 9 3/4% Notes, the 10 1/8% Notes or the LYONs
or JCC is successful in refinancing such borrowings, such event of default under
the Credit Facility would constitute an event of default under each of the
Notes, the 9 3/4% Notes, the 10 1/8% Notes and the LYONs. Such events of default
could result in the immediate acceleration of all then outstanding indebtedness
under each of the Notes, the 9 3/4% Notes, the 10 1/8% Notes and the LYONs. As a
result, differences in the definitions of change of control under the indentures
for the Notes, the 9 3/4% Notes, the 10 1/8% Notes and the LYONs will not have a
difference in the effect on JCC or the respective holders other than where the
lenders under the Credit Facility have waived such event of default. In the
event of such waiver there could be a change of control under the Notes, the
9 3/4% Notes and the 10 1/8% Notes which would not result in a change of control
under the LYONs or VICE VERSA. See "Description of Other Indebtedness."
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of JCC, and, thus, the removal of incumbent management.
The phrase "all or substantially all" of the assets of JCC will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of any of JCC has occurred. In addition, no assurances can be given that
JCC will be able to acquire Notes tendered upon the occurrence of a Change of
Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
The Indenture will provide that, except as set forth below in this covenant,
JCC and the Subsidiary Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Disqualified Capital Stock (including Acquired
Indebtedness) other than Permitted Indebtedness. Notwithstanding the foregoing
limitations, JCC may incur Indebtedness and Disqualified Capital Stock in
addition to Permitted Indebtedness: if (i) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving
effect on a PRO FORMA basis to, such incurrence of Indebtedness or Disqualified
Capital Stock and (ii) on the date of such incurrence (the "Incurrence Date"),
the Leverage Ratio of JCC for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a PRO FORMA basis to such incurrence of
such Indebtedness or Disqualified Capital Stock and, to the extent set forth in
the definition of Leverage Ratio, the use of proceeds thereof, would be less
than 7.0 to 1.
Indebtedness or Disqualified Capital Stock of any person which is
outstanding at the time such person becomes a Subsidiary of JCC (including upon
designation of any subsidiary or other person as a Subsidiary) or is merged with
or into or consolidated with JCC or a Subsidiary of JCC shall be deemed to have
been Incurred at the time such Person becomes such a Subsidiary of JCC or is
merged with or into or consolidated with JCC or a Subsidiary of JCC, as
applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that JCC and its Subsidiaries will not, and will
not permit any of their Subsidiaries to, directly or indirectly, make any
Restricted Payment if, after giving effect to such Restricted Payment on a PRO
FORMA basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) JCC is not permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Leverage Ratio in the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock," or (3)
the aggregate amount of all Restricted Payments made by JCC and its
Subsidiaries, including after giving effect to such proposed Restricted Payment,
from and after the Issue Date, would exceed the sum of (a)(x)
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<PAGE>
100% of the aggregate Consolidated EBITDA of JCC and its Consolidated
Subsidiaries for the period (taken as one accounting period), commencing on the
first day of the first full fiscal quarter commencing after the Issue Date, to
and including the last day of the fiscal quarter ended immediately prior to the
date of each such calculation (or, in the event Consolidated EBITDA for such
period is a deficit, then minus 100% of such deficit) less (y) 1.4 times
Consolidated Fixed Charges for the same period plus (b) the aggregate Net Cash
Proceeds received by JCC from the sale of its Qualified Capital Stock (other
than (i) to a Subsidiary of JCC and (ii) to the extent applied in connection
with a Qualified Exchange), after the Issue Date.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (w) payments to Jacor to reimburse Jacor for
reasonable and necessary corporate and administrative expenses, (x) Restricted
Investments, PROVIDED, that, after giving PRO FORMA effect to such Restricted
Investment, the aggregate amount of all such Restricted Investments made on or
after the Issue Date that are outstanding (after giving effect to any such
Restricted Investments that are returned to JCC or the Subsidiary Guarantor that
made such prior Restricted Investment, without restriction, in cash on or prior
to the date of any such calculation) at any time does not exceed $5.0 million,
(y) a Qualified Exchange, and (z) the payment of any dividend on Qualified
Capital Stock within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions. The full amount of any Restricted Payment made pursuant to
the foregoing clauses (x) and (z) of the immediately preceding sentence,
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
The Indenture will provide that JCC and its Subsidiaries will not, and will
not permit any of their Subsidiaries to, create, assume or suffer to exist any
consensual restriction on the ability of any Subsidiary of JCC to pay dividends
or make other distributions to or on behalf of, or to pay any obligation to or
on behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, JCC or any Subsidiary of JCC,
except (a) restrictions imposed by the Notes or the Indenture, (b) restrictions
imposed by applicable law, (c) existing restrictions under specified
Indebtedness outstanding on the Issue Date, (d) restrictions under any Acquired
Indebtedness not incurred in violation of the Indenture or any agreement
relating to any property, asset, or business acquired by JCC or any of its
Subsidiaries, which restrictions in each case existed at the time of
acquisition, were not put in place in connection with or in anticipation of such
acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (e) any such restriction or requirement imposed by
Indebtedness incurred under paragraph (f) under the definition of Permitted
Indebtedness, provided such restriction or requirement is no more restrictive
than that imposed by the Credit Facility as of the Issue Date, (f) restrictions
with respect solely to a Subsidiary of JCC imposed pursuant to a binding
agreement which has been entered into for the sale or disposition of all or
substantially all of the Equity Interests or assets of such Subsidiary, provided
such restrictions apply solely to the Equity Interests or assets of such
Subsidiary which are being sold, and (g) in connection with and pursuant to
permitted Refinancings, replacements of restrictions imposed pursuant to clauses
(a), (c) or (d) of this paragraph that are not more restrictive than those being
replaced and do not apply to any other person or assets than those that would
have been covered by the restrictions in the Indebtedness so refinanced.
Notwithstanding the foregoing, neither (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, or other standard non-assignment
clauses in contracts entered into in the ordinary course of business, (b)
Capital Leases or agreements governing purchase money Indebtedness which contain
restrictions of the type referred to above with respect to the property covered
thereby, nor (c) Liens permitted under the terms of the Indenture on assets
securing Senior Debt incurred pursuant to the Leverage Ratio in accordance with
the covenant described under "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" or permitted pursuant to the
definition of Permitted Indebtedness shall in and of themselves be considered a
restriction on the ability of the applicable Subsidiary to transfer such
agreement or assets, as the case may be.
