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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EMMIS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
INDIANA 4832 35-1542018
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer Identification
incorporation or organization) classification code number) No.)
</TABLE>
40 MONUMENT CIRCLE, 7TH FLOOR, INDIANAPOLIS, INDIANA 46204, (317) 266-0100
(Address, including zip code and telephone number, including area code, of
principal executive offices)
SEE "TABLE OF ADDITIONAL REGISTRANTS" ON THE FOLLOWING PAGE FOR INFORMATION
RELATING TO ADDITIONAL GUARANTORS
OF CERTAIN SECURITIES REGISTERED HEREBY WHO ARE ADDITIONAL REGISTRANTS
J. SCOTT ENRIGHT, ESQ.
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
EMMIS COMMUNICATIONS CORPORATION
40 MONUMENT CIRCLE, 7TH FLOOR
INDIANAPOLIS, INDIANA 46204
(317) 266-0100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------------
Copy to:
ALAN W. BECKER, ESQ.
BOSE MCKINNEY & EVANS
135 NORTH PENNSYLVANIA STREET, SUITE 2700
INDIANAPOLIS, INDIANA 46204
(317) 684-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C>
8.125% Senior Subordinated Notes due 2009................... $300,000,000 $83,400
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Guarantees of Subsidiary Guarantors......................... (1) (1)
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Total....................................................... $300,000,000 $83,400
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</TABLE>
(1) Also registered are Guarantees of certain subsidiaries of Emmis
Communications Corporation of the 8.125% Senior Subordinated Notes due 2009
for which no additional consideration will be received. Accordingly,
pursuant to Rule 457(n) under the Securities Act, no additional fee is
included for the registration of such Guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
TO FORM S-4 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C> <C>
Emmis FM Broadcasting Indiana 4832 35-1704900
Corporation of Indianapolis
Emmis FM Broadcasting Indiana 4832 35-1705341
Corporation of St. Louis
KPWR, Inc. Indiana 4832 35-1705334
Emmis Broadcasting Corporation Indiana 4832 35-1705332
of New York
Emmis FM Broadcasting Indiana 4832 31-1397437
Corporation of Chicago
Emmis Meadowlands Corporation Indiana 4832 35-1756647
Emmis Publishing Corporation Indiana 2721 35-1748335
Emmis AM Radio Corporation of Indiana 4832 35-1922651
Indianapolis
Emmis FM Radio Corporation of Indiana 4832 35-1922632
Indianapolis
Emmis 104.1 FM Radio Indiana 4832 35-2005992
Corporation of St. Louis
Emmis 106.5 FM Broadcasting Indiana 4832 35-2005991
Corporation of St. Louis
Emmis 1310 AM Radio Corporation Indiana 4832 35-2030857
of Indianapolis
Emmis 105.7 FM Radio Indiana 4832 35-2030858
Corporation of Indianapolis
Mediatex Communications Texas 2721 74-1723301
Corporation
Mediatex Development Texas 2721 74-2120662
Corporation
Texas Monthly, Inc. Texas 2721 74-2236977
Emmis DAR, Inc. Indiana 4800 35-1740703
Emmis International Corporation Indiana 4832 35-2027309
Emmis 1380 AM Radio Corporation Indiana 4832 35-2005995
of St. Louis
Emmis FM Holding Corporation of Delaware 4832 39-1623479
New York
Emmis 101.9 FM Radio Michigan 4832 38-2270683
Corporation of New York
Emmis Radio Corporation of New Delaware 4832 58-1825801
York
Emmis Indiana Broadcasting, Indiana 4832 35-2039701
L.P.
Emmis Television Broadcasting, Indiana 4833 35-2051031
L.P.
Emmis Publishing, L.P. Indiana 2721 35-2039702
(Exact name of Registrant as (State or other (Primary standard (I.R.S. Employer
specified in its charter) jurisdiction of industrial Identification No.)
incorporation or classification code
organization) number)
</TABLE>
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40 MONUMENT CIRCLE
7TH FLOOR
INDIANAPOLIS, INDIANA 46204
(317) 266-0100
(Address, including zip code and telephone number,
including area code, of principal executive offices)
J. SCOTT ENRIGHT, ESQ.
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
EMMIS COMMUNICATIONS CORPORATION
40 MONUMENT CIRCLE, 7TH FLOOR
INDIANAPOLIS, INDIANA 46204
(317) 266-0100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copy to:
ALAN W. BECKER, ESQ.
BOSE MCKINNEY & EVANS
135 NORTH PENNSYLVANIA STREET, SUITE 2700
INDIANAPOLIS, INDIANA 46204
(317) 684-5000
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<TABLE>
<S> <C> <C> <C>
Emmis FM License Corporation of California 4832 95-4662828
Indianapolis
Emmis FM License Corporation of St. California 4832 95-4662829
Louis
KPWR License, Inc. California 4832 95-4663002
Emmis License Corporation of New York California 4832 95-4662857
Emmis FM License Corporation of Chicago California 4832 95-4662827
Emmis AM Radio License Corporation of California 4832 95-4662831
Indianapolis
Emmis FM Radio License Corporation of California 4832 95-4662856
Indianapolis
Emmis Radio License Corporation of New California 4832 95-4662859
York
Emmis 104.1 FM Radio License California 4832 95-4662863
Corporation of St. Louis
Emmis 106.5 FM License Corporation of California 4832 95-4663001
St. Louis
Emmis 1310 AM Radio License Corporation California 4832 95-4663000
of Indianapolis
Emmis License Corporation California 4832 95-4662830
Emmis International Broadcasting California 4832 31-1573818
Corporation
Emmis Television License Corporation of California 4833 35-2051237
Honolulu
Emmis Television License Corporation of California 4833 35-2051244
Mobile
Emmis Television License Corporation of California 4833 35-2051644
Cape Coral
Emmis Television License Corporation of California 4833 35-2051241
Green Bay
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Emmis 1480 AM Radio License Corporation California 4832 35-2051646
of Terre Haute
Emmis Television License Corporation of California 4832 35-2051642
Terre Haute
Emmis 99.9 FM Radio License Corporation California 4832 35-2051618
of Terre Haute
Emmis 105.7 FM Radio License California 4832 95-4663004
Corporation of Indianapolis
Emmis Television License Corporation of California 4833 35-2051239
New Orleans
Emmis 105.5 FM Radio License California 4832 35-2051649
Corporation of Terre Haute
(Exact name of Registrant as specified (State or other (Primary standard (I.R.S.
in its charter) jurisdiction of industrial Employer
incorporation or classification code Identification
organization) number) No.)
</TABLE>
15821 VENTURA BLVD.
SUITE 685
ENCINO, CALIFORNIA 91436
(818) 817-8522
(Address, including zip code and telephone number,
including area code, of principal executive offices)
J. SCOTT ENRIGHT, ESQ.
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
EMMIS COMMUNICATIONS CORPORATION
40 MONUMENT CIRCLE, 7TH FLOOR
INDIANAPOLIS, INDIANA 46204
(317) 266-0100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copy to:
ALAN W. BECKER, ESQ.
BOSE MCKINNEY & EVANS
135 NORTH PENNSYLVANIA STREET, SUITE 2700
INDIANAPOLIS, INDIANA 46204
(317) 684-5000
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This information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor is it seeking an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 12, 1999
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PROSPECTUS
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EMMIS COMMUNICATIONS CORPORATION LOGO
EMMIS COMMUNICATIONS CORPORATION
$300,000,000
OFFER TO EXCHANGE SERIES B 8 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OUTSTANDING 8 1/8% SENIOR SUBORDINATED NOTES DUE 2009
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TERMS OF EXCHANGE OFFER
- - Expires 5:00 p.m., New York City time, , 1999, unless extended
- - All outstanding notes that are validly tendered and not withdrawn will be
exchanged
- - Tenders of outstanding notes may be withdrawn any time prior to the expiration
of the exchange offer
- - The exchange of notes will not be a taxable exchange for U.S. Federal income
tax purposes
- - We will not receive any proceeds from the exchange offer
- - The terms of the registered notes we will issue in the exchange offer are
substantially identical to the outstanding notes, except that certain transfer
restrictions and registration rights relating to the outstanding notes will
not apply to the registered notes
The notes are eligible for trading in The Portal(SM) Market, a subsidiary
of The Nasdaq Market, Inc. The notes also may be sold in the over-the-counter
market, in negotiated transactions or through a combination of such methods.
WE ARE NOT MAKING AN OFFER TO EXCHANGE NOTES IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED.
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" COMMENCING ON PAGE 14.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES TO BE DISTRIBUTED IN THE EXCHANGE OFFER, NOR
HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1999
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TABLE OF CONTENTS
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Page
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Prospectus Summary................. 1
Risk Factors....................... 14
Use of Proceeds.................... 23
Capitalization..................... 24
Selected Consolidated Financial and
Other Data....................... 25
Unaudited Pro Forma Condensed
Consolidated Financial Data...... 28
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 36
Business........................... 43
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Page
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Management......................... 51
Principal Shareholders............. 53
Description of Notes............... 55
Description of Certain
Indebtedness..................... 98
Certain Federal Income Tax
Considerations................... 101
The Exchange Offer................. 108
Plan of Distribution............... 120
Legal Matters...................... 121
Experts............................ 121
Where You Can Find More
Information...................... 122
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including the financial statements and related notes, appearing
elsewhere in this prospectus or incorporated into this prospectus by reference.
All references to "we," "our" or "Emmis" in this prospectus mean Emmis
Communications Corporation and its subsidiaries collectively, except where it is
clear we mean only the parent company.
THE EXCHANGE OFFER
On February 12, 1999, we completed the private offering of $300,000,000
aggregate original principal amount at maturity of 8 1/8% Senior Subordinated
Notes Due 2009. Emmis entered into a registration rights agreement with the
initial purchasers of the notes in the private offering in which we agreed,
among other things, to deliver to you this prospectus and to complete the
exchange offer on or prior to , 1999. This exchange offer allows you
to exchange your notes for registered notes with substantially identical terms.
If the exchange offer is not completed on or prior to , 1999, we will
be required to pay liquidated damages at an initial rate of $0.05 per week per
$1,000 principal amount of the notes until, among other things, the completion
of the exchange offer. You should read the discussions under the heading "--
Summary of Terms of the Registered Notes" and "Description of Notes" for further
information regarding the registered notes.
We believe that you may resell the notes issued in the exchange offer
without compliance with the registration and prospectus delivery provisions of
the Securities Act of 1933, subject to certain conditions. You should read the
discussion under the headings "-- Summary of the Exchange Offer" and "The
Exchange Offer" for further information regarding the exchange offer and resale
of the registered notes.
THE COMPANY
We are a diversified media company with radio broadcasting, television
broadcasting and magazine publishing operations. We are the eighth largest radio
broadcaster in the United States based on total revenues. The thirteen FM radio
stations and three AM radio stations we own in the United States serve the
nation's three largest radio markets of New York City, Los Angeles and Chicago,
as well as St. Louis, Indianapolis and Terre Haute, Indiana. Our six television
stations, which we acquired in 1998, are located in New Orleans, Louisiana,
Mobile, Alabama, Green Bay, Wisconsin, Honolulu, Hawaii, Fort Myers, Florida and
Terre Haute, Indiana. On a pro forma basis after considering recent
acquisitions, we had revenues and EBITDA of $219.5 million and $83.2 million,
respectively, for the twelve months ended November 30, 1998.
Our strategy is to selectively acquire underdeveloped media properties in
desirable markets and then to create value by developing those properties to
increase their cash flow. We find such underdeveloped properties attractive
because they offer greater potential for revenue and cash flow growth than
mature properties. We have been successful in acquiring these types of radio
stations and improving their ratings, revenues and cash flow with our marketing
focus and innovative programming expertise. We have created top-performing radio
stations which rank, in terms of primary demographic target audience share,
among the top ten stations in the New
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York City, Los Angeles and Chicago radio markets according to the Fall 1998
Arbitron survey. We believe that our strong large-market radio presence and
diversity of station formats makes us attractive to a diverse base of radio
advertisers and reduces our dependence on any one economic sector or specific
advertiser.
More recently, we have begun to apply our advertising sales and programming
expertise to our television stations. We view our entry into television as a
logical outgrowth of our radio business and as a platform for diversification.
Like the radio stations we previously acquired, our television stations are
underdeveloped properties located in desirable markets, which can benefit from
innovative, research-based programming and our experienced management team. We
believe we can improve the ratings, revenues and broadcast cash flow of our
television stations with a more market-focused, research-based programming
approach and other related strategies, which have proven successful with our
radio properties.
In addition to our domestic broadcasting properties, we operate news and
agricultural information radio networks in Indiana, publish the Indianapolis
Monthly, Atlanta, Cincinnati and Texas Monthly magazines, and have a 54%
interest in a national radio station in Hungary. We also engage in various
businesses ancillary to our broadcasting business, such as consulting and
broadcast tower leasing.
BUSINESS STRATEGY
We are committed to maintaining our leadership positions in broadcasting,
enhancing the performance of our broadcast properties, and distinguishing
ourselves through the quality of our operations. Our strategy has the following
principal components:
CREATE CASH FLOW GROWTH BY ENHANCING STATION PERFORMANCE. Our strategy is
to selectively acquire underdeveloped media properties in desirable markets
and then to create value by developing those properties to increase their
cash flow. We believe that our station portfolio provides significant
potential for revenue and cash flow growth through enhanced operating
performance. We believe that our growth is less dependent on overall
advertising market growth than it would be if we owned only mature
properties. We expect to continue to create value, particularly in our
recently-acquired television stations, through maximizing operating
efficiencies, development of innovative programming and focused sales and
marketing efforts.
DEVELOP INNOVATIVE PROGRAMMING. We believe that knowledge of local markets
and innovative programming developed to target specific demographic groups
are the most important determinants of individual radio and television
station success. We conduct extensive market research to identify
underserved segments of our markets or to insure that we are meeting the
needs and tastes of our target audiences. Utilizing the research results,
we concentrate on providing focused programming formats carefully tailored
to the demographics of our markets and our advertisers' preferences. Such
programming strategies might include, for example, the development or
acquisition of on-air talent or development of a sports coverage or news
franchise. Local market knowledge is particularly important in developing
programming for our Fox television stations, as the higher degree of
programming flexibility afforded by our Fox affiliation provides us greater
opportunity to tailor our programming to meet the specific demands of our
local markets. Greg Nathanson,
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who heads our television division and directs programming, has over 30
years of television broadcasting experience and has had extensive
independent programming experience as President of Programming and
Development for Twentieth Television and President of Fox Television
Stations.
EMPHASIZE FOCUSED SALES AND MARKETING STRATEGY. Emmis designs its local
and national sales efforts based on advertiser demand and competition
within each market. We provide our sales force with extensive training and
technology for sophisticated inventory management techniques, which allows
us to make frequent price adjustments based on regional and local market
conditions. We seek to maximize sources of non-traditional, non-spot
revenue and have led the industry in developing "vendor co-op" advertising
revenue. Although this source of advertising revenue is common in the
newspaper and magazine industry, we were among the first broadcasters to
recognize and take advantage of the potential of vendor co-op advertising.
ENCOURAGE ENTREPRENEURIAL MANAGEMENT APPROACH. We believe that
broadcasting is primarily a local business and that much of our success is
the result of the efforts of regional and local management and staff. We
have attracted and retained an experienced team of broadcast professionals
who understand the musical tastes, demographics and competitive
opportunities of their particular market. Our decentralized approach to
station management gives local management oversight of station spending,
long-range planning and resource allocation at their individual stations
and rewards local management based on those stations' performance. In
addition, we encourage our managers and employees to own a stake in Emmis,
and over 90% of all full-time employees have an equity ownership position
in the company. We believe that this entrepreneurial management approach
has given us a distinctive corporate culture, making Emmis a highly
desirable employer in the broadcasting industry and significantly enhancing
our ability to attract and retain experienced and highly motivated
employees and management.
SELECTIVELY PURSUE STRATEGIC ACQUISITIONS. Our acquisition strategy is to
selectively acquire underdeveloped media properties at reasonable purchase
prices where our experienced management team can enhance value. We believe
that continued consolidation in the radio broadcasting industry will create
attractive acquisition opportunities as the number of potential buyers for
radio assets declines as a result of in-market ownership limitations, and
we will continue to evaluate acquisitions of individual radio stations or
groups of radio stations in both our current and new markets. We also
believe that attractive acquisition opportunities are becoming increasingly
available in the television broadcasting industry. In many cases,
television stations have suffered ratings and revenue declines due to
management inattention, improper programming strategies or inadequate sales
and marketing efforts. We also expect to evaluate acquisitions of
international broadcasting stations and magazine publishing properties
which present attractive purchase prices and significant opportunities to
capitalize on our management expertise to enhance cash flow. We intend to
seek strong local minority-interest partners in evaluating and completing
any international broadcasting acquisitions.
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The following tables set forth certain information regarding our radio and
television stations and their broadcast markets.
RADIO STATIONS
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RANKING IN
MARKET MARKET PRIMARY PRIMARY STATION
AND RANK BY DEMOGRAPHIC DEMOGRAPHIC AUDIENCE
STATION REVENUE(1) FORMAT TARGET AGES TARGET(2) SHARE(2)
------- ---------- ------ ----------- ----------- --------
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Los Angeles 1
KPWR-FM Dance/Contemporary Hit 12-24 1 4.1
New York 2
WQHT-FM Dance/Contemporary Hit 12-24 1 5.3
WRKS-FM Classic Soul/Smooth R&B 25-54 4 3.8
WQCD-FM Contemporary Jazz 25-54 7 3.1
Chicago 3
WKQX-FM New Rock 18-34 2 3.9
St. Louis 18
KSHE-FM Album Oriented Rock 18-34 12 3.6
WKKX-FM Country 18-34 6t 3.8
WXTM-FM Extreme Rock 18-34 4 2.9
Indianapolis 30
WENS-FM Adult Contemporary 25-54 4 4.9
WIBC-AM News/Talk 35-64 4 7.8
WNAP-FM Classic Rock 18-34 8 3.3
WTLC-FM Urban Contemporary 25-54 6 6.0
WTLC-AM Solid Gold Soul, Gospel and 35-64 19 0.7
Talk
Terre Haute 172
WTHI-FM Country 25-54 1t 19.2
WTHI-AM News/Talk 35-54 9t 1.7
WWVR-FM Classic Rock 25-49 1 12.1
</TABLE>
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(1) "Market Rank by Revenue" is the ranking of the market revenue size of the
principal radio market served by the station among all radio markets in the
United States. Market revenue ranking figures are from Duncan's Radio Market
Guide (1998 ed.). We own a 40% equity interest in the publisher of Duncan's
Radio Market Guide.
(2) "Ranking in Primary Demographic Target" is the ranking of the station among
all radio stations in its market based on the Fall 1998 Arbitron survey. A
"t" indicates the station tied with another station for the stated ranking.
"Station Audience Share" represents a percentage generally computed by
dividing the average number of persons over age 12 listening to a particular
station during specified time periods by the average number of such persons
for all stations in the market area as determined by Arbitron.
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TELEVISION STATIONS
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<CAPTION>
NUMBER OF STATION
TELEVISION METROPOLITAN DMA AFFILIATION/ STATIONS STATION AUDIENCE
STATION AREA SERVED RANK(1) CHANNEL IN MARKET(2) RANK(3) SHARE(4)
---------- ------------ ------- ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
WVUE-TV New Orleans, LA 41 Fox/8 6 3t 9
WALA-TV Mobile, AL-Pensacola, 62 Fox/10 6 3 11
FL
WLUK-TV (5) Green Bay, WI 70 Fox/11 5 3 14
KHON-TV (5) Honolulu, HI 71 Fox/2 6 1 17
WFTX-TV Fort Myers, FL 83 Fox/36 5 4 8
WTHI-TV Terre Haute, IN 140 CBS/10 3 1 24
</TABLE>
- ------------------------------
(1) Estimated by the A. C. Nielsen Company ("Nielsen") as of January 1998.
Rankings are based on the relative size of a station's market among the 212
generally recognized Designated Market Areas ("DMAs"), as defined by
Nielsen.
(2) Represents the number of television stations ("Reportable Stations")
designated by Nielsen as "local" to the DMA, excluding public television
stations and stations which do not meet minimum Nielsen reporting standards
(i.e., a weekly cumulative audience of less than 2.5%) for reporting in the
9:00 a.m. to midnight, Sunday through Saturday time period.
(3) Reflects the station's rank relative to other Reportable Stations based upon
the DMA rating as reported by Nielsen from 9:00 a.m. to midnight, Sunday
through Saturday during November 1998.
(4) Reflects an estimate of the share of DMA households viewing television
received by a local commercial station in comparison to other local
commercial stations in the market as measured from 9:00 a.m. to midnight,
Sunday through Saturday.
(5) Emmis also owns KAII-TV and KHAW-TV, which operate as satellite stations of
KHON-TV and primarily re-broadcast the signal of KHON-TV. The stations are
considered one station for FCC multiple ownership purposes. Low power
television translators W40AN and K55D2 retransmit stations WLUK-TV and
KHON-TV, respectively.
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<PAGE> 13
SUMMARY OF THE EXCHANGE OFFER
Registration Rights
Agreement................ You have the right to exchange your notes for
registered notes with substantially identical
terms. This exchange offer is intended to satisfy
these rights. After the exchange offer is complete,
you will no longer be entitled to any exchange or
registration rights with respect to your notes.
The Exchange Offer......... We are offering to exchange $1,000 principal amount
of Emmis' 8 1/8% Senior Subordinated Notes due 2009
which have been registered under the Securities Act
for each $1,000 principal amount at maturity of
Emmis' outstanding 8 1/8% Senior Subordinated Notes
due 2009 which were issued in February 1999 in a
private offering. In order to be exchanged, an
outstanding note must be properly tendered and
accepted. We will exchange all notes validly
tendered and not validly withdrawn. As of this date
there is $300,000,000 aggregate principal amount of
notes outstanding. We will issue registered notes
on or promptly after the expiration of the exchange
offer.
Resales.................... We believe that the registered notes may be offered
for resale, resold and otherwise transferred by you
without compliance with the registration and
prospectus delivery provisions of the Securities
Act provided that:
- you acquire the registered notes issued in the
exchange offer in the ordinary course of your
business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate, in
the distribution of the registered notes issued
to you in the exchange offer; and
- you are not an "affiliate," as defined under Rule
405 of the Securities Act, of Emmis.
