<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 2, 1997
PROSPECTUS SUPPLEMENT
, 1997
(TO PROSPECTUS DATED APRIL 21, 1997)
4,650,000 SHARES
[LOGO]
[LOGO]
COMMON STOCK
All of the shares of Jacor Communications, Inc. ("Jacor") common stock, $.01
par value per share (the "Common Stock"), offered hereby (the "Offering") are
being sold by Jacor. The Common Stock is currently traded on the Nasdaq National
Market tier of The Nasdaq Stock Market (the "Nasdaq National Market") under the
symbol "JCOR." On May 1, 1997, the last reported sale price of the Common Stock
on the Nasdaq National Market was $28.50 per share.
The Common Stock is being issued to fund, in part, the acquisition of
Premiere Radio Networks, Inc., a Delaware corporation ("Premiere"), and, to the
extent available, other acquisitions. Alternatively and pending such uses, Jacor
intends to use the net proceeds from this Offering and the proceeds from the
Zell Offering (as defined herein) for general corporate purposes, including the
repayment in part of outstanding indebtedness. Concurrently with this Offering,
Jacor is offering a minimum of $20.0 million of Common Stock to Equity Group
Investments, Inc., an affiliate of Jacor's largest stockholder, the
Zell/Chilmark Fund L.P. (the "Zell Offering"). Consummation of this Offering is
not contingent on consummation of the Zell Offering or the consummation of the
Premiere Merger (as defined herein) or any of the other Pending Transactions (as
defined herein). See "Broadcasting Services Acquisitions," "Transactions" and
"Use of Proceeds."
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THE ACCOMPANYING PROSPECTUS 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 SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
PRICE UNDERWRITING
TO THE DISCOUNTS AND PROCEEDS
PUBLIC COMMISSIONS(1) TO JACOR(2)
- --------------------------------------------------------------------------------
Per Share.......................... $ $ $
Total (3).......................... $ $ $
- --------------------------------------------------------------------------------
</TABLE>
(1) SEE "UNDERWRITING" FOR INDEMNIFICATION ARRANGEMENTS WITH THE UNDERWRITERS
(AS DEFINED HEREIN).
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY JACOR ESTIMATED AT $ .
(3) JACOR HAS GRANTED TO THE UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP TO AN
AGGREGATE OF 697,500 ADDITIONAL SHARES AT THE PRICE TO THE PUBLIC, LESS
UNDERWRITING DISCOUNTS AND COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF
ANY. IF SUCH OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO THE PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS, AND PROCEEDS TO JACOR WILL BE
$ , $ , AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters and subject to various
prior conditions, including the right to reject orders in whole or in part. It
is expected that delivery of the Common Stock will be made in New York, New
York, on or about May , 1997.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
<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 1996 radio revenue rank, all
as shown in the table contained in the Prospectus Supplement Summary.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH
THIS OFFERING AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE
OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET-MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ STOCK MARKET'S
SMALLCAP MARKET, THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE IN ACCORDANCE WITH RULE 103 UNDER REGULATION M UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF SECURITIES IN THE
UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT 1986 AND
THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 WITH RESPECT TO ANYTHING DONE
BY ANY PERSON IN RELATION TO ANY SECURITIES IN, FROM OR OTHERWISE INVOLVING THE
UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
---------------------
PROSPECTUS SUPPLEMENT SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS
SUPPLEMENT, IN THE ACCOMPANYING PROSPECTUS, AND IN THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT DOES NOT GIVE EFFECT TO THE OVER-ALLOTMENT OPTION
DESCRIBED IN "UNDERWRITING." UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
(I) "JACOR" REFERS TO JACOR COMMUNICATIONS, INC. AND ITS SUBSIDIARIES AND
THEIR COMBINED OPERATIONS ON A HISTORICAL BASIS; AND (II) "COMPANY" REFERS TO
JACOR, THE ENTITIES, RADIO STATIONS AND OTHER ASSETS TO BE OWNED BY JACOR ON A
COMBINED BASIS ASSUMING THE PENDING TRANSACTIONS ARE CONSUMMATED AS CURRENTLY
SET FORTH IN THE RESPECTIVE TRANSACTION AGREEMENTS. THE TERM "PENDING
TRANSACTIONS" REFERS TO THE PREMIERE MERGER (AS DESCRIBED UNDER "BROADCASTING
SERVICES ACQUISITIONS -- PREMIERE MERGER") AND TO THE PENDING ACQUISITIONS,
DISPOSITIONS AND EXCHANGES DESCRIBED UNDER "TRANSACTIONS -- PENDING RADIO
STATION TRANSACTIONS." THE PREMIERE MERGER AND CERTAIN OF THE OTHER PENDING
TRANSACTIONS WILL NOT BE CONSUMMATED PRIOR TO THE CLOSING OF THIS OFFERING.
S-3
<PAGE>
THE COMPANY
Jacor, upon consummation of the Pending Transactions, will be the third
largest radio group in the nation as measured by revenue and will be the
country's fourth largest provider of syndicated radio programming. Jacor's
strategic objective is to maximize revenue and broadcast cash flow by becoming
the leading radio broadcaster in geographically diverse broadcast areas and by
leveraging its expertise in programming production, syndication and
distribution.
The Company will own and/or operate 137 radio stations and one television
station in 29 broadcast areas across the United States upon consummation of the
Pending Transactions. The Company's broadcast areas, as a group, are among the
most attractive in the country, demonstrating radio revenue growth in excess of
the radio industry average over the last five years. Through the Premiere Merger
and the EFM Acquisition (as defined herein), the Company will produce 54
syndicated programs and services for more than 4,000 radio stations, which
programs include RUSH LIMBAUGH and DR. DEAN EDELL, the number one and number
three rated radio programs in the United States, respectively. In 1996, the
Company would have been the top billing radio group in 17 of its 26 ranked
broadcast areas and would have had net revenue and broadcast cash flow of $523.2
million and $163.4 million, respectively.
The following table sets forth certain information regarding the Company and
its broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA
---------------------------------------------------- BROADCAST AREA DATA
NO. OF STATIONS ------------------------
1996 RADIO 1996 RADIO 1996 1996 RADIO
REVENUE AUDIENCE ------------------------ ARBITRON REVENUE
BROADCAST AREA RANK SHARE % AM FM RANK RANK
- ---------------------------------------------- ----------- ------------- --- --- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles................................... 6 3.1 1 1 2 1
Atlanta....................................... 1 15.0 1 3 12 10
San Diego (1)................................. 1 23.2 3 5 14 14
St. Louis..................................... 5 10.0 1 2 17 18
Tampa......................................... 1 32.7 2 5 21 19
Cleveland..................................... 3 8.4 1 1 22 23
Denver (2).................................... 1 29.0 4 4 23 15
Portland...................................... 1 22.1 2 2 24 22
Cincinnati (2)(3)............................. 1 57.6 3 4 25 20
Kansas City................................... 1 20.5 1 3 27 29
Columbus...................................... 1 21.5 2 5 32 30
Salt Lake City (2)............................ 2 19.7 2 4 35 33
Las Vegas..................................... 1 21.2 -- 4 45 39
Rochester..................................... 2 27.9 2 5 46 53
Louisville (2)................................ 2 20.5 1 4 50 51
Jacksonville.................................. 2 22.3 2 3 53 47
Toledo........................................ 1 35.0 2 3 75 73
Sarasota/Bradenton (4)........................ 1 12.1 1 1 79 176
Des Moines.................................... 1 19.2 1 1 88 67
Lexington..................................... 1 34.0 2 4 105 79
Boise......................................... 2 29.1 1 4 129 102
Santa Barbara................................. 1 16.1 1 2 184 147
Cedar Rapids.................................. 1 23.1 1 1 197 121
Cheyenne (4).................................. 1 44.8 1 3 218 220
Lima.......................................... 1 33.9 1 3 260 247
Casper (4).................................... 3 21.0 1 1 263 249
Fort Collins/Greeley (5)...................... N/A N/A 1 2 N/A N/A
Sandusky (5).................................. N/A N/A 1 1 N/A N/A
Venice/Englewood (5).......................... N/A N/A 1 2 N/A N/A
<CAPTION>
1991-1996
REVENUE CAGR
BROADCAST AREA %
- ---------------------------------------------- -------------
<S> <C>
Los Angeles................................... 4.3
Atlanta....................................... 13.3
San Diego (1)................................. 6.2
St. Louis..................................... 7.7
Tampa......................................... 9.5
Cleveland..................................... 8.1
Denver (2).................................... 10.9
Portland...................................... 12.3
Cincinnati (2)(3)............................. 9.4
Kansas City................................... 9.6
Columbus...................................... 7.6
Salt Lake City (2)............................ 13.3
Las Vegas..................................... 15.2
Rochester..................................... 6.2
Louisville (2)................................ 5.9
Jacksonville.................................. 8.6
Toledo........................................ 9.3
Sarasota/Bradenton (4)........................ N/A
Des Moines.................................... 10.7
Lexington..................................... 6.9
Boise......................................... 10.9
Santa Barbara................................. 3.6
Cedar Rapids.................................. 8.4
Cheyenne (4).................................. N/A
Lima.......................................... N/A
Casper (4).................................... N/A
Fort Collins/Greeley (5)...................... N/A
Sandusky (5).................................. N/A
Venice/Englewood (5).......................... N/A
</TABLE>
- ------------------------------
(1) Excludes two radio stations located in Baja California, Mexico which Jacor
provides programming to and sells air time for under an exclusive sales
agency agreement.
(2) Excludes one station in each of Denver, Cincinnati, Salt Lake City and
Louisville on which Jacor sells advertising time pursuant to joint sales
agreements (see "Business -- Radio Station Overview").
(3) Jacor also owns and operates television station WKRC, a CBS affiliate.
(4) Broadcast Area Data for these broadcast areas is for 1995 because 1996
information for the small markets has not yet been published.
(5) These broadcast areas do not have Arbitron ranks.
S-4
<PAGE>
BUSINESS STRATEGY
Jacor's strategic objective is to maximize revenue and broadcast cash flow
by becoming the leading radio broadcaster in geographically diverse broadcast
areas and by leveraging its expertise in programming production, syndication and
distribution. Jacor intends to acquire individual radio stations, radio groups
and/or businesses that provide radio broadcasting services that strengthen its
strategic position in the radio industry and enhance its operating performance.
Specifically, Jacor's business strategy centers upon:
BROADCAST AREA REVENUE LEADERSHIP. Jacor strives to maximize its audience
ratings in each of its broadcast areas in order to capture the largest share of
the radio advertising revenue in that area and to attract advertising away from
other media. Jacor believes that the most effective way to capture a higher
percentage of advertising revenue is to operate multiple radio stations within a
broadcast area, tailoring each station's programming to deliver highly effective
access to a target demographic. In implementing its multi-station strategy,
Jacor utilizes its programming expertise over a broad range of radio formats to
create distinct station personalities within a broadcast area. Jacor further
enhances its ability to increase its revenues through a more complete coverage
of the listener base by being an industry leader in successfully operating AM
stations.
STRATEGIC ACQUISITIONS OF COMPLEMENTARY STATIONS. Jacor focuses its
acquisition strategy on acquiring stations with powerful broadcast signals that
complement its existing portfolio and strengthen its overall competitive
position. By operating multiple stations within its broadcast areas, Jacor seeks
to position itself as the most efficient advertising medium in a geographic
location, providing advertisers with wide access to a variety of demographic
groups through a single purchase of advertising time. Through the acquisition of
additional stations within an existing broadcast area, Jacor spreads its fixed
costs over a larger base of stations and creates operating efficiencies enabling
it to generate higher broadcast cash flow. Jacor may enter additional broadcast
areas through acquisitions of radio groups that have multiple station platforms
and/or through acquisitions of individual stations in new locations where Jacor
believes a revenue-leading position can be created.
DEVELOPMENT OF REGIONAL CLUSTERS AROUND CORE BROADCAST AREAS. Jacor
believes it can leverage its position as the leader in a core broadcast area to
create additional revenue and cash flow opportunities by building regional
multi-station clusters around Jacor's core broadcast areas. Utilizing
programming from its core broadcast areas, Jacor provides its regional clusters
with high quality programming which would not otherwise be economically viable
in such smaller broadcast areas and spreads the costs associated with the
delivery of such programming across a greater number of stations. By improving
the ratings of its regional stations with such enhanced programming, Jacor
believes it can generate incremental revenue and broadcast cash flow. For
example, Jacor has utilized this strategy in the Denver broadcast area by
acquiring stations in Casper, Wyoming, Cheyenne, Wyoming, and Fort
Collins/Greeley, Colorado to develop a regional cluster.
DEVELOPMENT OF "STICK" PROPERTIES. In addition to acquiring developed, cash
flow producing stations, Jacor also strategically acquires underdeveloped
"stick" properties (I.E., properties with insignificant ratings and little or no
positive broadcast cash flow). Jacor believes that acquisitions of strategically
located "stick" properties often provide greater potential for revenue and
broadcast cash flow growth than do acquisitions of developed properties.
Historically, Jacor has been able to improve the ratings, revenue and cash flow
of its "stick" properties with increased marketing and focused programming that
complement its existing radio station formats. Additionally, Jacor increases the
revenue and cash flow of "stick" properties by encouraging advertisers to buy
advertising in a package with its more established stations. Jacor believes its
current portfolio of over 50 "stick" properties creates significant potential
for revenue and cash flow growth. For example, in 1992 Jacor had a total of five
"stick" stations which contributed no broadcast cash flow. In 1996, Jacor had
improved the broadcast cash flow of these same five stations to $9.3 million.
ACQUISITIONS OF BROADCAST RELATED BUSINESSES. Jacor strengthens its
strategic position in the radio industry through the acquisition and operation
of businesses that provide services to radio broadcasting companies. Through the
acquisition of Premiere, Jacor will significantly expand its production and
distribution of syndicated radio programming for sale to both Jacor's radio
stations and other broadcasting companies. In addition, these services will
enhance the Company's ability to increase ratings for existing stations,
S-5
<PAGE>
rapidly transform "stick" properties into cash flow producing properties and
maintain long-term relationships with Jacor's on-air talent. By combining the
national reach of the Company's radio stations with Premiere's network sales
force, the Company will maximize the commercial broadcast inventory that it can
sell to advertisers. In addition, Jacor will benefit from the distribution
network acquired with NSN Network Services (as defined herein), which network
will create efficiencies and lower costs related to the distribution of
programming among the Company's radio stations.
RECENT DEVELOPMENTS
Since the enactment of the Telecommunications Act of 1996 on February 8,
1996, through April 30, 1997, Jacor has acquired or entered into binding
agreements to acquire 108 radio stations and two television stations, 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 $1.5 billion. Jacor has also disposed or agreed to dispose of nine
radio stations for approximately $75.0 million. In addition, Jacor has exchanged
one of the acquired television stations and three radio stations for 11 radio
stations in transactions valued in the aggregate at approximately $245.0
million. Jacor also acquired for approximately $79.0 million a leading provider
of syndicated talk radio programming, a leading provider of satellite and
network services for the radio broadcasting industry and a leading provider of
traffic reporting services in the San Diego and Los Angeles broadcast areas. See
"Broadcasting Services Acquisitions" and "Transactions."
In addition, Jacor has entered into the Merger Agreement (as defined herein)
to acquire Premiere, a creator, producer and distributor of radio programming,
research and other services, for approximately $185.8 million. Also, of the
Pending Transactions referred to in the preceding paragraph, Jacor will acquire
36 radio stations for a purchase price aggregating approximately $218.4 million
(including $20.0 million already advanced by Jacor to fund various escrow
deposits). Jacor is currently negotiating additional acquisitions. 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 "Broadcasting Services
Acquisitions" and "Transactions."
For a discussion of the risks associated with Jacor's growth strategy, see
"Risk Factors" beginning on page 4 of the accompanying Prospectus.
MARKET DATA AND CERTAIN DEFINITIONS
All rankings by revenue or billings that are contained in this Prospectus
Supplement are based on 1995 and 1996 information contained in Duncan's Radio
Market Guide (1997 ed.), Duncan's American Radio (Small Market Edition 1996),
Duncan's American Radio (Fall 1996), Duncan's Radio Group Directory (1996-1997
ed.) and/or Broadcast Investment Analyst: Radio '97 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 Fall 1996 Arbitron Metro Area Ratings
Survey. All Designated Market Area ("DMA") information is derived from the
Nielsen Station Index, February 1997 ("Nielsen"). "FCC" means the Federal
Communications Commission. The term "LMAS" means local marketing agreements
which would be considered time brokerage agreements ("TBAS") 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. for $0.5 million. See "Transactions."
S-6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by Jacor..... 4,650,000 shares
Common Stock to be outstanding
immediately after this
Offering......................... 40,274,320 shares(1)(2)
Use of proceeds................... Jacor intends to use the net proceeds from this Offering
and the proceeds from the Zell Offering to fund, in
part, the Cash Consideration (as defined herein) to be
paid by Jacor under the Premiere Merger and, to the
extent available, the other Pending Transactions.
Alternatively and pending such uses, Jacor intends to
use the net proceeds from this Offering and the proceeds
from the Zell Offering for general corporate purposes,
including acquisitions of other broadcast properties and
broadcast related businesses and to repay in part
outstanding indebtedness under the Credit Facility (as
defined herein). See "Use of Proceeds."
Voting rights of Common Stock..... The Common Stock is the only authorized class of Jacor
common stock and each share is entitled to one vote per
share.
Nasdaq National Market symbol..... JCOR
</TABLE>
- ------------------------------
(1) Excludes (i) options outstanding on the date hereof to purchase
approximately 2,224,000 shares of Common Stock at a weighted average
exercise price of $13.39, (ii) the Citicasters Warrants (as defined herein),
(iii) the Regent Warrants (as defined herein), (iv) units granted to Jacor's
non-employee directors in July 1996 to acquire 18,700 shares of Common
Stock, (v) units granted to certain Jacor executive officers in November
1996 to acquire 21,963 shares of Common Stock, (vi) up to 3,364,101 shares
of Common Stock reserved for issuance pursuant to Jacor's existing stock
option and employee stock purchase plans and certain incentive compensation
plans adopted by the Jacor Board of Directors in April 1997 and to be
presented for approval by Jacor's stockholders at its Annual Meeting of
Stockholders currently scheduled for May 28, 1997, (vii) approximately
1,550,000 shares of Common Stock expected to be issued in the Premiere
Merger, and (viii) 750,000 shares of Common Stock expected to be issued in
certain other Pending Transactions. The Jacor Board of Directors has
authorized Jacor to purchase from time-to-time in open-market transactions
up to 1,000,000 shares of Common Stock.
(2) Assumes approximately 730,000 shares of Common Stock to be issued in the
Zell Offering.
S-7
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The following sets forth summary unaudited pro forma financial information
derived from the Unaudited Pro Forma Financial Information included elsewhere in
this Prospectus Supplement. The unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1996 and the latest
twelve months ("LTM") ended March 31, 1997, give effect to each of the following
transactions as if such transactions had been completed January 1, 1996: (i) the
Premiere Merger, (ii) the EFM Acquisition, (iii) Jacor's 1996 acquisitions of
Citicasters Inc. ("Citicasters") and Noble Broadcast Group, Inc. ("Noble"), the
acquisition of the Selected Gannett Radio Stations (as defined herein) and the
Tampa television station divestiture, and other immaterial acquisitions
completed in 1996, (iv) Jacor's 1997 acquisition of Regent Communications, Inc.
("Regent") and other 1997 immaterial acquisitions both completed and pending as
of April 30, 1997 ((iii) and (iv) collectively, the "Other Acquisitions"). The
pro forma condensed consolidated balance sheet as of March 31, 1997 has been
prepared as if the Premiere Merger and the other Pending Transactions had
occurred on March 31, 1997.
The Summary Unaudited Pro Forma Financial Information does not purport to
present the actual financial position or results of operations of Jacor had the
transactions and events assumed therein in fact occurred on the dates specified,
nor are they necessarily indicative of the results of operations that may be
achieved in the future. The Summary Unaudited Pro Forma Financial Information is
based on certain assumptions and adjustments described in the notes to the
Unaudited Pro Forma Financial Information and should be read in conjunction
therewith. See "Consolidated Financial Statements" and the Notes thereto for
Jacor and Premiere, incorporated by reference in this Prospectus Supplement.
<TABLE>
<CAPTION>
YEAR ENDED LTM ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................................................. $ 523,169 $ 533,627
Broadcast operating expenses................................................ 359,793 368,124
Depreciation and amortization............................................... 87,215 88,020
Corporate general and administrative expenses............................... 9,108 10,190
Operating income............................................................ 64,750 64,990
Interest expense............................................................ 80,195 78,712
OTHER FINANCIAL DATA:
Broadcast cash flow (1)..................................................... $ 163,376 $ 165,503
Broadcast cash flow margin (2).............................................. 31.2% 31.0%
EBITDA (1).................................................................. $ 154,268 $ 155,313
Cash interest expense....................................................... 71,124 71,124
Capital expenditures........................................................ 13,102 14,687
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1997
--------------
<S> <C>
BALANCE SHEET DATA:
Working capital................................................................................. $ 38,877
Intangible assets............................................................................... 1,970,354
Total assets.................................................................................... 2,347,358
Long-term debt, including current portion....................................................... 893,500
Liquid Yield Option Notes....................................................................... 120,183
Total shareholders' equity...................................................................... 816,473
</TABLE>
S-8
<PAGE>
- ------------------------------
(1) "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. Pro forma EBITDA excludes $2,303 of special
bonuses.
(2) Broadcast cash flow margin equals broadcast cash flow as a percentage of net
revenue.
S-9
<PAGE>
BROADCASTING SERVICES ACQUISITIONS
Jacor is a broadcasting company primarily engaged in radio broadcasting and
providing related services to radio broadcasting companies. Jacor's recent
acquisitions of radio broadcasting related businesses and services are described
below.
PREMIERE MERGER
In April 1997, Jacor entered into an Agreement and Plan of Merger dated as
of April 7, 1997 by and among Jacor, Jacor Communications Company, a Florida
corporation ("JCC") and wholly-owned subsidiary of Jacor, PRN Holding
Acquisition Corp., a Delaware corporation ("Acquisition Corp.") and newly-formed
subsidiary of JCC, and Premiere (the "Merger Agreement"), and a related stock
purchase agreement with Premiere's largest stockholder, to acquire all of the
outstanding shares of Premiere. Premiere is a public company that produces 52
syndicated programs and services, and has over 6,300 contracts to broadcast its
programming and to use its services on more than 4,000 radio stations. Premiere
distributes its programs and services in exchange for commercial broadcast time
that it can resell to advertisers.
Pursuant to the terms of the Merger Agreement, Acquisition Corp. will merge
with and into Premiere such that each outstanding share of Premiere capital
stock (other than Premiere shares held by Jacor, treasury shares and dissenting
shares, if any) will be converted into the right to receive $13.50 in cash (the
"Cash Consideration") and .1525424 shares (the "Exchange Ratio") of Common Stock
(the "Stock Consideration," and together with the Cash Consideration, the
"Merger Consideration"). Premiere will be the surviving company in the Premiere
Merger and will be a subsidiary of JCC. The holders of more than 50% of the
voting power of Premiere have entered into a shareholders' agreement whereby
they have agreed to vote their Premiere shares in favor of the Premiere Merger.
The Merger Consideration is subject to adjustment in certain circumstances.
If the Premiere Merger is not consummated on or before July 31, 1997, the Cash
Consideration will accrue interest up to a maximum additional per share amount
of $.084375 payable in cash. Also, if the average closing price of Common Stock
for the 10 trading days immediately preceding the third trading day prior to the
closing of the Premiere Merger (the "Average Price") is less than $26.50 or more
than $32.50, then the Exchange Ratio will be adjusted by multiplying .1525424 by
a fraction which has as its numerator either $26.50 or $32.50 (whichever is
applicable based upon which threshold is triggered) and as its denominator the
Average Price.