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<PAGE>
LIMITATIONS ON LAYERING INDEBTEDNESS; LIENS
The Indenture will provide that JCC and its Subsidiaries will not, and will
not permit any of their Subsidiaries to, directly or indirectly, incur, or,
other than with respect to the 10 1/8% Notes, suffer to exist (a) any
Indebtedness that is subordinate in right of payment to any other Indebtedness
of JCC or a Guarantor unless, by its terms, such Indebtedness (i) has a maturity
date subsequent to the Stated Maturity of the Notes and an Average Life longer
than that of the Notes and (ii) is subordinate in right of payment to, or ranks
PARI PASSU with, the Notes or the Guarantees, as applicable, or (b) other than
Permitted Liens, any Lien upon any of its property or assets, whether now owned
or hereafter acquired, or upon any income or profits therefrom securing
Indebtedness other than (1) Liens securing Senior Debt incurred pursuant to the
Leverage Ratio in accordance with the covenant described under "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock" and (2)
Liens securing Senior Debt incurred as permitted pursuant to the definition of
Permitted Indebtedness.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture will provide that JCC and its Subsidiaries will not, and will
not permit any of their Subsidiaries to, in one or a series of related
transactions, sell, transfer, or otherwise dispose of, any of its property,
business or assets, including by merger or consolidation (in the case of a
Guarantor or a Subsidiary of JCC), and including any sale or other transfer or
issuance of any Equity Interests of any direct or indirect Subsidiary of JCC,
whether by JCC or a direct or indirect Subsidiary thereof (an "Asset Sale"),
unless (1) within 450 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are (a) applied to the
optional redemption of the Notes in accordance with the terms of the Indenture
or to the repurchase of the Notes pursuant to an irrevocable, unconditional cash
offer (the "Asset Sale Offer") to repurchase Notes at a purchase price (the
"Asset Sale Offer Price") of 100% of principal amount, plus accrued interest to
the date of payment, (b) invested in assets and property (other than notes,
bonds, obligations and securities) which in the good faith reasonable judgment
of the Board of JCC will immediately constitute or be a part of a Related
Business of JCC or a Subsidiary (if it continues to be a Subsidiary) immediately
following such transaction or (c) used to permanently retire or reduce Senior
Debt or Indebtedness permitted pursuant to paragraphs (d), (e) or (f) under the
definition of Permitted Indebtedness (including that in the case of a revolver
or similar arrangement that makes credit available, such commitment is so
permanently reduced by such amount), (2) with respect to any Asset Sale or
related series of Asset Sales involving securities, property or assets with an
aggregate fair market value in excess of $2.5 million, at least 75% of the
consideration for such Asset Sale or series of related Asset Sales (excluding
the amount of (A) any Indebtedness (other than the Notes) that is required to be
repaid or assumed (and is either repaid or assumed by the transferee of the
related assets) by virtue of such Asset Sale and which is secured by a Lien on
the property or asset sold and (B) property received by JCC or any such
Subsidiary from the transferee that within 90 days of such Asset Sale is
converted into cash or Cash Equivalents) consists of cash or Cash Equivalents
(other than in the case of an Asset Swap or where JCC is exchanging all or
substantially all the assets of one or more Related Businesses operated by JCC
or its Subsidiaries (including by way of the transfer of capital stock) for all
or substantially all the assets (including by way of the transfer of capital
stock) constituting one or more Related Businesses operated by another person,
in which event the foregoing requirement with respect to the receipt of cash or
Cash Equivalents shall not apply), (3) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect,
on a PRO FORMA basis, to, such Asset Sale, and (4) the Board of JCC determines
in good faith that JCC or such Subsidiary, as applicable, receives fair market
value for such Asset Sale.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (1)(b) or (1)(c) above (the "Excess Proceeds") exceeds $5.0 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement and no longer (the "Asset Sale Offer Period"). Upon expiration of
the Asset Sale Offer Period, JCC shall apply the Asset Sale Offer Amount plus an
amount equal to accrued interest to the purchase of all Notes properly tendered
(on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to purchase
all Notes so tendered) at the Asset Sale Offer Price (together with accrued
interest). To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Asset Sale Offer Amount, JCC may use any
remaining Net Cash Proceeds for general corporate purposes as otherwise
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permitted by the Indenture and following each Asset Sale Offer the Excess
Proceeds amount shall be reset to zero. If required by applicable law, the Asset
Sale Offer Period may be extended as so required, however, if so extended it
shall nevertheless constitute an Event of Default if within 60 Business Days of
its commencement the Asset Sale Offer is not consummated or the properly
tendered Notes are not purchased pursuant thereto.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant the Indenture will provide that with respect to an Asset Sale Offer,
JCC will not be permitted to commence an Asset Sale Offer for the Notes until
such time as an Asset Sale Offer for the 9 3/4% Notes and the 10 1/8% Notes in
each case if required, has been completed. To the extent that any Excess
Proceeds remain after expiration of an Asset Sale Offer Period for the 9 3/4%
Notes and the 10 1/8% Notes, JCC may use the remaining Net Cash Proceeds to
commence an Asset Sale Offer for the Notes; PROVIDED, that the amount of Net
Cash Proceeds used for such Asset Sale Offer for the Notes shall not exceed the
amount permitted under the Redemption from the Proceeds on Asset Sales and
Limitation on Restricted Payments covenants set forth in the indenture governing
the 9 3/4% Notes and with respect to the 10 1/8% Notes the amount required under
the covenant Limitation on Sale of Assets and Subsidiary Stock set forth in the
indenture governing the 10 1/8% Notes; PROVIDED, HOWEVER, that with respect to
the 9 3/4% Notes this paragraph shall be of no further force and effect upon the
earlier of a 9 3/4% Note Event and with respect to the 10 1/8% Notes this
paragraph shall be of no further force and effect upon the earlier of (w) the
maturity of the 10 1/8% Notes, (x) the date upon which defeasance of the 10 1/8%
Notes become effective, (y) the date on which there are no longer any 10 1/8%
Notes outstanding in accordance with the terms of the indenture governing the
10 1/8% Notes and (z) the date on which the Limitation on Sale of Assets and
Subsidiary Stock covenant no longer applies in accordance with the terms of the
indenture governing the 10 1/8% Notes.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant and without complying with the foregoing provisions:
(i) JCC and its Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
(ii) JCC and its Subsidiaries may sell or dispose of inventory or
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of JCC or such Subsidiary, as applicable; and
(iii) any of JCC's Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets to, or merge with or into, JCC or any of its
wholly owned Subsidiary Guarantors.
All Net Cash Proceeds from an Event of Loss shall be applied to the
restoration, repair or replacement of the asset so affected or invested, used
for prepayment of Senior Debt, or used to repurchase Notes, all within the
period and as otherwise provided above in clauses 1(a) or 1(b)(i) of the first
paragraph of this covenant.
In addition to the foregoing, JCC will not, and will not permit any of its
Subsidiaries to, directly or indirectly make any Asset Sale of any of the Equity
Interests of any Subsidiary except pursuant to an Asset Sale of all the Equity
Interests of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON ASSET SWAPS
The Indenture will provide that JCC and its Subsidiaries will not, and will
not permit any of their Subsidiaries to, in one or a series of related
transactions, directly or indirectly, engage in any Asset Swaps, unless: (i) at
the time of entering into the agreement to swap assets and immediately after
giving effect to the proposed Asset Swap, no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof; (ii)
JCC would, after giving PRO FORMA effect to the proposed Asset Swap, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Leverage Ratio in the
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covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock"; (iii) the respective fair market values of the assets being
purchased and sold by JCC or any of its Subsidiaries (as determined in good
faith by the management of JCC or, if such Asset Swap includes consideration in
excess of $2.5 million by the Board of Directors of JCC, as evidenced by a Board
Resolution) are substantially the same at the time of entering into the
agreement to swap assets; and (iv) at the time of the consummation of the
proposed Asset Swap, the percentage of any decline in the fair market value
(determined as aforesaid) of the asset or assets being acquired by JCC and its
Subsidiaries shall not be significantly greater than the percentage of any
decline in the fair market value (determined as aforesaid) of the assets being
disposed of by JCC or its Subsidiaries, calculated from the time the agreement
to swap assets was entered into.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture will provide that neither JCC nor any of its Subsidiaries will
be permitted after the Issue Date to enter into any contract, agreement,
arrangement or transaction with any Affiliate (an "Affiliate Transaction"), or
any series of related Affiliate Transactions, (other than Exempted Affiliate
Transactions) (i) unless it is determined that the terms of such Affiliate
Transaction are fair and reasonable to JCC, and no less favorable to JCC than
could have been obtained in an arm's length transaction with a non-Affiliate
and, (ii) if involving consideration to either party in excess of $5.0 million,
unless such Affiliate Transaction(s) is evidenced by (A) an Officers'
Certificate addressed and delivered to the Trustee certifying that such
Affiliate Transaction (or Transactions) has been approved by a majority of the
members of the Board of Directors of JCC that are disinterested in such
transaction or, (B) in the event there are no members of the Board of Directors
of JCC who are disinterested in such transaction, then so long as JCC is a
wholly owned subsidiary of Jacor, an Officers' Certificate addressed and
delivered to the Trustee certifying that such Affiliate Transaction (or
Transactions) have been approved by a majority of the members of the Board of
Directors of Jacor that are disinterested in such transaction and (iii) if
involving consideration to either party in excess of $10.0 million, unless in
addition JCC, prior to the consummation thereof, obtains a written favorable
opinion as to the fairness of such transaction to JCC from a financial point of
view from an independent investment banking firm of national reputation.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that JCC will not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another person or group of affiliated persons or adopt a Plan of Liquidation,
unless (i) either (a) JCC is the continuing entity or (b) the resulting,
surviving or transferee entity or, in the case of a Plan of Liquidation, the
entity which receives the greatest value from such Plan of Liquidation is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of JCC in connection with the Notes and the Indenture; (ii) no
Default or Event of Default shall exist or shall occur immediately after giving
effect on a PRO FORMA basis to such transaction; and (iii) immediately after
giving effect to such transaction on a PRO FORMA basis, the consolidated
resulting, surviving or transferee entity or, in the case of a Plan of
Liquidation, the entity which receives the greatest value from such Plan of
Liquidation would immediately thereafter be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Leverage Ratio set forth in the covenant
described under "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of JCC or consummation of a Plan of Liquidation in accordance with
the foregoing, the successor corporation formed by such consolidation or into
which JCC is merged or to which such transfer is made or, in the case of a Plan
of Liquidation, the entity which receives the greatest value from such Plan of
Liquidation shall succeed to, and be substituted for, and may exercise every
right and power of, JCC under the Indenture with the same effect as if such
successor corporation had been named therein as JCC, and JCC shall be released
from the obligations under the Notes and the Indenture except with respect to
any obligations that arise from, or are related to, such transaction.
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For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, JCC's interest in which constitutes all or substantially all
of the properties and assets of JCC shall be deemed to be the transfer of all or
substantially all of the properties and assets of JCC.
LIMITATION ON LINES OF BUSINESS
The Indenture will provide that neither JCC nor any of its Subsidiaries
shall directly or indirectly engage to any substantial extent in any line or
lines of business activity other than that which is a Related Business.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
The Indenture will provide that JCC and the Guarantors will not sell, and
will not permit any of their Subsidiaries to issue or sell, any Equity Interests
of any Subsidiary of JCC to any person other than JCC or a wholly owned
Subsidiary of JCC, except for Equity Interests with no preferences or special
rights or privileges and with no redemption or prepayment provisions.