If our belief is inaccurate and you transfer any
registered note issued to you in the exchange offer
without delivering a prospectus meeting the
requirements of the Securities Act or without an
exemption of your registered notes from such
requirements, you may incur liability under the
Securities Act. We do not assume or indemnify you
against such liability. Each broker-dealer that
issued registered notes for its own account in
exchange for outstanding notes which were acquired
by such broker-dealer as a result of market-making
or other trading activities must acknowledge that
it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of the registered notes. A
broker-dealer may use
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<PAGE> 14
this prospectus for an offer to resell, resale or
other retransfer of the registered notes issued to
it in the exchange offer.
Record Date................ We mailed this prospectus and the related exchange
offer documents to registered holders of
outstanding notes on , 1999.
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, , 1999, unless we decide
to extend the expiration date.
Conditions to the Exchange
Offer.................... We may terminate or amend the exchange offer if:
- any legal proceeding, government action or other
adverse development materially impairs our
ability to complete the exchange offer;
- any SEC rule, regulation or interpretation
materially impairs the exchange offer; or
- we have not obtained any necessary governmental
approvals with respect to the exchange offer.
We may waive any or all of these conditions. At
this time, there are no adverse proceedings,
actions or developments pending or, to our
knowledge, threatened and no governmental approvals
are necessary to complete the exchange offer.
Procedures for Tendering
Outstanding Notes........ Each holder of outstanding notes wishing to accept
the exchange offer must:
- complete, sign and date the accompanying letter
of transmittal, or a facsimile thereof; or
- arrange for DTC to transmit certain required
information to the exchange agent in connection
with a book-entry transfer.
You must mail or otherwise deliver such
documentation and your outstanding notes to IBJ
Whitehall Bank and Trust Company, as exchange
agent, at the address set forth under "The Exchange
Offer -- Exchange Agent." By tendering your
outstanding notes in this manner, you will be
representing, among other things, that:
- you are acquiring the registered notes pursuant
to the exchange offer in the ordinary course of
your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to
7
<PAGE> 15
participate, in the distribution of the
registered notes issued to you in the exchange
offer; and
- you are not an affiliate of Emmis.
Untendered Outstanding
Notes.................... If you are eligible to participate in the exchange
offer and you do not tender your outstanding notes,
you will not have any further registration or
exchange rights and your outstanding notes will
continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market
for such outstanding notes could be adversely
affected.
Special Procedures for
Beneficial Owners........ If you beneficially own outstanding notes
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
you wish to tender your outstanding notes in the
exchange offer, you should contact such registered
holder promptly and instruct it to tender on your
behalf. If you wish to tender on your own behalf,
you must, prior to completing and executing the
letter of transmittal for the exchange offer and
delivering your outstanding notes, either arrange
to have your outstanding notes registered in your
name or obtain a properly completed bond power from
the registered holder. The transfer of registered
ownership may take considerable time.
Guaranteed Delivery
Procedures............... If you wish to tender your outstanding notes and
time will not permit your required documents to
reach the exchange agent by the expiration date of
the exchange offer, or you cannot complete the
procedure for book-entry transfer on time or you
cannot deliver certificates for your outstanding
notes on time, you may tender your outstanding
notes pursuant to the procedures described in this
prospectus under the heading "The Exchange
Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.......... You may withdraw the tender of your outstanding
notes at any time prior to 5:00 p.m., New York City
time, on , 1999.
Certain U.S. Federal Tax
Considerations........... The exchange of notes will not be a taxable event
for United States federal income tax purposes.
Use of Proceeds............ We will not receive any proceeds from the issuance
of registered notes pursuant to the exchange offer.
We will pay all our expenses incident to the
exchange offer.
Exchange Agent............. IBJ Whitehall Bank and Trust Company is serving as
the exchange agent in connection with the exchange
offer.
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<PAGE> 16
SUMMARY OF TERMS OF THE REGISTERED NOTES
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that the registered notes will be
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not be entitled to registration under the
Securities Act. In this regard, we use the term "notes" when describing
provisions that govern or otherwise pertain to both the outstanding notes and
the registered notes. The registered notes will evidence the same debt as the
outstanding notes, and the same indenture will govern both the registered notes
and the outstanding notes.
Issuer..................... Emmis Communications Corporation
Securities Offered......... $300 million aggregate principal amount of 8 1/8%
Senior Subordinated Notes due 2009.
Maturity Date.............. March 15, 2009.
Interest Payment Dates..... Interest on the notes will accrue at the rate of
8 1/8% per year, payable semi-annually in cash in
arrears on March 15 and September 15 of each year,
commencing September 15, 1999.
Optional Redemption........ Emmis can redeem the notes, in whole or in part, on
or after March 15, 2004, at the redemption prices
set forth in this prospectus, plus accrued and
unpaid interest. In addition, before March 15,
2002, Emmis can redeem up to 35% of the notes at
108.125% of the principal amount thereof, plus
accrued and unpaid interest, with the net cash
proceeds from certain common stock offerings.
Guarantees................. The notes will be unconditionally guaranteed by our
existing wholly-owned subsidiaries and certain
future subsidiaries. These guarantees will be
subordinate in right of payment to all existing and
future senior indebtedness of our subsidiary
guarantors. These subsidiary guarantees will rank
equal to other existing and future senior
subordinated indebtedness of the subsidiary
guarantors and senior in right of payment to all of
the existing and future obligations of the
subsidiary guarantors that are expressly
subordinated in right of payment to the subsidiary
guarantees.
Change of Control.......... Upon the occurrence of certain change of control
events, you may require Emmis to repurchase all or
a portion of your notes at 101% of the principal
amount thereof, plus accrued and unpaid interest.
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<PAGE> 17
Ranking.................... The notes:
- are general unsecured obligations of Emmis;
- rank equally with all of our other existing and
future senior subordinated indebtedness;
- are senior in right of payment to existing and
future obligations expressly subordinated in
right of payment to the notes; and
- rank junior to all existing and future senior
debt, as defined in the indenture governing the
notes.
Anti-Layering.............. Emmis will not incur any indebtedness that is
subordinate in right of payment to any of our
senior debt and senior in any respect in right of
payment to the notes. No subsidiary guarantor will
incur any indebtedness that is subordinate in right
of payment to any senior debt of such subsidiary
guarantor and senior in any respect in right of
payment to its subsidiary guarantee.
Certain Covenants.......... The indenture governing the notes contains
covenants that, among other things, limit our
ability and the ability of our subsidiaries to:
- pay or permit payment of certain dividends on,
redeem or repurchase its capital stock;
- make certain investments;
- incur additional indebtedness;
- allow the imposition of dividend restrictions on
certain subsidiaries;
- sell assets;
- guarantee indebtedness;
- issue capital stock;
- create certain liens;
- engage in certain transactions with affiliates;
and
- consolidate or merge or sell all or
substantially all our assets and the assets of
our subsidiaries.
All of these limitations are subject to important
exceptions and qualifications.
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<PAGE> 18
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following sets forth summary unaudited pro forma financial data derived
from the unaudited pro forma condensed consolidated financial data included
elsewhere in this prospectus. The unaudited pro forma condensed consolidated
statement of operations data for the year ended February 28, 1998 reflect
adjustments to our condensed consolidated historical operating data to give
effect to:
- the acquisitions of three radio stations in St. Louis, two radio
stations in Indianapolis and Texas Monthly and the disposition of the
St. Louis AM radio station (the "Fiscal 1998 Transactions"), all of
which occurred during the year ended February 28, 1998,
- the acquisition of WQCD-FM in New York City (the "WQCD Acquisition"),
- our equity offering in June 1998 (the "Equity Offering") and the
amendment and restatement of our Credit Facility in July 1998 (the
"Credit Facility Restatement"),
- the acquisition of four television stations in New Orleans, Louisiana,
Mobile, Alabama, Green Bay, Wisconsin and Honolulu, Hawaii (the "SF
Acquisition"),
- the acquisition of two television stations in Fort Myers, Florida and
Terre Haute, Indiana and three radio stations in Terre Haute (the
"Wabash Valley Acquisition") and
- the offering of the outstanding notes and a concurrent amendment to the
Credit Facility (the "Credit Facility Amendment")
as if such transactions had occurred at the beginning of the year presented.
The unaudited pro forma condensed consolidated statement of operations data
for the nine months ended November 30, 1998 reflect adjustments to our condensed
consolidated historical operating data to give effect to:
- the WQCD Acquisition,
- the Equity Offering and the Credit Facility Restatement,
- the SF Acquisition,
- the Wabash Valley Acquisition and
- the offering of the outstanding notes and the Credit Facility Amendment,
as if such transactions had occurred at the beginning of the period presented.
The unaudited pro forma condensed consolidated statement of operations data
for the twelve months ended November 30, 1998 reflect adjustments to our
condensed consolidated historical operating data to give effect to:
- the acquisition of Texas Monthly,
- the WQCD Acquisition,
- the Equity Offering and the Credit Facility Restatement,
- the SF Acquisition,
- the Wabash Valley Acquisition and
- the offering of the outstanding notes and the Credit Facility Amendment,
as if such transactions had occurred at the beginning of the period presented.
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<PAGE> 19
The summary unaudited pro forma financial data do not purport to present
the actual results of operations of Emmis 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 data are based on certain
assumptions and adjustments described in the notes to the unaudited pro forma
condensed consolidated financial data and should be read in conjunction with
those notes. The pro forma data presented below should also be read in
conjunction with, and are qualified in their entirety by reference to, our
consolidated financial statements for the year ended February 28, 1998 and our
unaudited condensed consolidated financial statements for the nine months ended
November 30, 1998 and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are incorporated in this
prospectus by reference.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
-------------------------------------------------------------
FISCAL YEAR ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
FEBRUARY 28, 1998 NOVEMBER 30, 1998 NOVEMBER 30, 1998
----------------- ----------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net broadcasting revenues.......... $ 204,675 $ 176,564 $ 219,536
Broadcasting operating expenses.... 118,618 96,622 124,599
Amortization of television
program rights..................... 5,754 4,662 6,071
Publication and other revenue,
net of operating expenses.......... 3,776 4,527 5,169
International business development
expenses........................... 999 974 1,041
Corporate expenses................. 9,286 7,488 9,763
Depreciation and amortization...... 31,656 26,361 34,220
Noncash compensation............... 4,882 (1,022) 328
----------- ----------- -----------
Operating income................... 37,256 46,006 48,683
Interest expense................... 48,919 37,337 49,450
Other income (expense) net......... (173) 4,013 (1,195)
----------- ----------- -----------
Income (loss) before income
taxes.............................. (11,836) 12,682 (1,962)
Provision (benefit) for income
taxes.............................. (2,900) 7,100 900
----------- ----------- -----------
Net income (loss).................. $ (8,936) $ 5,582 $ (2,862)
=========== =========== ===========
Basic net income (loss) per
share.............................. $ (.58) $ .36 $ (.18)
=========== =========== ===========
Diluted net income
(loss) per Share................... $ (.58) $ .35 $ (.18)
=========== =========== ===========
Weighted average
common shares outstanding:
Basic............................ 15,503,333 15,635,719 15,635,719
Diluted.......................... 15,503,333(10) 16,036,855 15,635,719(10)
OTHER FINANCIAL DATA:
Broadcast cash flow(1)............. $ 80,303 $ 75,280 $ 88,866
Broadcast cash flow margin(2)...... 39.2% 42.6% 40.5%
EBITDA(3).......................... $ 73,794 $ 71,345 $ 83,231
Capital expenditures(4)...................................................... 40,179
EMMIS AND ITS RESTRICTED
SUBSIDIARIES(5):
Consolidated EBITDA(6)....................................................... $ 84,503
Cash interest expense........................................................ 46,318
Total indebtedness........................................................... 575,152
Interest coverage ratio(7)................................................... 1.8x
Leverage ratio(8)............................................................ 6.8
</TABLE>
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<PAGE> 20
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
AS OF NOVEMBER 30, 1998
------------------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA(9):
Working capital........................................... $ 5,746
Intangible assets......................................... 811,214
Total assets.............................................. 1,019,701
Total debt................................................ 591,958
Total shareholders' equity................................ 238,655
</TABLE>
- ---------------
(1) Management believes that broadcast cash flow is useful because it provides a
meaningful comparison of broadcast operating performance between companies
in the industry and serves as an indicator of the market value of a group of
stations. Broadcast cash flow is generally recognized by the broadcasting
industry as a measure of performance and is used by analysts who report on
the performance of broadcasting companies. Broadcast cash flow does not take
into account Emmis' debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts
that may be available for dividends, reinvestment in Emmis' business or
other discretionary uses. It is not a measure of liquidity or of performance
in accordance with generally accepted accounting principles, and should be
viewed as a supplement to and not a substitute for our results of operations
presented on the basis of generally accepted accounting principles. Emmis
defines broadcast cash flow as advertising revenues net of agency
commissions, less broadcasting operating expenses and amortization of
television program rights.
(2) Broadcast cash flow margin is defined as broadcast cash flow divided by net
broadcasting revenues.
(3) EBITDA is defined as operating income plus depreciation and amortization and
noncash compensation expenses.
(4) Capital expenditures for the twelve months ended November 30, 1998 include
progress payments totaling $26,818 in connection with the construction of
our new Indianapolis office and studio facility.
(5) This information represents Emmis and its Restricted Subsidiaries (as
defined under the Indenture) and, therefore, excludes the results of its
Unrestricted Subsidiary, Radio Hungaria Co. Ltd.
(6) Consolidated EBITDA as defined under the Indenture for the Notes. See
"Description of Notes -- Certain Definitions."
(7) Represents the ratio of Consolidated EBITDA to cash interest expense.
(8) Represents the ratio of consolidated indebtedness to Consolidated EBITDA.
(9) Unaudited pro forma balance sheet data are calculated based on the unaudited
historical balance sheet at November 30, 1998 plus the effects of the
offering of the outstanding notes and the Credit Facility Amendment.
(10) Due to net loss, weighted average common shares outstanding for diluted net
income (loss) per share is the same as weighted average common shares
outstanding for basic net income (loss) per share.
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<PAGE> 21
RISK FACTORS
In connection with this exchange offer, you should consider carefully all
of the information in this prospectus and, in particular, the following factors.
Some of the statements contained in this prospectus are forward-looking.
All statements regarding our expected financial position, business and financing
plans are forward-looking statements. These statements can sometimes be
identified by our use of forward-looking words such as "may," "will," "should,"
"expect," "anticipate," "estimate" or "continue." Although we believe that our
expectations in such forward-looking statements are reasonable, we cannot
promise that our expectations will turn out to be correct. Actual results could
be materially different from and worse than our expectations for various
reasons, including those discussed in this section.
SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
We have now and, after the offering, will continue to have a significant
amount of indebtedness. At November 30, 1998, on a pro forma basis assuming we
had completed the offering of the outstanding notes as of that date and applied
the proceeds as intended, our total indebtedness would have been approximately
$592.0 million and our stockholders' equity would have been approximately $238.7
million. Our substantial indebtedness could have important consequences to you.
For example, it could:
- make it more difficult for us to satisfy our obligations with respect to
these notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to finance future acquisitions and to fund working
capital, capital expenditures and other general corporate requirements;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit, along with the financial and other restrictive covenants in our
credit facility and the indenture governing the notes, among other
things, our ability to borrow additional funds. Failing to comply with
those covenants could result in an event of default which, if not cured
or waived, could have a material adverse effect on us.
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
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<PAGE> 22
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The terms of the indenture governing the notes, do
not fully prohibit us or our subsidiaries from doing so. Our credit facility
would permit additional borrowings of up to $475.1 million, and all of those
borrowings would be senior to the notes and the subsidiary guarantees. If new
debt is added to our and our subsidiaries' current debt levels, the related
risks that we and they now face could intensify.
ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness,
including the notes, and to fund planned capital expenditures will depend on our
ability to generate cash in the future. This, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.
Based on our current level of operations and operating improvements, we
believe our cash flow from operations, available cash and available borrowings
under our credit facility will be adequate to meet our future liquidity needs
for at least the next few years.
We cannot assure you, however, that our business will generate sufficient
cash flow from operations, that currently anticipated operating improvements
will be realized on schedule or that future borrowings will be available to us
under our credit facility in an amount sufficient to enable us to pay our
indebtedness, including the notes, or to fund our other liquidity needs. We may
need to refinance all or a portion of our indebtedness, including the notes, on
or before maturity. We cannot assure you that we will be able to refinance any
of our indebtedness, including our credit facility and the notes, on
commercially reasonable terms or at all.
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR
EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER, THE
SUBSIDIARY GUARANTEES OF THE NOTES ARE JUNIOR TO ALL OUR SUBSIDIARY GUARANTORS'
EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS.
The notes and the subsidiary guarantees rank behind all of our and the
subsidiary guarantors' existing indebtedness and all of our and their future
borrowings, except any future indebtedness that expressly provides that it ranks
equal with, or is subordinated in right of payment to, the notes and the
subsidiary guarantees. As a result, upon any distribution to our creditors or
the creditors of the subsidiary guarantors in a bankruptcy, liquidation or
reorganization or similar proceeding relating to us or the subsidiary guarantors
or our or their property, the holders of senior debt of Emmis and the subsidiary
guarantors will be entitled to be paid in full in cash before any payment may be
made with respect to the notes or the subsidiary guarantees.
In addition, all payments on the notes and the subsidiary guarantees will
be blocked in the event of a payment default on senior debt and may be blocked
for up to 179 of 360 consecutive days in the event of certain non-payment
defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to Emmis or the subsidiary guarantors, holders of the notes
will participate with trade creditors and all other holders of subordinated
indebtedness of Emmis and the subsidiary guarantors in the
15
<PAGE> 23
assets remaining after Emmis and the subsidiary guarantors have paid all of the
senior debt. However, because the indenture governing the notes requires that
amounts otherwise payable to holders of the notes in a bankruptcy or similar
proceeding be paid to holders of senior debt instead, holders of the notes may
receive less, ratably, than holders of trade payables in any such proceeding. In
any of these cases, Emmis and the subsidiary guarantors may not have sufficient
funds to pay all of our creditors and holders of notes may receive less,
ratably, than the holders of senior debt.
Assuming we had completed the offering of the outstanding notes on November
30, 1998, the notes and the subsidiary guarantees would have been subordinated
to $274.9 million of senior debt, and approximately $475.1 million would have
been available for borrowing as additional senior debt under our credit
facility. We will be permitted to borrow substantial additional indebtedness,
including senior debt, in the future under the terms of the indenture governing
the notes.
NOT ALL SUBSIDIARIES ARE GUARANTORS -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE
NOTES COULD BE ADVERSELY AFFECTED IF ANY OF OUR NON-GUARANTOR SUBSIDIARIES
DECLARES BANKRUPTCY, LIQUIDATES OR REORGANIZES.
Most but not all of our subsidiaries will guarantee the notes. In the event
of a bankruptcy, liquidation or reorganization of any of the non-guarantor
subsidiaries, holders of their indebtedness and their trade creditors will
generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to us.
Assuming we had completed the offering of the outstanding notes on November 30,
1998, the notes would have been effectively junior to $27.8 million of
indebtedness and other liabilities (including trade payables) of these
non-guarantor subsidiaries. The non-guarantor subsidiaries generated 1.1% of our
consolidated revenues in the nine-month period ended November 30, 1998 and held
2.1% of our consolidated assets as of November 30, 1998.
FRAUDULENT CONVEYANCE MATTERS -- FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN
PAYMENTS RECEIVED FROM GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of that guarantor if, among
other things, the guarantor, at the time it incurred the indebtedness evidenced
by its guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
16
<PAGE> 24
In addition, any payment by that guarantor pursuant to its guarantee could be
voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets, or
- if the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature, or
- it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, we believe that each subsidiary guarantor, after giving
effect to its guarantee of the notes, will not be insolvent, will not have
unreasonably small capital for the business in which it is engaged and will not
have incurred debts beyond its ability to pay such debts as they mature. There
can be no assurance, however, as to what standard a court would apply in making
such determinations or that a court would agree with our conclusions in this
regard.
NEW LINE OF BUSINESS -- WE ACQUIRED OUR FIRST TELEVISION PROPERTIES IN JULY
1998, AND OUR ABILITY TO SUCCESSFULLY INTEGRATE AND OPERATE OUR TELEVISION
STATIONS IS UNPROVEN.
Until recently, we had concentrated our business operations in radio
broadcasting and magazine publishing and had not operated television stations.
In 1998, we acquired six television stations. Although we have hired a manager
with substantial television experience to manage our television stations, we
have no established operating history in the television industry, and we must
make the operations of these television stations a part of our operations. We
cannot be sure that our management can successfully integrate our newly-acquired
television stations into our business. If we experience any delays or unexpected
costs in that process, it could have an adverse effect on our business,
operating results or financial condition.
DEPENDENCE UPON ADVERTISING -- OUR REVENUES ARE SUBSTANTIALLY DEPENDENT UPON THE
DEMAND FOR ADVERTISING WHICH FLUCTUATES WITH GENERAL ECONOMIC CONDITIONS THAT WE
CANNOT CONTROL.
We derive substantially all of our revenues from the sale of advertising on
our radio and television stations. Because advertisers generally reduce their
spending during economic downturns, we could be adversely affected by a future
national recession. In addition, because a substantial portion of our revenues
are derived from local advertisers, our ability to generate advertising revenues
in specific markets could be adversely affected by local or regional economic
downturns. This is particularly true in New York, where our three radio stations
accounted for approximately 46.9% of our total pro forma broadcast cash flow for
the twelve months ended November 30, 1998.
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<PAGE> 25
RELIANCE ON PROGRAMMING -- CASH FLOW AT OUR TELEVISION STATIONS DEPENDS TO A
LARGE EXTENT ON OUR ABILITY TO SECURE POPULAR PROGRAMMING AT A REASONABLE COST.
A significant operating expense for our television stations is syndicated
programming. If the cost of syndicated programming increases in the future, it
may cause us to have lower net income. It is difficult to predict accurately how
a program will perform because television stations often must purchase program
rights two or three years in advance. In some instances, we may need to replace
programs early and write off a portion of their costs, which will increase our
operating expenses. In addition, because television stations need to purchase
syndicated programming and develop original programming substantially in advance
of the date it is first broadcast, the audience ratings and broadcast cash flow
of our television stations will probably not improve for some time. If we cannot
obtain or develop certain types of programming at an acceptable cost, or at all,
any improvements in audience ratings or broadcast cash flow could take even
longer or not be as large.