In order to facilitate the Premiere Merger, JCC agreed to purchase all of
the outstanding shares of common stock of Archon Communications, Inc.
("Archon"), the largest stockholder of Premiere capital stock. Such stock
purchase is to be consummated immediately prior to the closing of the Premiere
Merger and the consummation of the Premiere Merger is conditioned upon the
closing of JCC's purchase of the Archon stock. Archon's principal business
activity has been the ownership of Premiere common stock, Premiere Class A
common stock and options and warrants to acquire Premiere common stock, and the
provision of strategic consulting services to Premiere. Accordingly, for their
shares in Archon, the Archon shareholders will receive an amount of cash and
Common Stock calculated in the same manner as the Merger Consideration to be
received by the other Premiere stockholders, plus cash equal to Archon's cash on
hand (net of Archon's liabilities) upon closing.
The Merger Consideration to be paid by Jacor values Premiere at
approximately $18.00 per share of Premiere capital stock. The total Merger
Consideration to be paid by Jacor, including payment for certain Premiere
warrants and stock options, is expected to aggregate approximately $185.8
million inclusive of the amounts to be paid to the Archon shareholders as
discussed in the preceding paragraph. Of such amount, approximately $136.5
million will be paid in cash and the remainder will be paid in approximately
1,550,000 million shares of Common Stock. The total net consideration to be paid
by Jacor, net of
S-10
<PAGE>
Premiere's cash on hand and excess working capital to be acquired by Jacor in
the Premiere Merger, is expected to be approximately $165.0 million.
The closing of the Premiere Merger is subject to certain conditions,
including approval by the Premiere stockholders, any lenders' consent required
pursuant to the Credit Facility and other customary closing conditions. The
Merger Agreement provides that the closing must occur on or before August 31,
1997. Jacor anticipates that the closing will occur during the summer of 1997.
EFM COMPANIES
In April 1997, Jacor acquired substantially all of the assets relating to
the broadcast distribution and related print and electronic media publishing
businesses (the "EFM Acquisition") of EFM Media Management, Inc., EFM
Publishing, Inc. and PAM Media, Inc. (collectively, the "EFM Companies"). The
business of the EFM Companies included the ownership and distribution of the
RUSH LIMBAUGH and DR. DEAN EDELL programs, syndicated talk programming for radio
broadcasting, which contracts were assigned to Jacor in the acquisition. Jacor
paid $50.0 million in cash for the assets of the EFM Companies.
The RUSH LIMBAUGH program, a nationally syndicated talk radio program, is
broadcast on more than 600 radio stations. The DR. DEAN EDELL program, a health
care and medicine talk radio program, is broadcast on more than 300 radio
stations.
NSN NETWORK SERVICES
Also in April 1997, Jacor acquired the assets of Standard Broadcast Service,
Inc., a satellite systems integrator, Internet service provider and
communications consultant focused on the radio broadcasting industry, which
conducts business under the trade name NSN Network Services, Ltd. ("NSN Network
Services"). The purchase price paid by Jacor for the assets of NSN Network
Services was $11.0 million, of which approximately $9.3 million was paid in cash
and approximately $1.7 million was paid in 59,540 shares of Common Stock.
The principal products and services of NSN Network Services include
satellite audio systems for radio broadcasting, Wide Area Network business
connectivity, Internet server systems and software, satellite remote telephone
systems and paging systems, and communications consulting. These technologies
will create efficiencies and lower costs related to the distribution of
programming among Jacor's radio stations. Further, these technologies will
enhance Jacor's back-office backbone to facilitate the sharing of financial data
and other communications. Jacor will also benefit from the significant
management expertise that it will acquire, which Jacor would have otherwise had
to obtain from third parties.
AIRWATCH ACQUISITION
In April 1997, Jacor acquired the assets of Airwatch Communications, Inc.
("Airwatch") and Airtraffic Communications, Inc. ("Airtraffic") for a purchase
price of approximately $18.0 million in cash. Airwatch and Airtraffic provide
traffic reporting services to radio broadcasting companies, independent radio
stations and television stations in the San Diego and Los Angeles broadcast
areas, respectively. Airwatch provides traffic report services for 16 radio
stations and six television stations, including two of Jacor's radio stations in
San Diego. Airtraffic provides traffic report services for 26 radio stations and
one television station in Los Angeles. Jacor's other radio stations in San Diego
currently obtain traffic report services from a competitor of Airwatch and
Airtraffic. Jacor intends to convert these other stations in San Diego to
Airwatch and market Airwatch and Airtraffic services to other radio broadcasting
and television companies.
S-11
<PAGE>
TRANSACTIONS
RECENTLY COMPLETED RADIO STATION 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 $801.2 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. As
described below, Jacor completed the transfer of WKRQ-FM in April 1997.
Also, in February 1996, Jacor entered into an agreement to acquire 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 $160.0 million in cash.
Also, in February 1996, Jacor sold the business and certain operating assets
of radio stations WMYU-FM and WWST-FM in Knoxville to Heritage Media
Corporation. 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 from Asterisk
Radio, Inc. 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 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. In April 1997, Jacor consummated this acquisition for a purchase price
of approximately $13.0 million.
In June 1996, Jacor entered into an agreement to acquire from Trumper
Communications of Kentucky, Limited Partnership and Trumper Communications, Inc.
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.
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. In
May 1997, Jacor consummated this acquisition for a purchase price of
approximately $12.9 million.
In August 1996, Jacor entered into agreements with Sarasota-Charlotte
Broadcasting Corporation to acquire certain assets, a construction permit and
related real estate for unconstructed radio station
S-12
<PAGE>
WEDD-FM in Englewood, Florida for an aggregate purchase price of $0.8 million.
Jacor completed this transaction in February 1997.
In September 1996, Jacor entered into an agreement with a subsidiary of
Gannett Co., Inc. ("Gannett") to effect a tax-free like-kind 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"). Jacor and Gannett
consummated the Gannett Exchange in December 1996. 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 renamed WUSA-FM to WAKS-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 Los Angeles broadcast area. In connection with the closing of
the Gannett Exchange, Jacor and Gannett agreed to value the exchanged assets at
$170.0 million for tax purposes.
In October 1996, Jacor entered into an agreement with Clear Channel Radio,
Inc. ("Clear Channel") to purchase KTWO-AM, KMGW-FM and the Wyoming Radio
Network in Casper, Wyoming for a purchase price of $1.9 million. In December
1996, Jacor and Clear Channel consummated the transaction. Also, in October
1996, Jacor entered into a binding agreement with Colfax Communications, Inc.
("Colfax") to acquire KIDO-AM and KLTB-FM in Boise, Idaho and KARO-FM in
Caldwell, Idaho for a purchase price of $11.0 million. Jacor and Colfax
consummated the transaction in January 1997.
Also, in October 1996, Jacor entered into an agreement to acquire Regent
through a merger of Regent with and into Jacor (the "Regent Merger"). Regent
owned, operated or represented 19 radio stations located in Kansas City, Salt
Lake City, Las Vegas, Louisville and Charleston. During February 1997, Jacor
consummated the Regent Merger for the approximate aggregate value of $179.9
million, which included (i) the issuance of approximately 3,550,000 shares of
Common Stock valued at $105.9 million, (ii) the issuance of warrants to acquire
500,000 shares of Common Stock at $40 per share valued at $5.0 million (the
"Regent Warrants"), (iii) the repayment of approximately $64.0 million of debt,
and (iv) approximately $5.0 million in cash. The Regent Merger enhanced Jacor's
existing station portfolio in Kansas City and created new multiple radio station
platforms in Salt Lake City, Las Vegas, Louisville and Charleston. In April
1997, Jacor completed the purchase of KBGO-FM (formerly KEYV-FM) in Las Vegas,
Nevada for a purchase price of approximately $3.0 million, pursuant to an
agreement originally entered into by Regent prior to the closing of the Regent
Merger.
Also, in October 1996, Jacor entered into an agreement with Palmer
Broadcasting Limited Partnership whereby Jacor would acquire the FCC licenses
and assets of 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 transaction was
completed in March 1997.
Also, in October 1996, Jacor entered into an agreement with Nationwide
Communications, Inc. ("Nationwide") to effect a tax-free like-kind exchange of
the assets of Jacor's two radio stations in Phoenix, KSLX-AM and KSLX-FM, for
the assets of two of Nationwide's radio stations in San Diego, KGB-FM and
KPOP-AM. The assets exchanged were valued by Jacor and Nationwide at
approximately $45.0 million. This exchange of assets was consummated in April
1997.
In December 1996, Jacor entered into an agreement with American Radio
Systems Corporation and American Radio Systems License Corp. (together, "ARS")
to effect a tax-free like-kind exchange of Jacor's assets of WKRQ-FM, licensed
to Cincinnati, for ARS's assets of WVOR-FM, WHAM-AM and WHTK-AM, licensed to
Rochester, New York, and $16.0 million in cash. This exchange of assets was
consummated in April 1997.
Also, in December 1996, Jacor entered into an agreement whereby Jacor
acquired the FCC licenses and assets of WJCM-AM in Sebring, Florida from Rumbuat
Management, Inc. for a purchase price of $0.2 million. This transaction was
consummated in April 1997.
S-13
<PAGE>
Also, in December 1996, Jacor entered into an agreement with Tel Lease, Inc.
to acquire the FCC licenses and assets of WAZU-FM (formerly WAHC-FM), licensed
to Circleville, Ohio, and WHQK-FM (formerly WAKS-FM), licensed to Marysville,
Ohio. In May 1997, Jacor consummated this acquisition for a purchase price of
approximately $8.3 million.
In January 1997, Jacor entered into an agreement with The Great Lakes
Wireless Talking Machine, LLP to acquire WNVE-FM in Rochester, New York for a
purchase price of $5.5 million in cash. This transaction was consummated in
April 1997.
Also, in January 1997, Jacor entered into an agreement with an entity
affiliated with James E. Champlin to acquire the FCC licenses and assets of
WLRS-FM, licensed to Louisville, Kentucky. In April 1997, Jacor consummated this
acquisition for a purchase price of $5.1 million.
PENDING RADIO STATION TRANSACTIONS
All of the following pending radio station transactions are subject to
various conditions, including approval by the FCC. There can be no assurance
that Jacor will be successful in consummating all such transactions in a timely
manner or on the terms described herein. See "Risk Factors -- Increased
Antitrust Scrutiny" and "-- FCC Regulation of Broadcasting Industry" in the
accompanying Prospectus.
In October 1996, Jacor 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, of which $3.7 million has been placed in escrow pending
the closing of the transaction (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. Jacor received
early termination of the Hart-Scott-Rodino Antitrust Improvements Act as of
1976, as amended (the "HSR Act"), waiting period with respect to the Par
Transaction in January 1997. The HSR Act waiting period with respect to the
Entercom Transaction expired on December 1, 1996, and the FCC staff granted its
initial approval of the Entercom Transaction in January 1997. Jacor has entered
into a TBA with Entercom such that Entercom commenced the activities
contemplated by the TBA with regard to the Sacramento stations on January 1,
1997. Par has entered into a TBA with Jacor such that Jacor commenced the
activities contemplated by the TBA with regard to the San Diego stations (except
for KCBQ-AM, as discussed below) in February 1997. In April 1997, Jacor entered
into a binding agreement to sell KCBQ-AM to JS Communications, Inc. ("JSCI").
The FCC granted its initial consent to the assignment of KCBQ-AM to JSCI in
April 1997. JSCI is brokering KCBQ-AM pursuant to a TBA.
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 $24.1 million in cash, of which $1.2 million has been
placed in escrow pending the closing of the transaction. The Stanford
Transaction is contingent upon the successful closing of Stanford's agreement to
purchase WKQQ-FM, WXZZ-FM and WTKT-AM (the "Village Transaction") from Village
Communications, Inc. ("Village"). Stanford has assigned to Jacor its rights
under a TBA with Village such that Jacor will commence the activities
contemplated by the TBA upon the expiration or termination of the applicable
waiting period under the HSR Act. FCC applications were filed in December 1996.
This transaction is the subject of a second request at the Department of
Justice. In April 1997, Jacor entered into a binding agreement to sell WXZZ-FM
to JSCI to facilitate antitrust approval of the Stanford Transaction and the
Village Transaction. An FCC application relating to the sale of WXZZ-FM was
filed in April 1997.
S-14
<PAGE>
In December 1996, Jacor entered into two separate binding agreements with
unaffiliated parties whereby Jacor will acquire the FCC licenses and assets of
three radio stations. Jacor will acquire (i) KGLL-FM in Greeley, Colorado from
Duchossois Communications Company of Colorado, Inc. and (ii) KCOL-AM and KPAW-FM
in Fort Collins, Colorado from University Broadcasting Company, L.P. The
aggregate purchase price for the three radio stations is approximately $7.2
million, of which approximately $3.6 million has been placed in escrow pending
the closing of the transactions. The closings of these transactions are
contingent upon each other. The FCC has granted its initial consent to these
transactions.
In January 1997, Jacor entered into two separate binding agreements with
entities affiliated with James E. Champlin whereby Jacor will acquire the FCC
licenses and assets of three radio stations. Jacor will acquire (i) WLKT-FM,
licensed to Lexington, Kentucky, and (ii) WMCC-FM and WLOC-AM, licensed to
Munfordville, Kentucky. The aggregate purchase price for the three radio
stations is $5.4 million, of which $0.4 million has been placed in escrow
pending the closing of the transactions. FCC applications were filed in January
1997 and FCC consents to Jacor's acquisitions of WMCC-FM and WLOC-AM were
obtained in April 1997. Also in January 1997, Jacor entered into a binding
agreement to acquire (i) WIMA-AM and WIMT-FM, licensed to Lima, Ohio; (ii)
WBUK-FM, licensed to Ft. Shawnee, Ohio; and (iii) the construction permit for
WLVZ-FM, licensed to St. Mary's, Ohio, from Lima Broadcasting Co. for an
aggregate purchase price of $6.5 million, of which approximately $0.3 million
has been placed in escrow pending the closing of the transaction.
In February 1997, Jacor entered into a binding agreement to acquire the
assets of radio station KOTK-AM, Portland, Oregon, from EXCL Communications,
Inc. and Portland Radio, Inc. for a purchase price of $8.3 million, of which
approximately $0.4 million has been placed in escrow pending the closing of the
transaction. Also in February 1997, Jacor entered into three separate binding
agreements to acquire from Auburn Cablevision, Inc. and certain of its
subsidiaries the assets of radio stations WMAX-FM, in Irondequoit, New York,
WHMX-FM, in Canadaigua, New York and WRCD-FM in Honeoye Falls, New York for an
aggregate purchase price of $7.0 million, of which $0.3 million has been placed
in escrow pending the closing of the transactions. The FCC granted its initial
consent to these transactions in April 1997.
In March 1997, Jacor entered into a binding agreement to purchase the assets
of radio station KBKK-FM, Spanish Fork, Utah, from Garcia Broadcasting, L.L.C.
for a purchase price of $4.5 million, of which approximately $0.1 million has
been placed in escrow pending the closing of the transaction. Also in March
1997, Jacor entered into a binding agreement to purchase the assets of KQSB-AM
and KTYD-FM in Santa Barbara, California and KSBL-FM in Carpinteria, California
from Criterion Media Group, Inc. for a purchase price of $15.0 million, of which
approximately $0.8 million has been placed in escrow pending the closing of the
transaction. FCC applications were filed in April 1997.
In April 1997, Jacor entered into a binding agreement with Secret
Communications Limited Partnership ("Secret") to purchase the assets of WLTF-FM
and WTAM-AM in Cleveland, Ohio. The aggregate purchase price is approximately
$46.0 million, of which approximately $24.0 million is to be paid in cash and
the remainder of which is to be paid upon the issuance by Jacor of 750,000
shares of Common Stock. No adjustments to the stock consideration will be made,
regardless of any fluctuations in the market price of the Common Stock prior to
the closing of that acquisition. Jacor entered into a TBA with Secret such that
Jacor will commence the activities contemplated by the TBA upon the expiration
or termination of the HSR Act waiting period. In May 1997, the required
applications were filed under the HSR Act and with the FCC.
In April 1997, Jacor also entered into a binding agreement to purchase the
assets of radio station KFAM-AM, North Salt Lake City, Utah from General
Broadcasting, Inc. for a purchase price of $1.2 million, of which approximately
$0.1 million has been placed in escrow pending the closing of the transaction.
An FCC application was filed in April 1997.
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<PAGE>
In addition, in April 1997, Jacor entered into three separate binding
agreements with unaffiliated parties whereby Jacor will (i) sell the assets of
its radio stations WEZL-FM and WXLY-FM in Charleston, South Carolina to JSCI for
a purchase price of approximately $13.5 million; (ii) acquire the assets of
radio stations KIGN-FM, KOLZ-FM, KGAB-AM and KLEN-FM in Cheyenne, Wyoming from
Magic City Media for a purchase price of approximately $5.5 million, of which
$0.8 million has been loaned to the seller; and (iii) acquire the assets of
radio stations WLEC-AM and WCPZ-FM in Sandusky, Ohio from Erie Broadcasting II,
Inc. for a purchase price of approximately $7.7 million, of which $0.5 million
has been placed in escrow pending the closing of the transaction. FCC
applications for the first two of these transactions were filed in April 1997
and an application for the last transaction will be filed in early May 1997.
Further, in April 1997, Jacor entered into a binding agreement with LMS of
Boise, Inc. ("LMS") whereby Jacor will acquire the assets of KXLT-FM and KCIX-FM
in Boise, Idaho for a purchase price of approximately $8.0 million. Upon signing
the agreement, Jacor loaned an amount equal to the purchase price to LMS to
finance LMS's purchase of such stations. An FCC application will be filed in
early May 1997.
S-16
<PAGE>
USE OF PROCEEDS
The net proceeds (after deducting estimated expenses and underwriting
discounts and commissions) to Jacor from the sale of the shares of Common Stock
offered hereby are estimated to be $ million ($ million if the
Underwriters' over-allotment option is exercised in full). The proceeds to Jacor
from the Zell Offering are estimated to be $20.0 million (at a price per share
equal to the Price to the Public net of Underwriting Discounts and Commissions).
Jacor intends to use the net proceeds from this Offering and the proceeds from
the Zell Offering to fund, in part, the Cash Consideration to be paid by Jacor
under the Premiere Merger and, to the extent available, the other Pending
Transactions. Alternatively and pending such uses, Jacor intends to use the net
proceeds from this Offering and the proceeds from the Zell Offering for general
corporate purposes, including acquisitions of other broadcast properties and to
repay in part outstanding indebtedness. There can be no assurance that Jacor
will be successful in consummating the Premiere Merger or the other Pending
Transactions on terms acceptable to Jacor.
The Premiere Merger will not be and some of the other Pending Transactions
may not be consummated prior to the closing of this Offering. In the event that
the Premiere Merger and the other Pending Transactions are not consummated,
Jacor intends to use the net proceeds from this Offering and the proceeds from
the Zell Offering to pursue other strategic acquisitions and for general
corporate purposes. There can be no assurance that Jacor will be successful in
consummating any of such transactions or that any such transactions will be
available on terms acceptable to Jacor. See "Broadcasting Services Acquisitions"
and "Transactions." To the extent the amount of net proceeds from this Offering
plus the proceeds from the Zell Offering is not sufficient to fund any cash
component of the Pending Transactions, Jacor intends to fund the remaining cash
component with cash from operations and borrowings under its Credit Facility.
In June 1996, Jacor entered into a credit facility (the "Credit Facility")
with certain banks and other financial institutions. The Credit Facility was
amended and restated in February 1997. The Credit Facility provides availability
of $750.0 million of loans in three components: (i) a revolving credit facility
of up to $450.0 million with mandatory semi-annual commitment reductions
beginning June 12, 1999 and a final maturity date of June 12, 2003; (ii) a term
loan of $200.0 million with scheduled semi-annual reductions beginning December
12, 1997 and a final maturity date of June 12, 2003; and (iii) a tranche B term
loan of $100.0 million with scheduled semi-annual reductions beginning December
12, 1998 and a final maturity date no later than June 12, 2004. The Credit
Facility bears interest at a rate that fluctuates with a bank base rate and/or
the Eurodollar rate per annum, and in April 1997 this rate was 7 1/8%.
S-17
<PAGE>
CAPITALIZATION
The following sets forth the capitalization of Jacor on an actual basis as
of March 31, 1997 and as adjusted to give effect to (i) the application of the
net proceeds from this Offering (at an assumed public offering price of $28.00
per share), (ii) the proceeds from the Zell Offering, (iii) the Premiere Merger,
(iv) the EFM Acquisition and (v) the Other Acquisitions.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
--------------------
PRO FORMA
AS
ACTUAL ADJUSTED
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash.............................................................. $ 12,418 $ 5,739
--------- ---------
--------- ---------
Long-term debt, including current portion:(1)
Credit Facility................................................. $ 427,000 $ 623,500
9 3/4% Senior Subordinated Notes due 2006....................... 170,000 170,000
10 1/8% Senior Subordinated Notes due 2006...................... 100,000 100,000
Liquid Yield Option Notes due 2011(2)........................... 120,183 120,183
--------- ---------
Total long-term debt........................................ 817,183 1,013,683
--------- ---------
Shareholders' equity:
Common Stock, $.01 par value(3)................................. 348 428
Additional paid-in capital...................................... 538,564 759,134
Citicasters Warrants............................................ 26,500 26,500
Regent Warrants................................................. 5,000 5,000
Unrealized gain on investments.................................. 8,191 8,191
Retained earnings............................................... 17,220 17,220
--------- ---------
Total shareholders' equity.................................. 595,823 816,473
--------- ---------
Total capitalization.............................................. $1,413,006 $1,830,156
--------- ---------
--------- ---------
</TABLE>
- ------------------------------
(1) See Notes 6 and 7 of Notes to Jacor's consolidated financial statements
which are incorporated herein by reference from Jacor's Annual Report on
Form 10-K for the year ended December 31, 1996 for additional information
regarding the components and terms of Jacor's long-term debt.
(2) The Liquid Yield Option Notes due 2011 (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
but not of JCC. See "Description of Indebtedness-- The Liquid Yield Option
Notes" in the accompanying Prospectus.
(3) Excludes (i) options outstanding on the date hereof to purchase
approximately 2,224,000 shares of Common Stock at a weighted average
exercise price of $13.39, (ii) the Citicasters Warrants, (iii) the Regent
Warrants, (iv) units granted to Jacor's non-employee directors in July 1996
to acquire 18,700 shares of Common Stock, (v) units granted to certain Jacor
executive officers in November 1996 to acquire 21,963 shares of Common
Stock, (vi) up to 3,364,101 shares of Common Stock reserved for issuance
pursuant to Jacor's existing stock option and employee stock purchase plans
and certain incentive compensation plans adopted by the Jacor Board of
Directors in April 1997 and to be presented for approval by Jacor's
stockholders at its Annual Meeting of Stockholders currently scheduled for
May 28, 1997, (vii) approximately 1,550,000 shares of Common Stock expected
to be issued in the Premiere Merger, and (viii) 750,000 shares of Common
Stock expected to be issued in certain other Pending Transactions. The Jacor
Board of Directors has authorized Jacor to purchase from time-to-time in
open-market transactions up to 1,000,000 shares of Common Stock.
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<PAGE>
COMMON STOCK MARKET PRICE INFORMATION
The following sets forth, for the calendar quarters indicated, the reported
high and low sales prices of the Common Stock as reported on the Nasdaq National
Market.