SUBSIDIARY GUARANTORS
The Indenture will provide that (i) all present Subsidiaries of JCC and
their Subsidiaries (other than the Excluded Subsidiaries), and (ii) all future
Subsidiaries of JCC and their Subsidiaries (other than the Excluded
Subsidiaries), which are not prohibited from becoming guarantors by law or by
the terms of any Acquired Indebtedness or any agreement (other than an agreement
entered into in connection with the transaction resulting in such person
becoming a Subsidiary of JCC or its Subsidiaries) to which such Subsidiary is a
party, jointly and severally, will guaranty irrevocably and unconditionally all
principal, premium, if any, and interest on the Notes on a senior subordinated
basis; PROVIDED, HOWEVER, that upon any change in the law, Acquired Indebtedness
or any agreement (whether by expiration, termination or otherwise) which no
longer prohibits a Subsidiary of JCC from becoming a Subsidiary Guarantor, such
Subsidiary shall immediately thereafter become a Subsidiary Guarantor; PROVIDED,
FURTHER, in the event that any Subsidiary of JCC or their Subsidiaries becomes a
guarantor of any other Indebtedness of JCC or any of its Subsidiaries or any of
their Subsidiaries, such Subsidiary shall immediately thereafter become a
Subsidiary Guarantor.
All subsidiaries of JCC (other than the Excluded Subsidiaries) will be
subsidiary Guarantors if required by the covenant "Future Subsidiary
Guarantors."
RELEASE OF GUARANTORS
The Indenture will provide that no Guarantor shall consolidate or merge with
or into (whether or not such Guarantor is the surviving Person) another Person
unless (i) subject to the provisions of the following paragraph and certain
other provisions of the Indenture, the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, pursuant to which such Person shall
unconditionally guarantee, on a senior subordinated basis, all of such
Guarantor's obligations under such Guarantor's guarantee, the Indenture on the
terms set forth in the Indenture; (ii) immediately before and immediately after
giving effect to such transaction on a PRO FORMA basis, no Default or Event of
Default shall have occurred or be continuing; and (iii) immediately after such
transaction, the surviving person holds all permits required for operation of
the business of, and such entity is controlled by a person or entity (or has
retained a person or entity which is) experienced in, operating broadcast
properties, or otherwise holds all Permits to operate its business.
Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor or all of its assets to an entity which
is not a Subsidiary Guarantor, which transaction is otherwise in compliance with
the Indenture (including, without limitation, the provisions of the covenant
Limitations on Sale of Assets, and Subsidiary Stock), such Subsidiary Guarantor
will be deemed released from its obligations under its Guarantee of the Notes;
PROVIDED, HOWEVER, that any such termination shall occur only to the extent that
all obligations of such Subsidiary Guarantor under all of its guarantees of, and
under all of its pledges of assets or other security interests which secure, any
Indebtedness of JCC or any other Subsidiary shall also terminate upon such
release, sale or transfer.
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LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture will prohibit JCC and its Subsidiaries from being required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
REPORTS
The Indenture will provide that for so long as Jacor or any successor
thereto is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and JCC is a wholly owned subsidiary of Jacor, JCC shall deliver to
the Trustee and, to each Holder, Jacor's annual and quarterly reports pursuant
to Section 13
or 15(d) of the Exchange Act, within 15 days after such reports have been filed
with the Commission; PROVIDED, HOWEVER, in the event either (i) Jacor or a
successor as set forth above is no longer subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act or (ii) JCC is no longer a wholly
owned subsidiary of Jacor or a successor as set forth above, the Indenture will
provide that whether or not JCC is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, JCC shall deliver to the Trustee and,
to each Holder, within 15 days after it is or would have been (if it were
subject to such reporting obligations) required to file such with the
Commission, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
Commission, if JCC were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by JCC's certified independent public accountants as such would be
required in such reports to the Commission, and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required and, to the extent permitted by the
Exchange Act or the Commission (if it were subject to such reporting
obligations), file with the Commission the annual, quarterly and other reports
which it is or would have been required to file with the Commission.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by JCC to
pay any installment of interest on the Notes as and when the same becomes due
and payable and the continuance of any such failure for 30 days, (ii) the
failure by JCC to pay all or any part of the principal, or premium, if any, on
the Notes when and as the same becomes due and payable at maturity, redemption,
by acceleration or otherwise, including, without limitation, payment of the
Change of Control Purchase Price or the Asset Sale Offer Price, or otherwise,
(iii) the failure by JCC or any Guarantor to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 60 days
after written notice is given to JCC by the Trustee or to JCC and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Notes
outstanding, (iv) certain events of bankruptcy, insolvency or reorganization in
respect of JCC or any of its Significant Subsidiaries, (v) a default in any
issue of Indebtedness of JCC or any of their Subsidiaries with an aggregate
principal amount in excess of $5.0 million (a) resulting from the failure to pay
principal at final maturity or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity, and (vi) final
unsatisfied judgments not covered by insurance aggregating in excess of $5.0
million, at any one time rendered against JCC or any of its Subsidiaries and not
stayed, bonded or discharged within 60 days. The Indenture provides that if a
Default occurs and is continuing, the Trustee must, within 90 days after the
occurrence of such Default, give to the Holders notice of such Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to JCC or any Significant
Subsidiary,) then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
25% in aggregate principal amount of the Notes at the time outstanding, by
notice in writing to JCC (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest thereon to be due and payable immediately; provided,
however, that if any Senior Debt is outstanding pursuant to the Credit Facility
upon a declaration of such acceleration, such principal and interest shall be
due and payable upon the earlier of (x) the third Business Day after the sending
to JCC and the Representative of such written notice, unless such Event of
Default is cured or waived prior to such date and (y) the date of acceleration
of any Senior Debt under the Credit Facility. In the event a declaration of
acceleration resulting from an Event of Default described in clause (v) above
has occurred and is continuing,
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such declaration of acceleration shall be automatically annulled if such default
is cured or waived or the holders of the Indebtedness which is the subject of
such default have rescinded their declaration of acceleration in respect of such
Indebtedness within five days thereof and the Trustee has received written
notice of such cure, waiver or rescission and no other Event of Default
described in clause (v) above has occurred that has not been cured or waived
within five days of the declaration of such acceleration in respect of such
Indebtedness. If an Event of Default specified in clause (iv), above, relating
to JCC or any Significant Subsidiary occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of Notes at the time outstanding,
generally are authorized to rescind such acceleration if all existing Events of
Default, other than the non-payment of the principal of, premium, if any, and
interest on the Notes which have become due solely by such acceleration and
except on default with respect to any provision requiring a supermajority
approval to amend, which default may only be waived by such a supermajority, and
have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except on
default with respect to any provision requiring a supermajority approval to
amend, which default may only be waived by such a supermajority, and except a
default in the payment of principal of or interest on any Note not yet cured or
a default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to 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.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that JCC may, at its option, elect to have their
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that JCC
shall be deemed to have paid and discharged the entire indebtedness represented,
and the Indenture shall cease to be of further effect as to all outstanding
Notes and Guarantees, except as to (i) rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due from the trust funds; (ii) JCC's obligations with respect
to such Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or
agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and JCC's
obligations in connection therewith; and (iv) the Legal Defeasance provisions of
the Indenture. In addition, JCC may, at its option and at any time, elect to
have the obligations of JCC and the Guarantors released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) JCC
must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, U.S. legal tender, U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest on such Notes, and the Holders of
Notes must have a valid, perfected, exclusive security interest in such trust;
(ii) in the case of the Legal Defeasance, JCC shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
Trustee confirming that (A) JCC has received from, or there has been published
by the Internal Revenue Service, a
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ruling or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of such Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, JCC shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to such Trustee confirming that the Holders
of such Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after the
date of deposit; (v) such Legal 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 JCC or any of its
Subsidiaries is a party or by which JCC or any of its Subsidiaries is bound;
(vi) JCC shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by JCC with the intent of preferring the holders
of such Notes over any other creditors of JCC or with the intent of defeating,
hindering, delaying or defrauding any other creditors of JCC or others; and
(vii) JCC shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that the conditions precedent provided for in,
in the case of the officers' certificate, (i) through (vi) and, in the case of
the opinion of counsel, clauses (i), (with respect to the validity and
perfection of the security interest) (ii), (iii) and (v) of this paragraph have
been complied with.
JCC shall deliver to the Trustee any required consent of the lenders under
the Credit Facility to such defeasance or covenant defeasance, as the case may
be.
AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting JCC, the Guarantors and the
Trustee to enter into a supplemental indenture for certain limited purposes
without the consent of the Holders. With the consent of the Holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, JCC, the Guarantors and the Trustee are permitted to amend or
supplement the Indenture or any supplemental indenture or modify the rights of
the Holders; provided that no such modification may without the consent of
holders of at least 75% in aggregate principal amount of Notes at the time
outstanding, modify the provisions (including the defined terms used therein) of
the covenant "Repurchase of Notes at the Option of the Holder upon a Change of
Control" in a manner adverse to the Holders and provided, that no such
modification may, without the consent of each Holder affected thereby: (i)
change the Stated Maturity on any Note, or reduce the principal amount thereof
or the rate (or extend the time for payment) of interest thereon or any premium
payable upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Note or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or reduce the Change of Control
Purchase Price, the JCC Purchase Price or the Asset Sale Offer Price or alter
the provisions (including the defined terms used therein) regarding the right of
JCC to redeem the Notes in a manner adverse to the Holders, or (ii) reduce the
percentage in principal amount of the outstanding Notes, the consent of whose
Holders is required for any such amendment, supplemental indenture or waiver
provided for in the Indenture, or (iii) modify any of the waiver provisions,
except to increase any required percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Note affected thereby. The Indenture will contain
a provision that the subordination provisions may not be amended, modified or
waived in a manner adverse to the holders of the Senior Debt without the consent
of the Representative on behalf of the Required Lenders (as defined in the
Credit Facility) under the Credit Facility.