LIMITATIONS ON ACQUISITION STRATEGY -- OUR STRATEGY TO GROW THROUGH ACQUISITIONS
MAY BE LIMITED BY COMPETITION FOR SUITABLE PROPERTIES AND OTHER FACTORS WE
CANNOT CONTROL.
We intend to selectively pursue acquisitions of television stations, radio
stations and publishing properties as our management believes appropriate. In
order for us to be successful with this strategy, we must be effective at
quickly evaluating markets, obtaining loans to buy stations and publishing
properties on satisfactory terms and obtaining the necessary governmental
authorizations. We must also do these tasks at reasonable costs. We compete with
many other buyers for television and radio stations. Many of those competitors
have much more money and other resources than we do. We cannot predict whether
we will be successful in buying stations or whether we will be successful with
any station we buy. Also, our strategy is to buy underperforming broadcast
properties and use our experience to improve their performance. Thus, we will
likely benefit over time from any station we buy, rather than immediately, and
we may need to pay large initial costs for these improvements.
COMPETITIVE NATURE OF BROADCASTING -- WE COMPETE WITH OTHER RADIO AND TELEVISION
BROADCASTERS AS WELL AS OTHER COMPETING TECHNOLOGIES FOR AUDIENCE AND
ADVERTISERS.
The broadcasting industry is very competitive. The success of each of our
stations is dependent upon its audience ratings and share of the overall
advertising revenues within its market. Our stations compete for audiences and
advertising revenues directly with other radio and television stations, and some
of the owners of those competing stations have much more money than we do. Our
stations also compete with other media such as cable television, newspapers,
magazines, direct mail, compact discs, music videos, the Internet and outdoor
advertising. Although we believe that each of our stations can compete
effectively in its broadcast area, we cannot be sure that any of our stations
can keep or increase its current audience ratings or market share. In addition,
other stations may change their format or programming to compete directly with
our stations for audience and advertisers, or engage in aggressive promotional
campaigns. If this happens, the ratings and advertising revenues of our stations
could decrease, the promotion and other expenses of our stations could increase,
and our stations would have lower broadcast cash flow.
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<PAGE> 26
New media technologies are also being introduced to compete with the
broadcasting industry. Some of these new technologies are as follows:
- Direct broadcast satellite systems, which provide video and audio
programming on a subscription basis to people with a satellite signal
receiving dish and decoder equipment. These systems claim to provide
high picture and sound quality. They do not usually provide the signals
of traditional over-the-air broadcast stations, and thus are generally
restricted to providing cable-oriented and premium services.
- Digital audio broadcasting and satellite digital audio radio service,
which provide for the delivery of multiple new, high quality audio
programming formats to local and national audiences.
We cannot predict at this time the effect, if any, that any of these new
technologies may have on the radio or television broadcasting industry in
general or our stations in particular.
KEY EMPLOYEES -- THE LOSS OF ONE OR MORE KEY EXECUTIVES OR ON-AIR TALENT COULD
SERIOUSLY IMPAIR OUR ABILITY TO IMPLEMENT OUR STRATEGY.
Our business depends upon certain key employees, including Jeffrey H.
Smulyan, our Chief Executive Officer and President. We had an employment
agreement with Mr. Smulyan which expired in February 1999. We currently are
negotiating a new agreement for Mr. Smulyan. We are also in the process of
finalizing new employment agreements with certain other key employees. In each
of these cases, although we expect to enter into long-term agreements, we cannot
predict when or if such agreements will be completed and signed. In addition, we
employ several on-air personalities with significant loyal audiences. We
generally enter into long-term employment agreements with our key on-air talent,
but we cannot be sure that any of these on-air personalities will remain with
our company.
CONTROL OF OUR COMPANY -- ONE SHAREHOLDER CONTROLS A SUBSTANTIAL MAJORITY OF THE
COMMON STOCK VOTING POWER, AND HIS INTERESTS MAY CONFLICT WITH YOURS.
Jeffrey H. Smulyan holds shares representing approximately 68% of the
outstanding combined voting power of all classes of our common stock. As a
result of his voting power, Mr. Smulyan can control the outcome of most matters
submitted to a vote of our shareholders, including the election of a majority of
the directors. We cannot assure you that Mr. Smulyan's interest will align with
those of the holders of notes.
FUTURE CAPITAL COST OF DIGITAL CONVERSION -- WE EXPECT THAT THE COST OF
EQUIPPING OUR TELEVISION STATIONS WITH DIGITAL TELEVISION CAPABILITIES WILL BE
SIGNIFICANT.
Under current rules of the Federal Communications Commission, our
television stations will be required to broadcast a digital signal by May 2002
and then cease analog operations at the end of a digital television transition
period. Digital television will provide additional channels to television
broadcasters which can be used for multiple standard definition program
channels, data transfer and other services as well as digital video programming.
However, our costs to convert our television stations to digital television will
be significant, and we cannot predict whether or when there will be any consumer
demand for digital television services.
19
<PAGE> 27
UNITED STATES BROADCASTING INDUSTRY SUBJECT TO FEDERAL REGULATION -- WE MUST
COMPLY WITH COMPREHENSIVE, COMPLEX AND SOMETIMES UNPREDICTABLE FEDERAL
REGULATIONS.
The broadcasting industry in the United States is subject to extensive and
changing regulation by the Federal Communications Commission. Among other
things, the FCC is responsible for the following:
- Assigning frequency bands for broadcasting
- Determining the particular frequencies, locations and operating power of
stations
- Issuing, renewing, revoking and modifying station licenses
- Determining whether to approve changes in ownership or control of
station licenses
- Regulating equipment used by stations
- Adopting and implementing regulations and policies that directly affect
the ownership, operation and employment practices of stations.
The FCC has the power to impose penalties for violation of its rules or the
applicable statutes. In particular, our business will be dependent upon
continuing to hold broadcasting licenses from the FCC that are issued for terms
of up to eight years. While in the vast majority of cases these licenses are
renewed by the FCC, we cannot be sure that any of our United States stations'
licenses will be renewed at their expiration date. If our licenses are renewed,
we cannot be sure that the FCC will not impose conditions or qualifications that
could cause problems in our business.
Although a recent amendment to the law loosened or eliminated many
restrictions on ownership of radio and television stations in the United States,
we are still restricted from owning more than a certain number of stations in
any United States market. This restriction, as well as rules which could
"attribute" ownership of broadcast properties by other persons to us because
those persons are associated with us, may limit our ability to purchase stations
we would otherwise wish to buy.
The law also limits the ability of non-U.S. persons to own our voting
capital stock and to participate in our affairs. Our articles of incorporation
contain provisions which place restrictions on the ownership, voting and
transfer of our capital stock in accordance with the law.
INTANGIBLE ASSETS -- WE HAVE A SUBSTANTIAL AMOUNT OF INTANGIBLE ASSETS WHOSE
LIQUIDATION VALUE MIGHT NOT BE SUFFICIENT FOR US TO REPAY ALL OUR SENIOR DEBT
AND THE NOTES.
At November 30, 1998, approximately 79% of our total assets consisted of
intangible assets, such as broadcast licenses, excess of cost over fair value of
net assets of purchased businesses, subscription lists and similar assets, the
value of which depends significantly upon the continued operation of our
business. As a consequence, in the event of a default or any other event which
would result in a liquidation of our assets to pay our indebtedness, we cannot
assure you that the proceeds would be sufficient to repay our outstanding
indebtedness, including the notes.
20
<PAGE> 28
INTERNATIONAL BUSINESS RISKS -- OUR CURRENT AND ANY FUTURE INTERNATIONAL
OPERATIONS ARE SUBJECT TO CERTAIN RISKS THAT ARE UNIQUE TO OPERATING IN A
FOREIGN COUNTRY.
We currently own a 54% interest in a national radio station in Hungary, and
we intend to pursue opportunities to buy broadcasting properties in other
foreign countries. The risks of doing business in foreign countries include the
following:
- Changing regulatory or taxation policies
- Currency exchange risks
- Changes in diplomatic relations or hostility from local populations
- The risk that our property could be taken by the government, or that our
ability to transfer our property or earnings out of the foreign country
will be restricted
- Potential instability of foreign governments, which might result in
losses against which we are not insured.
Although we will try to evaluate the risks before we purchase a station in a
foreign country, we cannot be sure whether any of these risks will have an
effect on our business in the future.
FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE A CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE
GOVERNING THE NOTES.
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all notes then outstanding. However,
it is possible that we will not have sufficient funds at the time of the change
of control to make the required repurchase of notes or that restrictions in our
credit facility will not allow such repurchases. In addition, certain important
corporate events, such as leveraged recapitalizations that would increase the
level of our indebtedness, would not constitute a "change of control" under the
indenture governing the notes.
NO PRIOR MARKET FOR THE NOTES -- YOU CANNOT BE SURE THAT AN ACTIVE TRADING
MARKET WILL DEVELOP FOR THE NOTES.
The outstanding notes were not registered under the Securities Act or under
the securities laws of any state and may not be resold unless they are
subsequently registered or an exemption from the registration requirements of
the Securities Act and applicable state securities laws is available. The
registered notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
- the liquidity of any such market that may develop;
- the ability of registered note holders to sell their notes; or
- the price at which the registered note holders would be able to sell
their notes. If such a market were to exist, the registered notes may
trade at higher or lower prices than their principal amount or purchase
price, depending on many factors, including prevailing interest rates,
the market for similar debentures and the financial performance of
Emmis.
The notes are designated for trading among qualified institutional buyers
in The Portal(SM) Market. We understand that Credit Suisse First Boston
Corporation, Lehman Brothers Inc. and
21
<PAGE> 29
CIBC Oppenheimer Corp. presently intend to make a market in the notes. However,
they are not obligated to do so, and any market-making activity with respect to
the notes may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Securities Exchange Act of 1934, and may be limited during the
exchange offer or the pendency of an applicable shelf registration statement.
There can be no assurance that an active trading market will exist for the notes
or that such trading market will be liquid.
Notes that are not tendered or are tendered but not accepted will,
following the consummation of the exchange offer, continue to be subject to the
existing restrictions upon transfer, and, upon consummation of the exchange
offer, certain registration rights with respect to the outstanding notes will
terminate. In addition, any outstanding note holder who tenders in the exchange
offer for the purpose of participating in a distribution of the registered notes
may be deemed to have received restricted securities, and if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. To the extent that
outstanding notes are tendered and accepted in the exchange offer, the trading
market for untendered and tendered but unaccepted outstanding notes could be
adversely affected.
WE ARE NOT OBLIGATED TO NOTIFY YOU OF UNTIMELY OR DEFECTIVE TENDERS OF
OUTSTANDING NOTES.
We will issue registered notes pursuant to this exchange offer only after a
timely receipt of your outstanding notes, a properly completed and duly executed
letter of transmittal and all other required documents. Therefore, if you want
to tender your outstanding notes, please allow sufficient time to ensure timely
delivery. We are under no duty to give notification of defects or irregularities
with respect to the tenders of outstanding notes for exchange.
22
<PAGE> 30
USE OF PROCEEDS
Emmis will not receive any cash proceeds from the issuance of the
registered notes in exchange for the outstanding notes. In consideration for
issuing the registered notes, Emmis will receive outstanding notes in like
original principal amount at maturity. Outstanding notes received in the
exchange offer will be cancelled.
The net proceeds to Emmis from the original issuance of the outstanding
notes, after deducting discount and estimated expenses, were approximately
$291.3 million. We used approximately $26.1 million of the net proceeds to
retire our $25 million promissory note, including accrued interest, representing
a portion of the purchase price of the four television stations we acquired in
the SF Acquisition (the "SF Note"), and used the remainder of the net proceeds
to reduce the outstanding balance on our credit facility. For more information
regarding the SF Note and our credit facility, see "Description of Certain
Indebtedness."
As of February 12, 1999, we had aggregate amounts outstanding under our
credit facility of $552.0 million prior to application of net proceeds from the
sale of the outstanding notes. All amounts outstanding under our credit facility
bear interest at a rate that fluctuates with an applicable margin based on our
leverage ratio plus a bank base rate or a Eurodollar base rate as applicable. At
February 12, 1999, the weighted average interest rate on our credit facility was
approximately 7.3%. Outstanding indebtedness under our credit facility has been
incurred primarily to pay for acquisitions. The SF Note accrued interest at 8.0%
per annum and was scheduled to mature in July 1999.
Our credit facility, as amended and restated as of July 16, 1998, provided
availability of $750 million in loans, which could be increased to $1.0 billion
with the consent of the lenders. Concurrently with the offering of the
outstanding notes, our lenders amended the credit facility to permit Emmis to
complete the offering and use the proceeds of the offering as described above.
As so amended, the credit facility provides for the following:
- A $400 million senior secured revolving credit facility with a final
maturity date of August 31, 2006;
- A $250 million senior secured amortizing term loan with a final maturity
date of February 28, 2007; and
- A $100 million senior secured acquisition revolving credit/term loan
facility with a final maturity date of August 31, 2006, which will
terminate if not utilized prior to July 1999.
See "Description of Certain Indebtedness -- Amendment to Credit Facility."
23
<PAGE> 31
CAPITALIZATION
The following table sets forth the capitalization of Emmis as of November
30, 1998 and as adjusted to reflect the application of the net proceeds from the
offering of the outstanding notes in the manner described in "Use of Proceeds"
and the amendment of our credit facility, as described in "Description of
Certain Indebtedness -- Amendment to Credit Facility." Read the following
information in conjunction with our consolidated financial statements and
related notes, which are incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1998
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current maturities:
Credit facility......................................... $539,000 $274,946
SF Note................................................. 25,000 --
Capital leases.......................................... 206 206
Hungarian radio debt(1)................................. 16,806 16,806
8 1/8% Senior Subordinated Notes due 2009............... -- 300,000
-------- --------
Total long-term debt................................. 581,012 591,958
Total shareholders' equity................................ 238,655 238,655
-------- --------
Total capitalization.............................. $819,667 $830,613
======== ========
</TABLE>
- ------------------------------
(1) Hungarian radio debt represents obligations of our 54% owned Hungarian
subsidiary which are consolidated in our financial statements due to our
majority ownership interest. However, Emmis is not a guarantor of or
required to fund these obligations. See "Description of Certain
Indebtedness -- Hungarian Radio Debt."
24
<PAGE> 32
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The selected consolidated financial and other data have been derived,
except as otherwise noted, from the consolidated financial statements of Emmis
for the years ended February (29) 28, 1994, 1995, 1996, 1997 and 1998 which have
been audited by Arthur Andersen LLP and from the unaudited condensed
consolidated financial statements of Emmis for the nine months ended November
30, 1997 and 1998. The selected consolidated financial and other data presented
below should be read in conjunction with, and are qualified in their entirety by
reference to, our consolidated financial statements for the years ended February
(29) 28, 1996, 1997, and 1998 and to our unaudited condensed consolidated
financial statements for the nine months ended November 30, 1997 and 1998 and
related notes, both of which are incorporated by reference in this prospectus,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained elsewhere in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED FEBRUARY (29) 28, NOVEMBER 30,
----------------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1997 1998
------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net broadcasting revenues..... $50,311 $ 66,815 $ 99,830 $ 103,292 $ 125,855 $ 98,696 $ 145,277
Broadcasting operating
expenses.................... 29,368 38,794 53,948 52,839 67,646 50,739 76,182
Amortization of television
program rights.............. -- -- -- -- -- -- 2,011
Publication and other revenue,
net of operating expenses... 657 593 896 834 1,204 1,047 4,527
International business
development expenses........ -- 313 1,264 1,164 999 932 974
Corporate expenses............ 2,766 3,700 4,419 5,929 6,846 5,338 6,379
Depreciation and
amortization................ 2,812 3,827 5,677 5,481 7,536 5,407 18,595
Noncash compensation.......... 1,724 600 3,667 3,465 4,882 3,532 (1,022)
Time brokerage fee............ -- -- -- -- 5,667 3,542 2,220
------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income.............. 14,298 20,174 31,751 35,248 33,483 30,253 44,465
Interest expense(1)........... (13,588) (7,849) (13,540) (9,633) (13,772) (10,356) (24,942)
Minority interest............. -- -- -- -- -- -- 1,875
Loss on donation of radio
station..................... -- -- -- -- (4,833) -- --
Other income (expense), net... (367) (170) (303) 325 6 322 2,313
------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes and
extraordinary item.......... 343 12,155 17,908 25,940 14,884 20,219 23,711
Provision for income taxes.... 1,300 4,528 7,600 10,500 5,900 8,100 12,650
------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary item.......... (957) 7,627 10,308 15,440 8,984 12,119 11,061
------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)............. $(4,365) $ 7,627 $ 10,308 $ 15,440 $ 8,984 $ 12,119 $ 9,464
Basic net income (loss) per
share....................... (2) $ .72 $ .96 $ 1.41 $ .82 $ 1.10 $ .67
Diluted net income (loss) per
share....................... (2) $ .70 $ .93 $ 1.37 $ .79 $ 1.06 $ .66
Weighted average common shares
outstanding:
Basic....................... 10,557,328 10,690,677 10,942,996 10,903,333 11,034,856 14,046,628
Diluted..................... 10,831,695 11,083,504 11,291,225 11,377,765 11,450,283 14,447,764
</TABLE>
(footnotes
on following page)
25
<PAGE> 33
<TABLE>
<CAPTION>
AS OF FEBRUARY (29) 28, AS OF
---------------------------------------------------- NOVEMBER 30,
1994 1995 1996 1997 1998 1998
-------- -------- -------- -------- -------- ------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 1,607 $ 3,205 $ 1,218 $ 1,191 $ 5,785 $ 5,320
Working capital........... 6,210 10,088 14,761 15,463 21,083 (20,337)
Net intangible
assets(7)............... 30,751 139,729 135,830 131,743 234,558 801,351
Total assets.............. 57,849 183,441 176,566 189,716 333,388 1,009,838
Total debt................ 92,345 152,322 124,257 115,172 231,422 581,012
Redeemable preferred
stock................... 11,250 -- -- -- -- --
Shareholders' equity
(deficit)............... (54,229) (2,661) 13,884 34,422 45,210 238,655
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED FEBRUARY (29) 28, NOVEMBER 30,
----------------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1997 1998
------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Broadcast cash flow(3)......... $20,943 $ 28,021 $ 45,882 $ 50,453 $ 58,209 $ 47,957 $ 67,084
Broadcast cash flow
margin(4).................... 41.6% 41.9% 46.0% 48.8% 46.3% 48.6% 46.2%
EBITDA(5)...................... $18,834 $ 24,601 $ 41,095 $ 44,194 $ 51,568 $ 42,734 $ 64,258
Cash flows from:
Operating activities.......... (4,177) 15,480 23,221 21,362 22,487 13,534 30,365
Investing activities.......... 10,368 (102,682) 222 (13,919) (116,693) (61,480) (530,264)
Financing activities.......... (7,726) 88,800 (25,430) (7,470) 98,800 59,048 500,087
Capital expenditures(6)........ 659 1,081 1,396 7,559 16,991 6,492 26,224
Ratio of earnings to fixed
charges...................... 1.0x 2.4x 2.4x 3.4x 2.0x 2.8x 1.8x
</TABLE>
- ------------------------------
(1) Includes debt issuance cost and interest rate cap amortization of $3,263,
$660, $1,742, $1,071 and $2,183 for the years ended February (29) 28, 1994
through 1998, respectively, and $1,920 and $910 for the periods ended
November 30, 1997 and 1998, respectively.
(2) On March 1, 1994, Emmis closed on its initial public offering of its Class A
Common Stock. Accordingly, basic and diluted net income per share
information is not applicable for the year ended February 28, 1994.
(3) Management believes that broadcast cash flow is useful because it provides a
meaningful comparison of broadcast operating performance between companies
in the industry and serves as an indicator of the market value of a group of
stations. Broadcast cash flow is generally recognized by the broadcasting
industry as a measure of performance and is used by analysts who report on
the performance of broadcasting companies. Broadcast cash flow does not take
into account Emmis' debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts
that may be available for dividends, reinvestment in Emmis' business or
other discretionary uses. It is not a measure of liquidity or of performance
in accordance with generally accepted accounting principles, and should be
viewed as a supplement to and not a substitute for our results of operations
presented on the basis of generally accepted accounting principles. Emmis
defines broadcast cash flow as advertising revenues net of agency
commissions, less broadcasting operating expenses and amortization of
television program rights.
(4) Broadcast cash flow margin is defined as broadcast cash flow divided by net
broadcasting revenues.
(5) EBITDA is defined as operating income plus depreciation and amortization and
noncash compensation expenses.
26
(6) Capital expenditures for the year ended February 28, 1998 and nine months
ended November 30, 1997 and 1998 include progress payments totaling $11,775,
$4,342 and $19,385, respectively, in connection with the construction of our
new Indianapolis office and studio facility.
(7) Net intangible assets consist primarily of FCC licenses and excess of cost
over fair value of net assets of purchased businesses, net of accumulated
amortization.
27
<PAGE> 34
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial data
reflect the unaudited pro forma condensed consolidated results of operations
data of Emmis for the year ended February 28, 1998, the nine months ended
November 30, 1998 and the twelve months ended November 30, 1998. The unaudited
pro forma condensed consolidated statement of operations data for the year ended
February 28, 1998 reflect adjustments to our condensed consolidated historical
operating data to give effect to:
- the Fiscal 1998 Transactions, all of which occurred during the year
ended February 28, 1998,
- the WQCD Acquisition,
- the Equity Offering and the Credit Facility Restatement,
- the SF Acquisition,
- the Wabash Valley Acquisition, and
- the offering of the outstanding notes and the Credit Facility Amendment,
as if such transactions had occurred at the beginning of the year presented.
The unaudited pro forma condensed consolidated statement of operations data
for the nine months ended November 30, 1998 reflect adjustments to our condensed
consolidated historical operating data to give effect to:
- the WQCD Acquisition,
- the Equity Offering and the Credit Facility Restatement,
- the SF Acquisition,
- the Wabash Valley Acquisition, and
- the offering of the outstanding notes and the Credit Facility Amendment,
as if such transactions had occurred at the beginning of the period presented.