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
HIGH LOW
--------- ---------
<S> <C> <C>
1995
First Quarter................................................................................ $ 14.50 $ 12.00
Second Quarter............................................................................... 17.00 13.00
Third Quarter................................................................................ 19.25 15.00
Fourth Quarter............................................................................... 17.50 15.00
1996
First Quarter................................................................................ $ 22.25 $ 16.00
Second Quarter............................................................................... 31.25 19.50
Third Quarter................................................................................ 35.00 24.75
Fourth Quarter............................................................................... 36.38 23.75
1997
First Quarter................................................................................ $ 31.75 $ 25.63
Second Quarter (through May 1, 1997)......................................................... 28.75 26.50
</TABLE>
On April 11, 1997, there were approximately 1,500 holders of record of
Common Stock.
DIVIDEND POLICY
Jacor intends to retain future earnings for use in its business and does not
anticipate paying any dividends on shares of its Common Stock in the foreseeable
future. Under the Credit Facility, Jacor is prohibited from paying dividends on
its Common Stock except as provided therein. Jacor has neither declared nor paid
any dividends on its Common Stock to date. Jacor has no current intent to pay
dividends on its Common Stock.
S-19
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is based on the
historical financial statements of Jacor and Premiere and has been prepared to
illustrate the effects of the acquisitions described below and the related
financing transactions.
The unaudited pro forma condensed consolidated statements of operations for
the year ended December 31, 1996, the LTM ended March 31, 1997 and the three
months ended March 31, 1996 give effect to each of the following transactions as
if such transactions had been completed January 1, 1996: (i) the Premiere
Merger, (ii) the EFM Acquisition and (iii) the Other Acquisitions. The unaudited
pro forma condensed consolidated statement of operations for the three months
ended March 31, 1997 gives effect to the following transactions as if such
transactions had been completed January 1, 1997: (i) the Premiere Merger, (ii)
the EFM Acquisition, and (iii) Jacor's 1997 acquisition of Regent and other 1997
immaterial acquisitions both completed and pending as of April 30, 1997. The pro
forma condensed consolidated balance sheet as of March 31, 1997 has been
prepared as if the Premiere Merger and the other Pending Transactions had
occurred on March 31, 1997.
The Pending Transactions will be accounted for using the purchase method of
accounting. The total purchase costs of the Pending Transactions will be
allocated to the tangible and intangible assets and liabilities acquired based
upon their respective fair values. The allocation of the aggregate purchase
price reflected in the Unaudited Pro Forma Financial Information is preliminary.
The final allocation of the purchase price will be contingent upon the receipt
of final appraisals of the acquired assets and notes thereto. The Unaudited Pro
Forma Financial Information is not necessarily indicative of either future
results of operations or the results that might have occurred if the foregoing
transactions had been consummated on the indicated dates.
The Unaudited Pro Forma Financial Information should be read in conjunction
with Jacor's Consolidated Financial Statements and notes thereto incorporated by
reference in this Prospectus Supplement and Premiere's Consolidated Financial
Statements and notes thereto incorporated by reference in this Prospectus
Supplement.
S-20
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------
OTHER JACOR
ACQUISITIONS OTHER
HISTORICAL PRO FORMA ACQUISITIONS HISTORICAL HISTORICAL
JACOR ADJUSTMENTS PRO FORMA EFM PREMIERE
----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue..................................................... $ 223,761 $ 220,373(a) $ 444,134 $ 47,357 $ 23,826
Broadcast operating expenses.................................... 151,065 154,119(a) 305,184 29,538 16,533
Depreciation and amortization................................... 23,404 40,993(a) 64,397 84 1,908
Corporate general and administrative expenses................... 7,629 1,479(a) 9,108 13,645
Unusual charges................................................. 417
Special bonuses................................................. 2,303 2,303
----------- ------------ ------------ ----------- -----------
Operating income (loss)..................................... 39,360 23,782 63,142 4,090 4,968
Interest expense................................................ (32,244) (46,232)(b) (78,476) (102)
Gain on sale of radio stations and other assets................. 2,539 2,539
Write-off of debt issuance costs................................ (1,949)
Other income (expense), net..................................... 5,716 5,716 488 1,217
----------- ------------ ------------ ----------- -----------
Income (loss) before income taxes and extraordinary items... 15,371 (22,450) (7,079) 4,578 4,134
----------- ------------ ------------ ----------- -----------
Income tax (expense) benefit.................................... (7,300) 6,629(h) (671) (1,698)
----------- ------------ ------------ ----------- -----------
Income (loss) before extraordinary items.................... $ 8,071 $ (15,821) $ (7,750) $ 4,578 $ 2,436
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
Income (loss) per common share.............................. $ 0.30
-----------
-----------
Number of common shares used in per share computations.......... 26,830
-----------
-----------
<CAPTION>
LTM ENDED
MARCH 31,
1997
-----------
PREMIERE ACQUISITION TOTAL TOTAL
PRO FORMA PRO FORMA COMBINED COMBINED
ADJUSTMENTS ADJUSTMENTS PRO FORMA PRO FORMA
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net revenue..................................................... $ 7,852(c) $ 523,169 $ 533,627
Broadcast operating expenses.................................... 5,932(c) $ 2,606(d) 359,793 368,124
Depreciation and amortization................................... 2,400(c) 18,426(e) 87,215 88,020
Corporate general and administrative expenses................... (13,645)(d) 9,108 10,190
Unusual charges................................................. (417)(f)
Special bonuses................................................. 2,303 2,303
------------- ------------ ----------- -----------
Operating income (loss)..................................... (480) (6,970) 64,750 64,990
Interest expense................................................ (1,617)(b) (80,195) (78,712)
Gain on sale of radio stations and other assets................. 2,539 4,695
Write-off of debt issuance costs................................ 1,949(g)
Other income (expense), net..................................... (632)(c) 6,789 6,855
------------- ------------ ----------- -----------
Income (loss) before income taxes and extraordinary items... (1,112) (6,638) (6,117) (2,172)
------------- ------------ ----------- -----------
Income tax (expense) benefit.................................... 354(c) 1,128(h) (887) (454)
------------- ------------ ----------- -----------
Income (loss) before extraordinary items.................... $ (758) $ (5,510) $ (7,004) $ (2,626)
------------- ------------ ----------- -----------
------------- ------------ ----------- -----------
Income (loss) per common share.............................. $ (0.16) $ (0.06)
----------- -----------
----------- -----------
Number of common shares used in per share computations.......... 42,985(n) 42,985
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-21
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
----------------------------------------------------
OTHER JACOR
ACQUISITIONS OTHER
HISTORICAL PRO FORMA ACQUISITIONS HISTORICAL
JACOR ADJUSTMENTS PRO FORMA EFM
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net revenue.................................................................. $ 88,828 $ 11,151(a) $ 99,979 $ 11,191
Broadcast operating expenses................................................. 67,305 9,956(a) 77,261 6,833
Depreciation and amortization................................................ 13,369 3,411(a) 16,780 16
Corporate general and administrative expenses................................ 2,762 2,762 1,146
----------- ------------ ------------ -----------
Operating income (loss).................................................. 5,392 (2,216) 3,176 3,196
Interest expense............................................................. (17,176) (2,353)(b) (19,529)
Gain on sale of radio stations and other assets.............................. 4,695 4,695
Other income (expense), net.................................................. 405 405 6
----------- ------------ ------------ -----------
Income (loss) before income taxes and extraordinary items................ (6,684) (4,569) (11,253) 3,202
----------- ------------ ------------ -----------
Income tax (expense) benefit................................................. 4,100 1,781(h) 5,881
----------- ------------ ------------ -----------
Income (loss) before extraordinary items................................. $ (2,584) $ (2,788) $ (5,372) $ 3,202
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Loss per common share.................................................... $ (0.08)
-----------
-----------
Number of common shares used in per share computations....................... 34,085
<CAPTION>
THREE
MONTHS
ENDED MARCH
31, 1996
-----------
ACQUISITION TOTAL TOTAL
HISTORICAL PRO FORMA COMBINED COMBINED
PREMIERE ADJUSTMENTS PRO FORMA PRO FORMA
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net revenue.................................................................. $ 7,190 $ 118,360 $ 107,902
Broadcast operating expenses................................................. 5,163 $ 650(d) 89,907 81,576
Depreciation and amortization................................................ 1,073 4,632(e) 22,501 21,696
Corporate general and administrative expenses................................ (1,146)(d) 2,762 1,680
----------- ------------ ----------- -----------
Operating income (loss).................................................. 954 (4,136) 3,190 2,950
Interest expense............................................................. (494)(b) (20,023) (21,506)
Gain on sale of radio stations and other assets.............................. 4,695 2,539
Other income (expense), net.................................................. 170 581 515
----------- ------------ ----------- -----------
Income (loss) before income taxes and extraordinary items................ 1,124 (4,630) (11,557) (15,502)
----------- ------------ ----------- -----------
Income tax (expense) benefit................................................. (461) 1,472(h) 6,892 6,459
----------- ------------ ----------- -----------
Income (loss) before extraordinary items................................. $ 663 $ (3,158) $ (4,665) $ (9,043)
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Loss per common share.................................................... $ (0.11) $ (0.21)
----------- -----------
----------- -----------
Number of common shares used in per share computations....................... 42,985(n) 42,985
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-22
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
----------------------------------------------------------------
OTHER JACOR
ACQUISITION OTHER
HISTORICAL PRO FORMA ACQUISITIONS HISTORICAL HISTORICAL
JACOR ADJUSTMENTS PRO FORMA EFM(O) PREMIERE
---------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 12,418 $ (6,831)(j) $ 5,587 $ 4,868 $11,584
Accounts receivable............................. 86,326 156(i) 86,482 2,220 6,973
Prepaid expenses and other current assets....... 17,081 754(i) 17,835 7,283 2,049
---------- ----------- ------------ ---------- ----------
Total current assets........................ 115,825 (5,921) 109,904 14,371 20,606
Property and equipment............................ 157,631 27,418(i) 185,049 153 2,375
Intangible assets................................. 1,531,138 209,732(i) 1,740,870 29,405
Other assets...................................... 87,827 (24,174)(i) 54,653 33 5,632
(9,000)(j)
---------- ----------- ------------ ---------- ----------
Total assets................................ $1,892,421 $198,055 $2,090,476 $ 14,557 $58,018
---------- ----------- ------------ ---------- ----------
---------- ----------- ------------ ---------- ----------
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................... $ 65,496 $ 1,199(i) $ 66,695 $ 11,155 $ 3,354
Long-term debt, current portion................. 8,500 8,500
---------- ----------- ------------ ---------- ----------
Total current liabilities................... 73,996 1,199 75,195 11,155 3,354
Long-term debt.................................... 688,500 173,000(j) 861,500
5 1/2% Liquid Yield Option Notes.................. 120,183 120,183
Other liabilities................................. 111,035 1,206(i) 112,241 3,322 1,825
Deferred tax liability............................ 302,884 302,884 3,726
Shareholders' equity:
Common stock ................................... 348 9(j) 357 2 79
Additional paid-in capital...................... 538,564 22,641(j) 561,205 40,997
Common stock warrants........................... 31,500 31,500
Unrealized gain on investments.................. 8,191 8,191
Retained earnings............................... 17,220 17,220 78 8,037
---------- ----------- ------------ ---------- ----------
Total shareholders' equity.................. 595,823 22,650 618,473 80 49,113
---------- ----------- ------------ ---------- ----------
Total liabilities and shareholders'
equity..................................... $1,892,421 $198,055 $2,090,476 $ 14,557 $58,018
---------- ----------- ------------ ---------- ----------
---------- ----------- ------------ ---------- ----------
<CAPTION>
ACQUISITION TOTAL
PRO FORMA COMBINED
ADJUSTMENTS PRO FORMA
----------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents....................... $(16,300)(l) $ 5,739
Accounts receivable............................. 95,675
Prepaid expenses and other current assets....... 27,167
----------- ----------
Total current assets........................ (16,300) 128,581
Property and equipment............................ 528(k) 188,105
Intangible assets................................. 200,079(k) 1,970,354
Other assets...................................... 60,318
----------- ----------
Total assets................................ $184,307 $2,347,358
----------- ----------
----------- ----------
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................... $ 81,204
Long-term debt, current portion................. 8,500
----------
Total current liabilities................... 89,704
Long-term debt.................................... $ 23,500(l) 885,000
5 1/2% Liquid Yield Option Notes.................. 120,183
Other liabilities................................. 117,388
Deferred tax liability............................ 12,000(k) 318,610
Shareholders' equity:
(81)(m)
Common stock ................................... 71(l) 428
Additional paid-in capital...................... (40,997)(m) 759,134
197,929(l)
Common stock warrants........................... 31,500
Unrealized gain on investments.................. 8,191
Retained earnings............................... (8,115)(m) 17,220
----------- ----------
Total shareholders' equity.................. 143,107 816,473
----------- ----------
Total liabilities and shareholders'
equity..................................... $184,307 $2,347,358
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-23
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1997
(IN THOUSANDS)
(a) These adjustments reflect additional revenues and expenses related to the
Other Acquisitions.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND CORPORATE G
REVENUE EXPENSES AMORTIZATION & A
--------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Noble............................................. $ 10,715 $ 9,062 $ 2,365 --
Citicasters....................................... 101,806 58,543 21,913 $ 1,479
Gannett........................................... 2,202 6,727 -- --
Regent............................................ 33,797 26,447 6,897 --
Other............................................. 71,853 53,340 9,818 --
--------- ----------- ------------- -----------
Total......................................... $ 220,373 $ 154,119 $ 40,993 $ 1,479
--------- ----------- ------------- -----------
--------- ----------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-------------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND
REVENUE EXPENSES AMORTIZATION
--------- ----------- -------------
<S> <C> <C> <C> <C>
Regent............................................ -- $ 233 $ 1,145
Other............................................. $ 11,151 9,723 2,266
--------- ----------- -------------
11,151 9,956 3,411
--------- ----------- -------------
--------- ----------- -------------
</TABLE>
(b) These adjustments represent additional interest expense associated with
Jacor's borrowings under the Credit Facility, the issuance of the 1996
10 1/8% Notes, 1996 9 3/4% Notes and 5 1/2% Liquid Yield Option Notes, which
proceeds were used to finance acquisitions. The assumed interest rate under
the Credit Facility was 7 1/8%, which represents the rate as of April 1997.
(c) These adjustments represent additional revenues and expenses related to
Premiere's acquisitions of After MidNite Entertainment, completed January
1997, and Cutler Productions, SJM Productions and Philadelphia Music Works,
which were completed at various dates during the second half of 1996.
(d) These adjustments represent the elimination of $11,039 and $1,146 of
corporate expenses related to the EFM Acquisition and the reclassification
of $2,606 and $650 in operating expenses for the year ended December 31,
1996 and the three months ended March 31, 1997, respectively, to conform
with Jacor's reporting practices. The elimination of expenses is due
primarily to salaries of the selling shareholder whose employment was not
continued.
(e) These adjustments reflect the additional depreciation and amortization
expense resulting from the allocation of Jacor's purchase price to the
assets acquired in the Premiere Merger and the EFM Acquisition including, an
increase in property and equipment and identifiable intangible assets, to
their estimated fair market values and the goodwill associated with the
acquisition of Premiere. Goodwill is amortized over 40 years.
(f) These adjustments represent costs recorded by Premiere related to certain
attempted business acquisitions and the assimilation of completed business
acquisitions, including miscellaneous severance, professional fees and
transition costs.
(g) These adjustments represent the elimination of debt issuance costs written
off by Premiere in 1996.
(h) To provide for the tax effect of pro forma adjustments using an estimated
statutory tax rate of 40%. The acquisition adjustments described in Note (a)
include non-deductible goodwill amortization estimated to be approximately
$5,000 for the year ended December 31, 1996 and $1,250 for the three months
ended March 31, 1997. The acquisition adjustments for the Premiere Merger
include non-deductible goodwill amortization estimated to be approximately
$3,800 for the year ended December 31, 1996 and $950 for the three months
ended March 31, 1997.
(i) These adjustments represent the allocation of the purchase price of the
Other Acquisitions to the estimated fair value of the assets acquired and
liabilities assumed, and the recording of goodwill associated with the
acquisitions. Previously funded escrow deposits of $24,174 were allocated as
part of the purchase price.
S-24
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1997
(IN THOUSANDS)
(j) The adjustment represents the issuance of stock, and Credit Facility
borrowings to finance the Other Acquisitions.
<TABLE>
<CAPTION>
OTHER
ACQUISITIONS
<S> <C>
Common Stock Issued.................................................................. $ 22,650
Credit Facility Borrowings........................................................... 173,000
-----------
Total............................................................................ $ 195,650
-----------
-----------
</TABLE>
The Company utilized $6,831 in excess cash and $9,000 of proceeds from the
sale of an investment to finance, in part, the Other Acquisitions.
(k) The adjustments represent the allocation of the purchase price of the EFM
Acquisition and the Premiere Merger to the estimated fair value of the
assets acquired and liabilities assumed, and the recording of goodwill
associated with these acquisitions.
(l) The adjustment represents the assumed net proceeds from this Offering and
the proceeds from Zell Offering, to be utilized in part to finance a portion
of the Premiere Merger Consideration, and the issuance of stock to the
Premiere stockholders, borrowings under the Credit Facility to finance the
EFM Acquisition and excess cash utilized to pay down Credit Facility
borrowings.
<TABLE>
<CAPTION>
EFM PREMIERE TOTAL
<S> <C> <C> <C>
Common Stock Offering Net Proceeds.................................. -- $ 129,200 $ 129,200
Zell Offering Proceeds.............................................. -- 20,000 20,000
Common Stock Issued to Premiere Stockholders........................ -- 48,800 48,800
Credit Facility Borrowings (repayments)............................. $ 50,000 (26,500) 23,500
Excess Cash Utilized................................................ -- 16,300 16,300
--------- ----------- ---------
$ 50,000 $ 187,800 $ 237,800
--------- ----------- ---------
--------- ----------- ---------
</TABLE>
Common Stock issued to Premiere stockholders includes Jacor stock options
which will be issued to certain Premiere option holders valued at $5,700.
(m) The adjustments represent the elimination of historical stockholders' equity
of the EFM Companies and Premiere as these acquisitions will be accounted
for as purchases.
(n) The pro forma weighted average shares outstanding includes all shares of
Common Stock outstanding at December 31, 1996 and March 31, 1997 and the
shares to be issued in this Offering and the Zell Offering, the shares
issued in conjunction with the acquisition of Regent and the shares to be
issued to the Premiere stockholders. The pro forma weighted average shares
of Jacor do not reflect any outstanding options and warrants as they are
antidilutive.
(o) The historical balance sheet for the EFM Companies has been prepared as of
December 31, 1996, the latest date for which a historical balance sheet was
available. The historical balance sheet of the EFM Companies is not material
to the Unaudited Pro Forma Condensed Consolidated Balance Sheet.
S-25
<PAGE>
BUSINESS
GENERAL
Jacor, upon consummation of the Pending Transactions, will be the third
largest radio group in the nation as measured by revenue and will be the
country's fourth largest provider of syndicated radio programming. Jacor's
strategic objective is to maximize revenue and broadcast cash flow by becoming
the leading radio broadcaster in geographically diverse broadcast areas and by
leveraging its expertise in programming production, syndication and
distribution.
The Company will own and/or operate 137 radio stations and one television
station in 29 broadcast areas across the United States upon consummation of the
Pending Transactions. The Company's broadcast areas, as a group, are among the
most attractive in the country, demonstrating radio revenue growth in excess of
the radio industry average over the last five years. Through the Premiere Merger
and the EFM Acquisition, the Company will produce 54 syndicated programs and
services for more than 4,000 radio stations, which programs include RUSH
LIMBAUGH and DR. DEAN EDELL, the number one and number three rated radio
programs in the United States, respectively. In 1996, the Company would have
been the top billing radio group in 17 of its 26 ranked broadcast areas and
would have had net revenue and broadcast cash flow of $523.2 million and $163.4
million, respectively.
Jacor's principal executive offices are located at 50 East RiverCenter
Boulevard, 12th Floor, Covington, Kentucky 41011 and its telephone number is
(606) 655-2267.
The following table sets forth certain information regarding the Company and
its broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA
---------------------------------------------------- BROADCAST AREA DATA
NO. OF STATIONS ------------------------
1996 RADIO 1996 RADIO 1996 1996 RADIO
REVENUE AUDIENCE ------------------------ ARBITRON REVENUE
BROADCAST AREA RANK SHARE % AM FM RANK RANK
- ---------------------------------------------- ----------- ------------- --- --- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles................................... 6 3.1 1 1 2 1
Atlanta....................................... 1 15.0 1 3 12 10
San Diego (1)................................. 1 23.2 3 5 14 14
St. Louis..................................... 5 10.0 1 2 17 18
Tampa......................................... 1 32.7 2 5 21 19
Cleveland..................................... 3 8.4 1 1 22 23
Denver (2).................................... 1 29.0 4 4 23 15
Portland...................................... 1 22.1 2 2 24 22
Cincinnati (2)(3)............................. 1 57.6 3 4 25 20
Kansas City................................... 1 20.5 1 3 27 29
Columbus...................................... 1 21.5 2 5 32 30
Salt Lake City (2)............................ 2 19.7 2 4 35 33
Las Vegas..................................... 1 21.2 -- 4 45 39
Rochester..................................... 2 27.9 2 5 46 53
Louisville (2)................................ 2 20.5 1 4 50 51
Jacksonville.................................. 2 22.3 2 3 53 47
Toledo........................................ 1 35.0 2 3 75 73
Sarasota/Bradenton (4)........................ 1 12.1 1 1 79 176
Des Moines.................................... 1 19.2 1 1 88 67
Lexington..................................... 1 34.0 2 4 105 79
Boise......................................... 2 29.1 1 4 129 102
Santa Barbara................................. 1 16.1 1 2 184 147
Cedar Rapids.................................. 1 23.1 1 1 197 121
Cheyenne (4).................................. 1 44.8 1 3 218 220
Lima.......................................... 1 33.9 1 3 260 247
Casper (4).................................... 3 21.0 1 1 263 249
Fort Collins/Greeley (5)...................... N/A N/A 1 2 N/A N/A
Sandusky (5).................................. N/A N/A 1 1 N/A N/A
Venice/Englewood (5).......................... N/A N/A 1 2 N/A N/A
<CAPTION>
1991-1996
REVENUE CAGR
BROADCAST AREA %
- ---------------------------------------------- -------------
<S> <C>
Los Angeles................................... 4.3
Atlanta....................................... 13.3
San Diego (1)................................. 6.2
St. Louis..................................... 7.7
Tampa......................................... 9.5
Cleveland..................................... 8.1
Denver (2).................................... 10.9
Portland...................................... 12.3
Cincinnati (2)(3)............................. 9.4
Kansas City................................... 9.6
Columbus...................................... 7.6
Salt Lake City (2)............................ 13.3
Las Vegas..................................... 15.2
Rochester..................................... 6.2
Louisville (2)................................ 5.9
Jacksonville.................................. 8.6
Toledo........................................ 9.3
Sarasota/Bradenton (4)........................ N/A
Des Moines.................................... 10.7
Lexington..................................... 6.9
Boise......................................... 10.9
Santa Barbara................................. 3.6
Cedar Rapids.................................. 8.4
Cheyenne (4).................................. N/A
Lima.......................................... N/A
Casper (4).................................... N/A
Fort Collins/Greeley (5)...................... N/A
Sandusky (5).................................. N/A
Venice/Englewood (5).......................... N/A
</TABLE>
- ------------------------------
(1) Excludes two radio stations located in Baja California, Mexico which Jacor
provides programming to and sells air time for under an exclusive sales
agency agreement.