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NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of JCC, the Guarantors or
any successor entity shall have any personal liability in respect of the
obligations of JCC or the Guarantors under the Indenture or the Notes by reason
of his or its status as such stockholder, employee, officer or director.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of JCC,
including by designation, or is merged or consolidated into or with either of
JCC or one of its Subsidiaries; PROVIDED, that such Indebtedness was not
incurred in anticipation of, or in connection with, and was outstanding prior to
such person becoming a Subsidiary of JCC.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with JCC. For purposes
of this definition, the term "control" means the power to direct the management
and policies of a person, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract, or otherwise,
PROVIDED, THAT, a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"ASSET SWAP" means the execution of a definitive agreement, subject only to
regulatory approval and other customary closing conditions, that JCC in good
faith believes will be satisfied, for a substantially concurrent purchase and
sale, or exchange, of Productive Assets between JCC or any of its Subsidiaries
and another person or group of affiliated persons; provided that any amendment
to or waiver of any closing condition which individually or in the aggregate is
material to the Asset Swap shall be deemed to be a new Asset Swap.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BOARD RESOLUTION" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such or the executive committee of such
Board of Directors of such person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CASH EQUIVALENT" means (i) securities issued directly or fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) or (ii) time deposits and certificates of deposit
with, and commercial paper issued by the parent corporation of, any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500.0 million and commercial paper issued by others rated
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at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at
least P-2 or the equivalent thereof by Moody's Investors Service, Inc. and in
each case maturing within one year after the date of acquisition.
"CITICO" means Citicasters Co., an Ohio corporation and a wholly owned
subsidiary of JCC.
"CONSOLIDATED EBITDA" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) Consolidated income tax expense,
(ii) Consolidated depreciation and amortization expense, provided that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the equity interest
of JCC in such Subsidiary, (iii) other noncash charges (including amortization
of goodwill and other intangibles), (iv) Consolidated Fixed Charges, and less
the amount of all cash payments made by such person or any of its Subsidiaries
during such period to the extent such payments relate to non-cash charges that
were added back in determining Consolidated EBITDA for such period or any prior
period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of Preferred Stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by JCC to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP and (y) interest expense attributable to any
Indebtedness represented by the guaranty by such person or a Subsidiary of such
person of an obligation of another person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains or losses which are either
noncash or extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), (b) the net income, if positive, of any person, other
than a wholly owned Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's PRO RATA share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
"CREDIT FACILITY" means the Credit Agreement dated as of June 12, 1996, as
amended, by and among The Chase Manhattan Bank (as successor by merger to
Chemical Bank), as Administrative Agent, Banque
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Paribas, as Documentation Agent, and Bank of America, Illinois, as Syndication
Agent, certain financial institutions from time to time thereto, including any
related notes, guarantees, collateral documents, instruments, letters of credit,
reimbursement obligations and other agreements executed by JCC, any of its
Subsidiaries and/or Jacor in connection therewith (collectively, the "Related
Documents"), as such Credit Agreement and/or Related Documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Facility" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Facility and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification in whole or in part to any Credit Facility and all refundings,
refinancings and replacements in whole or in part of any Credit Facility,
including, without limitation, any agreement or agreements (i) extending the
maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder, PROVIDED that on the date such Indebtedness is incurred it would be
permitted by paragraph (f) under the definition of Permitted Indebtedness, or
(iv) otherwise altering the terms and conditions thereof.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any person, Equity Interests of such person that, by its terms or by
the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes, and (b) with respect to any
Subsidiary of such person (including with respect to any Subsidiary of JCC), any
Equity Interests other than any common equity with no preference, privileges, or
redemption or repayment provisions.
"EQUITY INTEREST" of any person means any shares, interests, participations
or other equivalents (however designated) in such person's equity, and shall in
any event include any Capital Stock issued by, or partnership interests in, such
person.
"EVENT OF LOSS" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCLUDED PERSON" means Zell/Chilmark Fund L.P. and all Related Persons of
such person.
"EXCLUDED SUBSIDIARY" means each of Jacor National Corp., WIBX Incorporated,
Marathon Communications, Inc. and Jacor Broadcasting of Idaho, Inc., an Idaho
corporation.
"EXEMPTED AFFILIATE TRANSACTION" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of JCC, (b) dividends permitted under the
terms of the covenant discussed above under "Limitation on Restricted Payments"
above and payable, in form and amount, on a pro rata basis to all holders of
Common Stock of Jacor, (c) transactions solely between JCC and any of its wholly
owned Subsidiaries or solely among wholly owned Subsidiaries of JCC, and (d)
payments to Zell/Chilmark Fund L.P. or its Affiliates for reasonable and
customary fees and expenses for financial advisory and investment banking
services provided to Jacor and JCC, and (e) payments to Jacor made in accordance
with the Tax Sharing Agreement.
"FUTURE SUBSIDIARY GUARANTOR" means future Subsidiaries of JCC and their
Subsidiaries (other than the Excluded Subsidiaries), which are not prohibited
from becoming guarantors by law or by the terms of any Acquired Indebtedness or
any agreement (other than an agreement entered into in connection with the
transaction resulting in such person becoming a Subsidiary of JCC or its
Subsidiaries) to which such Subsidiary is a party.
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"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date unless otherwise specified.
"INDEBTEDNESS" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such any person, (i) in respect of
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), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the kind described
in the preceding clause (a) or (b) that such person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person and all obligations to purchase, redeem or acquire any Equity
Interests; and (d) all Disqualified Capital Stock of such person (valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Disqualified Capital Stock, such Fair Market Value to be
determined in good faith by the board of directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits arising in the
ordinary course of business); (c) other than guarantees of Indebtedness of JCC
or any Guarantor to the extent permitted by the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock" or the
definition of Permitted Indebtedness, the entering into by such person of any
guarantee of, or other credit support or contingent obligation with respect to,
Indebtedness or other liability of such other person (other than the endorsement
of instruments for deposit or collection in the ordinary course of business);
and (d) the making of any capital contribution by such person to such other
person.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
JCC or a Guarantor, as applicable, that is subordinated in right of payment to
Senior Debt at least to the same extent as the Notes or
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the Guarantees, as applicable, and has no scheduled installment of principal
due, by redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Notes; PROVIDED, that in the case of subordination in respect of
Senior Debt under the Credit Facility, "Junior Security" shall mean any
Qualified Capital Stock and any Indebtedness of JCC or the Guarantors, as
applicable, that (i) has a final maturity date occurring after the final
maturity date of, all Senior Debt outstanding under the Credit Facility on the
date of issuance of such Qualified Capital Stock or Indebtedness, (ii) is
unsecured, (iii) has an Average Life longer than the security for which such
Qualified Capital Stock or Indebtedness is being exchanged, and (iv) by their
terms or by law are subordinated to Senior Debt outstanding under the Credit
Facility on the date of issuance of such Qualified Capital Stock or Indebtedness
at least to the same extent as the Notes.
"LEVERAGE RATIO" of any person on any date of determination (the
"Transaction Date") means the ratio, on a PRO FORMA basis, of (a) the sum of the
aggregate outstanding amount of Indebtedness and Disqualified Capital Stock of
such person and its Subsidiaries as of the date of calculation on a consolidated
basis in accordance with GAAP to (b) the aggregate amount of Consolidated EBITDA
of such person attributable to continuing operations and businesses (exclusive
of amounts attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period; PROVIDED, that for purposes of such
calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Leverage Ratio shall be
assumed to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (and the application of the proceeds therefrom to
the extent used to refinance or retire other Indebtedness) shall be assumed to
have occurred on the first day of such Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a PRO FORMA basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless such
person or any of its Subsidiaries is a party to an Interest Swap or Hedging
Obligation (which shall remain in effect for the 12-month period immediately
following the Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether higher or lower)
shall be used.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, or other encumbrance upon or with respect to any
property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"NET CASH PROCEEDS" means the aggregate amount of cash or Cash Equivalents
received by JCC in the case of a sale of Qualified Capital Stock and by JCC and
its Subsidiaries in respect of an Asset Sale or an Event of Loss plus, in the
case of an issuance of Qualified Capital Stock of JCC upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of JCC that were issued for cash on or after
the Issue Date, the amount of cash originally received by JCC upon the issuance
of such securities (including options, warrants, rights and convertible or
exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and (in the case of Asset Sales, reasonable and customary), expenses
(including, without limitation, the fees and expenses of legal counsel and
investment banking fees and expenses) incurred in connection with such Asset
Sale, Event of Loss or sale of Qualified Capital Stock, and, in the case of an
Asset Sale only, less an amount (estimated reasonably and in good faith by JCC
or the amount actually incurred, if greater) of income, franchise, sales and
other applicable taxes required to be paid by JCC or any of its Subsidiaries in
connection with such Asset Sale.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by JCC or any Guarantor under the terms of the Notes or
the Indenture.