The unaudited pro forma condensed consolidated statement of operations data
for the twelve months ended November 30, 1998 reflect adjustments to our
condensed consolidated historical operating data to give effect to:
- the acquisition of Texas Monthly,
- the WQCD Acquisition,
- the Equity Offering and the Credit Facility Restatement,
- the SF Acquisition,
- the Wabash Valley Acquisition, and
- the offering of the outstanding notes and the Credit Facility Amendment,
as if such transactions had occurred at the beginning of the period presented.
28
<PAGE> 35
Except as otherwise noted, the unaudited pro forma condensed consolidated
financial data are based on historical consolidated financial statements of
Emmis and the entities from which assets were acquired in connection with
certain of the transactions referred to above, and should be read in conjunction
with our consolidated financial statements for the year ended February 28, 1998,
our unaudited condensed consolidated financial statements for the nine months
ended November 30, 1998, the financial statements for Tribune New York Radio,
Inc. (WQCD-FM) for the year ended December 28, 1997, and the combined financial
statements of SF Broadcasting of Wisconsin, Inc. and SF Multistations, Inc. and
subsidiaries for the year ended December 28, 1997, incorporated in this
prospectus by reference. In the opinion of management, all adjustments necessary
to fairly present pro forma data have been made.
The unaudited pro forma data are presented for illustrative purposes only
and are not indicative of the operating results or financial position that would
have occurred if the transactions referred to above had been consummated on the
dates indicated.
29
<PAGE> 36
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
EQUITY
OFFERING WABASH
FISCAL 1998 WQCD AND CREDIT SF VALLEY
HISTORICAL TRANSACTIONS ACQUISITION FACILITY ACQUISITION ACQUISITION SUBTOTAL
---------- ------------ ----------- ---------- ----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net broadcasting
revenues................ $ 125,855 $ 1,975(3) $ 6,773(5) -- $ 52,934(8) $17,138(8) $204,675
Broadcasting operating
expenses................ 67,646 1,430(3) 3,570(5) -- 35,247(8) 10,725(8) 118,618
Amortization of
television
program rights.......... -- -- -- -- 3,528(4) 2,226(4) 5,754
Publication and other
revenue, net of
operating expenses...... 1,204 2,572(3) -- -- -- -- 3,776
International business
development expenses.... 999 -- -- -- -- -- 999
Corporate expenses....... 6,846 -- -- -- 1,940(8) 500(8) 9,286
Depreciation and
amortization............ 7,536 3,540(4) 5,240(4) -- 11,968(4) 3,372(4) 31,656
Noncash compensation..... 4,882 -- -- -- -- -- 4,882
Time brokerage fee....... 5,667 -- (5,667)(5) -- -- -- --
---------- ------- -------- --------- -------- ------- --------
Operating income
(loss).................. 33,483 (423) 3,630 -- 251 315 37,256
---------- ------- -------- --------- -------- ------- --------
Other income (expense):
Interest expense(1)..... (13,772) (3,840)(3) (10,215)(6) 12,871(7) (24,506)(9) (7,095)(11) (46,557)
Other income (expense),
net................... (234)(10) (234)
(4,827) 4,833(3) -- -- 55(8) -- 61
---------- ------- -------- --------- -------- ------- --------
Total other income
(expense)........... (18,599) 993 (10,215) 12,871 (24,685) (7,095) (46,730)
---------- ------- -------- --------- -------- ------- --------
Income (loss) before
income taxes............ 14,884 570 (6,585) 12,871 (24,434) (6,780) (9,474)
Provision (benefit) for
income taxes(2)......... 5,900 188 (2,169) 4,239 (8,047) (2,233) (2,122)
---------- ------- -------- --------- -------- ------- --------
Net income (loss)........ $ 8,984 $ 382 $ (4,416) $ 8,632 $(16,387) $(4,547) $(7,352)
========== ======= ======== ========= ======== ======= ========
Basic net income (loss)
per share............... $ .82
==========
Diluted net income (loss)
per share............... $ .79
==========
Weighted average common
shares outstanding:
Basic................... 10,903,333 -- -- 4,600,000(13) -- -- --
Diluted................. 11,377,765 -- -- 4,600,000(13) -- -- --
<CAPTION>
NOTES
OFFERING AND
CREDIT FACILITY
AMENDMENT PRO FORMA
--------------- ----------
(IN THOUSANDS)
<S> <C> <C>
Net broadcasting
revenues................ -- $ 204,675
Broadcasting operating
expenses................ -- 118,618
Amortization of
television
program rights.......... -- 5,754
Publication and other
revenue, net of
operating expenses...... -- 3,776
International business
development expenses.... -- 999
Corporate expenses....... -- 9,286
Depreciation and
amortization............ -- 31,656
Noncash compensation..... -- 4,882
Time brokerage fee....... -- --
------- ----------
Operating income
(loss).................. -- 37,256
------- ----------
Other income (expense):
Interest expense(1)..... (2,362)(12) (48,919)
Other income (expense),
net................... -- (234)
-- 61
------- ----------
Total other income
(expense)........... (2,362) (49,092)
------- ----------
Income (loss) before
income taxes............ (2,362) (11,836)
Provision (benefit) for
income taxes(2)......... (778) (2,900)
------- ----------
Net income (loss)........ $(1,584) $ (8,936)
======= ==========
Basic net income (loss)
per share............... $ (.58)
==========
Diluted net income (loss)
per share............... $ (.58)
==========
Weighted average common
shares outstanding:
Basic................... -- 15,503,333
Diluted................. -- 15,503,333(14)
</TABLE>
- ------------------------------
(1) Reflects pro forma interest expense for the twelve months ended February
28, 1998 resulting from borrowings under our credit facility, assuming the
Fiscal 1998 Transactions, WQCD Acquisition, the Equity Offering and the
Credit Facility Restatement, the SF Acquisition and the Wabash Valley
Acquisition had occurred as of March 1, 1997 and assuming a weighted
average interest rate of 7.981%.
(2) Calculated using a statutory tax rate of 38% of taxable income.
(3) Includes the Fiscal 1998 Transactions, assuming the transactions had
occurred as of March 1, 1997.
(4) Reflects pro forma depreciation of property and equipment and amortization
of intangibles and television program rights resulting from the allocation
of the purchase price of the acquisitions from March 1, 1997 through the
respective date of each acquisition.
30
<PAGE> 37
(5) Reflects the historical results of WQCD-FM in New York City for the period
from March 1, 1997 to June 30, 1997. Actual operating results for the
period from July 1, 1997 to February 28, 1998 are reflected in historical
operations because Emmis began operating the station on July 1, 1997 under
a time brokerage agreement. The time brokerage fees have been eliminated
for pro forma purposes.
(6) Reflects pro forma interest expense on the cash purchase price of the radio
station of $141,000 less $13,000 for adjustments relating to taxes. The net
purchase price was funded by borrowings under our credit facility.
(7) Reflects the net effect of (i) the elimination of interest expense and
amortization of debt issuance costs and interest rate caps resulting from
repayment of the outstanding balance under the prior credit facility by
application of $173,900 of the net proceeds of the Equity Offering and the
Credit Facility Restatement, and (ii) interest expense under our credit
facility and the amortization of debt issuance costs and interest rate caps
related to the Credit Facility Restatement.
(8) Represents the historical operating results of the acquired stations for
the year ended December 28, 1997, exclusive of depreciation and
amortization, and amortization of television program rights.
(9) Reflects pro forma interest expense on the borrowings, totaling $307,000,
associated with the purchase of the stations. The borrowings consist of the
SF Note accruing interest at 8.0% and $282,000 in borrowings under our
credit facility.
(10) Reflects reduced interest income due to cash paid for acquisition related
costs.
(11) Reflects pro forma interest expense on the adjusted cash purchase price of
the stations of $88,905. The purchase price was funded by $9,000 held in
escrow and $79,905 in borrowings under our credit facility.
(12) Represents an adjustment to interest expense to reflect (i) the repayment
of the SF Note and accrued interest of $26,083, (ii) the repayment of
borrowings under our credit facility of $264,054, (iii) the interest on the
notes at a rate of 8.125% and (iv) the amortization of debt issuance costs
relating to the offering of the outstanding notes and the Credit Facility
Amendment.
(13) Reflects issuance of 4.6 million shares of Class A Common Stock at $42.00
per share resulting from the Equity Offering.
(14) Due to net loss, weighted average common shares outstanding for diluted net
income (loss) per share is the same as weighted average common shares
outstanding for basic net income (loss) per share.
31
<PAGE> 38
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
EQUITY NOTES
OFFERING WABASH OFFERING AND
WQCD AND CREDIT SF VALLEY CREDIT FACILITY
HISTORICAL ACQUISITION FACILITY ACQUISITION ACQUISITION SUBTOTAL AMENDMENT
---------- ----------- ---------- ----------- ----------- -------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net broadcasting
revenues............... $ 145,277 $ -- $ -- $19,896(8) $11,391(11) $176,564 --
Broadcasting operating
expenses............... 76,182 -- -- 13,622(8) 6,818(11) 96,622 --
Amortization of
television program
rights................. 2,011 -- -- 1,323(3) 1,328(3) 4,662 --
Publication and other
revenue, net of
operating expenses..... 4,527 -- -- -- -- 4,527 --
International business
development expenses... 974 -- -- -- -- 974 --
Corporate expenses....... 6,379 -- -- 817(8) 292(11) 7,488 --
Depreciation and
amortization........... 18,595 1,310(3) -- 4,489(3) 1,967(3) 26,361 --
Noncash compensation..... (1,022) -- -- -- -- (1,022) --
Time brokerage fee....... 2,220 (2,220)(4) -- -- -- -- --
---------- ------- --------- ------- ------- -------- -------
Operating income
(loss)................. 44,465 910 -- (355) 986 46,006 --
---------- ------- --------- ------- ------- -------- -------
Other income (expense):
Interest expense(1).... (24,942) (2,554)(5) 5,256(6) (9,189)(9) (4,137)(12) (35,566) (1,771)(13)
Other income (expense),
net.................. 4,188 -- -- (175)(10) -- 4,013 --
---------- ------- --------- ------- ------- -------- -------
Total other income
(expense).......... (20,754) (2,554) 5,256 (9,364) (4,137) (31,553) (1,771)
---------- ------- --------- ------- ------- -------- -------
Income (loss) before
income taxes........... 23,711 (1,644) 5,256 (9,719) (3,151) 14,453 (1,771)
Provision (benefit) for
income taxes(2)........ 12,650 (827) 2,645 (4,891) (1,586) 7,991 (891)
---------- ------- --------- ------- ------- -------- -------
Net income (loss) before
extraordinary item..... 11,061 (817) 2,611 (4,828) (1,565) 6,462 (880)
Extraordinary item, net
of tax................. 1,597 -- (1,597)(7) -- -- -- --
---------- ------- --------- ------- ------- -------- -------
Net income (loss)........ $ 9,464 $ (817) $ 4,208 $(4,828) $(1,565) $ 6,462 $ (880)
========== ======= ========= ======= ======= ======== =======
Basic net income (loss)
per share.............. $ .67
==========
Diluted net income (loss)
per share.............. $ .66
==========
Weighted average common
shares outstanding:
Basic.................. 14,046,628 -- 1,589,091(14) -- -- -- --
Diluted................ 14,447,764 -- 1,589,091(14) -- -- -- --
<CAPTION>
PRO FORMA
----------
<S> <C>
Net broadcasting
revenues............... $ 176,564
Broadcasting operating
expenses............... 96,622
Amortization of
television program
rights................. 4,662
Publication and other
revenue, net of
operating expenses..... 4,527
International business
development expenses... 974
Corporate expenses....... 7,488
Depreciation and
amortization........... 26,361
Noncash compensation..... (1,022)
Time brokerage fee....... --
----------
Operating income
(loss)................. 46,006
----------
Other income (expense):
Interest expense(1).... (37,337)
Other income (expense),
net.................. 4,013
----------
Total other income
(expense).......... (33,324)
----------
Income (loss) before
income taxes........... 12,682
Provision (benefit) for
income taxes(2)........ 7,100
----------
Net income (loss) before
extraordinary item..... 5,582
Extraordinary item, net
of tax................. --
----------
Net income (loss)........ 5,582
==========
Basic net income (loss)
per share.............. $ .36
==========
Diluted net income (loss)
per share.............. $ .35
==========
Weighted average common
shares outstanding:
Basic.................. 15,635,719
Diluted................ 16,036,855
</TABLE>
- ------------------------------
(1) Reflects pro forma interest expense for the nine months ended November 30,
1998 resulting from borrowings under our credit facility, assuming the WQCD
Acquisition, the Equity Offering and the Credit Facility Restatement, the
SF Acquisition and the Wabash Valley Acquisition had occurred as of March
1, 1998 and assuming a weighted average interest rate of 7.981%.
(2) Calculated using a statutory tax rate of 37% of taxable income.
32
<PAGE> 39
(3) Reflects pro forma depreciation of property and equipment and amortization
of intangibles and television program rights resulting from the allocation
of the purchase price of the acquisitions from March 1, 1998 through the
respective date of each acquisition.
(4) Actual operating results for the period from March 1, 1998 to November 30,
1998 for WQCD-FM in New York City are reflected in historical operations
because Emmis began operating the station on July 1, 1997 under a time
brokerage agreement. The time brokerage fees have been eliminated for pro
forma purposes.
(5) Reflects pro forma interest expense on the cash purchase price of the radio
station of $141,000 less $13,000 for adjustments relating to taxes. The net
purchase price was funded by borrowings under our credit facility.
(6) Reflects the net effect of (i) the elimination of interest expense and
amortization of debt issuance costs and interest rate caps resulting from
repayment of the outstanding balance under the prior credit facility by
application of $173,900 of the net proceeds of the equity offering and by
borrowings under our credit facility, and (ii) interest expense under our
credit facility and the amortization of debt issuance costs and interest
rate caps related to the Credit Facility Restatement.
(7) Represents the elimination of the write-off of deferred debt issuance
costs, net of tax resulting from the Credit Facility Restatement, which
were recorded as an extraordinary item in the historical statement of
operations for the nine months ended November 30, 1998.
(8) Represents the historical operating results of the acquired stations for
the period from March 1, 1998 to July 14, 1998, exclusive of depreciation
and amortization and amortization of program rights.
(9) Reflects pro forma interest expense on the borrowings, totaling $307,000,
associated with the purchase of the stations. The borrowings consist of the
SF Note accruing interest at 8.0% and $282,000 in borrowings under our
credit facility.
(10) Reflects reduced interest income due to cash paid for acquisition related
costs.
(11) Represents the historical operating results of the stations acquired in the
Wabash Valley Acquisition for the period from March 1, 1998 to September
30, 1998, exclusive of depreciation and amortization and amortization of
program rights.
(12) Reflects pro forma interest expense on the adjusted cash purchase price of
the stations of $88,905. The purchase price was funded by $9,000 held in
escrow and $79,905 in borrowings under our credit facility.
(13) Represents an adjustment to interest expense to reflect (i) the repayment
of the SF Note and accrued interest of $26,083, (ii) the repayment of
borrowings under our credit facility of $264,054, (iii) the interest on the
notes at a rate of 8.125% and (iv) the amortization of debt issuance costs
relating to the offering of the outstanding notes and the Credit Facility
Amendment.
(14) Represents shares not included in historical related to the issuance of 4.6
million shares of Class A Common Stock at $42.00 per share resulting from
the Equity Offering.
33
<PAGE> 40
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
EQUITY
TEXAS OFFERING WABASH
MONTHLY WQCD AND CREDIT SF VALLEY
HISTORICAL ACQUISITION ACQUISITION FACILITY ACQUISITION ACQUISITION SUBTOTAL
---------- ----------- ----------- ---------- ----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net broadcasting
revenues............ $ 172,435 $ -- $ -- -- $31,742(9) $15,359(12) $219,536
Broadcasting
operating
expenses............ 93,089 -- -- -- 22,033(9) 9,477(12) 124,599
Amortization of
television program
rights.............. 2,011 -- -- -- 2,205(4) 1,855(4) 6,071
Publication and other
revenue, net of
operating
expenses............ 4,684 485(3) -- -- -- -- 5,169
International
business development
expenses............ 1,041 -- -- -- -- -- 1,041
Corporate expenses... 7,887 -- -- -- 1,459(9) 417(12) 9,763
Depreciation and
amortization........ 20,724 586(4) 2,620(4) -- 7,480(4) 2,810(4) 34,220
Noncash
compensation........ 328 -- -- -- -- -- 328
Time brokerage fee... 4,345 -- (4,345)(5) -- -- -- --
---------- ----- ------- --------- ------- ------- --------
Operating income
(loss).............. 47,694 (101) 1,725 -- (1,435) 800 48,683
---------- ----- ------- --------- ------- ------- --------
Other income
(expense):
Interest
expense(1)........ (28,358) (498) (5,106)(6) 8,099(7) (15,315)(10) (5,910)(13) (47,088)
Other income
(expense), net...... (961) -- -- -- (234)(11) -- (1,195)
---------- ----- ------- --------- ------- ------- --------
Total other income
(expense)....... (29,319) (498) (5,106) 8,099 (15,549) (5,910) (48,283)
---------- ----- ------- --------- ------- ------- --------
Income (loss) before
income taxes........ 18,375 (599) (3,381) 8,099 (16,984) (5,110) 400
Provision (benefit)
for income
taxes(2)............ 10,450 (281) (1,588) 3,803 (7,975) (2,400) 2,009
---------- ----- ------- --------- ------- ------- --------
Net income (loss)
before extraordinary
items............... 7,925 (318) (1,793) 4,296 (9,009) (2,710) (1,609)
Extraordinary
items............... 1,597 -- -- (1,597)(8) -- -- --
---------- ----- ------- --------- ------- ------- --------
Net income (loss).... $ 6,328 $(318) $(1,793) $ 5,893 $(9,009) $(2,710) $ (1,609)
========== ===== ======= ========= ======= ======= ========
Basic net income
(loss) per share.... $ .45
==========
Diluted net income
(loss) per share.... $ .44
==========
Weighted average
common shares
outstanding:
Basic............... 14,046,628 -- -- 1,589,091(15) -- -- --
Diluted............. 14,447,764 -- -- 1,589,091(15) -- -- --
<CAPTION>
NOTES
OFFERING AND
CREDIT FACILITY
AMENDMENT PRO FORMA
--------------- ----------
<S> <C> <C>
Net broadcasting
revenues............ -- $ 219,536
Broadcasting
operating
expenses............ -- 124,599
Amortization of
television program
rights.............. -- 6,071
Publication and other
revenue, net of
operating
expenses............ -- 5,169
International
business development
expenses............ -- 1,041
Corporate expenses... -- 9,763
Depreciation and
amortization........ -- 34,220
Noncash
compensation........ -- 328
Time brokerage fee... -- --
------- ----------
Operating income
(loss).............. -- 48,683
------- ----------
Other income
(expense):
Interest
expense(1)........ (2,362)(14) (49,450)
Other income
(expense), net...... -- (1,195)
------- ----------
Total other income
(expense)....... (2,362) (50,645)
------- ----------
Income (loss) before
income taxes........ (2,362) (1,962)
Provision (benefit)
for income
taxes(2)............ (1,109) 900
------- ----------
Net income (loss)
before extraordinary
items............... (1,253) (2,862)
Extraordinary
items............... -- --
------- ----------
Net income (loss).... $(1,253) $ (2,862)
======= ==========
Basic net income
(loss) per share.... $ (.18)
==========
Diluted net income
(loss) per share.... $ (.18)
==========
Weighted average
common shares
outstanding:
Basic............... -- 15,635,719
Diluted............. -- 15,635,719(16)
</TABLE>
- ------------------------------
(1) Reflects pro forma interest expense for the twelve months ended November
30, 1998 resulting from borrowings under our credit facility, assuming the
Texas Monthly acquisition, the WQCD Acquisition, the Equity Offering and
the Credit Facility Restatement, the SF Acquisition and the Wabash Valley
Acquisition had occurred as of December 1, 1997 and assuming a weighted
average interest rate of 7.981%.
(2) Calculated using a statutory tax rate of 37% of taxable income.
34
<PAGE> 41
(3) Represents the historical operating results of Texas Monthly for the period
from December 1, 1997 to January 31, 1998, exclusive of depreciation and
amortization.
(4) Reflects pro forma depreciation of property and equipment and amortization
of intangibles and television program rights resulting from the allocation
of the purchase price of the acquisitions from December 1, 1997 through the
respective date of each acquisition.
(5) Actual operating results for the period from December 1, 1997 to November
30, 1998 for WQCD-FM in New York City are reflected in historical
operations because Emmis began operating the station on July 1, 1997 under
a time brokerage agreement. The time brokerage fees have been eliminated
for pro forma purposes.
(6) Reflects pro forma interest expense on the cash purchase price of the radio
station of $141,000 less $13,000 for adjustments relating to taxes. The net
purchase price was funded by borrowings under our credit facility.
(7) Reflects the net effect of (i) the elimination of interest expense and
amortization of debt issuance costs and interest rate caps resulting from
repayment of the outstanding balance under the prior credit facility by
application of $173,900 of the net proceeds of the Equity Offering and by
the Credit Facility Restatement, and (ii) interest expense under our credit
facility and the amortization of debt issuance costs and interest rate caps
related to the Credit Facility Restatement.
(8) Represents the elimination of the write-off of deferred debt issuance
costs, net of tax resulting from the Credit Facility Restatement, which
were recorded as an extraordinary item in the historical statement of
operations for the twelve months ended November 30, 1998.
(9) Represents the historical operating results of the acquired stations for
the period from December 1, 1997 to July 14, 1998, exclusive of
depreciation and amortization and amortization of program rights.
(10) Reflects pro forma interest expense on the borrowings, totaling $307,000,
associated with the purchase of the stations. The borrowings consist of the
SF Note accruing interest at 8.0% and $282,000 in borrowings under our
credit facility.
(11) Reflects reduced interest income due to cash paid for acquisition related
costs.
(12) Represents the historical operating results of the stations acquired in the
Wabash Valley Acquisition for the period from December 1, 1997 to September
30, 1998, exclusive of depreciation and amortization and amortization of
program rights.