(2) Excludes one station in each of Denver, Cincinnati, Salt Lake City and
Louisville on which Jacor sells advertising time pursuant to joint sales
agreements (see "Business -- Radio Station Overview").
(3) Jacor also owns and operates television station WKRC, a CBS affiliate.
(4) Broadcast Area Data for these broadcast areas is for 1995 because 1996
information for the small markets has not yet been published.
(5) These broadcast areas do not have Arbitron ranks.
S-26
<PAGE>
BUSINESS STRATEGY
Jacor's strategic objective is to maximize revenue and broadcast cash flow
by becoming the leading radio broadcaster in geographically diverse broadcast
areas and by leveraging its expertise in programming production, syndication and
distribution. Jacor intends to acquire individual radio stations, radio groups
and/or businesses that provide radio broadcasting services that strengthen its
strategic position in the radio industry and enhance its operating performance.
Specifically, Jacor's business strategy centers upon:
BROADCAST AREA REVENUE LEADERSHIP. Jacor strives to maximize its audience
ratings in each of its broadcast areas in order to capture the largest share of
the radio advertising revenue in that area and to attract advertising away from
other media. Jacor believes that the most effective way to capture a higher
percentage of advertising revenue is to operate multiple radio stations within a
broadcast area, tailoring each station's programming to deliver highly effective
access to a target demographic. In implementing its multi-station strategy,
Jacor utilizes its programming expertise over a broad range of radio formats to
create distinct station personalities within a broadcast area. Jacor further
enhances its ability to increase its revenues through a more complete coverage
of the listener base by being an industry leader in successfully operating AM
stations.
STRATEGIC ACQUISITIONS OF COMPLEMENTARY STATIONS. Jacor focuses its
acquisition strategy on acquiring stations with powerful broadcast signals that
complement its existing portfolio and strengthen its overall competitive
position. By operating multiple stations within its broadcast areas, Jacor seeks
to position itself as the most efficient advertising medium in a geographic
location, providing advertisers with wide access to a variety of demographic
groups through a single purchase of advertising time. Through the acquisition of
additional stations within an existing broadcast area, Jacor spreads its fixed
costs over a larger base of stations and creates operating efficiencies enabling
it to generate higher broadcast cash flow. Jacor may enter additional broadcast
areas through acquisitions of radio groups that have multiple station platforms
and/or through acquisitions of individual stations in new locations where Jacor
believes a revenue-leading position can be created.
DEVELOPMENT OF REGIONAL CLUSTERS AROUND CORE BROADCAST AREAS. Jacor
believes it can leverage its position as the leader in a core broadcast area to
create additional revenue and cash flow opportunities by building regional
multi-station clusters around Jacor's core broadcast areas. Utilizing
programming from its core broadcast areas, Jacor provides its regional clusters
with high quality programming which would not otherwise be economically viable
in such smaller broadcast areas and spreads the costs associated with the
delivery of such programming across a greater number of stations. By improving
the ratings of its regional stations with such enhanced programming, Jacor
believes it can generate incremental revenue and broadcast cash flow. For
example, Jacor has utilized this strategy in the Denver broadcast area by
acquiring stations in Casper, Wyoming, Cheyenne, Wyoming, and Fort
Collins/Greeley, Colorado to develop a regional cluster.
DEVELOPMENT OF "STICK" PROPERTIES. In addition to acquiring developed, cash
flow producing stations, Jacor also strategically acquires underdeveloped
"stick" properties (I.E., properties with insignificant ratings and little or no
positive broadcast cash flow). Jacor believes that acquisitions of strategically
located "stick" properties often provide greater potential for revenue and
broadcast cash flow growth than do acquisitions of developed properties.
Historically, Jacor has been able to improve the ratings, revenue and cash flow
of its "stick" properties with increased marketing and focused programming that
complement its existing radio station formats. Additionally, Jacor increases the
revenue and cash flow of "stick" properties by encouraging advertisers to buy
advertising in a package with its more established stations. Jacor believes its
current portfolio of over 50 "stick" properties creates significant potential
for revenue and cash flow growth. For example, in 1992 Jacor had a total of five
"stick" stations which contributed no broadcast cash flow. In 1996, Jacor had
improved the broadcast cash flow of these same five stations to $9.3 million.
S-27
<PAGE>
ACQUISITIONS OF BROADCAST RELATED BUSINESSES. Jacor strengthens its
strategic position in the radio industry through the acquisition and operation
of businesses that provide services to radio broadcasting companies. Through the
acquisition of Premiere, Jacor will significantly expand its production and
distribution of syndicated radio programming for sale to both Jacor's radio
stations and other broadcasting companies. In addition, these services will
enhance the Company's ability to increase ratings for existing stations, rapidly
transform "stick" properties into cash flow producing properties and maintain
long-term relationships with Jacor's on-air talent. By combining the national
reach of the Company's radio stations with Premiere's network sales force, the
Company will maximize the commercial broadcast inventory that it can sell to
advertisers. In addition, Jacor will benefit from the distribution network
acquired with NSN Network Services, which network will create efficiencies and
lower costs related to the distribution of programming among the Company's radio
stations.
RADIO STATION OVERVIEW
The following table sets forth certain information regarding the 137 radio
stations that will be owned and/or operated by the Company upon completion of
the Pending Transactions.
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ------------------- ------------------- ----------------- ---------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
LOS ANGELES 6
KIIS-FM Contemporary Hit Radio Adults 18-34 3.9/6
KIIS-AM Sports Men 25-54 --
ATLANTA 1
WPCH-FM Adult Contemporary Women 25-54 9.4/2
WGST-AM/ FM (2) News Talk Men 25-54 6.7/6
WKLS-FM Album Oriented Rock Men 18-34 12.4/1
SAN DIEGO (3) 1
KHTS-FM Rhythmic Hits Adults 18-34 5.3/6
KSDO-AM Talk Men 25-54 3.1/8
KKBH-FM Adult Contemporary Women 25-54 4.3/7
KOGO-AM P News Talk Adults 25-54 1.1/22
KKLQ-FM P Contemporary Hit Radio Adults 18-34 4.1/8
KIOZ-FM P Album Oriented Rock Men 18-34 8.1/1
KGB-FM Classic Rock Men 25-54 5.9/2
KPOP-AM Nostalgia Adults 35-64 2.2/15(T)
ST. LOUIS 5
KMJM-FM Urban Contemporary Adults 25-54 7.1/3
KATZ-FM Urban Adult Contemporary Adults 25-54 1.7/17
KATZ-AM Gospel Adults 35-64 .5/22
TAMPA 1
WFLA-AM News Talk Adults 35-64 7.1/3
WFLZ-FM Contemporary Hit Radio Adults 18-34 15.9/1
WDUV-FM EZ/Nostalgia Adults 35-64 5.1/8
WXTB-FM Album Oriented Rock Men 18-34 20.0/1
WTBT-FM Classic Rock Men 18-34 2.9/12
WAKS-FM Hot Adult Contemporary Women 18-34 7.9/4
WDAE-AM Sports Men 25-54 --
CLEVELAND 3
WLTF-FM P Adult Contemporary Women 25-54 6.8/6
WTAM-AM P News Talk Men 25-54 6.2/5
</TABLE>
S-28
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ------------------- ------------------- ----------------- ---------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
DENVER (4) 1
KOA-AM News Talk Men 25-54 9.7/1
KRFX-FM Classic Rock Men 25-54 8.2/3
KBPI-FM Rock Alternative Men 18-34 8.9/3
KTLK-AM Talk Adults 35-64 .8/21
KHIH-FM Jazz Adults 25-54 7.0/2
KHOW-AM Talk Adults 25-54 2.8/12
KBCO-AM Talk Adults 25-54 --
KBCO-FM Album Oriented Rock Adults 25-54 6.2/5
PORTLAND 1
KEX-AM News Talk Adults 35-64 7.0/3
KKCW-FM Adult Contemporary Women 25-54 12.3/1
KKRZ-FM Contemporary Hit Radio Women 18-34 16.2/1
KOTK-AM P Talk Adults 35-64 2.2/12(T)
CINCINNATI (4) 1
WLW-AM News Talk Men 25-54 13.9/2
WEBN-FM Album Oriented Rock Men 18-34 27.1/1
WOFX-FM Classic Rock Men 25-54 7.9/4
WCKY-AM Talk Adults 35-64 5.5/6
WWNK-FM Adult Contemporary Women 25-54 6.1/7(T)
WAQZ-FM Contemporary Alternative Adults 18-34 4.0/9
WSAI-AM Nostalgia Adults 35-64 2.8/13
KANSAS CITY 1
WDAF-AM Country Adults 35-64 7.3/3
KYYS-FM Album Oriented Rock Men 18-34 7.9/5
KMXV-FM Contemporary Hit Radio Adults 18-34 8.7/5
KUDL-FM Adult Contemporary Women 25-54 7.3/2(T)
COLUMBUS 1
WTVN-AM News Talk Adults 35-64 9.7/1
WLVQ-FM Album Oriented Rock Men 18-34 10.6/3
WHOK-FM Country Adults 25-54 3.4/10
WHQK-FM Country Adults 25-54 2.2/12
WLOH-AM Nostalgia Adults 35-64 --
WAZU-FM Rock Men 18-34 1.9/13
WZAZ-FM Alternative Adults 18-34 2.5/12
SALT LAKE CITY (4) 2
KALL-AM News Talk Adults 35-64 6.0/4
KODJ-FM Oldies Women 25-54 7.1/2
KKAT-FM Country Adults 25-54 4.2/10(T)
KURR-FM New Rock Men 18-34 4.5/7
KZHT-FM Contemporary Hit Radio Women 18-34 5.7/7
KFAM-AM P Beautiful/EZ Adults 35-64 .7/23
LAS VEGAS 1
KFMS-FM Country Adults 25-54 5.1/8(T)
KWNR-FM Country Adults 25-54 5.5/7
KBGO-FM Oldies Women 25-54 4.1/8
KSNE-FM Adult Contemporary Women 25-54 11.8/1
</TABLE>
S-29
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ------------------- ------------------- ----------------- ---------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
ROCHESTER 2
WVOR-FM Adult Contemporary Adults 25-54 7.1/6
WHAM-AM News Talk Adults 25-54 9.8/2
WHTK-AM Talk Adults 35-64 1.2/15
WNVE-FM New Rock Men 18-34 14.2/2
WMAX-FM P Alternative Adults 18-34 4.1/9
WMHX-FM P Alternative Adults 18-34 --
WRCD-FM P New Adult Contemporary Adults 25-54 .9/16(T)
LOUISVILLE (4) 2
WDJX-FM Contemporary Hit Radio Adults 18-34 11.5/3
WFIA-AM Religion Adults 25-54 .3/21
WVEZ-FM Soft Adult Contemporary Women 25-54 6.3/6
WSFR-FM Classic Rock Men 25-54 8.4/3
WLRS-FM Adult Contemporary Women 25-54 3.3/10
JACKSONVILLE 2
WJBT-FM Urban Adults 18-34 10.2/2
WQIK-FM Country Adults 25-54 8.8/3
WSOL-FM Urban Adult Contemporary Adults 25-54 5.1/9
WZAZ-AM Gospel Adults 35-64 2.1/12
WJGR-AM Talk Adults 25-54 .5/21(T)
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 16.1/2
WIOT-FM Album Oriented Rock Men 18-34 18.5/1
WCWA-AM Nostalgia Adults 35-64 2.7/10(T)
SARASOTA/BRADENTON 1
WSRZ-FM Oldies Women 25-54 7.1/2
WYNF-FM Album Oriented Rock Men 25-54 15.9/1
WSPB-AM Business News Men 35-64 --
DES MOINES 1
WHO-AM News Talk Men 25-54 13.8/1
KLYF-FM Adult Contemporary Women 25-54 12.8/2
LEXINGTON 1
WMXL-FM Hot Adult Women 18-34 12.2/3
WWYC-FM Country Adults 18-34 9.8/5(T)
WLAP-AM Sports Men 25-54 2.2/11
WKQQ-FM P Album Oriented Rock Men 18-34 17.2/1
WTKT-AM P Urban Adult Contemporary Adults 35-64 1.5/14
WLKT-FM P Contemporary Hit Radio Adults 18-34 13.6/2
BOISE (5) 2
KIDO-AM News Talk Adults 25-54 6.5/6
KARO-FM Classic Rock Men 25-54 5.9/5(T)
KLTB-FM Oldies Adults 25-54 5.7/7(T)
KCIX-FM P Adult Contemporary Women 25-54 11.0/1(T)
KXLT-FM P Adult Contemporary Women 25-54 6.3/5
SANTA BARBARA 1
KTYD-FM P Rock Adults 18-34 13.8/1
KQSB-AM P Talk Adults 35-64 2.4/14(T)
KSBL-FM P Adult Contemporary Adults 25-54 9.1/1(T)
</TABLE>
S-30
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ------------------- ------------------- ----------------- ---------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
CEDAR RAPIDS (5) 1
WMT-AM Full Service Adults 35-64 13.5/2
WMT-FM Adult Contemporary Women 25-54 17.2/3
CHEYENNE (5) 1
KIGN-FM P Adult Contemporary Women 25-54 30.3/1
KLEN-FM P Adult Contemporary Women 25-54 15.2/2(T)
KOLZ-FM P Country Adults 25-54 13.0/2
KGAB-AM P Talk Adults 35-64 --
LIMA (5) 1
WIMA-AM P News Talk Adults 35-64 7.4/4
WIMT-FM P Country Adults 25-54 19.8/2
WBUK-FM P Oldies Adults 25-54 10.3/3(T)
WLVZ-FM (6) P -- -- --
CASPER (5) 3
KTWO-AM Full Service/Country Adults 35-64 14.6/3
KMGW-FM Adult Contemporary Women 25-54 12.0/2(T)
FORT COLLINS/
GREELEY (7) N/A
KCOL-AM P News Talk Adults 35-64 --
KPAW-FM P Oldies/Adult Contemporary Adults 25-54 --
KGLL-FM P Country Adults 25-54 --
SANDUSKY (7) N/A
WLEC-AM P Nostalgia Adults 35-64 --
WCPZ-FM P Adult Contemporary Women 25-54 --
VENICE/ ENGLEWOOD
(7) N/A
WAMR-AM Talk Adults 25-54 --
WCTQ-FM Country Adults 25-54 --
WEDD-FM (6) -- -- --
</TABLE>
- ------------------------------
(1) Jacor also owns or has the right to purchase two insignificant stations in
Munfordville, Kentucky and one each in Sebring, Florida and Morro Bay,
California.
(2) The Company provides programming and sells air time for the FM station
pursuant to a LMA.
(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 KTCL-FM in Denver, WAZU-AM in Cincinnati, KBKK-FM in Salt Lake City
and WSJW-FM in Louisville on which Jacor sells advertising time pursuant to
JSAs.
(5) Share and rank information is derived from the Spring 1996 Arbitron.
(6) WEDD-FM and WLVZ-FM are unconstructed stations and, as such, are not yet
operating.
(7) These broadcast areas do not have Arbitron ranks.
S-31
<PAGE>
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 has realized significant operating efficiencies including shared news
departments 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>
COMMERCIAL STATIONS IN
STATION RANK (1)
----------------------------
TV HOUSEHOLDS ADULTS BROADCAST AREA
BROADCAST NATIONAL BROADCAST IN DMA (1) AGED -------------
AREA/STATION AREA RANK (1) (000S) TV HOUSEHOLDS 25-54 VHF UHF
- ---------------------- ------------------- --------------- ----------------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Cincinnati/WKRC 30 801 2 1T 3 3
<CAPTION>
BROADCAST CABLE SUBSCRIBER NETWORK
AREA/STATION % AFFILIATION
- ---------------------- ----------------- ---------
<S> <C> <C>
Cincinnati/WKRC 62 CBS
</TABLE>
- ------------------------------
(1) Rankings for 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.
BROADCASTING SERVICES
Jacor currently owns and distributes syndicated talk programming for radio
broadcasting, including such programs as RUSH LIMBAUGH and DR. DEAN EDELL. The
Rush Limbaugh program is a nationally syndicated talk radio program broadcast on
more than 600 radio stations. The DR. DEAN EDELL program is a health care and
medicine talk radio program broadcast on more than 300 radio stations. Upon
Jacor's consummation of the Premiere Merger, the Company will also be the
producer and distributor for an additional 52 syndicated programs and services,
including LEEZA GIBBONS ENTERTAINMENT TONIGHT ON THE RADIO, THE MELROSE PLACE
MINUTE and THE JIM ROME SHOW. Premiere's programming is currently broadcast on
more than 4,000 radio stations pursuant to over 6,300 contracts. See
"Broadcasting Services Acquisitions."
The consummation of the Premiere Merger will also provide Jacor with
comprehensive radio research services and a national, in-house sales force.
Premiere's Newstrack service provides comprehensive weekly call-out research
services for News/Talk radio formats, which research services help radio station
affiliates increase their audience share and ratings. The Company will provide
the research services in exchange for commercial broadcast inventory instead of
on a cash basis distribution in order to make the services more attractive to
radio stations which have limited cash resources and/or excess commercial
broadcast inventory.
Premiere's national, in-house sales force and infrastructure sells
commercial broadcast inventory to more than 350 advertisers. The Company will
leverage its sales force and generate additional revenues without significant
additional overhead costs by providing network advertising sales representation
services, on a commission basis, to third-party radio networks and independent
programming and service suppliers that do not have their own sales forces. Jacor
believes that Premiere is presently the second largest network radio advertising
sales representative in the United States in terms of its gross billings. It
presently represents nine independent radio networks, including WOR Radio
Networks, One-on-One Sports Radio Network and Accuweather.
In addition, Jacor will benefit from the distribution network acquired with
NSN Network Services, which network will create efficiencies and lower costs
related to the distribution of programming among the Company's radio stations.
Further, this network will enhance the Company's back-office backbone by
facilitating the sharing of financial data and other communications.
S-32
<PAGE>
DESCRIPTION OF COMMON STOCK
For a general description of the Common Stock, see "Description of Capital
Stock" in the accompanying Prospectus. The description of the Common Stock in
the accompanying Prospectus and of certain provisions of Delaware law do not
purport to be complete and are subject to and qualified in their entirety by
reference to Jacor's Certificate of Incorporation and Bylaws and Delaware law.
Copies of such documents have been filed with the Commission. See "Available
Information" in the accompanying Prospectus.
Jacor has adopted several incentive compensation plans pursuant to which an
aggregate of up to 5,769,218 shares of Common Stock could be issued to
directors, executive officers and key employees, as described below. To date,
Jacor has issued 2,274,100 stock options under its 1993 Incentive Stock Option
Plan and 91,017 shares under its 1995 Employee Stock Purchase Plan. An aggregate
of 604,101 additional shares remain available for issuance under these two
plans. In April 1997, the Jacor Board of Directors approved the Amended and
Restated 1995 Employee Stock Purchase Plan which increased the number of shares
available for issuance by 500,000 shares. The Jacor Board of Directors also
approved three new stock based incentive compensation plans under which an
aggregate of up to 2,300,000 shares could be issued. The Amended and Restated
1995 Employee Stock Purchase Plan and the three new plans will be presented to
Jacor's stockholders for approval at its Annual Meeting of Stockholders
currently scheduled for May 28, 1997. Subject to stockholder approval, options
to acquire an aggregate of 40,000 shares were granted to Jacor's non-employee
directors under one of such new plans.
SHARES ELIGIBLE FOR FUTURE SALE
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. In general, under Rule 144, if one year has elapsed since the later of
the date of acquisition of restricted securities from an issuer or any
affiliate, the acquiror or subsequent holder thereof is entitled to sell within
any three-month period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of Common Stock or the average weekly trading
volume of the Common Stock during the four calendar weeks preceding such sale.
In addition, sales under Rule 144 may be made only through unsolicited "broker's
transactions" or directly with a market maker and are subject to various other
conditions, including the availability of certain public information about
Jacor. If two years have elapsed since the date of acquisition of restricted
securities from Jacor or any affiliate and the acquiror or subsequent holder is
not deemed to have been an affiliate of Jacor for at least 90 days prior to a
proposed transaction, such person would be entitled to sell such securities
under Rule 144 without regard to the limitations described above.
In general, under Rule 144 under the Securities Act as currently in effect,
a person (or persons whose shares are aggregated) who has beneficially owned
restricted securities within the meaning of Rule 144 ("Restricted Securities")
for at least one year, and including the holding period of any prior owner
except an affiliate, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of one percent of the
then-outstanding shares of Common Stock or the average weekly trading volume of
the Common Stock on the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about Jacor. Any person (or persons whose shares are aggregated) who
is not deemed to have been an affiliate of Jacor at any time during the three
months preceding a sale, and who has beneficially owned shares for at least two
years (including any period of ownership of preceding non-affiliated holders),
would be entitled to sell such shares under Rule 144(k) without regard to the
volume limitations, manner of sale provisions, public information requirements
or notice requirements. An "affiliate" is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or under common
control with, such issuer.
S-33
<PAGE>
In addition, the Commission has recently proposed further revisions to the
holding periods and volume limitations contained in Rule 144. The adoption of
amendments effecting such proposed revisions may result in resales of restricted
securities sooner than would be the case under Rule 144 as currently amended.
However, there can be no assurance of when, if ever, such amendments will be
proposed or adopted.
Rule 144A under the Securities Act as currently in effect generally permits
unlimited resales of certain Restricted Securities of any issuer provided that
the purchaser is a qualified institution that owns and invests on a
discretionary basis at least $100.0 million in securities (and, in the case of a
bank or savings and loan association, has a net worth of at least $25.0 million)
or is a registered broker-dealer that owns and invests on a discretionary basis
at least $10.0 million in securities. Rule 144A allows certain existing
shareholders of Jacor to sell their shares of Common Stock held prior to this
Offering to such institutions and registered broker-dealers without regard to
any volume or other restrictions. There can be no assurance that the
availability of such resale exemption will not have an adverse effect on the
trading price of the Common Stock.
Jacor, its directors and executive officers, Zell/Chilmark and certain
former shareholders of Citicasters who in the aggregate hold shares of Common
Stock and warrants to acquire Common Stock in excess of 5% of Jacor's total
outstanding shares of Common Stock (the "Citicasters Holders") have agreed not
to offer to sell, sell, distribute, grant any option to purchase, pledge,
hypothecate or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into, or exercisable or exchangeable for,
shares of Common Stock owned by them prior to the expiration of 120 days from
the date of this Prospectus Supplement, except (i) with the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), (ii) in
the case of Jacor, for the issuance of shares of Common Stock in connection with
the Pending Transactions or in connection with other acquisition transactions in
which the recipients of such shares are restricted from selling such shares
until after the expiration of 120 days from the date of this Prospectus
Supplement or upon the exercise of outstanding options, or the grant of options
to purchase shares of Common Stock under Jacor's stock option plans, stock
purchase plans and incentive stock plans, described in this Prospectus
Supplement or the accompanying Prospectus (by incorporation or otherwise), and
(iii) in the case of the directors and executive officers of Jacor, for the
exercise by such individuals of outstanding options and (iv) for the sale of
shares in this Offering and the Zell Offering. In addition, Jacor has informed
certain former shareholders of Regent who in the aggregate hold shares of Common
Stock and warrants to acquire Common Stock in excess of 5% of Jacor's total
outstanding shares of Common Stock (the "Regent Holders") that, for a period of
45 days from the date of this Prospectus Supplement, the Regent Holders may not
sell any of such shares or warrants pursuant to the shelf registration statement
currently in effect providing for the registration and distribution of such
shares and warrants. The Citicasters Holders and Regent Holders hold
approximately 2,950,465 shares of Common Stock and approximately 13,943,976
warrants to acquire an aggregated 2,590,808 shares of Common Stock. DLJ may, in
its sole discretion and at any time without prior notice, release all or any
portion of the shares subject to these "lock-up" agreements.