"PERMITTED INDEBTEDNESS" means any of the following:
(a) JCC and its Subsidiaries may incur Indebtedness solely in respect of
bankers acceptances, letters of credit and performance bonds (to the extent that
such incurrence does not result in the incurrence of any obligation to repay any
obligation relating to borrowed money of others), all in the ordinary course of
business in accordance with customary industry practices, in amounts and for the
purposes customary in
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JCC's industry; PROVIDED, that the aggregate principal amount outstanding of
such Indebtedness (including any Indebtedness issued to refinance, refund or
replace such Indebtedness) shall at no time exceed $5.0 million;
(b) JCC may incur Indebtedness to any wholly owned Subsidiary Guarantor, and
any wholly owned Subsidiary Guarantor may incur Indebtedness to any other wholly
owned Subsidiary Guarantor or to JCC; PROVIDED, that in the case of Indebtedness
of JCC, such obligations shall be unsecured and subordinated in all respects to
JCC's obligations pursuant to the Notes and the date of any event that causes
such Subsidiary Guarantor to no longer be a wholly owned Subsidiary shall be an
Incurrence Date;
(c) JCC and the Guarantors may incur Indebtedness evidenced by the Notes and
the Guarantees and represented by the Indenture up to the amounts specified
therein as of the date thereof;
(d) JCC and the Guarantors, as applicable, may incur Refinancing
Indebtedness with respect to any Indebtedness or Disqualified Capital Stock, as
applicable, which Indebtedness was incurred pursuant to the Leverage Ratio in
the covenant described under "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" or clause (c) of this definition;
(e) JCC and its Subsidiaries may incur Indebtedness in an aggregate amount
outstanding at any time (including any Indebtedness issued to refinance,
replace, or refund such Indebtedness) of up to $5.0 million;
(f) JCC and the Guarantors may incur Indebtedness incurred pursuant to the
Credit Facility up to an aggregate principal amount outstanding (including any
Indebtedness issued to refinance, refund or replace such Indebtedness in whole
or in part) at any time of $600.0 million, plus accrued interest and additional
expense and reimbursement obligations with respect thereto and such additional
amounts as may be deemed to be outstanding in the form of Interest Swap and
Hedging Obligations with lenders party to the Credit Facility, minus the amount
of any such Indebtedness retired with Net Cash Proceeds from any Asset Sale;
(g) JCC and the Subsidiary Guarantors may incur Indebtedness under Interest
Swap and Hedging Obligations that do not increase the Indebtedness of the
Company other than as a result of fluctuations in interest or foreign currency
exchange rates provided that such Interest Swap and Hedging Obligations are
incurred for the purpose of providing interest rate protection with respect to
Indebtedness permitted under the Indenture or to provide currency exchange
protection in connection with revenues generated in currencies other than U.S.
dollars;
(h) Subsidiaries may incur Acquired Indebtedness if JCC at the time of such
incurrence could incur such Indebtedness pursuant to the Leverage Ratio in the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock"; and
(i) JCC and its Subsidiaries may incur Indebtedness existing on the Issue
Date.
"PERMITTED INVESTMENT" means:
(a) Investments in any of the Notes;
(b) Cash Equivalents;
(c) intercompany loans to the extent permitted under clause (b) of the
definition of "Permitted Indebtedness" and intercompany security agreements
relating thereto;
(d) loans, advances or investments in existence on the Issue Date;
(e) Investments in a person substantially all of whose assets are of a type
generally used in a Related Business (an "Acquired Person") if, as a result of
such Investments, (i) the Acquired Person immediately thereupon is or becomes a
Subsidiary of the Company, or (ii) the Acquired Person immediately thereupon
either (1) is merged or consolidated with or into the Company or any of its
Subsidiaries and the surviving person is the Company or a Subsidiary of the
Company or (2) transfers or conveys all or substantially all of its assets, or
is liquidated into, JCC or any of its Subsidiaries.
(f) Investments in a person with whom JCC or any of its Subsidiaries have
entered into, (i) local market agreements or time brokerage agreements pursuant
to which JCC or any one of its Subsidiaries
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programs substantial portions of the broadcast day on such person's radio
broadcast station(s) and sells advertising time during such program segments for
its own account or (ii) joint sales agreements pursuant to which JCC or any of
its Subsidiaries sells substantially all of the advertising time for such
person's radio broadcast station(s);
(g) Investments that are in persons which will have the purpose of
furthering the operations of JCC and its Subsidiaries not to exceed $10.0
million; and
(h) demand deposit accounts maintained in the ordinary course of business.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges or
levies not yet subject to penalty or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of JCC in accordance with GAAP as of the date of
determination; (c) statutory liens of carriers, warehousemen, mechanics,
materialmen, landlords, repairmen or other like Liens arising by operation of
law in the ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 60 days, or (ii) such
Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of JCC in
accordance with GAAP as of the date of determination; (d) Liens securing the
performance of bids, trade contracts (other than borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business and
deposits made in the ordinary course of business to secure obligations of public
utilities; (e) easements, rights-of-way, zoning, building restrictions,
reservations, encroachments, exceptions, covenants, similar restrictions and
other similar encumbrances or title defects which, singly or in the aggregate,
do not in any case materially detract from the value of the property, subject
thereto (as such property is used by JCC or any of its Subsidiaries) or
interfere with the ordinary conduct of the business of JCC or any of its
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, provided, that the execution or other enforcement of such Liens is
effectively stayed and that the claims secured thereby are being contested in
good faith by appropriate proceedings; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
securing Indebtedness of a person existing at the time such person becomes a
Subsidiary or is merged with or into JCC or a Subsidiary or Liens securing
Indebtedness incurred in connection with an Acquisition, PROVIDED that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (i) leases or subleases granted to other persons in the
ordinary course of business not materially interfering with the conduct of the
business of JCC or any of its Subsidiaries or materially detracting from the
value of the relative assets of JCC or any of its Subsidiaries; (j) Liens
arising from precautionary Uniform Commercial Code financing statement filings
regarding operating leases entered into by JCC or any of its Subsidiaries in the
ordinary course of business; and (k) Liens securing Refinancing Indebtedness
incurred to refinance any Indebtedness that was previously so secured in a
manner no more adverse to the Holders of the Notes than the terms of the Liens
securing such refinanced Indebtedness provided that the Indebtedness secured is
not increased and the lien is not extended to any additional assets or property,
(l) Liens in favor of the Adminstrative Agent pursuant to the Credit Facility
and (m) Liens on property of a Subsdiary of JCC provided that such Liens secure
only obligations owing by such Subsidiary to JCC or another Subsidiary of JCC.
"PRODUCTIVE ASSETS" means assets of a kind used or usable by JCC and its
Subsidiaries in a Related Business.
"PUBLIC OFFERING" means a firm commitment underwritten primary offering of
Capital Stock of Jacor or JCC.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of JCC that is not
Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of JCC issued
on or after the Issue Date with the Net Cash Proceeds received by JCC from the
substantially concurrent sale of Qualified Capital Stock or any exchange of
Qualified Capital Stock for any Capital Stock or Indebtedness issued on or after
the Issue Date.
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"REFERENCE PERIOD" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
PROVIDED, that (A) such Refinancing Indebtedness of any Subsidiary of JCC shall
only be used to Refinance outstanding Indebtedness or Disqualified Capital Stock
of such Subsidiary, (B) such Refinancing Indebtedness shall (x) not have an
Average Life shorter than the Indebtedness or Disqualified Capital Stock to be
so refinanced at the time of such Refinancing and (y) in all respects, be no
less subordinated or junior, if applicable, to the rights of Holders of the
Notes than was the Indebtedness or Disqualified Capital Stock to be refinanced
and (C) such Refinancing Indebtedness shall have no installment of principal (or
redemption payment) scheduled to come due earlier than the scheduled maturity of
any installment of principal of the Indebtedness or Disqualified Capital Stock
to be so refinanced which was scheduled to come due prior to the Stated
Maturity.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by JCC and its Subsidiaries as of the Issue Date and any and all
businesses that in the good faith judgment of the Board of Directors of JCC are
materially related businesses.
"RELATED PERSON" means any person who controls, is controlled by or is under
common control with an Excluded Person; PROVIDED that for purposes of this
definition "control" means the beneficial ownership of more than 50% of the
total voting power of a person normally entitled to vote in the election of
directors, managers or trustees, as applicable of a person.
"RESTRICTED INVESTMENT" means, in one or a series of related transactions,
any Investment, other than investments in Permitted Investments; PROVIDED,
HOWEVER, that a merger of another person with or into JCC or a Subsidiary
Guarantor shall not be deemed to be a Restricted Investment so long as the
surviving entity is JCC or a direct wholly owned Subsidiary Guarantor.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or any Subsidiary or parent of such person,
(c) other than with the proceeds from the substantially concurrent sale of, or
in exchange for, Refinancing Indebtedness any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such person; PROVIDED, HOWEVER, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Capital Stock of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer; (ii) any dividend, distribution or other
payment to JCC, or to any of its wholly owned Subsidiary Guarantors, by any of
the Subsidiaries of JCC; or (iii) loans or advances to any Subsidiary Guarantor
the proceeds of which are used by such Subsidiary Guarantor in a Related
Business activity of such Subsidiary Guarantor.