(13) Reflects pro forma interest expense on the adjusted cash purchase price of
the stations of $88,905. The purchase price was funded by $9,000 held in
escrow and $79,905 in borrowings under our credit facility.
(14) Represents an adjustment to interest expense to reflect (i) the repayment
of the SF Note and accrued interest of $26,083, (ii) the repayment of
borrowings under our credit facility of $264,054, (iii) the interest on the
notes at a rate of 8.125% and (iv) the amortization of debt issuance costs
relating to the offering of the outstanding notes and the Credit Facility
Amendment.
(15) Represents shares not included in historical related to the issuance of 4.6
million shares of Class A Common Stock at $42.00 per share resulting from
the Equity Offering.
(16) Due to net loss, weighted average common shares outstanding for diluted net
income (loss) per share is the same as weighted average common shares
outstanding for basic net income (loss) per share.
35
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our selected
historical and pro forma financial statements and the related notes presented
elsewhere in this offering memorandum, as well as our historical financial
statements and the financial statements of acquired businesses which are
incorporated by reference in this offering memorandum.
GENERAL
We own and operate sixteen radio stations, six television stations and four
magazine publishing operations. Our radio stations consist of thirteen FM and
three AM stations serving New York City, Los Angeles, Chicago, St. Louis,
Indianapolis and Terre Haute, Indiana. Our television stations consist of five
Fox affiliated stations serving New Orleans, Louisiana, Mobile, Alabama, Green
Bay, Wisconsin, Honolulu, Hawaii and Fort Myers, Florida and one CBS affiliated
station serving Terre Haute, Indiana. Our publishing operations consist
primarily of four city or regional monthly magazines including Indianapolis
Monthly, Atlanta, Cincinnati and Texas Monthly.
The principal source of our broadcasting revenues is the sale of
broadcasting time on our radio and television stations for advertising. The sale
of advertising time is primarily affected by the demand for advertising time by
local and national advertisers and the advertising rates charged by our radio
and television stations. We derive a small portion of our broadcasting revenues
from fees paid by the networks and program syndicators for the broadcast of
programming. Our broadcast revenues are generally highest in our second and
third fiscal quarters.
Radio station advertising rates are based in part on a station's ability to
attract audiences in the demographic groups which advertisers wish to reach and
the number of stations competing in the market area, as well as local, regional
and national economic conditions. A station's audience is reflected in rating
service surveys of the size of the audience tuned to the station and the time
spent listening or viewing.
Television station advertising is sold for placement in proximity to
specific local or network programming and is priced primarily on the basis of a
program's popularity with the audience advertisers wish to reach, as measured
principally by quarterly audience surveys. In addition, advertising rates are
affected by the number of advertisers competing for the available time, the size
and demographic makeup of the market areas served, and local, regional and
national economic conditions.
In the broadcasting industry, stations often utilize trade (or barter)
agreements to exchange advertising time for goods or services (such as other
media advertising, travel or lodging), in lieu of cash. In order to preserve
most of our on-air inventory for cash advertising, we generally enter into trade
agreements only if the goods or services bartered to us will be used in our
business. We have minimized our use of trade agreements and in fiscal 1996, 1997
and 1998 sold approximately 95% of our advertising time for cash.
The principal source of our publishing revenues is the sale of local,
regional and national advertising pages in our magazines. Advertising sales and
the rates that we charge are
36
<PAGE> 43
determined in part by a publication's ability to attract audiences in the
geographic and demographic groups which advertisers wish to reach and the number
of magazines competing in the market area, as well as local, regional and
national economic conditions. Our publications also derive revenues from the
sale of subscriptions to our magazines and the sales of our magazines at retail
locations such as newsstands, bookstores and shops.
The primary operating expenses involved in owning and operating radio
stations are employee salaries and commissions, programming, advertising and
promotion. The primary operating expenses involved in owning and operating
television stations are syndicated program rights fees, employee salaries and
commissions, news gathering, programming, advertising and promotion. The
principal operating expenses involved in owning and operating magazines are
printing, employee salaries and commissions, advertising and promotion. Our net
earnings are also impacted by depreciation, amortization and interest expenses
associated with our acquisition of broadcasting and publishing operations.
The performance of a broadcasting group, such as Emmis, is customarily
measured by the ability of its stations to generate broadcast cash flow and
operating cash flow. We define broadcast cash flow as advertising revenues net
of agency commissions, less broadcast operating expenses and amortization of TV
program rights. We define operating cash flow as operating income before
depreciation and amortization, time brokerage fees and non-cash compensation
expenses. Broadcast cash flow and operating cash flow are not measures of
liquidity or of performance calculated in accordance with generally accepted
accounting principles, and should be viewed as a supplement to and not a
substitute for our results of operations presented on the basis of generally
accepted accounting principles. Broadcast and operating cash flow do not take
into account Emmis' debt service requirements and other commitments and,
accordingly, they are not necessarily indicative of amounts that may be
available for dividends, reinvestment in Emmis' business or other discretionary
uses. We believe that broadcast cash flow and operating cash flow are useful
because they are generally recognized by the broadcasting industry as measures
of performance and are used by analysts who report on the performance of
broadcast companies. Additionally, broadcast cash flow provides a meaningful
comparison of broadcast operating performance between companies in the industry
and serves as an indicator of the market value of a group of stations. Operating
cash flow is used by analysts to measure a company's ability to service debt and
is used in calculating the amount of additional indebtedness that a company may
incur.
RESULTS OF OPERATIONS
The pro forma comparisons discussed in this section are based on the pro
forma data in Note 2 to our consolidated financial statements for the nine
months ended November 30, 1998 and in Note 6 to our consolidated financial
statements for the fiscal year ended February 28, 1998.
NINE MONTHS ENDED NOVEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED NOVEMBER
30, 1997
Net broadcasting revenues for the nine months ended November 30, 1998 were
$145.3 million compared to $98.7 million for the same period of the prior year,
an increase of
37
<PAGE> 44
$46.6 million or 47.2%. This increase is principally due to the operation of
WQCD under a time brokerage agreement and the subsequent acquisition thereof,
the acquisition of WTLC FM and AM, the commencement of operations of our
Hungarian national radio subsidiary (known as Slager Radio), the SF Acquisition
and the Wabash Valley Acquisition, as well as improved performance at our
properties in New York and Chicago. On a pro forma basis, net broadcasting
revenues increased $15.2 million or 9.4% for the nine-month period. This pro
forma increase is principally due to improved performance at our radio stations
in New York and Chicago.
Broadcasting operating expenses for the nine months ended November 30, 1998
were $76.2 million compared to $50.7 million for the same period of the prior
year, an increase of $25.5 million or 50.1%. This increase is primarily
attributable to the operation of WQCD under a time brokerage agreement and the
subsequent acquisition thereof, the acquisition of WTLC FM and AM, the
commencement of operations of Slager Radio, the SF Acquisition and the Wabash
Valley Acquisition. On a pro forma basis, broadcasting operating expenses
increased $6.1 million or 6.8% for the nine-month period. This pro forma
increase is principally due to expenses associated with higher revenues.
Broadcast cash flow for the nine-months ended November 30, 1998 was $67.1
million compared to $48.0 million for the same period of the prior year, an
increase of $19.1 million or 39.9%. This increase is principally due to
increased net broadcasting revenues offset by increased broadcasting operating
expenses as discussed above. On a pro forma basis, broadcast cash flow increased
$8.3 million or 12.4% for the nine-month period. This pro forma increase is
principally due to improved operations at our properties in New York and
Chicago.
Corporate expenses for the nine-month period ended November 30, 1998 were
$6.4 million compared to $5.3 million for same period of the prior year, an
increase of $1.1 million or 19.5%. This increase is primarily due to the
establishment of corporate divisions for publishing and television.
International business development expenses for the nine-month period ended
November 30, 1998 were $1.0 million compared to $0.9 million for the same period
of the prior year. These expenses reflect costs associated with Emmis
International Corporation. The purpose of this wholly owned subsidiary is to
identify, investigate and develop international broadcast investments or other
international business opportunities. Expenses consist primarily of salaries,
travel and various administrative costs.
Operating cash flow for the nine months ended November 30, 1998 was $64.3
million compared to $42.7 million for the same period of the prior year, an
increase of $21.6 million or 50.4%. This increase is principally due to
increased net broadcasting revenues offset by increased broadcasting operating
expenses, as discussed above, and an increase in publication and other revenue
net of operating expenses resulting from the acquisition of Texas Monthly. On a
pro forma basis, operating cash flow increased $8.8 million or 13.8% for the
nine-month period.
Interest expense was $24.9 million for the nine months ended November 30,
1998 compared to $10.4 million for the same period of the prior year, an
increase of $14.5 million or 140.9%. This increase reflects higher outstanding
debt due to the WTLC FM and AM acquisitions, the acquisition of Texas Monthly,
the acquisition of Slager Radio, the WQCD Acquisition, the SF
38
<PAGE> 45
Acquisition and the Wabash Valley Acquisition. On a pro forma basis, interest
expense increased $0.3 million or 0.9% for the nine-month period.
YEAR ENDED FEBRUARY 28, 1998 COMPARED TO YEAR ENDED FEBRUARY 28, 1997
Net broadcasting revenues for the year ended February 28, 1998 were $125.9
million compared to $103.3 million for the same period of the prior year, an
increase of $22.6 million or 21.8%. This increase was principally due to the
acquisition of radio stations in St. Louis, the operation of WQCD-FM under a
time brokerage agreement, and the ability to realize higher advertising rates at
our broadcasting properties, resulting from higher ratings at certain
broadcasting properties, as well as increases in general radio spending in the
markets in which Emmis operates. On a pro forma basis, net broadcasting revenues
would have increased $8.5 million or 6.7% for the year. For these purposes, pro
forma information assumes the acquisition of Texas Monthly, the acquisition of
radio stations in Indianapolis and St. Louis and the operation of WQCD-FM under
a time brokerage agreement were effective on the first day of the year ended
February 28, 1997.
Broadcasting operating expenses for the year ended February 28, 1998 were
$67.6 million compared to $52.8 million for the same period of the prior year,
an increase of $14.8 million or 28.0%. This increase was principally
attributable to the acquisition of radio stations in St. Louis and the operation
of WQCD-FM under a time brokerage agreement and increased promotional spending
at our broadcasting properties. On a pro forma basis, broadcasting operating
expenses would have increased $4.9 million or 7.2% for the year.
Broadcast cash flow for the year ended February 28, 1998 was $58.2 million
compared to $50.4 million for the same period of the prior year, an increase of
$7.8 million or 15.4%. This increase was due to increased net broadcasting
revenues partially offset by increased broadcasting operating expenses as
discussed above. On a pro forma basis, broadcast cash flow would have increased
$3.6 million or 6.2% for the year.
Corporate expenses for the year ended February 28, 1998 were $6.8 million
compared to $5.9 million for the same period of the prior year, an increase of
$0.9 million or 15.5%. This increase was primarily due to increased travel
expenses and other expenses related to potential acquisitions that were not
finalized and increased professional fees.
Operating cash flow consists of operating income, excluding the time
brokerage fee, noncash compensation and depreciation and amortization. Operating
cash flow for the year ended February 28, 1998 was $51.6 million compared to
$44.2 million for the same period of the prior year, an increase of $7.4 million
or 16.7%. This increase was principally due to the increase in broadcast cash
flow partially offset by an increase in corporate expenses. On a pro forma
basis, operating cash flow would have increased $4.0 million or 7.5% for the
year.
Interest expense was $13.8 million for the year ended February 28, 1998
compared to $9.6 million for the same period of the prior year, an increase of
$4.2 million or 43.0%. This increase reflected higher outstanding debt due to
the acquisition of radio stations in St. Louis and the write-off of deferred
financing costs associated with refinancing of our bank debt, offset by
voluntary repayments made under the bank debt and a rate decrease associated
with the
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<PAGE> 46
refinancing. On a pro forma basis, interest expense would have increased $0.8
million or 4.6% for the year.
Publication and other revenues net of operating expenses for the year ended
February 28, 1998 were $1.2 million compared to $0.8 million for same period of
the prior year, an increase of $0.4 million or 44.4%. This increase was due to
the acquisition of Texas Monthly and increased tower rental revenue offset by an
increase in operating expenses at Atlanta magazine. On a pro forma basis,
publication and other revenues would have increased $1.1 million or 43.2%.
Depreciation and amortization expense for the year ended February 28, 1998
was $7.5 million compared to $5.5 million for the same period of the prior year,
an increase of $2.0 million or 37.5%. This increase was primarily due to the
acquisition of Texas Monthly and radio stations in Indianapolis and St. Louis.
On a pro forma basis, depreciation and amortization expense would have increased
$0.1 million or 0.9%.
Noncash compensation expense for year ended February 28, 1998 was $4.9
million compared to $3.5 million for the same period of the prior year, an
increase of $1.4 million or 40.9%. Noncash compensation includes compensation
expense associated with stock options granted, restricted common stock issued
under employment agreements and common stock contributed to our profit sharing
plan. This increase was due primarily to the increase in stock price from the
prior year.
Accounts receivable at February 28, 1998 were $32.1 million compared to
$20.8 million at February 28, 1997, an increase of $11.3 million or 54.2%. This
increase in accounts receivable was due primarily to the acquisition of Texas
Monthly and Cincinnati magazines, radio stations in Indianapolis and St. Louis
and two radio networks and the operation of WQCD-FM under a time brokerage
agreement.
LIQUIDITY AND CAPITAL RESOURCES
The increase in accounts receivable from February 28, 1998 to November 30,
1998 is due to the increase of net broadcasting revenues in the quarter ended
November 30, 1998 compared to the quarter ended February 28, 1998.
In August 1996, Emmis announced its plan to build an office building in
downtown Indianapolis for its corporate office and its Indianapolis operations.
The project is substantially complete. In the nine-month period ended November
30, 1998, Emmis had capital expenditures of $26.2 million, of which $19.4
million relate to payments in connection with the Indianapolis building project.
In June 1998, Emmis completed the sale of 4.6 million shares of its Class A
Common Stock at $42.00 per share, resulting in net proceeds of $182.6 million.
Net proceeds from the offering were used to repay outstanding obligations under
our prior credit facility.
In July 1998, Emmis entered into an amended and restated credit facility.
See Note 6 to our financial statements for the nine months ended November 30,
1998, incorporated by reference in this prospectus. Concurrently with the
offering of the outstanding notes, our lenders amended the credit facility. See
"Description of Certain Indebtedness -- Amendment to Credit Facility."
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<PAGE> 47
We have entered into an agreement to acquire a new publication for a
purchase price of approximately $21.0 million. This acquisition is subject to a
number of conditions. There can be no assurances that we will be able to
consummate this particular acquisition.
We expect that cash flow from operating activities will be sufficient to
fund all debt service obligations, working capital and capital expenditure
requirements for the next fiscal year. As part of its business strategy, Emmis
frequently evaluates potential acquisitions of radio and television stations. In
connection with future acquisition opportunities, we may incur additional debt
or issue additional equity or debt securities depending on market conditions and
other factors.
INFORMATION REGARDING OPERATING GROUPS
On a pro forma basis, for the nine-month period ended November 30, 1998,
Emmis would have derived approximately 59.4% of its net revenue from radio
operations and approximately 27.0% of its net revenue from television
operations, and approximately 13.6% of its net revenue from publishing and other
operations. On a pro forma basis, for the twelve-month period ended November 30,
1998, Emmis would have derived approximately 58.1% of its net revenue from radio
operations and approximately 27.5% of its net revenue from television
operations, and approximately 14.4% of its net revenue from publishing and other
operations. The following table sets forth selected pro forma information
regarding our operating groups for the fiscal year ended February 28, 1998 and
for the nine-month and twelve-month periods ended November 30, 1998 assuming the
acquisition of WQCD-FM and our television stations had occurred as of the
beginning of the periods:
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
-----------------------------------------------------------
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
FEBRUARY 28, NOVEMBER 30, NOVEMBER 30,
1998 1998 1998
(IN THOUSANDS)
<S> <C> <C> <C>
RADIO:
Net revenue....................... $136,279 $121,386 $148,916
Broadcast cash flow............... 61,593 58,009 68,098
TELEVISION:
Net revenue....................... 68,396 55,178 70,620
Broadcast cash flow............... 18,710 17,271 20,768
PUBLISHING AND OTHER:
Net revenue....................... 36,904 27,941 36,961
Publishing and other cash
flow(1)........................ 3,776 4,527 5,169
Total group net revenue............. 241,579 204,505 256,497
Total group broadcast, publishing
and other cash flow............... 84,079 79,807 94,035
Corporate and international business
development expenses.............. 10,285 8,462 10,804
-------- -------- --------
EBITDA.............................. $ 73,794 $ 71,345 $ 83,231
======== ======== ========
</TABLE>
- ------------------------------
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<PAGE> 48
(1) Publishing and other cash flow for our Publishing and Other operating group
represents publishing, tower leasing and consulting revenues, net of
operating expenses.
YEAR 2000 COMPLIANCE
Emmis has completed its assessment phase of year 2000 compliance for
information technology for all of its radio broadcasting properties except those
included in the Wabash Valley Acquisition, its publishing entities and its
corporate operations. It has also completed its assessment of other equipment,
including broadcast equipment, at some radio properties. Assessment of year 2000
compliance at newly acquired radio and television stations is partially
complete. It has been determined that certain information technology and other
equipment is represented by its vendors to be year 2000 compliant. Emmis is in
the process of testing this technology and equipment. Testing should be
completed by August 31, 1999. Technology and equipment that is currently not
represented as year 2000 compliant will be upgraded or replaced, and tested
prior to August 31, 1999. In connection with the move of our corporate and
Indianapolis operations to an office building in downtown Indianapolis,
substantially all information technology and other equipment in the building
will be year 2000 compliant. Emmis intends to upgrade broadcast equipment at
radio properties that are not currently utilizing digital equipment. Currently,
Emmis estimates that this upgrade to digital will cost approximately $1.0
million. Emmis believes that this upgrade will make the radio broadcast
equipment year 2000 compliant. Emmis has completed its assessment of information
technology, and other equipment at some of its television stations and estimates
that costs to make such equipment year 2000 compliant will be approximately $1.0
million. Emmis intends to fund all expenditures relating to year 2000
remediation from current operations. Emmis has not separately tracked costs
incurred to date relating to year 2000 compliance; however, management believes
that these costs have been insignificant. If certain broadcast equipment and
information technology is not year 2000 compliant prior to January 1, 2000, a
station using that equipment and information technology might not be able to
broadcast and process transactions. If this were to occur, temporary solutions
or processes not involving the malfunctioning equipment could be implemented.
Emmis intends to develop a contingency plan which would be used to implement
such temporary solutions.
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<PAGE> 49
BUSINESS
We are a diversified media company with radio broadcasting, television
broadcasting and magazine publishing operations. We are the eighth largest radio
broadcaster in the United States based on total revenues. The thirteen FM radio
stations and three AM radio stations we own in the United States serve the
nation's three largest radio markets of New York City, Los Angeles and Chicago,
as well as St. Louis, Indianapolis and Terre Haute, Indiana. Our six television
stations, which we acquired in 1998, are located in New Orleans, Louisiana,
Mobile, Alabama, Green Bay, Wisconsin, Honolulu, Hawaii, Fort Myers, Florida and
Terre Haute, Indiana. On a pro forma basis after considering recent
acquisitions, we had revenues and EBITDA of $219.5 million and $83.2 million,
respectively, for the twelve months ended November 30, 1998.
Our strategy is to selectively acquire underdeveloped media properties in
desirable markets and then to create value by developing those properties to
increase their cash flow. We find such underdeveloped properties attractive
because they offer greater potential for revenue and cash flow growth than
mature properties. We have been successful in acquiring these types of radio
stations and improving their ratings, revenues and cash flow with our marketing
focus and innovative programming expertise. We have created top-performing radio
stations which rank, in terms of primary demographic target audience share,
among the top ten stations in the New York City, Los Angeles and Chicago radio
markets according to the Fall 1998 Arbitron survey. We believe that our strong
large-market radio presence and diversity of station formats makes us attractive
to a diverse base of radio advertisers and reduces our dependence on any one
economic sector or specific advertiser.
More recently, we have begun to apply our advertising sales and programming
expertise to our television stations. We view our entry into television as a
logical outgrowth of our radio business and as a platform for diversification.
Like the radio stations we previously acquired, our television stations are
underdeveloped properties located in desirable markets, which can benefit from
innovative, research-based programming and our experienced management team. We
believe we can improve the ratings, revenues and broadcast cash flow of our
television stations with a more market-focused, research-based programming
approach and other related strategies, which have proven successful with our
radio properties.
In addition to our domestic broadcasting properties, we operate news and
agricultural information radio networks in Indiana, publish the Indianapolis
Monthly, Atlanta, Cincinnati and Texas Monthly magazines, and have a 54%
interest in a national radio station in Hungary. We also engage in various
businesses ancillary to our broadcasting business, such as consulting and
broadcast tower leasing.
BUSINESS STRATEGY
We are committed to maintaining our leadership positions in broadcasting,
enhancing the performance of our broadcast properties, and distinguishing
ourselves through the quality of our operations. Our strategy has the following
principal components:
CREATE CASH FLOW GROWTH BY ENHANCING STATION PERFORMANCE. Our strategy is
to selectively acquire underdeveloped media properties in desirable markets
and then to create value by developing those properties to increase their
cash flow. We believe that our station portfolio
43
<PAGE> 50
provides significant potential for revenue and cash flow growth through
enhanced operating performance. We believe that our growth is less
dependent on overall advertising market growth than it would be if we owned
only mature properties. We expect to continue to create value, particularly
in our recently-acquired television stations, through maximizing operating
efficiencies, development of innovative programming and focused sales and
marketing efforts.
DEVELOP INNOVATIVE PROGRAMMING. We believe that knowledge of local markets
and innovative programming developed to target specific demographic groups
are the most important determinants of individual radio and television
station success. We conduct extensive market research to identify
underserved segments of our markets or to insure that we are meeting the
needs and tastes of our target audiences. Utilizing the research results,
we concentrate on providing focused programming formats carefully tailored
to the demographics of our markets and our advertisers' preferences. Such
programming strategies might include, for example, the development or
acquisition of on-air talent or development of a sports coverage or news
franchise. Local market knowledge is particularly important in developing
programming for our Fox television stations, as the higher degree of
programming flexibility afforded by our Fox affiliation provides us greater
opportunity to tailor our programming to meet the specific demands of our
local markets. Greg Nathanson, who heads our television division and
directs programming, has over 30 years of television broadcasting
experience and has had extensive independent programming experience as
President of Programming and Development for Twentieth Television and
President of Fox Television Stations.