Jacor can make no prediction as to the effect, if any, that sales of shares
of its Common Stock, or the availability of shares for future sale, will have on
the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of warrants or options) in the public market, or the perception that such sales
could occur, could depress the prevailing market price for the Common Stock.
Such sales may also make it more difficult for Jacor to sell equity securities
or equity-related securities in the future at a time and price which it deems
appropriate.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder who, for United States Federal
S-34
<PAGE>
income tax purposes, is not a "United States person" (a "Non-United States
Holder"). This discussion is based upon the United States Federal tax law now in
effect, which is subject to change, possibly retroactively. For purposes of this
discussion, a "United States person" means a citizen or resident of the United
States; a corporation, partnership, or other entity created or organized in the
United States or under the laws of the United States or of any State; an estate
whose income is includible in gross income for the United States Federal income
tax purposes regardless of its source; or a trust whose administration is
subject to the primary supervision of a United States court and which has one or
more United States fiduciaries who have the authority to control all substantial
decisions of the trust. This discussion does not consider any specific facts or
circumstances that may apply to a particular Non-United States Holder.
Prospective investors are urged to consult their tax advisors regarding the
United States Federal tax consequences of acquiring, owning, and disposing of
Common Stock, as well as any tax consequences that may arise under the laws of
any foreign, state, local, or other tax jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal Income tax at the rate of 30% unless the
dividends are effectively connected with the conduct of a trade or business
within the United States by the Non-United States Holder, in which case the
dividends will be subject to the United States Federal income tax on net income
that applies to persons generally (and, with respect to corporate holders and
under certain circumstances, the branch profits tax). Non-United States Holders
should consult any applicable income tax treaties, which may provide for a lower
rate of withholding or other rules different from those described above. A
Non-United States Holder may be required to satisfy certain certification
requirements in order to claim treaty benefits or otherwise claim a reduction of
or exemption from withholding under the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder, (ii) in
the case of a Non-United States Holder who is a nonresident alien individual and
holds the Common Stock as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year and certain other requirements
are met, or (iii) the Non-United States Holder is subject to tax under the
United States real property holding company rules discussed below. Gain that is
effectively connected with the conduct of a trade or business within the United
States by the Non-United States Holder will be subject to the United States
Federal income tax on net income that applies to United States persons generally
(and, with respect to corporate holders and under certain circumstances, the
branch profits tax) but will not be subject to withholding. Non-United States
Holders should consult applicable treaties, which may provide for different
rules.
The Company does not believe that it has been or will be treated as a United
States real property holding company for United States Federal income tax
purposes. If the Company were to be treated as a United States real property
holding company, however, a Non-United States Holder who holds, directly or
indirectly, more than 5% of the Common Stock will be subject to Federal income
taxation on any gain realized from the sale or exchange of such Common Stock,
unless an exemption is provided under an applicable treaty.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States Federal estate tax purposes)
of the United States at the date of death will be included in such individual's
estate for United States Federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
S-35
<PAGE>
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder at an
address outside the United States. Payments by a United States office of a
broker of the proceeds of a sale of the Common Stock is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies its Non-United States Holder status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements (but not
backup withholding) will also apply to payments of the proceeds of sales of the
Common Stock by foreign offices of United States brokers, or foreign brokers
with certain types of relationships to the United States, unless the broker has
documentary evidence in its records that the holder is a Non-United States
Holder and certain other conditions are met, or the holder otherwise establishes
an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the Common Stock could be
changed by future regulations. The Internal Revenue Service issued proposed
Treasury Regulations on April 22, 1996 concerning the withholding of tax and
reporting for certain amounts paid to non-resident individuals and foreign
corporations. The proposed Treasury Regulations, if adopted in their present
form, would be effective for payments made after December 31, 1997. Prospective
investors should consult their tax advisors concerning the potential adoption of
proposed Treasury Regulations and the potential effect on their ownership of the
Common Stock.
S-36
<PAGE>
UNDERWRITING
Subject to certain conditions contained in the Underwriting Agreement, a
syndicate of underwriters named below (the "Underwriters"), for whom Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Credit Suisse First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley
& Co. Incorporated and Smith Barney Inc. are acting as representatives (the
"Representatives"), severally have agreed to purchase from Jacor, and Jacor has
agreed to sell to the Underwriters at the public offering price set forth on the
cover page of this Prospectus Supplement, less the underwriting discount, an
aggregate of 4,650,000 shares of Common Stock. The number of shares of Common
Stock that each Underwriter has agreed to purchase is set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..............................
Credit Suisse First Boston Corporation...........................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated...............................
Morgan Stanley & Co. Incorporated................................................
Smith Barney Inc.................................................................
----------
Total..........................................................................
----------
----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by counsel
and to certain other conditions. If any of the shares of Common Stock are
purchased by the Underwriters pursuant to the Underwriting Agreement, all such
shares (other than shares covered by the overallotment option described below)
must be so purchased.
Jacor has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the Underwriters may be required to make in respect
thereof.
Jacor has been advised by the Representatives that the Underwriters propose
to offer the Common Stock to the public initially at the price to the public set
forth on the cover page of this Prospectus Supplement and to certain dealers
(who may include the Underwriters) at such price less a concession not to exceed
$ per share. The Underwriters may allow, and such dealers may reallow,
discounts not in excess of $ per share to any other Underwriter and certain
other dealers.
Jacor has granted to the Underwriters an option to purchase up to an
aggregate of 697,500 additional shares of Common Stock, at the initial public
offering price less underwriting discounts and commissions, solely to cover
overallotments. Such option may be exercised at any time until 30 days after the
date of this Prospectus Supplement. To the extent that the Underwriters exercise
such option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.
S-37
<PAGE>
In connection with this Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may overallot the Offering,
creating a syndicate short position. Underwriters may bid for and purchase
shares of Common Stock in the open market to cover syndicate short positions. In
addition, the Underwriters may bid for and purchase shares of Common Stock in
the open market to stabilize the price of the Common Stock. These activities may
stabilize or maintain the market price of the Common Stock above independent
market levels. The Underwriters are not required to engage in these activities,
and may end these activities at any time.
The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Commission. In general, a passive market maker may not bid
for or purchase the Common Stock at a price that exceeds the highest independent
bid. In addition, the net daily purchases made by any passive market maker
generally may not exceed 30% of its average daily trading volume in the Common
Stock during a specified two month prior period, or 200 shares, whichever is
greater. A passive market maker must identify passive market making bids on the
Nasdaq electronic inter-dealer reporting system. Passive market making may
stabilize or maintain the market price of the Common Stock above independent
market levels. Underwriters and dealers are not required to engage in passive
market making and may end passive market making activities at any time.
Jacor, its directors and executive officers, Zell/Chilmark and the
Citicasters Holders have agreed not to offer to sell, sell, distribute, grant
any option to purchase, pledge, hypothecate or otherwise dispose of, directly or
indirectly, any shares of Common Stock or securities convertible into, or
exercisable or exchangeable for, shares of Common Stock owned by them prior to
the expiration of 120 days from the date of this Prospectus Supplement, except
(i) with the prior written consent of DLJ, (ii) in the case of Jacor, for the
issuance of shares of Common Stock in connection with the Pending Transactions
or in connection with other acquisition transactions in which the recipients of
such shares are restricted from selling such shares until after the expiration
of 120 days from the date of this Prospectus Supplement or upon the exercise of
outstanding options, or the grant of options to purchase shares of Common Stock
under Jacor's stock option plans, stock purchase plans and incentive stock
plans, described in this Prospectus Supplement or the accompanying Prospectus
(by incorporation or otherwise), and (iii) in the case of the directors and
executive officers of Jacor, for the exercise by such individuals of outstanding
options and (iv) for the sale of shares in this Offering and the Zell Offering.
In addition, Jacor has informed the Regent Holders that, for a period of 45 days
from the date of this Prospectus Supplement, the Regent Holders may not sell any
of such shares or warrants pursuant to the shelf registration statement
currently in effect providing for the registration and distribution of such
shares and warrants. The Citicasters Holders and the Regent Holders hold
approximately 2,950,465 shares of Common Stock and approximately 13,943,976
warrants to acquire an aggregated 2,590,808 shares of Common Stock. DLJ may, in
its sole discretion and at any time without prior notice, release all or any
portion of the shares subject to these "lock-up" agreements.
Each Underwriter has represented and agreed that (i) it has not offered or
sold, and will not for a period of six months following consummation of the
Offering offer or sell any shares of Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances that do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995, (ii) it has complied with and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the shares of Common Stock in,
from, or otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue or sale of the shares of Common
Stock to a person who is of a kind described in
S-38
<PAGE>
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
The distribution of this Prospectus Supplement and the accompanying
Prospectus and the offering and sale of the shares of Common Stock in certain
jurisdictions may be restricted by law. Persons into whose possession this
Prospectus Supplement and the accompanying Prospectus come are required by the
Underwriters and the Company to inform themselves about and to observe any such
restrictions. This Prospectus Supplement and the accompanying Prospectus do not
constitute, and may not be used for or in connection with, an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or to any person to whom it is unlawful to make such offer or
solicitation.
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1996 and 1995 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1996 and the combined balance sheets of EFM Media
Management, Inc., EFM Publishing, Inc. and PAM Media, Inc. (the "Combined EFM
Companies") as of December 31, 1995 and 1996 and related combined statements of
operations, changes in retained earnings and cash flows for the years ended
December 31, 1994, 1995 and 1996, each incorporated by reference in the
Prospectus, have been incorporated therein in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
The consolidated financial statements of Premiere Radio Networks, Inc. at
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, appearing in Jacor Communications, Inc.'s Current Report on
Form 8-K(A) dated April 7, 1997 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The authorization and issuance of the shares of Common Stock 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.
S-39
<PAGE>
PROSPECTUS
APRIL 21, 1997
$250,000,000
[LOGO]
PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
CONVERTIBLE DEBT SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
JACOR COMMUNICATIONS COMPANY
AND THE SUBSIDIARY GUARANTORS
JACOR COMMUNICATIONS COMPANY
DEBT SECURITIES
CONVERTIBLE DEBT SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
JACOR COMMUNICATIONS, INC.
AND THE SUBSIDIARY GUARANTORS
Jacor Communications, Inc. ("Jacor") may from time to time offer (i)
convertible debt securities consisting of debentures, notes or other evidences
of indebtedness representing unsecured obligations of Jacor, which may be either
subordinated or senior if Jacor's then-existing loan agreements and indentures
permit the issuance of Senior Debt (as defined herein), and which are
convertible or exchangeable into Jacor Common Stock (as defined below), Jacor
Preferred Stock (as defined below) or other debt securities issued hereunder
(the "Jacor Convertible Debt Securities"), (ii) shares of Preferred Stock, par
value $.01 per share (the "Jacor Preferred Stock"), which may be issued in the
form of depositary shares evidenced by depositary receipts (the "Jacor
Depositary Shares"); (iii) shares of Jacor Preferred Stock convertible or
exchangeable into Common Stock, par value $.01 per share (the "Jacor Common
Stock"), another series of Jacor Preferred Stock or other debt securities issued
hereunder (the "Jacor Convertible Preferred Stock"); and (iv) shares of Jacor
Common Stock, in each case, in amounts, at prices and on terms to be determined
at the time of the offering.
Jacor Communications Company, a wholly-owned subsidiary of Jacor ("JCC"),
may also from time to time offer (i) debt securities consisting of debentures,
notes or other evidences of indebtedness representing unsecured obligations of
JCC, which may be either subordinated or senior if JCC's then-existing loan
agreements and indentures permit the issuance of Senior Debt (the "JCC Debt
Securities"); and (ii) convertible debt securities consisting of JCC Debt
Securities which are convertible or exchangeable into Jacor Common Stock or
Jacor Preferred Stock or other debt securities issued hereunder (the "JCC
Convertible Debt Securities"), in each case, in amounts, at prices and on terms
to be determined at the time of the offering. In connection therewith, Jacor and
the Subsidiary Guarantors (as defined herein) may, on a joint and several basis,
offer full and unconditional guarantees ("Guarantees") with respect to the JCC
Debt Securities and JCC Convertible Debt Securities, as described herein under
"Description of Convertible Debt Securities and JCC Debt Securities." All
subsidiaries of JCC will become Subsidiary Guarantors if required by the
indenture governing the Convertible Debt Securities and/or the JCC Debt
Securities. The Jacor Convertible Debt Securities and the JCC Convertible Debt
Securities are sometimes collectively referred to as the "Convertible Debt
Securities." The Jacor Convertible Debt Securities, the Jacor Preferred Stock,
the Jacor Convertible Preferred Stock, the Jacor Common Stock, the Jacor
Depositary Shares, the JCC Debt Securities, the JCC Convertible Debt Securities,
and the Guarantees are collectively called the "Securities." See "Description of
Convertible Debt Securities and JCC Debt Securities -- Certain Covenants --
Subsidiary Guarantees" and "Description of Other Indebtedness -- The Credit
Facility," "-- The 1996 10 1/8% Notes," "-- The Liquid Yield Option-TM- Notes,"
and "-- The 1996 9 3/4% Notes."
For each offering of Securities for which this Prospectus is being
delivered, there will be an accompanying Prospectus Supplement (the "Prospectus
Supplement"), which sets forth, where applicable, (i) in the case of Convertible
Debt Securities and JCC Debt Securities, the specific designation, aggregate
principal amount, the denomination, maturity, priority, premium, if any, the
rate (which may be fixed or variable), time and method of calculating payment of
interest, if any, on such Convertible Debt Securities or JCC Debt Securities,
any terms of redemption at the option of Jacor, JCC, or the holder, terms for
sinking fund payments, and with respect to Convertible Debt Securities, terms
for conversion or exchange into Jacor Common Stock, Jacor Preferred Stock or
other debt securities issued hereunder; (ii) in the case of Jacor Preferred
Stock or Jacor Convertible Preferred Stock, the specific title and stated value,
any dividend, liquidation, redemption, voting and other rights, and any other
special terms, including the terms for converting or exchanging Jacor
Convertible Preferred Stock into other Securities, and whether the Jacor
Preferred Stock or Jacor Convertible Preferred Stock will be offered in the form
of Jacor Depositary Shares and the terms thereof; and (iii) in the case of Jacor
Common Stock, the number of shares of Jacor Common Stock and the terms of
offering thereof. The Prospectus Supplement will also contain information, as
applicable, about certain United States Federal income tax considerations
relating to the particular Securities offered thereby.
The aggregate initial offering price of the Securities offered by Jacor
and/or JCC hereby will not exceed $250,000,000.00.
Jacor and/or JCC may sell the Securities to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement will set forth the names of any underwriters,
dealers or agents involved in the sale of the Securities in respect of which
this Prospectus is being delivered, the amounts proposed to be purchased by
them, any applicable fee, commission or discount arrangements with them, the
initial public offering price and the net proceeds to Jacor and/or JCC. Any
statement contained in this Prospectus will be deemed to be modified or
superseded by any inconsistent statement contained in the accompanying
Prospectus Supplement.
The Jacor Common Stock is traded on the Nasdaq National Market under the
symbol "JCOR." Any Jacor Common Stock sold pursuant to a Prospectus Supplement
will be listed on the Nasdaq National Market, subject to official notice of
issuance. Warrants issued by Jacor in 1996 are listed on the Nasdaq National
Market under the symbol "JCORZ." Liquid Yield Option-TM- Notes issued by Jacor
in 1996 are listed on the Nasdaq Small Cap Market under the symbol "JCORL" and
Warrants issued by Jacor in 1997 are listed on the Nasdaq National Market under
the symbol "JCORM." Jacor has not yet determined whether any of the JCC Debt
Securities, JCC Convertible Debt Securities, Jacor Convertible Debt Securities,
Jacor Preferred Stock, or Jacor Convertible Preferred Stock offered hereby will
be listed on any exchange or over-the-counter market. If Jacor decides to seek
listing of any such Securities, the Prospectus Supplement relating thereto will
disclose such exchange or market.
SEE "RISK FACTORS" AT PAGE 4 FOR CERTAIN INFORMATION 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.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
<PAGE>
AVAILABLE INFORMATION
Jacor is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and accordingly files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Jacor, JCC and the Subsidiary Guarantors have
filed a Registration Statement on Form S-3 together with all amendments and
exhibits thereto (the "Registration Statement") with the Commission under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Securities offered hereby. 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.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Jacor 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, 1996, as amended;
(b) Jacor's Current Reports on Form 8-K dated January 9, 1997, January 24,
1997, March 7, 1997 (amending Jacor's Form 8-K dated October 23, 1996), March
21, 1997, as amended, and April 8, 1997; and
(c) Jacor's Form 8-B Registration Statement dated September 23, 1996.
All documents filed by Jacor 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 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., 50 East RiverCenter Boulevard, 12th Floor,
Covington, Kentucky 41011, Attention: Corporate Communications and Investor
Relations, Telephone Number (606) 655-2267, Fax Number (606) 655-9345.
3
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE PURCHASING THE
SECURITIES OFFERED HEREBY.
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 programming and 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. Jacor cannot predict whether it will be
successful in pursuing such acquisition opportunities or what the consequences
of any such acquisition would be.
The receipt of certain federal and state governmental or regulatory
approvals is required in order to consummate the acquisitions, including
approvals or waivers from the Federal Communications Commission (the "FCC"),
and, if certain criteria are met, the expiration of or termination of the
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), as enforced by the Antitrust Division
of the Department of Justice (the "Antitrust Division"). With regard to each
proposed acquisition, Jacor will use its reasonable best efforts to obtain such
approvals or waivers, but there can be no assurance that (i) the FCC will
approve the transfer of the broadcast licenses in connection with each proposed
transaction; (ii) the FCC or a court would affirm the FCC consent to the
proposed transaction if such review is undertaken; (iii) the HSR Act waiting
periods with respect to the various proposed transactions will expire without
objections being raised by either the Federal Trade Commission (the "FTC") or
the Antitrust Division that would not be eliminated without substantial changes
to the terms of the applicable proposed transactions; or (iv) Jacor will be
successful in consummating various proposed transactions in a timely manner or
on the terms originally agreed upon by the parties to the transactions.
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 businesses. 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, future acquisitions also may involve the expenditure of
significant funds, including the issuance of additional debt or equity.
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
Telecommunications Act of 1996 (the "Telecom Act") on February 8, 1996, the
radio broadcast industry has been subject to an increased amount of scrutiny by
the Antitrust Division. Such scrutiny caused Jacor to experience delays and
increased costs in closing several transactions and also compelled changes in
the proposed terms of several acquisitions. Jacor could experience similar
delays, increased costs, and compelled changes in connection with future
transactions.
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
4
<PAGE>
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.
Jacor'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. 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 Jacor'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 Jacor'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 directly 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 Jacor believes that
each of its stations is able to compete effectively in its respective broadcast
area, there can be no assurance that any such stations will be able to maintain
or increase its current audience ratings and advertising revenues.
SUBSTANTIAL LEVERAGE AND LIMITED FINANCIAL FLEXIBILITY. Jacor's outstanding
indebtedness and its offering of any debt securities hereunder may have the
following important consequences: (i) significant interest expense and principal
repayment obligations resulting in substantial annual fixed charges; (ii)
significant limitations on Jacor's ability to obtain additional debt financing;
and (iii) increased vulnerability to adverse general economic and industry
conditions. In addition, Jacor's existing and anticipated credit facilities have
or will have 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")
holds approximately 13,349,720 shares of the outstanding Jacor Common Stock and
is Jacor's largest stockholder as of the date hereof. 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 Jacor Common Stock might
otherwise receive a premium for their shares over then-current market prices.
Subject to certain restrictions under the Securities Act, Zell/Chilmark is
free to sell shares of Jacor Common Stock from time to time for any reason. By
virtue of its current control of Jacor, Zell/Chilmark could sell large amounts
of Jacor Common Stock by causing Jacor to file a registration statement with
respect to such stock. In addition, Zell/Chilmark could sell its shares of Jacor
Common Stock without registration pursuant to Rule 144 under the Securities Act.
Jacor can make no prediction as to the effect, if any, that such sales of shares
of Jacor Common Stock would have on the prevailing market price. Sales of
substantial amounts of Jacor Common Stock, or the availability of such shares
for sale, could adversely affect prevailing market prices. Sales or transfers of
Jacor Common Stock by Zell/Chilmark could result in another person or entity
becoming the controlling stockholder of Jacor.
LACK OF DIVIDENDS; RESTRICTIONS ON PAYMENTS OF DIVIDENDS. Jacor has not
paid any dividends to its stockholders. Jacor intends to retain all available
earnings, if any, generated by its operations for the
5
<PAGE>
development and growth of its business and does not anticipate paying any
dividends on Jacor Common Stock in the foreseeable future. In addition, the
payment of dividends on the Jacor Common Stock is restricted under Jacor's
credit facilities.
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.
POTENTIAL NEGATIVE IMPACT OF OTHER SECURITIES ISSUANCES. Jacor has
authorized for issuance up to 4,000,000 shares of undesignated preferred stock.
The Jacor Board of Directors has the authority, without further vote or action
by Jacor stockholders, to issue the undesignated shares of Jacor Preferred Stock
in one or more series and to fix all rights, qualifications, preferences,
privileges, limitations and restrictions of each such series, including dividend
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series. Although it currently has no plans to do so, the Jacor Board of
Directors, without stockholder approval, can issue Jacor Preferred Stock with
voting and conversion rights which would adversely affect the voting power of
the holders of Jacor Common Stock. In addition, the issuance of Jacor Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of Jacor and could therefore have a negative impact on the trading price
of the Jacor Common Stock. Jacor may also issue other types of securities in the
future that may have the same or similar negative effects as the undesignated
preferred stock. See "Description of Capital Stock."
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 "Business of Jacor and JCC," 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.
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BUSINESS
Jacor and JCC, a direct wholly-owned subsidiary of Jacor, are holding
companies engaged primarily in the radio broadcasting business. Jacor's
strategic objective is to be a leading radio broadcaster by operating multiple
radio station platforms in each of its broadcast areas. Jacor and JCC also own
and operate, through their subsidiaries, one television station in Cincinnati,
Ohio, the Georgia Radio News Service, a radio news service which provides news,
sports and public affairs programming to more than 140 radio stations, a
national distributor of syndicated talk programming for radio broadcasting and a
leading provider of satellite and network services for the radio broadcasting
industry.
Additional information concerning Jacor and JCC is incorporated by reference
in this Prospectus. See "Available Information" and "Incorporation of Certain
Documents by Reference."
USE OF PROCEEDS
Jacor does not currently have specific plans for the use of the net proceeds
from the sale of Securities offered hereby. However, Jacor currently anticipates
that any such net proceeds would be used for general corporate purposes, which
may include but are not limited to working capital, capital expenditures,
repayment of indebtedness, investments and acquisitions. When a particular
series of Securities is offered, the Prospectus Supplement relating thereto will
set forth Jacor's intended use for the net proceeds received from the sale of
such Securities. Pending the application of the net proceeds, Jacor expects to
invest such proceeds in short-term, interest-bearing instruments or other
investment-grade securities.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the unaudited consolidated ratio of earnings
to fixed charges and the unaudited consolidated ratio of earnings to combined
fixed charges and preferred stock dividends for Jacor for the periods shown
(dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (1)...................... N/A 1.9 6.0 5.7 1.4
--------- --------- --- --- ---
--------- --------- --- --- ---
Ratio of earnings to combined fixed charges and preferred
stock dividends (1)(2)..................................... N/A 1.9 6.0 5.7 1.4
--------- --------- --- --- ---
--------- --------- --- --- ---
Coverage deficiency......................................... $ 23,701 N/A N/A N/A N/A
--------- --------- --- --- ---
--------- --------- --- --- ---
</TABLE>
- ------------------------
(1) 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.