"SENIOR DEBT" of JCC or any Guarantor means Indebtedness (including any
monetary obligation in respect of the Credit Facility, and interest, whether or
not such interest is allowed or allowable, accruing on Indebtedness incurred
pursuant to the Credit Facility at the contracted-for rate after the
commencement of any proceeding under any bankruptcy, insolvency or similar law)
of JCC or such Guarantor arising under the Credit Facility or that, by the terms
of the instrument creating or evidencing such Indebtedness, is expressly
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designated Senior Debt and made senior in right of payment to the Notes or the
applicable Guarantee; provided, that in no event shall Senior Debt include (a)
Indebtedness to any Subsidiary of JCC or any officer, director or employee of
JCC or any Subsidiary of JCC, (b) Indebtedness incurred in violation of the
terms of the Indenture, (c) Indebtedness to trade creditors, (d) Disqualified
Capital Stock and (e) any liability for taxes owed or owing by JCC or such
Guarantor.
"SIGNIFICANT SUBSIDIARY" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.
"STATED MATURITY," when used with respect to any Note, means December 15,
2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of JCC or a Guarantor that is
subordinated in right of payment to the Notes or such Guarantee, as applicable,
in any respect or has a stated maturity on or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest, or (iii) a
partnership in which such person or a Subsidiary of such person is, at the time,
a general partner and in which such person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest.
"SUBSIDIARY GUARANTORS" means (i) the Present Subsidiary Guarantors
identified in the following sentence and (ii) Future Subsidiary Guarantors that
become Subsidiary Guarantors pursuant to the terms of the Indenture, but
excluding any Persons whose guarantees have been released pursuant to the terms
of the Indenture. The "PRESENT SUBSIDIARY GUARANTORS" means Jacor Broadcasting
Corporation; Broadcast Finance, Inc.; Jacor Broadcasting of Florida, Inc.; Jacor
Broadcasting of Atlanta, Inc.; Jacor Broadcasting of Colorado, Inc.; Jacor
Broadcasting of Lexington, Inc.; Jacor Broadcasting of Knoxville, Inc.; Jacor
Broadcasting of Tampa Bay, Inc.; Jacor Cable, Inc.; Georgia Network Equipment,
Inc.; Jacor Broadcasting of San Diego, Inc.; Jacor Broadcasting of St. Louis,
Inc.; Jacor Broadcasting of Sarasota, Inc.; Jacor Broadcasting of Idaho, Inc., a
Delaware corporation; Jacor Broadcasting of Iowa, Inc.; Noble Broadcast Group,
Inc.; Noble Broadcast of Colorado, Inc.; Noble Broadcast of San Diego, Inc.;
Noble Broadcast of St. Louis, Inc.; Noble Broadcast of Toledo, Inc.; Nova
Marketing Group, Inc.; Noble Broadcast Licenses, Inc.; Noble Broadcast Holdings,
Inc.; Sports Radio Broadcasting, Inc.; Nobro, S.C.; Sports Radio, Inc.; Noble
Broadcast Center, Inc.; Citicasters Co.; GAAC-N26LB, Inc.; GACC-340, Inc.; Cine
Guarantors, Inc.; Great American Television Productions, Inc.; Cine Guarantors
II, Inc.; Great American Merchandising Group, Inc.; Taft-TCI Satellite Services,
Inc.; Cine Films, Inc.; The Sy Fischer Company Agency, Inc.; Location
Productions, Inc.; Location Productions II, Inc.; VTTV Productions; F.M.I.
Pennsylvania, Inc.; Inmobiliaria Radial, S.A. de C.V.; WHOK, Inc.; Cine Mobile
Systems Int'l. N.V.; Cine Movil S.A. de C.V.; and Cine Guarantors II, Ltd., each
a direct or indirect subsidiary of the Company or any successor entity, whether
by merger, consolidation, change of name or otherwise.
"TAX SHARING AGREEMENT" means any agreements between JCC and Jacor pursuant
to which JCC may make payments to Jacor with respect to JCC's Federal, state, or
local income or franchise tax liabilities where JCC is included in a
consolidated, unitary or combined return filed by Jacor; PROVIDED, HOWEVER, that
the payment by JCC under such agreement may not exceed the liability of Jacor
for such taxes if it had filed its income tax returns as a separate company.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form of
one or more registered Notes in global form (the "Global Notes"). Each Global
Note will be deposited on the date of the closing of the sale of the Notes (the
"Closing Date") with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that
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its participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the NYSE, the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the SEC.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Underwriters with an interest in the
Global Note and (ii) ownership of the Notes evidenced by the Global Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own and that security interests in negotiable instruments
can only be perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Notes evidenced by the Global Note will be
limited to such extent.
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests in
a Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes, and will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
As a result, the ability of a person having a beneficial interest in Notes
represented by a Global Note to pledge such interest to persons or entities that
do not participate in the Depositary's system, or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, interest on, any
Note represented by a Global Note registered in the name of the Depositary or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of the Depositary or its nominee in its capacity as the
registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes (including principal, premium, if any
or interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the Global Note as shown on the
records of the Depositary. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depositary of
the Global Notes, Certificated Notes will be issued to each person that the
Depositary identifies as the beneficial owner of the Notes represented by Global
Notes. In addition, subject to certain conditions, any person having a
beneficial interest in a Global Note
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may, upon request to the Trustee, exchange such beneficial interest for Notes in
the form of Certificated Notes. Upon any such issuance, the Trustee is required
to register such Certificated Notes in the name of such person or persons (or
the nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from the Depositary
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable. The Company will have no responsibility for the
performance by the Depositary or its Participants of their respective
obligations as described hereunder or under the rules and procedures governing
their respective operations.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes represented
by the Global Notes (including principal, premium, if any, and interest) be made
by wire transfer of immediately available funds to the accounts specified by the
Depositary. With respect to Notes represented by Certificated Notes, the Company
will make all payments of principal, premium, if any, and interest, by mailing a
check to each such Holder's registered address. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity, or until the Notes
are issued in certificated form, and secondary market trading activity in the
Notes will therefore be required by the Depositary to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
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DESCRIPTION OF OTHER INDEBTEDNESS
The summaries contained herein of certain of the indebtedness of the Company
do not purport to be complete and are qualified in their entirety by reference
to the provisions of the various agreements and indentures related thereto,
which are filed as exhibits to the Registration Statement of which this
Prospectus is a part and to which reference is hereby made.
CREDIT FACILITY
The Credit Facility provides availability of $600.0 million of loans to JCC
in three components: (i) a revolving credit facility of up to $200.0 million
with mandatory semi-annual commitment reductions beginning March 18, 1999 and a
final maturity date of September 18, 2003; (ii) a term loan of $300.0 million
with scheduled semi-annual reductions beginning March 18, 1998 and a final
maturity date of September 18, 2003; and (iii) a tranche B term loan of $100.0
million with scheduled semi-annual reductions beginning March 18, 1999 and a
final maturity date of September 18, 2004.
The Credit Facility bears interest at a rate that fluctuates with a bank
base rate and/or the Eurodollar rate per annum, and at October 31, 1996 this
rate was 7.73%. Jacor borrowed monies under the Credit Facility to (i) finance a
portion of the cash consideration paid in the Citicasters Merger, and (ii) fund
$100 million of the repurchase price of the 9 3/4% Notes. The Citicasters Merger
constituted a change in control for the purposes of the indenture under which
the 9 3/4% Notes were issued and Jacor was required to make an offer to
repurchase such notes at 101% of their aggregate principal amount. Under the
Citicasters Put, the holders of $106.9 million in principal amount of the 9 3/4%
Notes elected in October 1996 to sell their 9 3/4% Notes to Jacor pursuant to
Jacor's repurchase offer.
In November 1996, Jacor entered into discussions to expand the availability
under the Credit Facility from up to $600.0 million to up to $750.0 million,
among other things. Jacor is discussing with the lenders that the components of
the increased Credit Facility consist of a revolving credit facility with an
availability of up to $450.0 million, a $200.0 million seven-year amortizing
term loan and a $100.0 million up to eight-year amortizing term loan. There can
be no assurance that the availability under the Credit Facility will be
increased or that the components of the Credit Facility will be revised.
The loans under the Credit Facility are guaranteed by each of the Company's
direct and indirect subsidiaries other than certain immaterial subsidiaries. The
Company's obligations with respect to the Credit Facility and each guarantor's
obligations with respect to the related guaranty are secured by substantially
all of their respective assets, including, without limitation, inventory,
equipment, accounts receivable, intercompany debt and, in the case of the
Company's subsidiaries, capital stock. JCC's obligations under the Credit
Facility are secured by a first priority lien on the capital stock of the
Company's subsidiaries and by the guarantee of JCC's parent, Jacor.