EMPHASIZE FOCUSED SALES AND MARKETING STRATEGY. Emmis designs its local
and national sales efforts based on advertiser demand and competition
within each market. We provide our sales force with extensive training and
technology for sophisticated inventory management techniques, which allows
us to make frequent price adjustments based on regional and local market
conditions. We seek to maximize sources of non-traditional, non-spot
revenue and have led the industry in developing "vendor co-op" advertising
revenue. Although this source of advertising revenue is common in the
newspaper and magazine industry, we were among the first broadcasters to
recognize and take advantage of the potential of vendor co-op advertising.
ENCOURAGE ENTREPRENEURIAL MANAGEMENT APPROACH. We believe that
broadcasting is primarily a local business and that much of our success is
the result of the efforts of regional and local management and staff. We
have attracted and retained an experienced team of broadcast professionals
who understand the musical tastes, demographics and competitive
opportunities of their particular market. Our decentralized approach to
station management gives local management oversight of station spending,
long-range planning and resource allocation at their individual stations
and rewards local management based on those stations' performance. In
addition, we encourage our managers and employees to own a stake in Emmis,
and over 90% of all full-time employees have an equity ownership position
in the company. We believe that this entrepreneurial management approach
has given us a distinctive corporate culture, making Emmis a highly
desirable employer in the broadcasting industry and significantly enhancing
our ability to attract and retain experienced and highly motivated
employees and management.
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<PAGE> 51
SELECTIVELY PURSUE STRATEGIC ACQUISITIONS. Our acquisition strategy is to
selectively acquire underdeveloped media properties at reasonable purchase
prices where our experienced management team can enhance value. We believe
that continued consolidation in the radio broadcasting industry will create
attractive acquisition opportunities as the number of potential buyers for
radio assets declines as a result of in-market ownership limitations, and
we will continue to evaluate acquisitions of individual radio stations or
groups of radio stations in both our current and new markets. We also
believe that attractive acquisition opportunities are becoming increasingly
available in the television broadcasting industry. In many cases,
television stations have suffered ratings and revenue declines due to
management inattention, improper programming strategies or inadequate sales
and marketing efforts. We also expect to evaluate acquisitions of
international broadcasting stations and magazine publishing properties
which present attractive purchase prices and significant opportunities to
capitalize on our management expertise to enhance cash flow. We intend to
seek strong local minority-interest partners in evaluating and completing
any international broadcasting acquisition opportunities.
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<PAGE> 52
RADIO AND TELEVISION STATIONS
The following tables set forth certain information regarding our radio and
television stations and their broadcast markets:
RADIO STATIONS
<TABLE>
<CAPTION>
RANKING IN
MARKET MARKET PRIMARY PRIMARY STATION
AND RANK BY DEMOGRAPHIC DEMOGRAPHIC AUDIENCE
STATION REVENUE(1) FORMAT TARGET AGES TARGET(2) SHARE(2)
------- ---------- ------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Los Angeles 1
KPWR-FM Dance/Contemporary Hit 12-24 1 4.1
New York 2
WQHT-FM Dance/Contemporary Hit 12-24 1 5.3
WRKS-FM Classic Soul/Smooth R&B 25-54 4 3.8
WQCD-FM Contemporary Jazz 25-54 7 3.1
Chicago 3
WKQX-FM New Rock 18-34 2 3.9
St. Louis 18
KSHE-FM Album Oriented Rock 18-34 12 3.6
WKKX-FM Country 18-34 6t 3.8
WXTM-FM Extreme Rock 18-34 4 2.9
Indianapolis 30
WENS-FM Adult Contemporary 25-54 4 4.9
WIBC-AM News/Talk 35-64 4 7.8
WNAP-FM Classic Rock 18-34 8 3.3
WTLC-FM Urban Contemporary 25-54 6 6.0
WTLC-AM Solid Gold Soul, Gospel and 35-64 19 0.7
Talk
Terre Haute 172
WTHI-FM Country 25-54 1t 19.2
WTHI-AM News/Talk 35-54 9t 1.7
WWVR-FM Classic Rock 25-49 1 12.1
</TABLE>
- ------------------------------
(1) "Market Rank by Revenue" is the ranking of the market revenue size of the
principal radio market served by the station among all radio markets in the
United States. Market revenue ranking figures are from Duncan's Radio Market
Guide (1998 ed.). We own a 40% equity interest in the publisher of Duncan's
Radio Market Guide.
(2) "Ranking in Primary Demographic Target" is the ranking of the station among
all radio stations in its market based on the Fall 1998 Arbitron survey. A
"t" indicates the station tied with another station for the stated ranking.
"Station Audience Share" represents a percentage generally computed by
dividing the average number of persons over age 12 listening to a particular
station during specified time periods by the average number of such persons
for all stations in the market area as determined by Arbitron.
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<PAGE> 53
TELEVISION STATIONS
<TABLE>
<CAPTION>
NUMBER OF STATION
TELEVISION METROPOLITAN DMA AFFILIATION/ STATIONS STATION AUDIENCE
STATION AREA SERVED RANK(1) CHANNEL IN MARKET(2) RANK(3) SHARE(4)
---------- ------------ ------- ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
WVUE-TV New Orleans, LA 41 Fox/8 6 3t 9
WALA-TV Mobile, AL-Pensacola, FL 62 Fox/10 6 3 11
WLUK-TV(5) Green Bay, WI 70 Fox/11 5 3 14
KHON-TV(5) Honolulu, HI 71 Fox/2 6 1 17
WFTX-TV Fort Myers, FL 83 Fox/36 5 4 8
WTHI-TV Terre Haute, IN 140 CBS/10 3 1 24
</TABLE>
- ------------------------------
(1) Estimated by Nielsen as of January 1998. Rankings are based on the relative
size of a station's market among the 212 generally recognized DMAs, as
defined by Nielsen.
(2) Represents the number of Reportable Stations designated by Nielsen as
"local" to the DMA, excluding public television stations and stations which
do not meet minimum Nielsen reporting standards (i.e., a weekly cumulative
audience of less than 2.5%) for reporting in the 9:00 a.m. to midnight,
Sunday through Saturday time period.
(3) Reflects the station's rank relative to other Reportable Stations based upon
the DMA rating as reported by Nielsen from 9:00 a.m. to midnight, Sunday
through Saturday during November 1998.
(4) Reflects an estimate of the share of DMA households viewing television
received by a local commercial station in comparison to other local
commercial stations in the market as measured from 9:00 a.m. to midnight,
Sunday through Saturday.
(5) Emmis also owns KAII-TV and KHAW-TV, which operate as satellite stations of
KHON-TV and primarily re-broadcast the signal of KHON-TV. The stations are
considered one station for FCC multiple ownership purposes. Low power
television translators W40AN and K55D2 retransmit stations WLUK-TV and
KHON-TV, respectively.
RADIO NETWORKS
In addition to our other radio broadcasting operations, we own and operate
two radio networks. Network Indiana provides news and other programming to
nearly 70 affiliated radio stations in Indiana. AgriAmerica Network provides
farm news, weather information and market analysis to radio stations across
Indiana.
PUBLISHING OPERATIONS
We publish four magazines through our publishing division, as follows.
Indianapolis Monthly. We have published Indianapolis Monthly magazine
since September 1988. Indianapolis Monthly covers local personalities, homes and
lifestyles and currently has a paid monthly circulation of approximately 45,000.
With a large advertising base and a popular editorial focus, Indianapolis
Monthly is the market's leading general interest magazine focusing on the
Indianapolis area.
Atlanta. We acquired and began publishing Atlanta magazine in August 1993.
Atlanta covers area personalities, issues and style and currently has a paid
monthly circulation of approximately 65,000. The magazine was unprofitable for
several years before we acquired it for a nominal investment. Certain
initiatives, including downsizing staff, increasing sales efforts and
repositioning the editorial focus, have contributed to improving profitability.
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<PAGE> 54
Cincinnati. We acquired Cincinnati magazine in October 1997. Cincinnati
magazine was founded by the Greater Cincinnati Chamber of Commerce in 1967 and,
under its prior owners, the magazine grew to a paid monthly circulation of
approximately 22,000. We repositioned the editorial product to an up-to-date
city/regional magazine covering people and entertainment in Cincinnati, doubled
the existing sales staff and marketed the newly designed magazine to the
Cincinnati area. The magazine currently has a paid monthly circulation of
approximately 31,000.
Texas Monthly. We acquired Texas Monthly magazine in February 1998. The
critically acclaimed magazine, which has received eight National Magazine
Awards, has a paid monthly circulation of approximately 300,000, and we believe
it is read by more than two million people. It marked its 25th anniversary with
the publication of the February 1998 issue, which set a single issue advertising
record. Since acquiring the magazine, we have worked to increase Texas Monthly's
operating efficiencies while leaving the highly regarded editorial product
intact.
COMMUNITY INVOLVEMENT
We believe that to be successful, we must be integrally involved in the
communities we serve. To that end, each of our stations participates in many
community programs, fundraisers and activities that benefit a wide variety of
organizations. Charitable organizations that have been the beneficiaries of our
marathons, walkathons, dance-a-thons, concerts, fairs and festivals include,
among others, The March of Dimes, American Cancer Society, Riley Children's
Hospital and research foundations seeking cures for cystic fibrosis, leukemia
and AIDS and helping to fight drug abuse. In addition to our planned activities,
our stations take leadership roles in community responses to natural disasters.
INDUSTRY INVOLVEMENT
We have an active leadership role in a wide range of industry
organizations. Our senior managers have served in various capacities with
industry associations, including as directors of the National Association of
Broadcasters, the Radio Advertising Bureau, the Radio Futures Committee and the
Arbitron Advisory Council and as founding members of the Radio Operators Caucus.
In addition, our managers have been voted Radio President of the Year and
General Manager of the Year, and at various times we have been voted Most
Respected Broadcaster in polls of radio industry chief executive officers and
managers.
CERTAIN REGULATORY DEVELOPMENTS
In August 1998, the FCC adopted new rules and procedures that establish the
use of competitive bidding (auctions) to resolve competing applications for all
new broadcast stations and mutually exclusive applications for major changes to
existing broadcast stations. The rules apply to full power commercial radio and
analog television stations as well as all secondary commercial broadcast
services (e.g., low power television, FM translator and television translator
services).
With respect to equal employment opportunity regulation, the FCC recently
initiated a rulemaking proceeding that may lead to reinstatement (in revised
form) of the equal employment opportunity rules and reporting requirements which
were overturned last year by the
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<PAGE> 55
U.S. Court of Appeals for the D.C. Circuit. The FCC suspended its EEO rules and
reporting requirements following the court's denial of the FCC's request for
rehearing en banc.
In July 1998, the FCC initiated a rulemaking proceeding to determine the
nature and extent of the mandatory carriage obligations of cable operators
during the digital television transition. The rulemaking proceeding also seeks
comment on related issues, including how to resolve technical compatibility
problems, whether the FCC should modify its signal quality requirement during
the transition, how to regulate channel placement of digital television signals
and whether such signals must be carried on the basic cable tier. The FCC also
adopted new rules in November 1998 requiring the payment of fees by commercial
broadcasters in connection with any revenues they receive from their use of
digital television spectrum for services other than free, over-the-air
advertiser supported television. The fee is set at 5% of gross revenues from
covered services.
The FCC has also initiated a rulemaking proceeding to determine whether to
give greater flexibility to direct broadcast satellite operators seeking to
provide distant broadcast network signals to their subscribers. Additionally, as
part of the ongoing examination of its broadcast ownership rules, the FCC is
considering whether to permit a single entity to own television stations
covering more than 35% of the national television homes. The FCC is also
considering whether to eliminate or modify the 50% discount credited to UHF
television stations in calculating compliance with the national ownership cap.
We cannot predict the outcome of any of these rulemaking proceedings or the
effect of a particular outcome on the ownership and operation of our station
properties.
ADVERTISING SALES
Our stations derive their advertising revenue from local and regional
advertising in the marketplaces in which they operate, as well as from the sale
of national advertising. Local and most regional sales are made by a station's
sales staff. National sales are made by firms specializing in such sales which
are compensated on a commission-only basis. We believe that the volume of
national advertising revenue tends to adjust to shifts in a station's audience
share position more rapidly than does the volume of local and regional
advertising revenue.
We have led the industry in developing "vendor co-op" advertising revenue
(i.e., revenue from a manufacturer or distributor which is used to promote its
particular goods together with local retail outlets for those goods). Although
this source of advertising revenue is common in the newspaper and magazine
industry, we were among the first radio broadcasters to recognize, and take
advantage of, the potential of vendor co-op advertising. Our Revenue Development
Systems division has established a network of radio stations which share
information about sources of vendor co-op revenue. In addition, each of our
stations has a salesperson devoted exclusively to the development of cooperative
advertising. We also use this approach at our television stations.
COMPETITION
Radio and television broadcasting stations compete with the other
broadcasting stations in their respective market areas, as well as with other
advertising media such as newspapers, magazines, outdoor advertising, transit
advertising, the Internet and direct mail marketing.
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<PAGE> 56
Competition within the broadcasting industry occurs primarily in individual
market areas, so that a station in one market does not generally compete with
stations in other market areas. In each of our markets, our stations face
competition from other stations with substantial financial resources, including
stations targeting the same demographic groups. In addition to management
experience, factors which are material to competitive position include the
station's rank in its market, authorized power, assigned frequency, audience
characteristics, local program acceptance and the number and characteristics of
other stations in the market area. We attempt to improve our competitive
position with programming and promotional campaigns aimed at the demographic
groups targeted by our stations, and through sales efforts designed to attract
advertisers that have done little or no broadcast advertising by emphasizing the
effectiveness of radio and television advertising in increasing the advertisers'
revenues. Recent changes in the policies and rules of the FCC permit increased
joint ownership and joint operation of local stations. Those stations taking
advantage of these joint arrangements may in certain circumstances have lower
operating costs and may be able to offer advertisers more attractive rates and
services. Although we believe that each of our stations can compete effectively
in its market, there can be no assurance that any of our stations will be able
to maintain or increase its current audience ratings or advertising revenue
market share.
Although the broadcasting industry is highly competitive, some barriers to
entry exist. The operation of a broadcasting station in the United States
requires a license from the FCC, and the number of stations that can operate in
a given market is limited by the availability of the frequencies that the FCC
will license in that market, as well as by the FCC's multiple ownership rules
regulating the number of stations that may be owned and controlled by a single
entity. The FCC's multiple ownership rules have changed significantly as a
result of the Telecommunications Act of 1996.
The broadcasting industry historically has grown in terms of total revenues
despite the introduction of new technology for the delivery of entertainment and
information, such as cable television, audio tapes and compact discs. We believe
that radio's portability in particular makes it less vulnerable than other media
to competition from new methods of distribution or other technological advances.
There can be no assurance, however, that the development or introduction in the
future of any new media technology will not have an adverse effect on the radio
or television broadcasting industry.
EMPLOYEES
As of November 30, 1998, Emmis had approximately 1,242 full-time employees
and approximately 332 part-time employees. We have approximately 246 employees
at various radio and television stations represented by unions. We consider
relations with our employees to be excellent.
LITIGATION
Emmis currently and from time to time is involved in litigation incidental
to the conduct of its business. However, we are not a party to any lawsuit or
proceeding which, in the opinion of management, is likely to have a material
adverse effect on us.
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<PAGE> 57
MANAGEMENT
The following table sets forth information about our executive officers and
directors as of March 1, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Jeffrey H. Smulyan................... 51 Chairman, President and Chief Executive Officer
Doyle L. Rose........................ 50 Radio Division President and Director
Greg Nathanson....................... 51 Television Division President and Director
Richard F. Cummings.................. 47 Executive Vice President --Programming
Walter Z. Berger..................... Executive Vice President, Treasurer and Chief
Financial Officer
Norman H. Gurwitz.................... 51 Executive Vice President -- Human Resources and
Secretary
Gary L. Kaseff....................... 50 General Counsel, Executive Vice President and
Director
Susan B. Bayh........................ 39 Director
Richard A. Leventhal................. 51 Director
Frank V. Sica........................ 47 Director
Lawrence B. Sorrel................... 40 Director
</TABLE>
Jeffrey H. Smulyan founded Emmis in 1981 and is our Chairman of the Board
of Directors, President and Chief Executive Officer. Mr. Smulyan began working
in radio in 1973, and has owned one or more radio stations since then. Formerly,
he was also the owner and chief executive officer of the Seattle Mariners major
league baseball team. He is a Director of the Radio Advertising Bureau and The
Finish Line, a sports apparel manufacturer, and serves as a Trustee of Ball
State University. Mr. Smulyan has been chosen Radio Executive of the Year by a
radio industry group and was voted one of the Ten Most Influential Radio
Executives in the Past 20 Years in a poll in Radio and Records magazine.
Doyle L. Rose has been Radio Division President of Emmis since 1989, and
General Manager of KPWR-FM in Los Angeles from 1991 through 1995. Previously, he
was our Executive Vice President-Operations. Mr. Rose has been a general manager
of one or more radio stations for approximately twenty years.
Greg Nathanson joined Emmis in 1998 as Television Division President. Mr.
Nathanson has over 30 years of television broadcasting experience, most recently
as President of Programming and Development for Twentieth Television from 1996
to 1998, as General Manager of KTLA-TV in Los Angeles, California from 1992 to
1996 and as President of Fox Television Stations from 1990 to 1992.
Richard F. Cummings was the Program Director of WENS from 1981 to March
1984, when he became the National Program Director and a Vice President of
Emmis. He became our Executive Vice President -- Programming in 1988.
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<PAGE> 58
Walter Z. Berger became Executive Vice President and Chief Financial
Officer of Emmis on March 1, 1999. Most recently, Mr. Berger served as Group
President of the Energy Marketing Division of LG&E Energy Corporation. Prior to
that appointment, he served as Executive Vice President and Chief Financial
Officer of LG&E Energy Corporation. From 1992 to 1996, he held several senior
financial and operating management positions at Enron Corporation and its
affiliates. Mr. Berger also spent seven years in various financial management
roles at Baker Hughes Incorporated.
Norman H. Gurwitz currently serves as Executive Vice President -- Human
Resources, a position he assumed in 1998. Previously he served as Corporate
Counsel for Emmis from 1987 to 1998 and as a Vice President from 1988 to 1995.
He became Secretary of Emmis in 1989 and became an Executive Vice President in
1995. Prior to 1987, he was a partner in the Indianapolis law firm of Scott &
Gurwitz.
Gary L. Kaseff is employed as Executive Vice President and General Counsel
to Emmis, a post he has held since 1998. Mr. Kaseff also has been a solo
practitioner attorney in Southern California since 1992. Previously, he was
President of the Seattle Mariners major league baseball team and partner with
the law firm of Epport & Kaseff.
Susan B. Bayh is the Commissioner of the International Joint Commission of
the United States and Canada, and also serves as a Distinguished Visiting
Professor at Butler University, positions she has held since 1994. Previously,
she was an attorney with Eli Lilly & Company.
Richard A. Leventhal has owned and operated a wholesale fabric and textile
company in Carmel, Indiana, for 24 years. Mr. Leventhal is the brother-in-law of
Norman H. Gurwitz.
Frank V. Sica is a Managing Director of Soros Fund Management LLC and head
of Soros Fund Management's Private Equity Operations. He is director of CSG
Systems International, Inc., a computer software company, and Kohl's
Corporation, a retail company. Prior to joining Soros in 1998, Mr. Sica had been
a Managing Director at Morgan Stanley Dean Witter & Co.
Lawrence B. Sorrel is a general partner of Welsh, Carson, Anderson & Stowe,
a private investment firm. Prior to May 1998, he was a Managing Director of
Morgan Stanley & Co. Incorporated, where he had been employed since 1986.
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<PAGE> 59
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to Emmis with
respect to beneficial ownership of our common stock as of March 1, 1999 by (i)
each person known to us to be the beneficial owner of more than five percent of
each class of our issued and outstanding common stock, (ii) each director and
executive officer and (iii) all officers and directors as a group.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
--------------------- --------------------
AMOUNT AND AMOUNT AND PERCENT
FIVE PERCENT SHAREHOLDERS, NATURE OF PERCENT NATURE OF PERCENT OF TOTAL
DIRECTORS AND BENEFICIAL OF BENEFICIAL OF VOTING
EXECUTIVE OFFICERS OWNERSHIP CLASS OWNERSHIP CLASS POWER(1)
<S> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan.............................. 239,595(2) 1.7% 2,935,610(15) 100.0% 67.9%
Susan B. Bayh................................... 10,100(3) * -- -- *
Richard F. Cummings............................. 37,957(4) * -- -- *
Norman H. Gurwitz............................... 83,906(5) * -- -- *
Gary L. Kaseff.................................. 24,424(6) * -- -- *
Richard A. Leventhal............................ 30,600(7) * -- -- *
Doyle L. Rose................................... 32,935(8) * -- -- *
Walter Z. Berger................................ -- * -- -- *
Greg Nathanson.................................. 122,000(9) * -- -- *
Lawrence B. Sorrel.............................. 4,000 * -- -- *
Frank V. Sica................................... -- -- -- -- --
Mellon Bank Corporation......................... 1,415,741(10) 10.0 -- -- 3.5
Westport Asset Management, Inc.................. 507,200(11) 3.6 -- -- 1.3
Denver Investment Advisors LLC.................. 504,500(12) 3.5 -- -- 1.3
Safeco Corp..................................... 1,740,600(13) 12.2 -- -- 4.3
All executive officers and directors as a group
(11 persons).................................. 629,637(14) 4.4 2,935,610 100.0 68.8
</TABLE>
- ------------------------------
* Less than 1%
(1) The Class A Common Stock generally entitles holders to one vote per share,
and the Class B Common Stock generally entitles the holder to ten votes per
share.
(2) Includes 159,595 shares held by Mr. Smulyan as trustee for the Emmis
Communications Corporation Profit Sharing Trust (the "Profit Sharing
Trust"), as to which Mr. Smulyan disclaims beneficial ownership.