(2) Jacor had no shares of Jacor Preferred Stock outstanding and no dividends
were declared or paid on Jacor Preferred Stock during any of the periods
indicated.
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DESCRIPTION OF CONVERTIBLE DEBT SECURITIES AND JCC DEBT SECURITIES
The Jacor Convertible Debt Securities are to be issued under an Indenture
(the "Jacor Indenture") between Jacor and a trustee to be identified in the
applicable Prospectus Supplement (the "Jacor Trustee"). The JCC Debt Securities
and the JCC Convertible Debt Securities are to be issued under an Indenture (the
"JCC Indenture") between JCC and a trustee to be identified in the applicable
Prospectus Supplement (the "JCC Trustee"). The Jacor Trustee and the JCC Trustee
may be the same trustee. The Jacor Indenture and the JCC Indenture are sometimes
collectively called the "Indentures." The terms of the Indentures will also be
governed by certain provisions of the Trust Indenture Act of 1939, as amended.
The following summary statements with respect to the JCC Debt Securities and the
Convertible Debt Securities do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the detailed provisions of
the Indentures. Although some of the following summary statements collectively
refer to Jacor, JCC, the Subsidiary Guarantors and other parties, such
statements concerning each party shall apply to each such party respectively and
the applicable Indentures, unless otherwise noted. Capitalized terms are defined
in the Indentures unless otherwise defined herein. Whenever any particular
section of the Indentures or any term defined therein is referred to, such
section or definition is incorporated herein by reference. A copy of the form of
Indentures is available upon request.
GENERAL
The JCC Debt Securities and the Convertible Debt Securities offered hereby
will be limited to an aggregate initial offering price not to exceed
$250,000,000. The Jacor Indenture will not limit the amount of Jacor Convertible
Debt Securities which can be issued thereunder and will provide that additional
Jacor Convertible Debt Securities may be issued in one or more series thereunder
up to the aggregate principal amount which may be authorized from time to time
by Jacor's Board of Directors. The JCC Indenture will not limit the amount of
JCC Debt Securities or JCC Convertible Debt Securities which can be issued
thereunder and will provide that additional JCC Debt Securities or JCC
Convertible Debt Securities may be issued in one or more series thereunder up to
the aggregate principal amount which may be authorized from time to time by
JCC's Board of Directors. The Jacor Convertible Debt Securities, the JCC
Convertible Debt Securities and the JCC Debt Securities will be unsecured
obligations of Jacor or JCC, respectively, and to the extent as may be permitted
under Jacor's and JCC's then-existing loan agreements and indentures, will rank
either senior to or equally and ratably with all other unsecured indebtedness of
JCC. The Jacor Convertible Debt Securities, the JCC Convertible Debt Securities
and the JCC Debt Securities also may be subordinate, and junior in right of
payment to all Senior Debt, to the extent and in the manner set forth in the
respective Indenture. See "Subordination."
The Jacor Convertible Debt Securities will be fully and unconditionally
guaranteed by JCC and may be further guaranteed fully and unconditionally,
jointly and severally with JCC by certain subsidiaries of JCC (the "Subsidiary
Guarantors"). The JCC Debt Securities and JCC Convertible Debt Securities will
be fully and unconditionally guaranteed on a senior subordinated basis by Jacor
and may be further guaranteed fully and unconditionally, jointly and severally
with Jacor by the Subsidiary Guarantors (collectively with JCC and Jacor, 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.
Reference is made to the Prospectus Supplement relating to the particular
Convertible Debt Securities or JCC Debt Securities offered thereby for the
following terms, where applicable, of the Convertible Debt Securities or JCC
Debt Securities: (i) the specific designation of the Convertible Debt Securities
or JCC Debt Securities; (ii) the denominations in which such Convertible Debt
Securities or JCC Debt Securities are authorized to be issued; (iii) the
aggregate principal amount of such Convertible Debt Securities or JCC Debt
Securities; (iv) the date or dates on which the principal of such Convertible
Debt Securities or JCC Debt Securities will mature or the method of determining
such date or dates; (v) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Convertible Debt Securities or
JCC Debt Securities will be issued; (vi) the rate or rates (which may be fixed
or variable) at which such Convertible Debt Securities or JCC Debt Securities
will bear interest, if any, or the method of
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<PAGE>
calculating such rate or rates; (vii) the times and places where principal of,
premium, if any, and interest, if any, on such Convertible Debt Securities or
JCC Debt Securities will be payable; (viii) the date, if any, after which such
Convertible Debt Securities or JCC Debt Securities may be redeemed and the
redemption prices; (ix) the date or dates on which interest, if any, will be
payable and the record date or dates therefor or the method by which such date
or dates will be determined; (x) the period or periods within which, the price
or prices at which, the currency or currencies (including currency units) in
which, and the terms and conditions upon which, such Convertible Debt Securities
or JCC Debt Securities may be redeemed, in whole or in part, at the option of
Jacor or JCC, as applicable; (xi) the obligation, if any, of Jacor or JCC to
redeem or purchase such Convertible Debt Securities or JCC Debt Securities
pursuant to any sinking fund or analogous provisions, upon the happening of a
specified event or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which, such Convertible Debt Securities or JCC Debt Securities shall be redeemed
or purchased, in whole or in part, pursuant to such obligations; (xii) the terms
and conditions upon which conversion or exchange of such Convertible Debt
Securities will be effected, including the exchange terms, the conversion price,
the conversion period and other conversion or exchange provisions in addition to
or in lieu of those described below; (xiii) if other than the principal amount
thereof, the portion of the principal amount of such Convertible Debt Securities
or JCC Debt Securities which will be payable upon declaration of the
acceleration of the maturity thereof or the method by which such portion shall
be determined; (xiv) the person to whom any interest on any such Debt Security
or Convertible Debt Security shall be payable if other than the person in whose
name such Debt Security or Convertible Debt Security is registered on the
applicable record date; (xv) any addition to, or modification or deletion of,
any Event of Default or any covenant of Jacor or JCC specified in the Indenture
with respect to such Convertible Debt Securities or JCC Debt Securities; (xvi)
the application, if any, of such means of defeasance or covenant defeasance as
may be specified for such Convertible Debt Securities or JCC Debt Securities;
(xvii) whether such Convertible Debt Securities or JCC Debt Securities are to be
issued in whole or in part in the form of one or more temporary or permanent
global securities and, if so, the identity of the depositary for such global
security or securities; (xviii) whether such Convertible Debt Securities or JCC
Debt Securities shall be subordinated and subject to the right to prior payment
in full of all Senior Debt, including the then-existing credit facilities; and
(xix) any other special terms pertaining to such Convertible Debt Securities or
JCC Debt Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the Convertible Debt Securities or JCC Debt Securities will not be
listed on any securities exchange. Unless otherwise provided in the applicable
Prospectus Supplement, principal and premium, if any, or interest, if any, will
be payable and the Convertible Debt Securities or JCC Debt Securities may be
surrendered for payment or transferred at the offices of the applicable Trustee
as paying and authenticating agent, provided that payment of interest on
Registered Securities may be made at the option of Jacor or JCC, as applicable,
by check mailed to the address of the person entitled thereto as it appears in
the Security Register. Payment of Convertible Debt Securities or JCC Debt
Securities in bearer form will be made at such paying agencies outside of the
United States as Jacor or JCC, as applicable, may appoint.
Unless otherwise specified in the applicable Prospectus Supplement, the
Convertible Debt Securities and JCC Debt Securities will be issued in fully
registered form without coupons in denominations set forth in the Prospectus
Supplement. No service charge will be made for any transfer or exchange of such
Convertible Debt Securities or JCC Debt Securities, but Jacor or JCC, as
applicable, may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Where Convertible Debt
Securities and JCC Debt Securities of any series are issued in bearer form, the
special restrictions and considerations, including special offering restrictions
and special Federal income tax considerations, applicable to any such
Convertible Debt Securities or JCC Debt Securities and to payment on and
transfer and exchange of such Convertible Debt Securities or JCC Debt Securities
will be described in the Prospectus Supplement. Bearer Convertible Debt
Securities and JCC Debt Securities will be transferrable by delivery.
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<PAGE>
Some of the Convertible Debt Securities and JCC Debt Securities may be
issued at a discount (bearing no interest or interest at below market rates) to
be sold at a substantial discount below their stated principal amount. Federal
income tax consequences and other special considerations applicable to any such
Convertible Debt Securities and JCC Debt Securities will be described in the
applicable Prospectus Supplement.
The Prospectus Supplement for a particular series may indicate terms for
redemption at the option of a Holder. Unless otherwise indicated in the
applicable Prospectus Supplement, the covenants contained in the Indentures and
the Convertible Debt Securities or JCC Debt Securities (as the case may be)
would not provide for redemption at the option of a Holder nor necessarily
afford Holders thereof protection in the event of a highly leveraged or other
transaction that may adversely affect such Holders.
CONVERSION OF CONVERTIBLE DEBT SECURITIES
The following provisions will further apply to Convertible Debt Securities,
unless otherwise provided in the applicable Prospectus Supplement for such
Convertible Debt Securities. The holder of any Convertible Debt Securities will
have the right exercisable at any time prior to maturity, or prior to such other
date as may be specified in the applicable Prospectus Supplement, unless
previously redeemed by Jacor or JCC, as applicable, to convert such Convertible
Debt Securities into shares of Jacor Common Stock or Jacor Preferred Stock at
the conversion price set forth in the applicable Prospectus Supplement, subject
to adjustment. In the case of Convertible Debt Securities called for redemption,
conversion rights will expire at the close of business on the date fixed for the
redemption unless Jacor or JCC, as applicable, shall default in payment of the
redemption price, except that in the case of redemption at the option of the
Holder thereof, if applicable, the conversion right will terminate upon receipt
of written notice of the exercise of such option. In certain events, the
conversion price will be subject to adjustment as set forth in the applicable
Prospectus Supplement. Fractional shares of Jacor Common Stock or Jacor
Preferred Stock will not be issued upon conversion, but, in lieu thereof, Jacor
or JCC, as applicable, will pay a cash adjustment based on the then current
market price for the Jacor Common Stock or Jacor Preferred Stock.
EXCHANGEABILITY
The Holders of Convertible Debt Securities of any series may be obligated at
any time or at maturity to exchange them for Jacor Common Stock, Jacor Preferred
Stock or other debt securities of Jacor issued hereunder. The terms of any such
exchange will be described in the Prospectus Supplement relating to such series
of Convertible Debt Securities.
SUBORDINATION
The Convertible Debt Securities and JCC Debt Securities may be subordinated
and junior in right of payment, to the extent set forth in the applicable
Prospectus Supplement, to all "Senior Debt" of Jacor, JCC or the Guarantors, as
applicable, including the then-existing credit facilities, as set forth in the
applicable Prospectus Supplement.
To the extent the JCC Debt Securities and/or the Convertible Debt Securities
are subordinated to Senior Debt, the Indentures will provide 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 Convertible Debt Securities and JCC Debt Securities) or distribution (by
set-off or otherwise) may be made by or on behalf of Jacor, JCC or a Guarantor,
as applicable, on account of the principal of, premium, if any, or interest on
the Convertible Debt Securities and JCC Debt Securities (including any
repurchases of Convertible Debt Securities and JCC Debt Securities) or any other
amounts with respect thereto, or on account of the redemption provisions of the
Convertible Debt Securities and JCC Debt Securities, for cash or property (other
than Junior Securities), (i) upon the maturity of any Senior Debt of Jacor, 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 Jacor,
JCC or such
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<PAGE>
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 Jacor, JCC or such Guarantor, as applicable, and the Trustee by
Representative under the then-existing credit facilities 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 Convertible Debt Securities and
JCC Debt Securities) or distribution (by set-off or otherwise) may be made by or
on behalf of Jacor, 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
Convertible Debt Securities and JCC Debt Securities (including any repurchases
of any of the Convertible Debt Securities and JCC Debt Securities), or any other
amount with respect thereto, or on account of the redemption provisions of the
Convertible Debt Securities and JCC Debt Securities, 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), Jacor, JCC and
the Guarantors, as applicable, shall not be prohibited by the subordination
provisions from paying all sums then due and not paid to the Holders of the
Convertible Debt Securities and JCC Debt Securities during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as and
when due on the Convertible Debt Securities and JCC Debt Securities. 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 Jacor, JCC or any Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of
Jacor, 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 marshaling of assets or liabilities, (i) the holders
of all Senior Debt of Jacor, 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 Convertible Debt Securities and JCC Debt Securities) or
distribution on account of principal of, premium, if any, and interest on, or
any other amounts with respect to, the Convertible Debt Securities and JCC Debt
Securities (other than Junior Securities) and (ii) any payment or distribution
of assets of Jacor, 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 Indentures, 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 Jacor, 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 in trust for the benefit of the holders of such
Senior Debt, and shall be paid or delivered by the Trustee
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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 Indentures will contain other customary subordination provisions,
including rights of subrogation and rights to file claims in bankruptcy.
As among Jacor, JCC, the Guarantors and the Holders, no provision contained
in the Indentures or the Convertible Debt Securities and JCC Debt Securities
will affect the obligations of Jacor, JCC and the Guarantors, which are absolute
and unconditional, to pay, when due, principal of, premium, if any, and interest
on the Convertible Debt Securities and JCC Debt Securities. The subordination
provisions of the Indentures and the Convertible Debt Securities and JCC Debt
Securities will not prevent the occurrence of any Default or Event of Default
under the Indentures or limit the rights of the Trustee or any Holder to pursue
any other rights or remedies with respect to the Convertible Debt Securities and
JCC Debt Securities.
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 Jacor, JCC or
any of the Guarantors or a marshaling of assets or liabilities of Jacor, JCC or
any of the Guarantors, holders of the Convertible Debt Securities and JCC Debt
Securities may receive ratably less than other creditors.
Jacor and JCC conduct operations through their subsidiaries. Accordingly,
Jacor's and JCC's ability to meet their cash obligations will be dependent upon
the ability of their subsidiaries to make cash distributions to Jacor and JCC,
respectively. Furthermore, any right of Jacor or 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 Jacor or JCC, as
applicable, is itself recognized as a creditor or preferred stockholder of such
subsidiary, in which case the claims of Jacor or JCC, as applicable, would still
be subordinate to any indebtedness or preferred stock of such subsidiary senior
in right of payment to that held by Jacor or JCC, as applicable.
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 JCC Debt Securities and/or the
Convertible Debt Securities 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 applicable Convertible Debt
Securities or JCC Debt Securities and (ii) at the time of the issuance of such
Convertible Debt Securities or JCC Debt Securities, the Guarantor (A) was
insolvent or became insolvent as a result of the incurrence of the obligations
represented by such Convertible Debt Securities or JCC Debt Securities, (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 of such Convertible Debt Securities or JCC Debt Securities. 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 will be
structured so as to
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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 proceeds
actually received by any given Guarantor from the offering of such Convertible
Debt Securities or JCC Debt Securities.
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 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 Jacor's obligations under the Jacor
Convertible Debt Securities, JCC's obligations under the JCC Debt Securities
and/or JCC Convertible Debt Securities 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 such Convertible Debt Securities or JCC Debt
Securities or the Guarantees were incurred with actual intent to hinder, delay,
or defraud now existing or future creditors. If the obligations under such
Convertible Debt Securities or JCC Debt Securities 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 such Convertible Debt Securities
or JCC Debt Securities. 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 such Convertible Debt
Securities or JCC Debt Securities.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indentures will provide that in the event that a Change of Control has
occurred, each Holder of Convertible Debt Securities or JCC Debt Securities will
have the right, at such Holder's option, pursuant to an irrevocable and
unconditional offer by Jacor or JCC , as applicable, (the "Change of Control
Offer"), to require Jacor or JCC, as applicable, to repurchase all or any part
of such Holder's Convertible Debt Securities or JCC Debt Securities (PROVIDED,
that the principal amount of such Convertible Debt Securities or JCC Debt
Securities 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 remain open for 20 Business Days
following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, Jacor or JCC, as applicable,
promptly shall purchase all Convertible Debt Securities or JCC Debt Securities
properly tendered in response to the Change of Control Offer.
As used herein, 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
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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, Jacor or JCC, as
applicable, will (i) accept for payment Convertible Debt Securities or JCC Debt
Securities 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 Convertible Debt Securities or JCC Debt Securities so tendered and (iii)
deliver to the Trustee Convertible Debt Securities or JCC Debt Securities so
accepted together with an Officers' Certificate listing the Convertible Debt
Securities or JCC Debt Securities or portions thereof being purchased by Jacor
or JCC, as applicable. The Paying Agent promptly will pay the Holders of
Convertible Debt Securities or JCC Debt Securities 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 Convertible Debt Security or JCC Debt Security equal in principal
amount to any unpurchased portion of the Convertible Debt Securities or JCC Debt
Securities surrendered. Any Convertible Debt Securities or JCC Debt Securities
not so accepted will be delivered promptly by Jacor or JCC, as applicable, to
the Holder thereof. Jacor or JCC, as applicable, publicly will announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
A change of control under the indenture which governs each of the
Convertible Debt Securities or JCC Debt Securities, the 1996 10 1/8% Notes, the
LYONs (as defined herein) and the 1996 9 3/4% Notes will result in a default
under the Credit Facility (as defined herein). Additionally, unless Jacor and/or
JCC, as applicable, is successful in seeking consents from its lenders under the
Credit Facility to permit change of control repurchase offers for each of the
Convertible Debt Securities or JCC Debt Securities, the 1996 10 1/8% Notes, the
LYONs or the 1996 9 3/4% Notes or Jacor and/or JCC, as applicable, is successful
in refinancing such borrowings, such event of default under the Credit Facility
would constitute an event of default under each of the Convertible Debt
Securities or JCC Debt Securities, the 1996 10 1/8% Notes, the LYONs and the
1996 9 3/4% Notes. Such events of default could result in the immediate
acceleration of all then outstanding indebtedness under each of the Convertible
Debt Securities or JCC Debt Securities, the 1996 10 1/8% Notes, the LYONs and
the 1996 9 3/4% Notes. As a result, differences in the definitions of change of
control under the indentures for the Convertible Debt Securities or JCC Debt
Securities, the 1996 10 1/8% Notes, the LYONs and the 1996 9 3/4% Notes will not
have a difference in the effect on Jacor or JCC , as applicable, 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 Convertible Debt Securities or JCC Debt Securities,
the 1996 10 1/8% Notes and the 1996 9 3/4% Notes which would not result in a
change of control under the LYONs or VICE VERSA. See "Description of
Indebtedness."
The Change of Control purchase feature of the Convertible Debt Securities or
JCC Debt Securities may make more difficult or discourage a takeover of Jacor or
JCC, and, thus, the removal of incumbent management.
The phrase "all or substantially all" of the assets of Jacor or JCC, as
applicable, 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 Jacor or JCC, as applicable, has occurred.
In addition, no assurance can be given that Jacor or JCC, as applicable, will be
able to acquire Convertible Debt Securities or JCC Debt Securities tendered upon
the occurrence of a Change of Control.
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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 Indentures will provide that, except as set forth below in this
covenant, Jacor, JCC and any 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, Jacor or 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 the ratio specified in the Indentures.
Indebtedness or Disqualified Capital Stock of any person which is
outstanding at the time such person becomes a Subsidiary of Jacor or JCC
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with Jacor or JCC or a Subsidiary of
Jacor or JCC, respectively, shall be deemed to have been incurred at the time
such Person becomes such a Subsidiary of Jacor or JCC, respectively, or is
merged with or into or consolidated with Jacor or JCC, respectively, or a
Subsidiary of Jacor or JCC, as applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Indentures will provide that Jacor and JCC and their 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) Jacor and JCC is not permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Leverage Ratio described in the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," or (3) the aggregate amount of all Restricted Payments made by Jacor and
JCC and their Subsidiaries, including after giving effect to such proposed
Restricted Payment, from and after the Issue Date, would exceed the amount
specified in the Indentures.
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 an amount
specified in the Indentures, (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.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
The Indentures will provide that Jacor, JCC and their 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 Jacor or
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, Jacor
or JCC or any Subsidiary of Jacor or JCC, respectively, except (a) restrictions
imposed by the JCC Debt Securities, the Convertible Debt Securities or the
Indenture,
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(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 Indentures or any
agreement relating to any property, asset, or business acquired by Jacor, JCC or
any of their 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 Jacor's or JCC's, as applicable, credit facilities in
effect as of the Issue Date, (f) restrictions with respect solely to a
Subsidiary of Jacor or 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.
LIMITATIONS ON LAYERING INDEBTEDNESS; LIENS
The Indentures will provide that Jacor, JCC and their Subsidiaries will not,
and will not permit any of their Subsidiaries to, directly or indirectly, incur,
or, other than with respect to the 1996 10 1/8% Notes and the 1996 9 3/4% Notes,
suffer to exist (a) any Indebtedness that is subordinate in right of payment to
any other Indebtedness of Jacor, JCC or a Guarantor unless, by its terms, such
Indebtedness (i) has a maturity date subsequent to the Stated Maturity of the
respective Convertible Debt Securities or JCC Debt Securities and an Average
Life longer than that of such Convertible Debt Securities or JCC Debt Securities
and (ii) is subordinate in right of payment to, or ranks PARI PASSU with, such
JCC Debt Securities, Convertible Debt Securities 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 Indentures will provide that Jacor, JCC and their 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 Jacor or JCC), and including any sale or other
transfer or issuance of any Equity Interests of any direct or indirect
Subsidiary of Jacor or JCC, whether by Jacor or 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 Convertible Debt
Securities and/or JCC Debt Securities in accordance with the terms of the
Indentures or to the repurchase of the Convertible Debt Securities and/or JCC
Debt Securities pursuant to an irrevocable, unconditional cash offer (the "Asset
Sale Offer") to repurchase Convertible Debt Securities and/or JCC Debt
Securities at a
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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 Jacor or JCC, as applicable, will
immediately constitute or be a part of a Related Business of Jacor or JCC, as
applicable, 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 Convertible Debt Securities
and/or JCC Debt Securities) 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 Jacor or JCC, as applicable, 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 Jacor or JCC, as applicable, is exchanging
all or substantially all the assets of one or more Related Businesses operated
by Jacor or JCC, as applicable, 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 Jacor or JCC, as applicable, determines in good faith
that Jacor or JCC, as applicable, or such Subsidiary, as applicable, receives
fair market value for such Asset Sale.