The Credit Facility contains covenants and provisions that restrict, among
other things, the Company's ability to: (i) incur additional indebtedness; (ii)
incur liens on its property; (iii) make investments and advances; (iv) enter
into guarantees and other contingent obligations; (v) merge or consolidate with
or acquire another person or engage in other fundamental changes; (vi) engage in
certain sales of assets; (vii) make capital expenditures; (viii) enter into
leases; (ix) engage in certain transactions with affiliates; and (x) make
restricted junior payments. The Credit Facility also requires the satisfaction
of certain financial performance criteria (including a consolidated interest
coverage ratio, a leverage-to-operating cash flow ratio and a consolidated
operating cash flow available for fixed charges ratio) and the repayment of
loans under the Credit Facility with proceeds of certain sales of assets and
debt issuances, and with 50% of the Company's Consolidated Excess Cash Flow (as
defined in the Credit Facility).
Events of default under the Credit Facility include various events of
default customary for such type of agreement, such as failure to pay scheduled
payments when due, cross defaults on other indebtedness, change of control
events under other indebtedness (including the LYONs, the Notes, the 9 3/4%
Notes and the 10 1/8% Notes) and certain events of bankruptcy, insolvency and
reorganization. In addition, the Credit Facility includes events of default for
JCC and the cessation of any lien on any of the collateral under the Credit
Facility as a perfected first priority lien and the failure of Zell/Chilmark
appointees to represent at least 30% of the Jacor Board of Directors.
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For purposes of the Credit Facility, a change of control includes the
occurrence of any event that triggers a change of control under the LYONs, the
Notes , the 9 3/4% Notes or the 10 1/8% Notes. Such change of control under the
Credit Facility would constitute an event of default which would give the
syndicate the right to accelerate the unpaid principal amounts due under the
Credit Facility. Upon such acceleration, there is no assurance that JCC will
have funds available to fund such repayment or that such funds will be available
or terms acceptable to JCC.
THE 9 3/4% NOTES
The 9 3/4% Notes are general unsecured obligations of JCC and are
subordinated in rights of payment to all Senior Indebtedness (as defined in the
9 3/4% Note Indenture). The 9 3/4% Notes were issued pursuant to an indenture
between Citicasters and Shawmut Bank Connecticut, National Association, as
Trustee (the "9 3/4% Note Indenture").
Following the Citicasters Put, the November 15, 1996 aggregate outstanding
principal amount of the 9 3/4% Notes is $18.1 million and the 9 3/4% Notes
mature on February 15, 2004. Interest on the 9 3/4% Notes accrues at the rate of
9 3/4% per annum.
The 9 3/4% Notes are not redeemable at JCC's option before February 15, 1999
(other than in connection with certain public offerings of common stock by JCC,
as described below). Thereafter, the 9 3/4% Notes are subject to redemption at
the option of JCC, at redemption prices declining from 104.875% of the principal
amount for the twelve months commencing February 15, 1999 to 100.00% on and
after February 15, 2002, plus, in each case, accrued and unpaid interest thereon
to the applicable redemption date.
Within 60 days after any Change of Control (as defined in the 9 3/4% Note
Indenture), JCC or its successors must make an offer to purchase the 9 3/4%
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest to the date of purchase. As discussed
under "-- Credit Facility," the Citicasters Merger constituted a Change of
Control. Any 9 3/4% Notes which are not acquired in connection with such Change
of Control offer, subject to the successor's right to redeem the 9 3/4% Notes as
described above, will remain outstanding. Jacor will comply with the
requirements of Rule 14e-1 in connection with the repurchase of the 9 3/4%
Notes, as such rule might apply to any such repurchase at the time thereof. In
addition, prior to December 31, 1996, JCC can redeem the 9 3/4% Notes from the
proceeds of Asset Sales (as defined in the 9 3/4% Note Indenture) subject to
certain restrictions.
The 9 3/4% Note Indenture contains certain covenants which impose certain
limitations and restrictions on the ability of JCC to incur additional
indebtedness, pay dividends or make other distributions, make certain loans and
investments, apply the proceeds of Asset Sales (and use the proceeds thereof),
create liens, enter into certain transactions with affiliates, merge,
consolidate or transfer substantially all its assets and make investments in
unrestricted subsidiaries. In addition, the 9 3/4% Note Indenture limits JCC's
Subsidiaries from incurring additional indebtedness.
The Indenture for the 9 3/4% Notes includes various events of default
customary for such type of agreements, such as failure to pay principal and
interest when due on the 9 3/4% Notes, cross defaults on other indebtedness and
certain events of bankruptcy, insolvency and reorganization.
THE 10 1/8% NOTES
In June 1996, JCAC, Inc. (a predecessor to JCC) conducted an offering (the
"10 1/8% Notes Offering") whereby JCAC, Inc. issued and sold 10 1/8% Senior
Subordinated Notes due 2006 (the "10 1/8% Notes") in an aggregate principal
amount of $100.0 million. JCAC, Inc. then lent the net proceeds of the 10 1/8%
Notes Offering to Jacor. The 10 1/8% Notes have interest payment dates of June
15 and December 15, commencing on December 15, 1996, and mature on June 15,
2006.
The 10 1/8% Note Indenture contains certain covenants which impose certain
limitations and restrictions on the ability of Jacor to incur additional
indebtedness, pay dividends or make other distributions, make certain loans and
investments, apply the proceeds of asset sales (and use the proceeds thereof),
create liens, enter into certain transactions with affiliates, merge,
consolidate or transfer substantially all its assets and make investments in
unrestricted subsidiaries.
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If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 10 1/8% Notes at a price equal to 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of repurchase.
There can be no assurance that JCC will have sufficient funds to purchase all of
the 10 1/8% Notes in the event of a change of control offer or that JCC would be
able to obtain financing for such purpose on favorable terms, if at all. In
addition, the Credit Facility restricts JCC's ability to repurchase the 10 1/8%
Notes, including pursuant to a change of control offer. Furthermore, a change of
control under the 10 1/8% Note Indenture will result in a default under the
Credit Facility.
As used herein, (a) prior to the earlier of a 9 3/4% Note Event, a "Change
of Control" means any transaction or series of transactions in which any of the
following occurs: (i) any person or group (within the meaning of Rule 13d-3
under the Exchange Act and Sections 13(d) and 14(d) of the Exchange Act), other
than Zell/Chilmark or any of its Affiliates, becomes the direct or indirect
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of (A)
greater than 50% of the total voting power (on a fully diluted basis as if all
convertible securities had been converted) entitled to vote in the election of
directors of JCC or CitiCo, or the surviving person (if other than the Company),
or (B) greater than 20% of the total voting power (on a fully diluted basis as
if all convertible securities had been converted) entitled to vote in the
election of directors of JCC or CitiCo, or the surviving person (if other than
JCC), and such person or group has the ability to elect, directly or indirectly,
a majority of the members of the Board of Directors of JCC; or (ii) JCC or
CitiCo consolidates with or merges into another person, another person
consolidates with or merges into JCC or CitiCo, JCC or CitiCo issues shares of
its Capital Stock or all or substantially all of the assets of JCC or CitiCo are
sold, assigned, conveyed, transferred, leased or otherwise disposed of to any
person as an entirety or substantially as an entirety in one transaction or a
series of related transactions and the effect of such consolidation, merger,
issuance or sale is as described in clause (i) above. Notwithstanding the
foregoing, no Change of Control shall be deemed to have occurred by virtue of
(I) JCC or any of its employee benefit or stock plans filing (or being required
to file after the lapse of time) a Schedule 13D or 14D-1 (or any successor or
similar schedule, form or report under the Exchange Act) or (II) the purchase by
one or more underwriters of Capital Stock of JCC in connection with a Public
Offering; and (b) upon and following a 9 3/4% Note Event, a "Change of Control"
will mean (i) any merger or consolidation of JCC with or into any person or any
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of any of the assets of JCC, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction(s), any "person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) (other than an Excluded Person) is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total voting power in
the aggregate normally entitled to vote in the election of directors, managers,
or trustees, as applicable, of the transferee(s) or surviving entity or
entities, (ii) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate of all
classes of Capital Stock of JCC then outstanding normally entitled to vote in
elections of directors, or (iii) during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of JCC (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of JCC was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of JCC then in
office.
The events of default under the 10 1/8% Note Indenture include various
events of default customary for such type of agreement, including the failure to
pay principal and interest when due on the 10 1/8% Notes, cross defaults on
other indebtedness for borrowed monies in excess of $5.0 million (which
indebtedness would therefore include the Credit Facility, the LYONs, the Notes
and the 9 3/4% Notes) and certain events of bankruptcy, insolvency and
reorganization.
THE LYONS
Also in June 1996, Jacor conducted an offering (the "LYONs Offering")
whereby Jacor issued and sold Senior Liquid Yield Option Notes-TM- due June 12,
2011 (the "LYONs") in the aggregate principal amount at maturity of $259.9
million. Each LYON had an Issue Price of $443.14 and a principal amount at
maturity of $1,000.