(3) Consists of 100 shares owned individually and 10,000 shares represented by
stock options exercisable within 60 days of March 1, 1999.
(4) Consists of 24,316 shares owned individually, 2,468 shares held for the
benefit of Mr. Cummings' children, 1,573 shares held in the Profit Sharing
Trust and 9,600 shares represented by stock options exercisable within 60
days of March 1, 1999.
(5) Consists of 11,865 shares owned individually or jointly with his spouse,
275 owned by Mr. Gurwitz's spouse, 979 shares held in the Profit Sharing
Trust, 10,100 shares owned by a corporation of which Mr. Gurwitz's spouse
is a 50% owner 2,308 shares owned for the benefit of Mr. Gurwitz's children
and 58,379 shares represented by stock options exercisable within 60 days
of March 1, 1999.
(6) Consists of 3,059 shares owned individually by Mr. Kaseff, 1,154 shares
owned by Mr. Kaseff's spouse, 211 shares held in the Profit Sharing Trust
and 20,000 shares represented by stock options exercisable within 60 days
of March 1, 1999.
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<PAGE> 60
(7) Consists of 4,000 shares owned individually, 1,500 shares owned by Mr.
Leventhal's spouse, 10,100 shares owned by a corporation of which Mr.
Leventhal is a 50% owner and 15,000 shares represented by stock options
exercisable within 60 days of March 1, 1999.
(8) Consists of 21,762 shares owned individually, 1,573 shares held in the
Profit Sharing Trust and 9,600 shares represented by stock options
exercisable within 60 days of March 1, 1999.
(9) Consists of 100,000 shares owned individually or jointly with his spouse
and 22,000 shares owned by a trust for the benefit of Mr. Nathanson's
children.
(10) Information concerning these shares was obtained from an Amendment to
Schedule 13G filed in November 1998 by Mellon Bank Corporation on behalf of
itself, Boston Group Holdings, Inc. and The Boston Company, Inc., each of
which has a mailing address c/o Mellon Bank Corporation, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258.
(11) Information concerning these shares was obtained from a Schedule 13G filed
in February 1998 by Westport Asset Management, Inc., which has an address
of 235 Riverside Avenue, Westport, Connecticut 06880.
(12) Information concerning these shares was obtained from a Schedule 13G filed
in February 1998 by Denver Investment Advisors LLC, which has an address of
1225 17th Street, 26th Floor, Denver, Colorado 80202.
(13) Information concerning these shares was obtained from a Schedule 13G filed
in June 1998 by Safeco Corporation on behalf of itself, Safeco Common Stock
Trust and Safeco Asset Management Company. Each such entity has an address
of Safeco Plaza, Seattle, Washington 98101.
(14) Includes 183,412 shares represented by stock options exercisable within 60
days of March 1, 1999 and 159,595 shares held in the Profit Sharing Trust.
(15) Consists of 2,589,610 shares owned individually and 346,000 shares
represented by stock options exercisable within 60 days of March 1, 1999.
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<PAGE> 61
DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." Certain other capitalized terms are
defined in the indenture governing the notes (the "Indenture"). In this
description, the word "Emmis" refers only to Emmis Communications Corporation
and not to any of its subsidiaries.
The registered notes have the same form and terms as the outstanding notes,
which they replace, with two exceptions. First, because the issuance of the
registered notes has been registered under the Securities Act, the registered
notes will not bear legends restricting their transfer. Second, the holders of
registered notes will not be entitled to rights under the registration rights
agreement, since the primary provision of that agreement will terminate when the
exchange offer is consummated. A copy of the Indenture, dated February 12, 1999,
among Emmis, the subsidiary guarantors and IBJ Whitehall Bank and Trust Company,
as trustee, has been filed as an exhibit to the exchange offer registration
statement of which this prospectus forms a part. The terms of the notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939.
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
holders of these notes.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
THE NOTES
These notes:
- are general unsecured obligations of Emmis;
- are subordinated in right of payment to all existing and future Senior
Debt of Emmis, including borrowings under the Credit Agreement;
- are pari passu in right of payment to any additional senior subordinated
debt incurred by Emmis in the future;
- are senior in right of payment to any future subordinated Indebtedness of
Emmis that expressly provides by its terms that it is subordinated to the
notes;
- are effectively junior to (i) all liabilities of Emmis' Subsidiaries that
are Unrestricted Subsidiaries (and thus not subsidiary guarantors), (ii)
all liabilities of any subsidiary guarantor if such subsidiary
guarantor's guarantee is subordinated or avoided by a court of competent
jurisdiction (see "Risk Factors -- Fraudulent Conveyance Matters") and
(iii) all secured obligations, to the extent of the collateral securing
such obligations, including any borrowings under any future secured
credit facilities of Emmis; and
- are unconditionally guaranteed by the Guarantors.
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<PAGE> 62
THE GUARANTEES
These notes are unconditionally guaranteed, jointly and severally, by the
following Subsidiaries of Emmis, which include all of Emmis' direct and indirect
Domestic Restricted Subsidiaries (the "Subsidiary Guarantors"):
Emmis FM Broadcasting Corporation of Indianapolis
Emmis FM Broadcasting Corporation of St. Louis
KPWR, Inc.
Emmis Broadcasting Corporation of New York
Emmis FM Broadcasting Corporation of Chicago
Emmis FM License Corporation of Indianapolis
Emmis FM License Corporation of St. Louis
KPWR License, Inc.
Emmis License Corporation of New York
Emmis FM License Corporation of Chicago
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis AM Radio Corporation of Indianapolis
Emmis FM Radio Corporation of Indianapolis
Emmis AM Radio License Corporation of Indianapolis
Emmis FM Radio License Corporation of Indianapolis
Emmis Radio License Corporation of New York
Emmis 104.1 FM Radio Corporation of St. Louis
Emmis 104.1 FM Radio License Corporation of St. Louis
Emmis 106.5 FM Broadcasting Corporation of St. Louis
Emmis 106.5 FM License Corporation of St. Louis
Emmis 1310 AM Radio Corporation of Indianapolis
Emmis 1310 AM Radio License Corporation of Indianapolis
Emmis 105.7 FM Radio Corporation of Indianapolis
Mediatex Communications Corporation
Mediatex Development Corporation
Texas Monthly, Inc.
Emmis License Corporation
Emmis International Broadcasting Corporation
Emmis DAR, Inc.
Emmis Publishing, L.P.
Emmis International Corporation
Emmis 1380 AM Radio Corporation of St. Louis
Emmis Television License Corporation of Honolulu
Emmis Television License Corporation of Mobile
Emmis Television License Corporation of Cape Coral
Emmis Television License Corporation of Green Bay
Emmis FM Holding Corporation of New York
Emmis 101.9 FM Radio Corporation of New York
Emmis Radio Corporation of New York
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<PAGE> 63
Emmis 1480 AM Radio License Corporation of Terre Haute
Emmis Television License Corporation of Terre Haute
Emmis 99.9 FM Radio License Corporation of Terre Haute
Emmis 105.7 FM Radio License Corporation of Indianapolis
Emmis Television License Corporation of New Orleans
Emmis 105.5 FM Radio License Corporation of Terre Haute
Emmis Indiana Broadcasting, L.P.
Emmis Television Broadcasting, L.P.
The Guarantees of these notes:
- are general unsecured obligations of each Guarantor;
- are subordinated in right of payment to all existing and future Senior
Debt of each Guarantor, including Guarantees of each Guarantor of Senior
Debt of Emmis;
- are pari passu in right of payment to all existing and any future senior
subordinated debt of each Guarantor, including Guarantees of any future
senior subordinated debt of Emmis; and
- are senior in right of payment to any future subordinated Indebtedness of
each Guarantor that expressly provides by its terms that it is
subordinated to the Guarantee of such Guarantor.
Assuming we had completed the offering of these notes and applied the net
proceeds as intended, as of November 30, 1998, Emmis and the Subsidiary
Guarantors would have had total Senior Debt of approximately $274.9 million,
with an additional $475.1 million available under the Credit Agreement. As
indicated above and as discussed in detail below under the subheading
"Subordination," payments on the Notes and under the Guarantees will be
subordinated to the payment of Senior Debt. The Indenture will permit Emmis and
the Guarantors to incur additional Senior Debt.
As of the date of the Indenture, all of Emmis' Subsidiaries, except for
Radio Hungaria Co. Ltd., will be "Restricted Subsidiaries." However, under the
circumstances described below under the subheading "Certain
Covenants -- Designation of Restricted and Unrestricted Subsidiaries," we will
be permitted to designate certain of our Subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants in the Indenture. Unrestricted Subsidiaries will not
guarantee these notes. In addition, if Emmis acquires or creates a new
Restricted Subsidiary that is not a Domestic Restricted Subsidiary, Emmis will
not be required to make such newly acquired or created Restricted Subsidiary a
Guarantor. See "Certain Covenants -- Additional Subsidiary Guarantees."
In the event of a bankruptcy, liquidation or reorganization of any of these
non-guarantor Subsidiaries, these non-guarantor Subsidiaries will pay the
holders of their debt and their trade creditors before they will be able to
distribute any of their assets to us. The non-guarantor Subsidiaries generated
1.1% of our consolidated revenues in the nine-month period ended November 30,
1998 and held 2.1% of our consolidated assets as of November 30, 1998.
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<PAGE> 64
PRINCIPAL, MATURITY AND INTEREST
The Indenture will be limited to a maximum aggregate principal amount of
notes equal to $400 million, of which $300 million was issued in the offering of
the outstanding notes. The notes are in denominations of $1,000 and integral
multiples of $1,000. The notes will mature on March 15, 2009.
Interest on these notes will accrue at the rate of 8 1/8% per annum and
will be payable semiannually in arrears on March 15 and September 15, commencing
on September 15, 1999. Emmis will make each interest payment to the holders of
record of these notes on the immediately preceding March 1 and September 1.
Interest on these notes will accrue from the date of original issuance or,
if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee Emmis' obligations
under these notes. Each Subsidiary Guarantee will be subordinated to the prior
payment in full in cash of all Senior Debt of that Guarantor and Emmis on the
same basis and to the same extent as the notes are junior subordinated to the
prior payment in full in cash of the Senior Debt of Emmis. The obligations of
each Guarantor under its Subsidiary Guarantee will be limited as necessary to
prevent that Subsidiary Guarantee from constituting a fraudulent conveyance
under applicable law. See "Risk Factors -- Fraudulent Conveyance Matters."
A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving entity), another entity unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists and either (a) such Guarantor is the surviving
corporation; or (b) the entity formed by or surviving any such
consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia or the
jurisdiction in which such Guarantor is organized and under the laws of
which it is existing;
(2) the entity formed by or surviving any such consolidation or merger (if
other than such Guarantor) or the entity to which such sale,
assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of such Guarantor under the Guarantees
and the Indenture, as applicable, pursuant to agreements reasonably
satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) such Guarantor or the entity formed by or surviving any such
consolidation or merger (if other than such Guarantor) will have
Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of such Guarantor immediately
preceding the transaction; and
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<PAGE> 65
(5) the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of
merger or consolidation), if Emmis applies the Net Proceeds of that
sale or other disposition, in accordance with the applicable provisions
of the Indenture; or
(2) in connection with any sale of all of the capital stock of a Guarantor,
if Emmis applies the Net Proceeds of that sale in accordance with the
applicable provisions of the Indenture; or
(3) if Emmis designates any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary.
See "Repurchase at the Option of Holders -- Asset Sales."
SUBORDINATION
The payment of principal, premium and liquidated damages, if any, and
interest on these notes will be subordinated to the prior payment in full in
cash of all Senior Debt of Emmis.
The holders of Senior Debt will be entitled to receive payment in full in
cash of all Obligations due in respect of Senior Debt (including interest after
the commencement of any such proceeding described below at the rate specified in
the applicable Senior Debt) before the holders of notes will be entitled to
receive any payment with respect to the notes (except that holders of notes may
receive and retain Permitted Junior Securities and payments made from the trust
as described under "-- Legal Defeasance and Covenant Defeasance"), in the event
of any distribution to creditors of Emmis:
(1) in a liquidation or dissolution of Emmis or any of its Subsidiaries;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Emmis, any of its Subsidiaries or any of their
respective property;
(3) in an assignment for the benefit of creditors of Emmis or any of its
Subsidiaries; or
(4) in any marshalling of Emmis' or any of its Subsidiaries' assets and
liabilities.
Emmis also may not make any payment in respect of the notes (except in
Permitted Junior Securities or from the trust as described under " -- Legal
Defeasance and Covenant Defeasance") if:
(1) a payment default with respect to any principal, interest, premium or
fees due on Designated Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on Designated Senior Debt
that currently, or with the passage of time or the giving of notice,
permits holders of the Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a "Payment
Blockage Notice") from Emmis or the holders of any Designated Senior
Debt.
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<PAGE> 66
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived in writing by the representatives of the holders of
Designated Senior Debt; and
(2) in case of a nonpayment default, upon the earlier of the date on which
such nonpayment default is cured or waived in writing by the
representatives of the holders of Designated Senior Debt or 179 days
after the date on which the applicable Payment Blockage Notice is
received by the trustee, unless the maturity of any Designated Senior
Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the commencement of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 120 days.
Emmis must promptly notify holders of Senior Debt if payment of the notes
is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Emmis, holders of these notes
may recover less ratably than creditors of Emmis who are holders of Senior Debt.
See "Risk Factors -- Subordination."
OPTIONAL REDEMPTION
At any time prior to March 15, 2002, Emmis may on any one or more occasions
redeem up to 35% of the aggregate principal amount of notes originally issued
under the Indenture at a redemption price of 108.125% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date, with the net cash proceeds of one or more Public
Equity Offerings; provided that
(1) at least 65% of the aggregate principal amount of notes originally
issued under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding notes held by Emmis and its
Subsidiaries); and
(2) the redemption must occur within 45 days of the date of the closing of
such Public Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be
redeemable at Emmis' option prior to March 15, 2004.
After March 15, 2004, Emmis may redeem all or a part of these notes upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and liquidated damages thereon, if any,
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<PAGE> 67
to the applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2004............................................ 104.063%
2005............................................ 102.708%
2006............................................ 101.354%
2007 and thereafter............................. 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of notes will have the right to
require Emmis to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of that holder's notes pursuant to the Change of Control
Offer. In the Change of Control Offer, Emmis will offer a Change of Control
Payment in cash equal to 101% of the aggregate principal amount of notes
repurchased plus accrued and unpaid interest and liquidated damages thereon, if
any, to the date of purchase. Within ten days following any Change of Control,
Emmis will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
notes on the Change of Control Payment Date specified in such notice, pursuant
to the procedures required by the Indenture and described in such notice. Emmis
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a Change of Control.
On the Change of Control Payment Date, Emmis will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with Emmis' paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the trustee the notes so accepted
together with an officers' certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Emmis.
The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, Emmis
will either repay all outstanding Senior Debt or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt to permit the
repurchase of notes required by this covenant. Emmis will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
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<PAGE> 68
The provisions described above that require Emmis to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the holders of the notes to require that Emmis
repurchase or redeem the notes in the event of a takeover, recapitalization or
similar transaction.
Emmis' outstanding Senior Debt currently prohibits Emmis from purchasing
any notes, and also provides that certain change of control events with respect
to Emmis would constitute a default under the agreements governing the Senior
Debt. Any future credit agreements or other agreements relating to Senior Debt
to which Emmis becomes a party may contain similar restrictions and provisions.
In the event a Change of Control occurs at a time when Emmis is prohibited from
purchasing notes, Emmis could seek the consent of its senior lenders to the
purchase of notes or could attempt to refinance the borrowings that contain such
prohibition. If Emmis does not obtain such a consent or repay such borrowings,
Emmis will remain prohibited from purchasing notes. In such case, Emmis' failure
to purchase tendered notes would constitute an Event of Default under the
Indenture which would, in turn, constitute a default under such Senior Debt. In
such circumstances, the subordination provisions in the Indenture would likely
restrict payments to the holders of notes.
Emmis will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by Emmis and purchases
all notes validly tendered and not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Emmis and its Subsidiaries taken as a whole. Although there is
a limited body of case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of notes to require Emmis to repurchase
such notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of Emmis and its Subsidiaries taken
as a whole to another person or group may be uncertain.
ASSET SALES
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) Emmis (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) such fair market value is determined by Emmis' Board of Directors and
evidenced by a resolution of the board of directors set forth in an
officers' certificate delivered to the trustee; and
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<PAGE> 69
(3) at least 80% of the consideration therefor received by Emmis or such
Restricted Subsidiary is in the form of cash. For purposes of this
provision, each of the following shall be deemed to be cash:
(a) any liabilities (as shown on Emmis' or such Restricted Subsidiary's
most recent balance sheet), of Emmis or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their
terms subordinated to the notes or any Subsidiary Guarantee) that
are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases Emmis or such Restricted
Subsidiary from further liability; and
(b) any securities, notes or other obligations received by Emmis or any
such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted
by Emmis or such Restricted Subsidiary into cash (to the extent of
the cash received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Emmis may apply such Net Proceeds at its option:
(1) to repay Senior Debt;
(2) to acquire all or substantially all of the assets of, or a majority of
the Voting Stock of, another Permitted Business that is owned by Emmis
or a Guarantor;
(3) to make a capital expenditure; or
(4) to acquire other long-term assets that are used or useful in a
Permitted Business that is owned by Emmis or a Guarantor.
Pending the final application of any such Net Proceeds, Emmis may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture.
Notwithstanding the two immediately preceding paragraphs, Emmis and its
Restricted Subsidiaries will be permitted to consummate an Asset Sale without
complying with such paragraphs to the extent (i) at least 80% of the
consideration for such Asset Sale constitutes Productive Assets, cash, Cash
Equivalents and/or Marketable Securities and (ii) such Asset Sale is for fair
market value (as determined in good faith by the board of directors and
certified to in an officer's certificate); provided that any consideration not
constituting Productive Assets received by Emmis or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall be subject to the provisions of the preceding paragraph.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $5.0 million, Emmis will make an
Asset Sale Offer to all holders of notes and all holders of other Indebtedness
that is pari passu with the notes containing provisions similar to those set
forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the maximum principal amount of notes
and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds. The offer price in any Asset
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Sale Offer will be equal to 100% of principal amount plus accrued and unpaid
interest and liquidated damages thereon, if any, to the date of purchase, and
will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer, Emmis may use such Excess Proceeds for any purpose not
otherwise prohibited by the Indenture. If the aggregate principal amount of
notes and such other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the trustee shall select the notes and
such other pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed, on a pro rata basis, by lot or by such
method as the trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of Emmis' or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection
with any merger or consolidation involving Emmis or any of its
Restricted Subsidiaries) or to the direct or indirect holders of Emmis'
or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of Emmis or to Emmis
or a Restricted Subsidiary of Emmis);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving Emmis) any Equity Interests of Emmis or any direct or
indirect parent of Emmis or any Restricted Subsidiary of
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Emmis (other than any such Equity Interests owned by Emmis or any
Restricted Subsidiary of Emmis);
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes or the Subsidiary Guarantees (other than the
notes or the Subsidiary Guarantees), except a payment of interest or
principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in the foregoing clauses (1) through (4) being collectively
referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) Emmis would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Leverage Ratio test set forth in the first paragraph of the covenant
described below under the caption " -- Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Emmis and its Restricted Subsidiaries
after the date of the Indenture (excluding Restricted Payments permitted
by clauses (2) and (3) of the next succeeding paragraph), is less than
the sum, without duplication, of:
(a) (i) the aggregate Consolidated EBITDA of Emmis for the period
(taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the Indenture to the
end of Emmis' most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, in the event aggregate Consolidated EBITDA for such
period is a deficit, then minus such deficit) less (ii) 1.4 times
the aggregate Fixed Charges of Emmis for the same period; plus
(b) the aggregate net cash proceeds received by Emmis since the date of
the Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of Emmis (other than
Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of Emmis that have been converted into or exchanged for
such Equity Interests (other than Equity Interests (or Disqualified
Stock or debt securities) sold to a Subsidiary of Emmis); plus
(c) to the extent that any Restricted Investment is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment (less
the cost of disposition, if any) and (ii) the initial amount of
such Restricted Investment; plus
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(d) if any Unrestricted Subsidiary (i) is redesignated as a Restricted
Subsidiary, the fair market value of such redesignated Subsidiary
(as determined in good faith by the board of directors) as of the
date of its redesignation or (ii) pays any cash dividends or cash
distributions to Emmis or any of its Restricted Subsidiaries, 100%
of any such cash dividends or cash distributions made after the
date of the Indenture; plus
(e) $10.0 million.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of Emmis or any Guarantor or of any
Equity Interests of Emmis or any Restricted Subsidiary in exchange for,
or out of the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of Emmis) of, Equity Interests of Emmis
(other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Emmis or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of Emmis to the
holders of its common Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of Emmis or any Restricted Subsidiary of Emmis
held by any former member of Emmis' (or any of its Subsidiaries')
management pursuant to any management equity subscription agreement or
stock option agreement in effect as of the date of the Indenture;
provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $1.0
million in any twelve-month period; and
(6) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of Emmis (other than those described in clause
(5) above) in an amount not to exceed $25 million in the aggregate.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Emmis or such Restricted Subsidiary, as
the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the board of directors whose resolution with respect thereto
shall be delivered to the trustee. The board of directors' determination must be
based upon an
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opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $5.0 million. Not
later than the date of making any Restricted Payment, Emmis shall deliver to the
trustee an officers' certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this "Restricted Payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Emmis will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt), and Emmis will not issue
any Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that Emmis and any
Restricted Subsidiary may incur Indebtedness (including Acquired Debt), and may
issue Disqualified Stock, if the Leverage Ratio of Emmis for the Reference
Period immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would not have been greater than
7.0 to 1, determined on a pro forma basis (after giving pro forma effect to such
incurrence or issuance and to the application of the net proceeds therefrom) and
in accordance with the definition of Leverage Ratio.