The Indentures 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, Jacor or JCC, as applicable, shall apply the Asset
Sale Offer Amount plus an amount equal to accrued interest to the purchase of
all Convertible Debt Securities and/or JCC Debt Securities properly tendered (on
a PRO RATA basis if the Asset Sale Offer Amount is insufficient to purchase all
Convertible Debt Securities and/or JCC Debt Securities so tendered) at the Asset
Sale Offer Price (together with accrued interest). To the extent that the
aggregate amount of Convertible Debt Securities and/or JCC Debt Securities
tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, Jacor or JCC, as applicable, may use any remaining Net Cash Proceeds for
general corporate purposes as otherwise permitted by the Indentures 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 Convertible Debt Securities
and/or JCC Debt Securities are not purchased pursuant thereto.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant the Indentures will provide that with respect to an Asset Sale Offer,
Jacor or JCC, as applicable, will not be permitted to commence an Asset Sale
Offer for the Convertible Debt Securities and/or JCC Debt Securities until such
time as an Asset Sale Offer for the 1996 10 1/8% Notes and the 1996 9 3/4% 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 1996
10 1/8% Notes and the 1996 9 3/4% Notes, Jacor or JCC, as applicable, may use
the remaining Net Cash Proceeds to commence an Asset Sale Offer for the
Convertible Debt Securities and/or JCC Debt Securities; PROVIDED, that the
amount of Net Cash Proceeds used for such Asset Sale Offer for the Convertible
Debt Securities and/or JCC Debt Securities shall not exceed the amount required
under the covenant Limitation on Sale of Assets and Subsidiary Stock set forth
in the indenture governing the 1996 10 1/8% Notes and the 1996 9 3/4% Notes;
PROVIDED, HOWEVER, that with respect to the 1996 10 1/8% Notes and the
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1996 9 3/4% Notes this paragraph shall be of no further force and effect upon
the earlier of (w) the maturity of the 1996 10 1/8% Notes or the 1996 9 3/4%
Notes, as applicable, (x) the date upon which defeasance of the 1996 10 1/8%
Notes or the 1996 9 3/4% Notes, as applicable, becomes effective, (y) the date
on which there are no longer any 1996 10 1/8% Notes or 1996 9 3/4% Notes, as
applicable, outstanding under the terms of the governing indenture 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 1996
10 1/8% Notes or the 1996 9 3/4% Notes, as applicable.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant and without complying with the foregoing provisions:
(i) Jacor or JCC, as applicable, 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 Indentures;
(ii) Jacor or JCC, as applicable, 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 Jacor or JCC, as applicable, or
such Subsidiary, as applicable; and
(iii) any of Jacor's or JCC's, as applicable, Subsidiaries may convey,
sell, transfer, assign or otherwise dispose of assets to, or merge with or
into, Jacor or JCC, as applicable, 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 Convertible Debt Securities
and/or JCC Debt Securities, all within the period and as otherwise provided
above in clauses 1(a), 1(b) or 1(c) of the first paragraph of this covenant.
In addition to the foregoing, Jacor or JCC, as applicable, 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 Indentures will provide that Jacor, JCC and their 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)
Jacor or 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 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 Jacor, JCC or any of their
Subsidiaries (as determined in good faith by the management of Jacor or JCC or,
if such Asset Swap includes consideration in excess of $2.5 million, by the
Board of Directors of Jacor or JCC, respectively, 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 Jacor, JCC
and their 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 Jacor, JCC or their Subsidiaries, calculated from the time
the agreement to swap assets was entered into.
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LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indentures will provide that neither Jacor, JCC nor any of their
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 Jacor or JCC, as
applicable, and no less favorable to Jacor or JCC, as applicable, 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(s) has been approved by a majority of the members of the Board of
Directors of Jacor or JCC, as applicable, who are disinterested in such
transaction or, (B) with regard to JCC, 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(s) have been approved by a majority of the members of the Board of
Directors of Jacor who are disinterested in such transaction and (iii) if
involving consideration to either party in excess of $10.0 million, unless in
addition Jacor or JCC, as applicable, prior to the consummation thereof, obtains
a written favorable opinion as to the fairness of such transaction to Jacor or
JCC, as applicable, from a financial point of view from an independent
investment banking firm of national reputation.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indentures will provide that Jacor and 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 their 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) Jacor or JCC, as applicable, 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 Jacor or JCC, as
applicable, in connection with the JCC Debt Securities, Convertible Debt
Securities and/or the Indentures; (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 Jacor or JCC or consummation of a Plan of Liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which Jacor or JCC, as applicable, 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, Jacor or JCC
under the Indentures with the same effect as if such successor corporation had
been named therein as Jacor or JCC, and Jacor or JCC shall be released from the
obligations under the respective Convertible Debt Securities and/or JCC Debt
Securities and the Indentures except with respect to any obligations that arise
from, or are related to, such transaction.
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, Jacor's or JCC's interest in which constitutes all or
substantially all of the properties and assets of Jacor or JCC, as applicable,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of Jacor or JCC, as applicable.
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LIMITATION ON LINES OF BUSINESS
The Indentures will provide that neither Jacor, JCC nor any of their
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 Indentures will provide that Jacor, 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 Jacor or JCC, as applicable, to any person other
than Jacor or JCC, as applicable, or a wholly owned Subsidiary of Jacor or JCC,
as applicable, except for Equity Interests with no preferences or special rights
or privileges and with no redemption or prepayment provisions.
SUBSIDIARY GUARANTORS
The Indentures will provide that (i) all present Subsidiaries of Jacor or
JCC, if any, and their Subsidiaries, and (ii) all future Subsidiaries of Jacor
or JCC and their 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 Jacor, JCC or their Subsidiaries) to which such
Subsidiary is a party, jointly and severally, will guaranty fully and
unconditionally all principal, premium, if any, and interest on the JCC Debt
Securities and the Convertible Debt Securities 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 Jacor or JCC from becoming a Subsidiary Guarantor,
such Subsidiary shall immediately thereafter become a Subsidiary Guarantor;
PROVIDED, FURTHER, in the event that any Subsidiary of Jacor, JCC or their
Subsidiaries becomes a guarantor of any other Indebtedness of Jacor, JCC or any
of their Subsidiaries or any of their Subsidiaries, such Subsidiary shall
immediately thereafter become a Subsidiary Guarantor.
All subsidiaries of Jacor or JCC, as applicable, will be Subsidiary
Guarantors if required by the covenant "Subsidiary Guarantors."
RELEASE OF GUARANTORS
The Indentures 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 Indentures, 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 Indentures on the
terms set forth in the Indentures; (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 Indentures, such Subsidiary Guarantor will be deemed released from its
obligations under its Guarantee of the Convertible Debt Securities and/or JCC
Debt Securities; 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 Jacor or 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 Indentures will prohibit Jacor, JCC and their 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 JCC 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 JCC
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 Indentures will define an Event of Default as (i) the failure by Jacor
or JCC, as applicable, to pay any installment of interest on the Convertible
Debt Securities and/or JCC Debt Securities as and when the same becomes due and
payable and the continuance of any such failure for 30 days, (ii) the failure by
Jacor or JCC, as applicable, to pay all or any part of the principal, or
premium, if any, on such Convertible Debt Securities or JCC Debt Securities when
and as the same becomes due and payable at maturity, redemption, by acceleration
or otherwise, (iii) the failure by Jacor, JCC or any Guarantor, as applicable,
to observe or perform any other covenant or agreement contained in the JCC Debt
Securities, Convertible Debt Securities and/or the Indentures and, subject to
certain exceptions, the continuance of such failure for a period of 60 days
after written notice is given to Jacor or JCC, as applicable, by the Trustee or
to Jacor or JCC, as applicable, and the Trustee by the Holders of at least 25%
in aggregate principal amount of the such Convertible Debt Securities or JCC
Debt Securities outstanding, as the case may be, (iv) certain events of
bankruptcy, insolvency or reorganization in respect of Jacor, JCC or any of
their Significant Subsidiaries, (v) a default in any issue of Indebtedness of
Jacor, 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 Jacor, JCC or any of their Subsidiaries and not stayed, bonded
or discharged within 60 days. The Indentures will provide 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 Jacor, JCC or any Significant
Subsidiary,) then in every such case, unless the principal of all of the
Convertible Debt Securities and JCC Debt Securities shall have already become
due and payable, either the Trustee or the Holders of 25% in aggregate principal
amount of such Convertible Debt Securities or JCC Debt Securities at the time
outstanding, by notice in writing to Jacor or 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
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Debt is outstanding pursuant to Jacor's or JCC's credit facilities then in
effect 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 Jacor or JCC, as applicable, 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 such credit
facilities. In the event a declaration of acceleration resulting from an Event
of Default described in clause (v) above has occurred and is continuing, 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 or 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 Jacor, JCC or any Significant Subsidiary occurs, all principal and accrued
interest thereon will be immediately due and payable on all outstanding
Convertible Debt Securities and JCC Debt Securities without any declaration or
other act on the part of Trustee or the Holders. The Holders of a majority in
aggregate principal amount of such Convertible Debt Securities or JCC Debt
Securities at the time outstanding, as the case may be, 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 such
Convertible Debt Securities or JCC Debt Securities 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 any Convertible
Debt Securities or JCC Debt Securities, the Holders of a majority in aggregate
principal amount of such Convertible Debt Securities or JCC Debt Securities at
the time outstanding, as the case may be, 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 Debt Security or Convertible Debt Security 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 Debt Security or
Convertible Debt Security affected. Subject to the provisions of the Indentures
relating to the duties of the Trustee, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indentures 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
Indentures and applicable law, the Holders of a majority in aggregate principal
amount of the Convertible Debt Securities or JCC Debt Securities at the time
outstanding, as the case may be, 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 Indentures will provide that Jacor or JCC may, at its option, elect to
have its obligations and the obligations of the Guarantors discharged with
respect to the outstanding Convertible Debt Securities and/or JCC Debt
Securities ("Legal Defeasance"). Such Legal Defeasance means that Jacor or JCC,
as applicable, shall be deemed to have paid and discharged the entire
indebtedness represented, and the Indentures shall cease to be of further effect
as to all such outstanding Convertible Debt Securities and JCC Debt Securities
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 Convertible
Debt Securities and JCC Debt Securities when such payments are due from the
trust funds; (ii) Jacor's or JCC's, as applicable, obligations with respect to
such Convertible Debt Securities and JCC Debt Securities concerning issuing
temporary Convertible Debt Securities and JCC Debt Securities, registration of
Convertible Debt Securities and JCC Debt Securities, mutilated, destroyed, lost
or stolen Convertible Debt Securities and JCC Debt Securities, 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 Jacor's or JCC's, as applicable, obligations in connection
therewith; and (iv) the Legal Defeasance provisions of the Indentures. In
addition, Jacor or JCC may, at its option and at any time, elect to have the
obligations of Jacor or JCC and the Guarantors released
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with respect to certain covenants that are described in the Indentures
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Convertible Debt Securities and JCC Debt Securities. 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
Convertible Debt Securities and JCC Debt Securities.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Jacor or JCC, as applicable, must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Convertible Debt Securities and JCC
Debt Securities, 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 Convertible Debt Securities and JCC Debt
Securities 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 Convertible Debt Securities and JCC Debt Securities, and the Holders of
Convertible Debt Securities and JCC Debt Securities must have a valid,
perfected, exclusive security interest in such trust; (ii) in the case of the
Legal Defeasance, Jacor or JCC, as applicable, shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that (A) Jacor or JCC, as applicable, has received from, or
there has been published by the Internal Revenue Service, a ruling or (B) since
the date of the Indentures, 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 Convertible Debt
Securities and JCC Debt Securities 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, Jacor or JCC, as applicable,
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
Convertible Debt Securities and JCC Debt Securities 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 Jacor, JCC or any of their Subsidiaries is a party or by
which Jacor, JCC or any of their Subsidiaries is bound; (vi) Jacor or JCC, as
applicable, shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by Jacor or JCC, as applicable, with the intent of
preferring the holders of such Convertible Debt Securities and JCC Debt
Securities over any other creditors of Jacor or JCC, as applicable, or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
Jacor or JCC, as applicable, or others; and (vii) Jacor or JCC, as applicable,
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.
Jacor or JCC, as applicable, shall have delivered to the Trustee any
required consent of the lenders under its then-existing credit facilities to
such defeasance or covenant defeasance, as the case may be.
AMENDMENTS AND SUPPLEMENTS
The Indentures will contain provisions permitting Jacor, 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 Convertible Debt
Securities and JCC Debt Securities at the time outstanding, as the case may be,
Jacor, JCC, the Guarantors and the Trustee are permitted to amend or supplement
the Indentures or any supplemental indenture or
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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 such
Convertible Debt Securities and/or JCC Debt Securities at the time outstanding,
provided, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity on any Debt Security or
Convertible Debt Security 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 Debt Security or Convertible Debt Security 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 alter the
provisions (including the defined terms used therein) regarding the right of
Jacor or JCC, as applicable, to redeem the Convertible Debt Securities and JCC
Debt Securities in a manner adverse to the Holders, or (ii) reduce the
percentage in principal amount of the outstanding Convertible Debt Securities
and/or JCC Debt Securities, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in the Indentures,
or (iii) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indentures cannot
be modified or waived without the consent of the Holder of each outstanding Debt
Security or Convertible Debt Security affected thereby. The Indentures 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 lenders under the Jacor or
JCC credit facilities then in effect.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS OR DIRECTORS
The Indentures will provide that no direct or indirect stockholder,
employee, officer or director, as such, past, present or future of Jacor, JCC,
the Guarantors or any successor entity shall have any personal liability in
respect of the obligations of Jacor, JCC or the Guarantors under the Indentures,
the JCC Debt Securities and/or the Convertible Debt Securities by reason of his
or its status as such stockholder, employee, officer or director.
REGARDING THE TRUSTEE
The Indentures will provide that, except during the continuance of an Event
of Default, the Trustee shall perform only such duties as are specifically set
forth in the Indentures. During the continuance of any Event of Default, the
Trustee shall exercise such of the rights and powers vested in it under the
Indenture and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee may acquire and hold Convertible Debt Securities or JCC Debt
Securities and, subject to certain conditions, otherwise deal with Jacor or JCC
as if it were not the Trustee under the Indentures.
Jacor and JCC may maintain deposit accounts and conduct other banking
transactions with the Trustee in the ordinary course of Jacor's and JCC's
business.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of Jacor or
JCC, including by designation, or is merged or consolidated into or with either
of Jacor, JCC or one of their 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 Jacor or 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 Jacor or JCC, as
applicable. 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
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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 Jacor or JCC,
as applicable, in good faith believes will be satisfied, for a substantially
concurrent purchase and sale, or exchange, of Productive Assets between Jacor or
JCC, as applicable, or any of their 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 at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least A-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition.
"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 Jacor or JCC, as applicable, 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,
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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 Jacor
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 Jacor or JCC, as applicable, 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," as of the date hereof, means the Credit Agreement dated
as of June 12, 1996 as amended and restated as of February 14, 1997 among JCC,
The Chase Manhattan Bank, as Administrative Agent, Banque Paribas, as
Documentation Agent, Bank of America Illinois, as Syndication Agent, and certain
financial institutions which are parties thereto from time to time, including
any related notes, guarantees, collateral documents, instruments, letters of
credit, reimbursement obligations and other agreements executed by Jacor, JCC
and/or any of their Subsidiaries in connection therewith (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,
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
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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 Convertible Debt Securities and JCC
Debt Securities, and (b) with respect to any Subsidiary of such person
(including with respect to any Subsidiary of Jacor or 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.
"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 Jacor or JCC, as applicable, (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 Jacor Common Stock, (c) transactions solely between Jacor or
JCC, as applicable, and any of their wholly owned Subsidiaries or solely among
wholly owned Subsidiaries of Jacor or JCC, as applicable, 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 any Tax Sharing
Agreement.
"FUTURE SUBSIDIARY GUARANTOR" means future Subsidiaries of Jacor or JCC and
their Subsidiaries, which are not prohibited form 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 Jacor or JCC or their Subsidiaries) to which
such Subsidiary is a party.
"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
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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" with respect to each series of Convertible Debt Securities
and/or JCC Debt Securities issued under its respective Indenture, means the date
of first issuance of such series of Convertible Debt Securities and/or JCC Debt
Securities.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
Jacor, JCC or a Guarantor, as applicable, that is subordinated in right of
payment to Senior Debt at least to the same extent as the Convertible Debt
Securities and JCC Debt Securities or 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 such Convertible Debt
Securities and/or JCC Debt Securities; PROVIDED, that in the case of
subordination in respect of Senior Debt under Jacor's or JCC's then-existing
credit facilities, "Junior Security" shall mean any Qualified Capital Stock and
any Indebtedness of Jacor, 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 such credit facilities 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 such credit facilities on the date
of issuance of such Qualified Capital Stock or Indebtedness at least to the same
extent as such Convertible Debt Securities and/or JCC Debt Securities.
"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
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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 Jacor and/ or JCC, as applicable, in the case of a sale of Qualified
Capital Stock and by Jacor and/or JCC, as applicable, and their Subsidiaries in
respect of an Asset Sale or an Event of Loss plus, in the case of an issuance of
Qualified Capital Stock of Jacor and/or JCC, as applicable, upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of Jacor and/or JCC, as applicable, that were
issued for cash on or after the Issue Date, the amount of cash originally
received by Jacor and/or JCC, as applicable, 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 Jacor and/or JCC, as
applicable, or the amount actually incurred, if greater) of income, franchise,
sales and other applicable taxes required to be paid by Jacor and/or JCC, as
applicable, or any of their Subsidiaries in connection with such Asset Sale.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by Jacor, JCC or any Guarantor under the terms of the
JCC Debt Securities, Convertible Debt Securities and/or the respective
Indenture.
"PERMITTED INDEBTEDNESS" means any of the following:
(a) Jacor, JCC and their 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 Jacor's or 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) Jacor and 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 Jacor or JCC; PROVIDED, that
in the case of Indebtedness of Jacor or JCC, such obligations shall be unsecured
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and subordinated in all respects to Jacor's or JCC's obligations pursuant to the
Convertible Debt Securities and JCC Debt Securities 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) Jacor, JCC and the Guarantors may incur Indebtedness evidenced by the
Convertible Debt Securities and JCC Debt Securities and the Guarantees and
represented by the respective Indenture up to the amounts specified therein as
of the date thereof;
(d) Jacor, 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) Jacor, JCC and their 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) Jacor, JCC and the Guarantors may incur Indebtedness incurred pursuant
to Jacor's or JCC's then-existing credit facilities 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 the maximum
borrowing amount permitted by such credit facilities, 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 such lenders, minus the amount of any such
Indebtedness retired with Net Cash Proceeds from any Asset Sale;
(g) Jacor, JCC and the Subsidiary Guarantors may incur Indebtedness under
Interest Swap and Hedging Obligations that do not increase the Indebtedness of
Jacor 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 respective 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 Jacor or 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) Jacor, JCC and their Subsidiaries may incur Indebtedness existing on the
Issue Date.
"PERMITTED INVESTMENT" means:
(a) Investments in any of the Convertible Debt Securities and/or JCC Debt
Securities;
(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 Jacor, or (ii) the Acquired Person immediately thereupon either
(1) is merged or consolidated with or into Jacor or any of its Subsidiaries and
the surviving person is Jacor or a Subsidiary of Jacor or (2) transfers or
conveys all or substantially all of its assets, or is liquidated into, Jacor,
JCC or any of their Subsidiaries.
(f) Investments in a person with whom Jacor, JCC or any of their
Subsidiaries have entered into, (i) local marketing agreements or time brokerage
agreements pursuant to which Jacor, JCC or any one of their Subsidiaries
programs substantial portions of the broadcast day on such person's radio
broadcast
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station(s) and sells advertising time during such program segments for its own
account or (ii) joint sales agreements pursuant to which Jacor, JCC or any of
their 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 Jacor, JCC and their 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 Jacor or 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 Jacor or
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 Jacor, JCC or any of their Subsidiaries) or
interfere with the ordinary conduct of the business of Jacor, JCC or any of
their 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 Jacor, 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 Jacor, JCC or any of their Subsidiaries or materially detracting
from the value of the relative assets of Jacor, JCC or any of their
Subsidiaries; (j) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by Jacor,
JCC or any of their 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
Convertible Debt Securities and JCC Debt Securities 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 lenders pursuant to Jacor's or JCC's then- existing
credit facilities and (m) Liens on property of a Subsidiary of Jacor or JCC
provided that such Liens secure only obligations owing by such Subsidiary to
Jacor or JCC or another Subsidiary of Jacor or JCC.
"PRODUCTIVE ASSETS" means assets of a kind used or usable by Jacor, JCC and
their 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 Jacor or JCC that is
not Disqualified Capital Stock.
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"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of Jacor or JCC
issued on or after the Issue Date with the Net Cash Proceeds received by Jacor
or 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.
"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 JCC Debt Securities, Convertible Debt Securities
and/or the respective 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 Jacor or
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 Convertible Debt Securities and JCC Debt Securities 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 Jacor, JCC and their Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of
Jacor or JCC, as applicable, 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 Jacor, JCC or a Subsidiary
Guarantor shall not be deemed to be a Restricted Investment so long as the
surviving entity is Jacor, 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
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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 Jacor or JCC,
or to any of their wholly owned Subsidiary Guarantors, by any of the
Subsidiaries of Jacor or 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 Jacor, JCC or any Guarantor means Indebtedness (including
any monetary obligation in respect of Jacor's or JCC's then-existing credit
facilities, and interest, whether or not such interest is allowed or allowable,
accruing on Indebtedness incurred pursuant to such credit facilities at the
contracted-for rate after the commencement of any proceeding under any
bankruptcy, insolvency or similar law) of Jacor, JCC or such Guarantor arising
under such credit facilities or that, by the terms of the instrument creating or
evidencing such Indebtedness, is expressly designated Senior Debt and made
senior in right of payment to the Convertible Debt Securities and JCC Debt
Securities or the applicable Guarantee; provided, that in no event shall Senior
Debt include (a) Indebtedness to any Subsidiary of Jacor or JCC or any officer,
director or employee of Jacor or JCC or any Subsidiary of Jacor or JCC, (b)
Indebtedness incurred in violation of the terms of the respective Indenture, (c)
Indebtedness to trade creditors, (d) Disqualified Capital Stock and (e) any
liability for taxes owed or owing by Jacor, 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 each series of Convertible Debt
Securities and/or JCC Debt Securities issued under the respective Indenture or
any installment of principal thereof or premium thereon or interest thereon,
means the date specified in such series of Convertible Debt Securities and/or
JCC Debt Securities or a coupon, if any, representing such installment of
interest, as the date on which the principal of such series of Convertible Debt
Securities and/or JCC Debt Securities or such installment of principal, premium,
or interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of Jacor, JCC or a Guarantor
that is subordinated in right of payment to the Convertible Debt Securities and
JCC Debt Securities 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 Indentures, but
excluding any Persons whose guarantees have been released pursuant to the terms
of the Indentures. 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 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.; 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
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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.;
Cine Guarantors II, Ltd.; Regent Broadcasting of Charleston, Inc.; Regent
Broadcasting of Kansas City, Inc.; Regent Broadcasting of Las Vegas, Inc.;
Regent Broadcasting of Las Vegas II, Inc.; Regent Broadcasting of Louisville,
Inc.; Regent Broadcasting of Louisville II, Inc.; Regent Broadcasting of Salt
Lake City, Inc.; Regent Broadcasting of Salt Lake City II, Inc.; Regent Licensee
of Charleston, Inc.; Regent Licensee of Kansas City, Inc.; Regent Licensee of
Las Vegas, Inc.; Regent Licensee of Las Vegas II, Inc.; Regent Licensee of
Louisville, Inc.; Regent Licensee of Louisville II, Inc.; Regent Licensee of
Salt Lake City, Inc.; Regent Licensee of Salt Lake City II, Inc.; and EFM
Programming, Inc., each a direct or indirect subsidiary of Jacor and JCC 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.
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DESCRIPTION OF CAPITAL STOCK
Jacor's Certificate of Incorporation authorizes 104,000,000 shares of
capital stock, of which 100,000,000 shares are Jacor Common Stock, 2,000,000
shares are Class A Preferred Stock, $.01 par value and 2,000,000 shares are
Class B Preferred Stock, $.01 par value (together with the Class A Preferred
Stock, the "Preferred Stock"). As of February 28, 1997, 34,834,780 shares of
Jacor Common Stock were issued and outstanding.
JACOR COMMON STOCK
Under Jacor's Certificate of Incorporation and Delaware law, the holders of
Jacor Common Stock have no preemptive rights and the Jacor Common Stock has no
redemption, sinking fund, or conversion privileges. The holders of Jacor Common
Stock are entitled to one vote for each share held on any matter submitted to
the stockholders and do not have the right to cumulate their votes in the
election of directors. All corporate action requiring stockholder approval,
unless otherwise required by law, Jacor's Certificate of Incorporation or its
Bylaws, must be authorized by a majority of the votes cast. Approval of only a
majority of the outstanding voting shares is required to effect (i) an amendment
to Jacor's Certificate of Incorporation, (ii) a merger or consolidation, and
(iii) a disposition of all or substantially all of Jacor's assets. A majority of
the directors on the Jacor Board, as well as a majority of the outstanding
voting shares, have the ability to amend the Jacor Bylaws.