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Each LYON is convertible, at the option of the Holder, at any time on or
prior to maturity, unless previously redeemed or otherwise purchased, into
Common Stock at a conversion rate of 13.412 shares per LYON. The conversion rate
will not be adjusted for accrued original issue discount, but will be subject to
adjustment upon the occurrence of certain events affecting the Common Stock.
Upon conversion, the Holder will not receive any cash payment representing
accrued original issue discount; such accrued original issue discount will be
deemed paid by the Common Stock received by the Holder on conversion.
The LYONs are not redeemable by Jacor prior to June 12, 2001. Thereafter,
the LYONs are redeemable for cash at any time at the option of Jacor, in whole
or in part, at redemption prices equal to the issue price plus accrued original
issue discount to the date of redemption.
The LYONs will be purchased by Jacor, at the option of the Holder, on June
12, 2001 and June 12, 2006, for a Purchase Price of $581.25 and $762.39
(representing issue price plus accrued original issue discount to each date),
respectively, representing a 5.50% yield per annum to the Holder on such date,
computed on a semiannual bond equivalent basis. Jacor, at its option, may elect
to pay the purchase price on any such purchase date in cash or Common Stock, or
any combination thereof. In addition, as of 35 business days after the
occurrence of a change in control of Jacor occurring on or prior to June 12,
2001, each LYON will be purchased for cash, by Jacor, at the option of the
Holder, for a change in control purchase price equal to the issue price plus
accrued original issue discount to the change in control purchase date set for
such purchase. The change in control purchase feature of the LYONs may in
certain circumstances have an antitakeover effect.
Under the Indenture for the LYONs, a "Change in Control" of Jacor is deemed
to have occurred at such time as (i) any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than
Zell/Chilmark, Jacor, any subsidiary of Jacor, or any employee benefit plan of
either Jacor or any Subsidiary of Jacor, files a Schedule 13D or 14D-1 under the
Exchange Act (or any successor schedule, form or report) disclosing that such
person has become the beneficial owner of 50% or more of the Common Stock or
other capital stock of Jacor into which such Common Stock is reclassified or
changed, with certain exceptions, or (ii) there shall be consummated any
consolidation or merger of Jacor (a) in which Jacor is not the continuing or
surviving corporation or (b) pursuant to which the Common Stock would be
converted into cash, securities or other property, in each case, other than a
concolidation or merger of Jacor in which the holders of Common Stock
immediately prior to the consolidation or merger own, directly or indirectly, at
least a majority of Common Stock of the continuing or surviving corporation
immediately after the consolidation or merger. A Change of Control under the
LYONs indenture constitutes an event of default under the Credit Facility. See
"-- Credit Facility."
The Indenture for the LYONs includes various events of default customary for
such type of agreement, such as cross defaults on other indebtedness for
borrowed monies in excess of $10.0 million (which indebtedness would therefore
include the Credit Facility, the Notes, the 9 3/4% Notes and the 10 1/8% Notes)
and certain events of bankruptcy, insolvency and reorganization.
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UNDERWRITING
Subject to certain conditions contained in the Underwriting Agreement,
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriters"), severally have agreed to
purchase from JCC and the Guarantors , and JCC and the Guarantors have agreed to
sell to the Underwriters at the public offering price set forth on the cover
page of this Prospectus, less the underwriting discount, the respective
principal amount of Notes (together with the Guarantees) set forth opposite
their names below:
<TABLE>
<CAPTION>
UNDERWRITER
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........... $102,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................ $68,000,000
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$170,000,000
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</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to purchase and accept delivery of the Notes offered hereby are subject to the
approval of certain legal matters by counsel and to certain other conditions.
The nature of the Underwriters' obligations is such that the Underwriters are
committed to purchase all of the Notes if any of the Notes are purchased by
them.
JCC and the Guarantors have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, or
to contribute to payments that the Underwriter may be required to make in
respect thereof.
The Underwriters propose to offer the Notes to the public initially at the
price to the public set forth on the cover page of this Prospectus. After the
initial public offering of the Notes, the offering price and other selling terms
may be changed by the Underwriters.
The Notes are new issues of securities, have no established trading market
and may not be widely distributed. JCC has been advised by the Underwriters
that, following the completion of this Offering, the Underwriters presently
intend to make a market in the Notes as permitted by applicable laws and
regulations. However, the Underwriters are under no obligation to do so and may
discontinue any market making activities at any time at the sole discretion of
the individual Underwriters. No assurance can be given as to the liquidity of
any trading market for the Notes.
52
<PAGE>
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1995 and 1994 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1995, and the combined balance sheets of the
Selected Gannett Radio Stations as of December 31, 1995 and September 29, 1996
and the combined statements of operations, changes in Gannett's investment in
radio stations and cash flows for the years ended December 25, 1994 and December
31, 1995 and the nine month period ended September 29, 1996, incorporated by
reference in this registration statement, have been included herein in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The consolidated balance sheets of Citicasters as of December 31, 1995 and
1994 and the consolidated statements of operations, changes in shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1995 incorporated by reference in this registration statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon (which contains an explanatory paragraph with respect to Citicasters'
emergence from bankruptcy and subsequent adoption of "fresh-start reporting" as
of December 31, 1993, as more fully described in Note B to the consolidated
financial statements), included therein and incorporated by reference herein.
Such consolidated financial statements are incorporated by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of Noble Broadcast Group, Inc. as of
December 31, 1995 and December 25, 1994 and for each of the three years in the
period ended December 31, 1995, incorporated in this Prospectus by reference to
Jacor Communications, Inc.'s Current Report on Form 8-K dated March 6, 1996, as
amended on May 23, 1996, have been so incorporated in reliance on the report
(which includes an explanatory paragraph relating to Jacor's agreement to
purchase Noble Broadcast Group, Inc. as described in Note 2 to the consolidated
financial statements) of Price Waterhouse LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The authorization and issuance of the Notes offered hereby will be passed
upon for Jacor by Graydon, Head & Ritchey, Cincinnati, Ohio. Certain legal
matters in connection with this Offering will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles,
California.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Jacor and Citicasters (now known
as JCC) with the Securities and Exchange Commission (the "Commission") are
incorporated herein by reference and are made a part hereof:
(a) Jacor's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, as amended;
(b) Jacor's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996, as amended, and September 30, 1996, as amended;
(c) Jacor's Current Reports on Form 8-K dated February 14, 1996, February
27, 1996, March 6, 1996, as amended, March 27, 1996, as amended, July 30,
1996, October 3, 1996, October 11, 1996, October 23, 1996, November 6,
1996 and December 12, 1996;
(d) Jacor's Form 8-B Registration Statement dated September 23, 1996;
(e) Citicasters' Annual Report on Form 10-K for the year ended December 31,
1995, as amended;
(f) Citicasters' Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, as amended, June 30, 1996 and September 30, 1996;
(g) Citicasters' Current Report on Form 8-K dated February 14, 1996; and
(h) Citicasters' Form 8-B Registration Statement dated September 23, 1996.
53
<PAGE>
All documents filed by Jacor and JCC with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this Prospectus
and prior to the termination of the offering of the securities made 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 by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in any other subsequently filed
document that is or is deemed to be incorporated by reference herein) modifies
or supersedes such previous statement. Any statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus except as so
modified or superseded.
This Prospectus incorporates by reference certain documents relating to
Jacor and Citicasters which are not delivered herewith. These documents (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference herein) are available, without charge, upon oral or
written request by any person to whom this Prospectus is delivered. Such
requests should be directed to Jacor Communications, Inc., 1300 PNC Center, 201
East Fifth Street, Cincinnati, Ohio 45202, Attention: Kirk Brewer, Director of
Corporate Communications and Investor Relations, Telephone Number (847)
256-9282, Fax Number (847) 256-2980.
AVAILABLE INFORMATION
Jacor is subject to the informational requirements of the Exchange Act, and
accordingly files reports, proxy statements and other information with the
Commission. Jacor has filed a Registration Statement on Form S-3 together with
all amendments and exhibits thereto with the Commission under the Securities Act
with respect to the Offering. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement, including any amendments, schedules and exhibits
thereto, is available for inspection and copying as set forth above. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein include all material terms of such contracts or
other documents but are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. Such reports, proxy statements and other information filed
with the Commission are available for inspection and copying at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and at 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such documents may also be obtained from the Public
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Jacor files its reports, proxy
statements and other information with the Commission electronically, and the
Commission maintains a Web site located at http://www.sec.gov containing such
information. In addition, reports and other information concerning Jacor are
available for inspection and copying at the offices of The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006-1506.
54
<PAGE>
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NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE 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 ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY 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>
Prospectus Summary.................................. 3
Risk Factors........................................ 9
Transactions........................................ 12
Use of Proceeds..................................... 15
Capitalization...................................... 16
Business............................................ 17
Description of Notes................................ 23
Description of Other Indebtedness................... 48
Underwriting........................................ 52
Experts............................................. 53
Legal Matters....................................... 53
Incorporation of Certain Documents By Reference..... 53
Available Information............................... 54
</TABLE>
$170,000,000
JACOR COMMUNICATIONS
COMPANY
GUARANTEED BY
[LOGO]
9 3/4% SENIOR SUBORDINATED
NOTES DUE 2006
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
DECEMBER 12, 1996
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