In the event of liquidation, each share of Jacor Common Stock is entitled to
share ratably in the distribution of remaining assets after payment of all
debts, subject to the prior rights in liquidation of any share of Jacor
Preferred Stock issued. Holders of shares of Jacor Common Stock are entitled to
share ratably in such dividends as the Jacor Board of Directors, in its
discretion, may validly declare from funds legally available therefor, subject
to the prior rights of holders of shares of Jacor Preferred Stock as may be
outstanding from time to time. Certain restrictions on the payment of dividends
are imposed under the Credit Facility. See "Risk Factors--Lack of Dividends;
Restrictions on Payments of Dividends."
JACOR CLASS A AND CLASS B PREFERRED STOCK
No shares of Jacor Preferred Stock have been issued. The Class A Preferred
Stock has full voting rights. The Class B Preferred Stock has no voting rights
except as otherwise provided by law or as lawfully fixed by the Jacor Board of
Directors with respect to a particular series.
Jacor's Certificate of Incorporation authorizes the Jacor Board of Directors
to provide from time to time for the issuance of the shares of Jacor Preferred
Stock and by resolution to establish the terms of each such series, including
(i) the number of shares of the series and the designation thereof, (ii) the
rights in respect of dividends on the shares, (iii) liquidation rights, (iv)
redemption rights, (v) the terms of any purchase, retirement or sinking fund to
be provided for the shares of the series, (vi) terms of conversion, if any,
(vii) restrictions, limitations and conditions, if any, on issuance of
indebtedness of Jacor, (viii) voting rights; and (ix) any other preferences and
other rights and limitations not inconsistent with law, the Certificate of
Incorporation, or any resolution of the Jacor Board of Directors.
The issuance of Jacor Preferred Stock, while providing flexibility in
connection with the possible acquisitions and other corporate purposes, could
among other things adversely affect the rights of holders of Jacor Common Stock,
and, under certain circumstances, make it more difficult for a third party to
gain control of Jacor. In the event that shares of Jacor Preferred Stock are
issued and convertible into shares of Jacor Common Stock the holders of Jacor
Common Stock may experience dilution.
The Prospectus Supplement for any series of Jacor Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
another series of Jacor Preferred Stock or Jacor Common Stock or exchangeable
for another series of Jacor Preferred Stock, Jacor Common Stock or other debt
securities issued hereunder.
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JACOR DEPOSITARY SHARES
Jacor may, at its option, elect to offer fractional shares of Class A or
Class B Preferred Stock, rather than full shares of Class A or Class B Preferred
Stock. In the event such option is exercised, Jacor will issue receipts for
Jacor Depositary Shares, each of which will represent a fraction (to be set
forth in the Prospectus Supplement relating to the Class A or Class B Preferred
Stock) of a share of such Jacor Preferred Stock.
The share of Class A or Class B Preferred Stock represented by Jacor
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") between Jacor and a bank or trust company selected by Jacor having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Class A or Class B Preferred
Stock represented by such Depositary Share, to all the rights and preferences of
the Class A or Class B Preferred Stock represented thereby (including dividend,
voting, redemption, conversion and liquidation rights).
The above summary description of the Jacor Depositary Shares does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the description in the applicable Prospectus Supplement and the
detailed provisions of the Deposit Agreement (which will contain the form of
Depositary Receipt). A copy of the form of Deposit Agreement is available upon
request.
CITICASTERS WARRANTS
Jacor issued warrants (the "Citicasters Warrants") pursuant to the terms of
its February 1996 agreement to acquire Citicasters Inc. through a merger (the
"Citicasters Merger") of JCC (formerly JCAC, Inc.) with and into Citicasters
Inc. ("Citicasters"). If all of the Citicasters Warrants are exercised,
4,400,000 shares of Jacor Common Stock would be issued. Each Citicasters Warrant
initially entitles the holder thereof to purchase .2035247 of a share of Jacor
Common Stock at a price of $28.00 per full share (the "Citicasters Price"). The
Citicasters Price and the number of shares of Jacor Common Stock issuable upon
the exercise of each Citicasters Warrant are subject to adjustment in certain
events described below. Each Citicasters
Warrant may be exercised until 5:00 p.m., Eastern Time, on September 18, 2001
(the "Citicasters Expiration Date") in accordance with the terms of the
Citicasters Warrants and Citicasters Warrant Agreement. To the extent that any
Citicasters Warrant remains outstanding after such time, such unexercised
Citicasters Warrant will automatically terminate.
Citicasters Warrants may be exercised by surrendering to the warrant agent a
signed Citicasters Warrant certificate together with the form of election to
purchase on the reverse thereof indicating the warrant holder's election to
exercise all or a portion of the Citicasters Warrants evidenced by such
certificate. Surrendered certificates must be accompanied by payment of the
aggregate Citicasters Price in respect of the Citicasters Warrant to be
exercised, which payment may be made in cash or by certified or bank cashier's
check drawn on a banking institution chartered by the government of the United
States or any state thereof payable to the order of Jacor. No adjustments as to
cash dividends with respect to the Jacor Common Stock will be made upon any
exercise of Citicasters Warrants.
If fewer than all of the Citicasters Warrants evidenced by any certificate
are exercised, the warrant agent will deliver to the exercising warrant holder a
new Citicasters Warrant certificate representing the unexercised Citicasters
Warrants. Jacor will not be required to issue fractional shares of Jacor Common
Stock upon exercise of any Citicasters Warrant and in lieu thereof will pay in
cash an amount equal to the same fraction of the closing price per share of the
Jacor Common Stock, determined as provided in the Citicasters Warrant Agreement.
Jacor has reserved for issuance a number of shares of Jacor Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the Citicasters Warrants.
A Citicasters Warrant may not be exercised in whole or in part if in the
reasonable opinion of counsel to Jacor the issuance of Jacor Common Stock upon
such exercise would cause Jacor to be in violation of the Communications Act or
the rules and regulations in effect thereunder.
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The number of shares of Jacor Common Stock purchasable upon the exercise of
each Citicasters Warrant and the Citicasters Price are subject to the adjustment
in connection with (i) the issuance of a stock dividend to holders of Jacor
Common Stock, a combination or subdivision or issuance by reclassification of
Jacor Common Stock; (ii) the issuance of rights, options or warrants to all
holders of Jacor Common Stock without charge to such holders to subscribe for or
purchase shares of Jacor Common Stock at a price per share which is lower than
the current market price; and (iii) certain distributions by Jacor to the
holders of Jacor Common Stock of evidences of indebtedness or of its assets
(excluding cash dividends, or distributions out of earnings or out of surplus
legally available for dividends) or of convertible securities, all as set forth
in the Citicasters Warrant Agreement. Notwithstanding the foregoing, no
adjustment in the number of shares of Jacor Common Stock issuable upon the
exercise of Citicasters Warrants will be required until such adjustment would
require an increase or decrease of at least one percent (1%) in the number of
shares of Jacor Common Stock purchasable upon the exercise of each Citicasters
Warrant. In addition, Jacor may at its option reduce the Citicasters Price.
In case of any consolidation or merger of Jacor with or into another
corporation, or any sale, transfer or lease to another corporation of all or
substantially all of the property of Jacor, the Citicasters Warrant Agreement
requires that effective provisions be made so that each holder of an outstanding
Citicasters Warrant will have the right thereafter to exercise the Citicasters
Warrant for the kind and amount of securities and property receivable in
connection with such consolidation, merger, sale, transfer or lease by a holder
of the number of shares of Jacor Common Stock for which such Citicasters Warrant
were exercisable immediately prior thereto.
The Citicasters Warrant Agreement may be amended or supplemented without the
consent of the holders of Citicasters Warrants to cure any ambiguity or to
correct or supplement any defective or inconsistent provision contained therein,
or to make such other necessary or desirable changes which shall not adversely
affect the interests of the warrant holders. Any other amendment to the
Citicasters Warrant Agreement requires the consent of warrant holders
representing not less than 50% of the Citicasters Warrants then outstanding
provided that no change in the number or nature of the securities purchasable
upon the exercise of any Citicasters Warrant, or the Citicasters Price therefor,
or the acceleration of the Citicasters Expiration Date, and no change in the
antidilution provisions which would adversely affect the interest of the holders
of Citicasters Warrants, shall be made without the consent of the holder of such
Citicasters Warrant, other than such changes as are specifically prescribed by
the Citicasters Warrant Agreement or are made in compliance with the applicable
law.
No holder of Citicasters Warrants is entitled to vote or receive dividends
or be deemed for any purpose the holder of Jacor Common Stock until the
Citicasters Warrants are properly exercised as provided in the Citicasters
Warrant Agreement.
REGENT WARRANTS
Jacor issued warrants (the "Regent Warrants") pursuant to the terms of its
October 1996 merger agreement (the "Regent Merger Agreement") with Regent
Communications, Inc. ("Regent"), whereby Regent merged with and into Jacor. If
all such Regent Warrants are exercised, 500,000 shares of Jacor Common Stock
would be issued. Each Regent Warrant initially entitles the holder thereof to
purchase .11271 (the "Fraction") of a share of Jacor Common Stock at a price of
$40.00 per full share (the "Regent Price"). The Regent Price and the number of
shares of Jacor Common Stock issuable upon the exercise of each Regent Warrant
are subject to adjustment in certain events described below. Each Regent Warrant
may be exercised until 5:00 pm., Eastern Time, on February 27, 2002 (the "Regent
Expiration Date") in accordance with the terms of the Regent Warrants and the
Regent Warrant Agreement; PROVIDED, HOWEVER, if any of the Regent Warrants are
called for redemption by Jacor, at a price per Regent Warrant equal to $12.00
multiplied by the Fraction, as adjusted from time to time under the terms of the
Regent Warrant Agreement, on or after February 27, 2000, the right to so redeem
the Regent Warrants shall expire at the close of business, New York time, on
such redemption date. To the extent that any Regent Warrant remains outstanding
after such time, such unexercised Regent Warrant will automatically terminate.
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Regent Warrants may be exercised by surrendering to the warrant agent a
signed Regent Warrant certificate together with the form of election to purchase
on the reverse thereof indicating the warrant holder's election to exercise all
or a portion of the Regent Warrants evidenced by such certificate. Surrendered
certificates must be accompanied by payment of the aggregate Regent Price in
respect of the Regent Warrants to be exercised, which payment may be made in
cash or by certified or bank cashier's check drawn on a banking institution
chartered by the government of the United States or any state thereof payable to
the order of Jacor. No adjustments as to cash dividends with respect to the
Jacor Common Stock will be made upon any exercise of Regent Warrants.
If fewer than all the Regent Warrants evidenced by any certificate are
exercised, the warrant agent will deliver to the exercising warrant holder a new
Regent Warrant certificate representing the unexercised Regent Warrants. Jacor
will not be required to issue fractional shares of Jacor Common Stock upon
exercise of any Regent Warrant and in lieu thereof will pay in cash an amount
equal to the same fraction of the closing price per share of Jacor Common Stock,
determined as provided in the Regent Warrant Agreement. Jacor has reserved for
issuance a number of shares of Jacor Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the Regent Warrants.
A Regent Warrant may not be exercised in whole or in part if in the
reasonable opinion of counsel to Jacor the issuance of Jacor Common Stock upon
such exercise would cause Jacor to be in violation of the Communications Act or
the rules and regulations in effect thereunder.
The number of shares of Jacor Common Stock purchasable upon the exercise of
each Regent Warrant and the Regent Price are subject to adjustment in connection
with (i) the issuance of a stock dividend to holders of Jacor Common Stock, a
combination or subdivision or issuance by reclassification of Jacor Common
Stock; (ii) the issuance of rights, options or warrants to all holders of Jacor
Common Stock without charge to such holders to subscribe for or purchase shares
of Jacor Common Stock at a price per share which is lower than the current
market price; and (iii) certain distributions by Jacor to the holders of Jacor
Common Stock of evidences of indebtedness or of its assets (excluding cash
dividends or distributions pursuant to an announced policy of Jacor payable out
of earnings or out of surplus legally available for dividends) or of convertible
securities, all as set forth in the Regent Warrant Agreement. Notwithstanding
the foregoing, no adjustment in the number of shares of Jacor Common Stock
issuable upon the exercise of the Regent Warrants will be required until such
adjustment would require an increase or decrease of at least one percent (1%) in
the number of shares of Jacor Common Stock purchasable upon the exercise of each
Regent Warrant. In addition, Jacor may at its option reduce the Regent Price to
any amount deemed appropriate by the Jacor Board of Directors.
In case of any consolidation or merger of Jacor with or into another
corporation, or any sale, transfer or lease to another corporation of all or
substantially all the property of Jacor, the Regent Warrant Agreement requires
that effective provisions be made so that each holder of an outstanding Regent
Warrant will have the right thereafter to exercise the Regent Warrant for the
kind and amount of securities and property receivable in connection with such
consolidation, merger, sale, transfer or lease by a holder of the number of
shares of Jacor Common Stock for which such Regent Warrant were exercisable
immediately prior thereto.
The Regent Warrant Agreement may be amended or supplemented without the
consent of the holders of Regent Warrants to cure any ambiguity or to correct or
supplement any defective or inconsistent provision contained therein, or to make
such other necessary or desirable changes which shall not adversely affect the
interests of the warrant holders. Any other amendment to the Regent Warrant
Agreement shall require the consent of warrant holders representing not less
than 50% of the Regent Warrants then outstanding provided that no change in the
number or nature of the securities purchasable upon the exercise of any Regent
Warrant, or the Regent Price therefor, or the acceleration of the Regent
Expiration Date, and no change in the antidilution provisions which would
adversely affect the interests of the holders of Regent Warrants, shall be made
without the consent of the holder of such Regent Warrant, other than such
changes as are specifically prescribed by the Regent Warrant Agreement or are
made in compliance with applicable law.
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No holder of Regent Warrants is entitled to vote or receive dividends or be
deemed for any purpose the holder of Jacor Common Stock until the Regent
Warrants are properly exercised as provided in the Regent Warrant Agreement.
DELAWARE ANTITAKEOVER STATUTE
Jacor is subject to the "business combination" statute of the Delaware
General Corporation Law (Section 203). In general, such statute prohibits a
publicly held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) such transaction is approved by the Board
of Directors prior to the date the "interested stockholder" obtains such status,
(ii) upon consummation of the transaction the interested stockholder
beneficially owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by (a) persons
who are directors and also officers and (b) employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) the "business combination" is approved by the Board of Directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to an "interested
stockholder." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock. The statute could prohibit or delay mergers or
other takeover or change in control attempts with respect to Jacor and,
accordingly, may discourage attempts to acquire Jacor.
REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services is the registrar and transfer agent for the
Jacor Common Stock and the warrant agent for the Citicasters Warrants and the
Regent Warrants.
DESCRIPTION OF INDEBTEDNESS
The summaries contained herein of certain of the indebtedness of Jacor and
JCC 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.
THE CREDIT FACILITY
JCC entered into its existing credit facility on June 12, 1996, as amended
and restated on February 14, 1997, (the "Credit Facility") with a syndicate of
banks and other financial institutions. The Credit Facility provides
availability of up to $750.0 million of loans to JCC in three components: (i) a
revolving credit facility of up to $450.0 million with mandatory semi-annual
commitment reductions beginning June 12, 1999 and a final maturity date of June
12, 2003; (ii) a term loan of $200.0 million with scheduled semi-annual
reductions beginning December 12, 1997 and a final maturity date of June 12,
2003; and (iii) a tranche B term loan of $100.0 million with scheduled
semi-annual reductions beginning December 12, 1998 and a final maturity date no
later than June 12, 2004.
The Credit Facility bears interest at a rate that fluctuates with a bank
base rate and/or the Eurodollar rate per annum.
The loans under the Credit Facility are guaranteed by each of Jacor's direct
and indirect subsidiaries other than certain immaterial subsidiaries. Jacor'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
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the case of Jacor's subsidiaries, capital stock. JCC's obligations under the
Credit Facility are secured by a first priority lien on the capital stock of the
Jacor's and JCC's subsidiaries and by the guarantee of JCC's parent, Jacor.
The Credit Facility contains covenants and provisions that restrict, among
other things, JCC'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 JCC'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 1996 10 1/8% Notes and
the 1996 9 3/4% 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.
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
1996 10 1/8% Notes or the 1996 9 3/4% 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
on terms acceptable to JCC.
THE 1996 10 1/8% NOTES
In June 1996, JCAC, Inc. (a predecessor to JCC) conducted an offering (the
"1996 10 1/8% Notes Offering") whereby JCAC, Inc. issued and sold 10 1/8% Senior
Subordinated Notes due 2006 (the "1996 10 1/8% Notes") in an aggregate principal
amount of $100.0 million. The 1996 10 1/8% Notes were issued pursuant to an
Indenture between JCAC, Inc. and First Trust of Illinois, National Association,
as Trustee (the "1996 10 1/8% Note Indenture"). JCAC, Inc. then lent the net
proceeds of the 1996 10 1/8% Notes Offering to Jacor. The 1996 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 1996 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.
If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 1996 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 1996 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
1996 10 1/8% Notes, including pursuant to a change of control offer.
Furthermore, a change of control under the 1996 10 1/8% Note Indenture will
result in a default under the Credit Facility.
As used herein, 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
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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 1996 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 1996 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 and the 1996
9 3/4% Notes) and certain events of bankruptcy, insolvency and reorganization.
THE LIQUID YIELD OPTION-TM- NOTES
Also in June 1996, Jacor conducted an offering (the "LYONs Offering")
whereby Jacor issued and sold Senior Liquid Yield Option-TM- Notes 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. The LYONs were issued pursuant to an Indenture between Jacor
and The Bank of New York, as Trustee (the "LYONs Indenture").
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 Jacor
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 Jacor 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 Jacor 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 Jacor 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 LYONs Indenture, 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
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or report) disclosing that such person has become the beneficial owner of 50% or
more of the Jacor Common Stock or other capital stock of Jacor into which such
Jacor 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 Jacor Common Stock would be converted into cash, securities or other
property, in each case, other than a consolidation or merger of Jacor in which
the holders of Jacor Common Stock immediately prior to the consolidation or
merger own, directly or indirectly, at least a majority of Jacor 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 "-- The Credit Facility."
The LYONs Indenture 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 1996 9 3/4% Notes and the 1996 10 1/8% Notes) and
certain events of bankruptcy, insolvency and reorganization.
THE 1996 9 3/4% NOTES
In December 1996, JCC conducted an offering (the "1996 9 3/4% Notes
Offering") whereby JCC issued and sold 9 3/4% Senior Subordinated Notes due 2006
(the "1996 9 3/4% Notes") in an aggregate principal amount of $170.0 million.
The 1996 9 3/4% Notes were issued pursuant to an Indenture between JCC and The
Bank of New York, as Trustee (the "1996 9 3/4% Note Indenture"). JCC then lent
the net proceeds of the 1996 9 3/4% Notes Offering to Jacor. The 1996 9 3/4%
Notes have interest payment dates of June 15 and December 15, commencing on June
15, 1997, and mature on December 15, 2006.
The 1996 9 3/4% 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.
If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 1996 9 3/4% 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 1996 9 3/4% 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
1996 9 3/4% Notes, including pursuant to a change of control offer. Furthermore,
a change of control under the 1996 9 3/4% Note Indenture will result in a
default under the Credit Facility.
As used herein, 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.
42
<PAGE>
The events of default under the 1996 9 3/4% 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 1996 9 3/4% 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 and the 1996
10 1/8% Notes) and certain events of bankruptcy, insolvency and reorganization.
43
<PAGE>
PLAN OF DISTRIBUTION
Jacor and/or JCC may sell the Securities to one or more underwriters for
public offering and sale in the United States or Canada by them or may sell the
Securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of Securities will be named in the
applicable Prospectus Supplement. Jacor and JCC have reserved the right to sell
Securities directly to investors on its own behalf in those jurisdictions where
and in such manner as it is authorized to do so.
Underwriters may offer and sell Securities at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. Jacor and/or
JCC also may, from time to time, authorize dealers, acting as Jacor's agents, to
offer and sell Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters may receive compensation from Jacor and/or JCC in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by Jacor and/or JCC to underwriters or
agents in connection with the offering of Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with Jacor and/or JCC, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act.
If so indicated in the Prospectus Supplement, Jacor and/or JCC will
authorize dealers acting as Jacor's and/or JCC's agents to solicit offers by
certain institutions to purchase the Securities from Jacor and/or JCC at the
public offering price set forth in the applicable Prospectus Supplement pursuant
to delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than the amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of Jacor and/or
JCC. Contracts will not be subject to any conditions except (i) the purchase by
the institution of the Securities covered by its Contract shall not at the time
of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Securities are
being sold to underwriters, Jacor and/or JCC shall have sold to such
underwriters the total amount specified in the applicable Prospectus Supplement.
A commission indicated in the applicable Prospectus Supplement will be paid to
underwriters and agents soliciting purchases of Securities pursuant to Contracts
accepted by Jacor and/or JCC.
The rules of the Commission generally prohibit underwriters and other
members of the selling group from making a market in Jacor Common Stock during
the "cooling off" period immediately preceding the commencement of sales in the
offering. The Commission has, however, adopted an exemption from these rules
that permits passive market making under certain conditions. These rules permit
an underwriter or other member of the selling group to continue to make a market
in Jacor Common Stock subject to the conditions, among others, that its bid not
exceed the highest bid by a market maker not connected with the offering and
that its net purchases on any one trading day not exceed prescribed limits.
Pursuant to these exemptions, certain underwriters and other members of the
selling group may engage in passive market making in Jacor Common Stock during
the cooling off period.
44
<PAGE>
VALIDITY OF SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement relating
to the Securities, the validity of the Securities offered hereby will be passed
upon for Jacor, JCC and the Subsidiary Guarantors by Graydon, Head & Ritchey,
Cincinnati, Ohio.
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1996 and 1995 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1996 and the combined balance sheets of EFM Media
Management, Inc., EFM Publishing, Inc. and PAM Media, Inc. (the "Combined EFM
Companies") as of December 31, 1995 and 1996 and related combined statements of
operations, changes in retained earnings and cash flows for the years ended
December 31, 1994, 1995 and 1996, each incorporated by reference in this
registration statement, have been incorporated herein in reliance on the reports
of Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
45
<PAGE>
[The inside back cover depicts a growling bull dog with the following
caption beneath it: "Jacor--The noise you can't ignore."]
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY JACOR OR
ANY OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE 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 SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
<S> <C>
PAGE
Prospectus Supplement Summary.................. S-3
Broadcasting Services Acquisitions............. S-10
Transactions................................... S-12
Use of Proceeds................................ S-17
Capitalization................................. S-18
Common Stock Market Price Information.......... S-19
Dividend Policy................................ S-19
Unaudited Pro Forma Financial Information...... S-20
Business....................................... S-26
Description of Common Stock.................... S-33
Shares Eligible for Future Sale................ S-33
Certain United States Federal Tax Consequences
to Non-United States Holders.................. S-34
Underwriting................................... S-37
Experts........................................ S-39
Legal Matters.................................. S-39
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
Risk Factors................................... 4
Business....................................... 7
Use of Proceeds................................ 7
Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividends................. 7
Description of Convertible Debt Securities and
JCC Debt Securities........................... 8
Description of Capital Stock................... 35
Description of Indebtedness.................... 39
Plan of Distribution........................... 44
Validity of Securities......................... 45
Experts........................................ 45
</TABLE>
4,650,000 SHARES
[LOGO]
[LOGO]
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
MAY , 1997
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