So long as no Default shall have occurred and be continuing or would be
caused thereby, the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by Emmis and any Restricted Subsidiary of Indebtedness
under the Credit Agreement; provided that the aggregate principal amount
of all Indebtedness of Emmis and the Restricted Subsidiaries outstanding
under the Credit Agreement after giving effect to such incurrence does
not exceed an amount equal to $750.0 million less the aggregate amount
of all Net Proceeds of Asset Sales required to be applied by Emmis or
any of its Restricted Subsidiaries since the date of the Indenture to
repay Indebtedness under the Credit Facilities pursuant to the covenant
described above under the caption "-- Asset Sales;"
(2) the incurrence by Emmis and its Restricted Subsidiaries of Existing
Indebtedness;
(3) the incurrence by Emmis and the Guarantors of Indebtedness represented
by the outstanding notes or the registered notes and the Subsidiary
Guarantees;
(4) the incurrence by Emmis or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of Emmis or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $5.0 million at any time outstanding;
(5) the incurrence by Emmis or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace, Indebtedness (other
than intercompany Indebtedness) that was
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permitted by the Indenture to be incurred under the first paragraph of
this covenant or clauses (2), (3), (4), (8) or (9) of this paragraph;
(6) the incurrence by Emmis or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Emmis and any Guarantor;
provided, however, that:
(a) if Emmis or any Guarantor is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the notes, in the
case of Emmis, or the Subsidiary Guarantee of such Guarantor, in
the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a person other than
Emmis or a Guarantor and (ii) any sale or other transfer of any
such Indebtedness to a person that is not either Emmis or a
Guarantor shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by Emmis or such Restricted
Subsidiary, as the case may be, that was not permitted by this
clause (6);
(7) the incurrence by Emmis or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be
outstanding;
(8) the guarantee by Emmis or any of the Restricted Subsidiaries of
Indebtedness of Emmis or a Restricted Subsidiary of Emmis that is also
a Guarantor that was permitted to be incurred by another provision of
this covenant;
(9) the incurrence by Emmis or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (9), not to exceed $25
million;
(10) the incurrence by Emmis' Unrestricted Subsidiaries of Non-Recourse
Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Emmis that was not permitted by this clause (10);
(11) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms (provided, in each such
case, that the amount thereof is included in Fixed Charges of Emmis as
accrued), and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock; and
(12) the incurrence by Emmis and any Restricted Subsidiary of up to an
aggregate principal amount of $250.0 million of Indebtedness under the
Credit Facilities for the purpose of acquiring Permitted Businesses.
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For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (12) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, Emmis
will be permitted to classify such item of Indebtedness on the date of its
incurrence in any manner that complies with this covenant.
NO SENIOR SUBORDINATED DEBT
Emmis will not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Senior Debt of Emmis and senior in any respect in right of payment to the
notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of such Guarantor and senior in any respect in right
of payment to such Guarantor's Subsidiary Guarantee.
LIENS
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness, Attributable Debt or trade payables on any asset now
owned or hereafter acquired, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
Emmis or any of Emmis' Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to Emmis or any of Emmis' Restricted
Subsidiaries;
(2) make loans or advances to Emmis or any of Emmis' Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Emmis or any of Emmis'
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the Indenture and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such Existing
Indebtedness, as in effect on the date of the Indenture;
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(2) the Indenture and the notes;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a person
acquired by Emmis or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any person, or the
properties or assets of any person, other than the person, or the
property or assets of the person, so acquired, provided that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of
the Indenture to be incurred;
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(6) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on the property so acquired of the
nature described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by such Restricted Subsidiary
pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred pursuant
to the provisions of the covenant described above under the caption
"-- Liens" that limit the right of Emmis or any of its Restricted
Subsidiaries to dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business; and
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Emmis may not, directly or indirectly: (1) consolidate or merge with or
into another person (whether or not Emmis is the surviving corporation); or (2)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
person; unless:
(1) either: (a) Emmis is the surviving corporation; or (b) the person
formed by or surviving any such consolidation or merger (if other than
Emmis) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District
of Columbia;
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(2) the person formed by or surviving any such consolidation or merger (if
other than Emmis) or the person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of Emmis under the notes and the Indenture pursuant
to agreements reasonably satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) Emmis or the person formed by or surviving any such consolidation or
merger (if other than Emmis):
(a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Emmis
immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Leverage Ratio test set forth in the
first paragraph of the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock."
In addition, Emmis may not, directly or indirectly, lease all or substantially
all of its properties or assets, in one or more related transactions, to any
other person. This "Merger, Consolidation, or Sale of Assets" covenant will not
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among Emmis and any of its Wholly Owned Subsidiaries.
TRANSACTIONS WITH AFFILIATES
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any affiliate, unless:
(1) such affiliate transaction is on terms that are no less favorable to
Emmis or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by Emmis or such Restricted
Subsidiary with an unrelated person; and
(2) Emmis delivers to the trustee:
(a) with respect to any affiliate transaction or series of related
affiliate transactions involving aggregate consideration in excess
of $1.0 million, a resolution of the board of directors set forth in
an officers' certificate certifying that such affiliate transaction
complies with this covenant and that such affiliate transaction has
been approved by a majority of the disinterested members of the
board of directors; and
(b) with respect to any affiliate transaction or series of related
affiliate transactions involving aggregate consideration in excess
of $5.0 million, an opinion as to the fairness to the holders of the
notes of such affiliate transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of
national standing.
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The following items shall not be deemed to be affiliate transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by Emmis or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the
past practice of Emmis or such Restricted Subsidiary;
(2) transactions between or among Emmis and/or its Restricted Subsidiaries;
(3) payment of reasonable directors fees to persons who are not otherwise
affiliates of Emmis; and
(4) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "-- Restricted Payments."
ADDITIONAL SUBSIDIARY GUARANTEES
If Emmis or any of its Restricted Subsidiaries acquires or creates another
Subsidiary after the date of the Indenture, then, unless such Subsidiary either
(1) is designated as an "Unrestricted Subsidiary" in accordance with the
covenant described below under the caption "-- Designation of Restricted and
Unrestricted Subsidiaries" or (2) is not a Domestic Restricted Subsidiary, that
newly acquired or created Restricted Subsidiary must become a Guarantor and
execute a supplemental indenture satisfactory to the trustee and deliver an
opinion of counsel to the trustee within 10 business days of the date on which
it was acquired or created.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The board of directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by Emmis and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be an Investment made as of the time
of such designation and will reduce the amount available for Restricted Payments
under the first paragraph of the covenant described above under the caption
"-- Restricted Payments" or Permitted Investments, as applicable. All such
outstanding Investments will be valued at their fair market value at the time of
such designation. In addition, such designation will only be permitted if such
Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
board of directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default.
SALE AND LEASEBACK TRANSACTIONS
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that Emmis or any
Guarantor may enter into a sale and leaseback transaction if:
(1) Emmis or that Guarantor, as applicable, could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction under the Leverage Ratio test in
the first paragraph of the covenant described above under the caption
"-- Incurrence of Additional Indebtedness and Issuance of Preferred
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Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to
the covenant described above under the caption "-- Liens;"
(2) the gross cash proceeds of that sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by
the board of directors and set forth in an officers' certificate
delivered to the trustee, of the property that is the subject of such
sale and leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction is
permitted by, and Emmis applies the proceeds of such transaction in
compliance with, the covenant described above under the caption
"-- Asset Sales."
LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED
SUBSIDIARIES
Emmis will not, and will not permit any of its Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests in
any Wholly Owned Restricted Subsidiary of Emmis to any person (other than Emmis
or a Wholly Owned Restricted Subsidiary of Emmis), unless:
(1) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Wholly Owned Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with the covenant described
above under the caption "-- Asset Sales."
In addition, Emmis will not permit any Wholly Owned Restricted Subsidiary of
Emmis to issue any of its Equity Interests (other than, if necessary, shares of
its Capital Stock constituting directors' qualifying shares) to any person other
than to Emmis or a Wholly Owned Restricted Subsidiary of Emmis.
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS
Emmis will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of Emmis unless such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture providing for the Guarantee of the payment
of the notes by such Restricted Subsidiary, which Guarantee shall be senior to
or pari passu with such Restricted Subsidiary's Guarantee of or pledge to secure
such other Indebtedness, unless such other Indebtedness is Senior Debt, in which
case the Guarantee of the notes may be subordinated to the Guarantee of such
Senior Debt to the same extent as the notes are subordinated to such Senior
Debt.
Notwithstanding the preceding paragraph, any Subsidiary Guarantee of the
notes will provide by its terms that it will be automatically and
unconditionally released and discharged under the circumstances described above
under the caption "-- Subsidiary Guarantees." The form of the Subsidiary
Guarantee will be attached as an exhibit to the Indenture.
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PAYMENTS FOR CONSENT
Emmis will not, and will not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any holder of notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of the Indenture or the notes unless such
consideration is offered to be paid and is paid to all holders of the notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
Emmis will furnish to the holders of notes, within the time periods specified in
the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if
Emmis were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
on the annual financial statements by Emmis' certified independent
accountants; and
(2) all current reports that would be required to be filed with the SEC on
Form 8-K if Emmis were required to file such reports.
If Emmis has designated any of its Subsidiaries as Unrestricted
Subsidiaries or if any Restricted Subsidiaries of Emmis are not Guarantors, then
the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of Emmis and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the non-Guarantor Subsidiaries of Emmis.
In addition, whether or not required by the SEC, Emmis will file a copy of
all of the information and reports referred to in clauses (1) and (2) above with
the SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
liquidated damages with respect to, the notes, whether or not
prohibited by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of or premium, if any, on
the notes, whether or not prohibited by the subordination provisions of
the Indenture;
(3) failure by Emmis or any of its Subsidiaries to comply with the
provisions described under the captions "-- Change of Control,"
"-- Asset Sales," "-- Restricted
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Payments" or "-- Incurrence of Indebtedness and Issuance of Preferred
Stock" or "-- Merger, Consolidation or Sale of Assets;"
(4) failure by Emmis or any of its Restricted Subsidiaries to comply with
any of the other agreements in the Indenture for 60 days after notice
to Emmis by the trustee or the holders of at least 25% in aggregate
principal amount of the notes then outstanding;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Emmis or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Emmis or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, if that default:
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default"); and
(b) results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $5.0
million or more;
(6) failure by Emmis or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) except as permitted by the Indenture, any Subsidiary Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor,
or any person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to Emmis or its
Restricted Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Emmis, any Restricted Subsidiary that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all notes then outstanding
will become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the trustee or the holders of
at least 25% in principal amount of the notes then outstanding may declare all
the notes to be due and payable immediately.
Holders of the notes may not enforce the Indenture or the notes except as
provided in the Indenture. Subject to certain limitations, holders of a majority
in principal amount of the notes then outstanding may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
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The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Emmis with the
intention of avoiding payment of the premium that Emmis would have had to pay if
Emmis then had elected to redeem the notes pursuant to the optional redemption
provisions of the Indenture, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the notes. If an Event of Default occurs prior to March 15, 2004, by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of
Emmis with the intention of avoiding the prohibition on redemption of the notes
prior to March 15, 2004, then the premium specified in the Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the notes.
Emmis is required to deliver to the trustee annually a statement regarding
compliance with the Indenture. Upon becoming aware of any Default or Event of
Default, Emmis is required to deliver to the trustee a statement specifying such
Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Emmis or any
Guarantor, as such, shall have any liability for any obligations of Emmis or the
Guarantors under the notes, the Indenture or the Subsidiary Guarantees or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of notes by accepting a note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the notes. The waiver may not be effective to waive liabilities under the
federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Emmis may, at its option and at any time, elect to have all of its
obligations discharged with respect to notes then outstanding and all
obligations of the Guarantors discharged with respect to their Subsidiary
Guarantees ("Legal Defeasance") except for:
(1) the rights of holders of notes then outstanding to receive payments in
respect of the principal of, premium and liquidated damages, if any,
and interest on such notes when such payments are due from the trust
referred to below;
(2) Emmis' obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Emmis' obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, Emmis may, at its option and at any time, elect to have the
obligations of Emmis and the Guarantors released with respect to certain
covenants that are described in the
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Indenture ("Covenant Defeasance") and thereafter any omission to comply with
those covenants shall not constitute a Default or Event of Default with respect
to the notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Emmis must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the notes, cash in U.S. dollars, non-callable
Government Securities, 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 the notes then outstanding on the stated maturity
or on the applicable redemption date, as the case may be, and Emmis
must specify whether the notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, Emmis shall have delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that (a) Emmis has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the
date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the holders of the
notes then outstanding 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;
(3) in the case of Covenant Defeasance, Emmis shall have delivered to the
trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the holders of the notes then outstanding 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;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit); or (b) 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;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which Emmis or
any of its Restricted Subsidiaries is a party or by which Emmis or any
of its Restricted Subsidiaries is bound, including without limitation
the Credit Facilities;
(6) Emmis must have delivered to the trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of
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any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(7) Emmis must deliver to the trustee an officers' certificate stating that
the deposit was not made by Emmis with the intent of preferring the
holders of notes over the other creditors of Emmis with the intent of
defeating, hindering, delaying or defrauding creditors of Emmis or
others; and
(8) Emmis must deliver to the trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and Emmis may require a
holder to pay any taxes and fees required by law or permitted by the Indenture.
Emmis is not required to transfer or exchange any note selected for redemption.
Also, Emmis is not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next and the third succeeding paragraphs, the
Indenture or the notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the Indenture or the notes may be waived with
the consent of the holders of a majority in principal amount of the notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the notes (except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment
default that resulted from such acceleration);
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(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the Indenture relating to waivers
of past Defaults or the rights of holders of notes to receive payments
of principal of or premium, if any, or interest on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the
Indenture relating to subordination that adversely affects the rights of the
holders of the notes will require the consent of the holders of at least 75% in
aggregate principal amount of notes then outstanding. Also, any amendment to
such provisions will require the consent of the representatives of the holders
of Designated Senior Debt.
Notwithstanding the preceding, without the consent of any holder of notes,
Emmis and the trustee may amend or supplement the Indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of Emmis' obligations to holders of notes
in the case of a merger or consolidation or sale of all or
substantially all of Emmis' assets;
(4) to make any change that would provide any additional rights or benefits
to the holders of notes or that does not adversely affect the legal
rights under the Indenture of any such holder; or
(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Emmis or any Guarantor, the Indenture
limits its right to obtain payment of claims in certain cases, or to realize
property received in respect of any such claim as security or otherwise. The
trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the notes then outstanding
will have the right to direct the time, method and place of conducting any
proceeding for exercising any, remedy available to the trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent person in the conduct of his
or her own affairs. Subject to such provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of notes, unless such holder shall have offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
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METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to Emmis, Emmis will make
all principal, premium, liquidated damages and interest payments on those notes
in accordance with those instructions. All other payments on these notes will be
made at the office or agency of the paying agent and registrar within the City
and State of New York unless Emmis elects to make interest payments by check
mailed to the holders at their address set forth in the register of holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. Emmis may
change the paying agent or registrar without prior notice to the holders of the
notes, and Emmis or any of its Subsidiaries may act as paying agent or
registrar.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The notes initially will be in the form of one or more registered global
notes without interest coupons (collectively, the "Global Notes"). Upon
issuance, the Global Notes will be deposited with the trustee, as custodian for
the Depository Trust Company ("DTC" or the "Depositary"), in New York and
registered in the name of DTC or its nominee for credit to the accounts of DTC's
Direct Participants and Indirect Participants (each as defined).
Transfer of beneficial interests in Global Notes will be subject to the
applicable rules and procedures of DTC and its Direct Participants or Indirect
Participants (including, if applicable, those of Euroclear and CEDEL), which may
change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor DTC or its nominee in certain limited
circumstances. Beneficial interests in the Global Notes may be exchanged for
notes in certificated form in certain limited circumstances. See "-- Transfer of
Interests in Global Notes for Certificated Notes."
The notes may be presented for registration of transfer and exchanged at
the offices of the registrar.
DEPOSITARY PROCEDURES
DTC has advised Emmis that DTC is a limited-purpose trust company created
to hold securities for its participating organizations (collectively, the
"Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, including Euroclear and CEDEL. Access to DTC's
system is also available to other entities that clear through or maintain a
direct or indirect, custodial relationship with a Direct Participant
(collectively, the "Indirect Participants"). DTC may hold securities
beneficially owned by other persons only through the Direct Participants or
Indirect Participants and such other person's ownership interest and transfer of
ownership interest will be recorded only on the records of the Direct
Participant and/or Indirect Participant and not on the records maintained by
DTC.
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DTC has also advised Emmis that, pursuant to DTC's procedures, (i) upon
deposit of the Global Notes, DTC will credit the accounts of Direct Participants
with portions of the principal amount of the Global Notes, and (ii) DTC will
maintain records of the ownership interests of such Direct Participants in the
Global Notes and the transfer of ownership interests by and between Direct
Participants. DTC will not maintain records of the ownership interests of, or
the transfer of ownership interests by and between, Indirect Participants or
other owners of beneficial interests in the Global Notes. Direct Participants
and Indirect Participants must maintain their own records of the ownership
interests of, and the transfer of ownership interests by and between, Indirect
Participants and other owners of beneficial interests in the Global Notes.
Investors in the Global Notes may hold their interests therein directly
through DTC if they are Direct Participants in DTC or indirectly through
organizations that are Direct Participants in DTC. The laws of some states in
the United States require that certain persons take physical delivery in
definitive, certificated form, of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a Global Note to such
persons. Because DTC can act only on behalf of Direct Participants, which in
turn act on behalf of Indirect Participants and others, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to persons
or entities that are not Direct Participants in DTC, or to otherwise take
actions in respect of such interests, may be affected by the lack of physical
certificates evidencing such interests. For certain other restrictions on the
transferability of the Notes see "-- Transfers of Interests in Global Notes for
Certificated Notes."
EXCEPT AS DESCRIBED IN "-- TRANSFERS OF INTEREST IN GLOBAL NOTES FOR
CERTIFICATED NOTES," OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Under the terms of the Indenture, Emmis, the Guarantors and the Trustee
will treat the persons in whose names the notes are registered (including notes
represented by Global Notes) as the owners thereof for the purpose of receiving
payments and for any and all other purposes whatsoever. Payments in respect of
the principal, premium, liquidated damages, if any, and interest on Global Notes
registered in the name of DTC or its nominee will be payable by the trustee to
DTC or its nominee as the registered holder under the Indenture. Consequently,
none of Emmis, the Guarantors, the trustee or any agent of Emmis, the Guarantors
or the trustee has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Direct Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Note or for maintaining, supervising or reviewing any of
DTC's records or any Direct Participant's or Indirect Participant's records
relating to the beneficial ownership interests in any Global Note or (ii) any
other matter relating to the actions and practices of DTC or any of its Direct
Participants or Indirect Participants.
DTC has advised Emmis that its current payment practice (for payments of
principal, interest and the like) with respect to securities such as the notes
is to credit the accounts of the relevant Direct Participants with such payment
on the payment date in amounts proportionate to such Direct Participant's
respective ownership interests in the Global Notes as shown on DTC's records.
Payments by Direct Participants and Indirect Participants to the beneficial
owners of the notes will be governed by standing instructions and customary
practices between them and will
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not be the responsibility of DTC, the trustee, Emmis or the Guarantors. None of
Emmis, the Guarantors or the trustee will be liable for any delay by DTC or its
Direct Participants or Indirect Participants in identifying the beneficial
owners of the notes, and Emmis and the trustee may conclusively rely on and will
be protected in relying on instructions from DTC or its nominee as the
registered owner of the notes for all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the notes through Euroclear or CEDEL) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the notes through Euroclear and CEDEL will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between Direct Participants in
DTC, on the one hand, and Indirect Participants who hold interests in the notes
through Euroclear or CEDEL, on the other hand, will be effected by Euroclear's
or CEDEL's respective nominee through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL; however, delivery of instructions relating to
crossmarket transactions must be made directly to Euroclear or CEDEL, as the
case may be, by the counterparty in accordance with the rules and procedures of
Euroclear or CEDEL and within their established deadlines (Brussels time for
Euroclear and U.K. time for CEDEL). Indirect Participants who hold interest in
the notes through Euroclear and CEDEL may not deliver instructions directly to
Euroclear's or CEDEL's nominee. Euroclear or CEDEL will, if the transaction
meets its settlement requirements, deliver instructions to its respective
nominee to deliver or receive interests on Euroclear's or CEDEL's behalf in the
relevant Global Note in DTC, and make or receive payment in accordance with
normal procedures for same-day funds settlement applicable to DTC.
Because of time zone differences, the securities of accounts of an Indirect
Participant who holds an interest in the notes through Euroclear or CEDEL
purchasing an interest in a Global Note from a Direct Participant in DTC will be
credited, and any such crediting will be reported, to Euroclear or CEDEL during
the European business day immediately following the settlement date of DTC in
New York.
DTC has advised Emmis that it will take any action permitted to be taken by
a holder of notes only at the direction of one or more Direct Participants to
whose account interest in the Global Notes is credited and only in respect of
such portion of the aggregate principal amount of the notes to which such Direct
Participant or Direct Participants has or have given direction. However, if
there is an Event of Default under the notes, DTC reserves the right to exchange
Global Notes (without the direction of one or more of its Direct Participants)
for notes in certificated form, and to distribute such certificated forms of
notes to its Direct Participants. See "-- Transfers of Interest in Global Notes
for Certificated Notes."
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interest in the Global Notes among Direct
Participants, including Euroclear and
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CEDEL, they are under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. None of Emmis,
the Guarantors or the trustee shall have any responsibility for the performance
by DTC, Euroclear or CEDEL or their respective Direct Participants and Indirect
Participants of their respective obligations under the rules and procedures
governing any of their operations.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that Emmis believes to
be reliable, but Emmis takes no responsibility for the accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive notes in registered,
certificated form with interest coupons ("Certificated Notes") if (i) DTC (x)
notifies Emmis that it is unwilling or unable to continue as depositary for the
Global Notes and Emmis thereupon fails to appoint a successor depositary within
90 days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) Emmis, at its option, notifies that Trustee in writing that it elects
to cause the issuance of Certificated Notes or (iii) there shall have occurred
and be continuing a Default or an Event of Default with respect to the notes. In
any such case, Emmis will notify the trustee in writing that, upon surrender by
the Direct Participants and Indirect Participants of their interest in such
Global Note, Certificated Notes will be issued to each person that such Direct
Participants and Indirect Participants and the DTC identify as being the
beneficial owner of the related notes.
Beneficial interests in Global Notes held by any Direct Participant or
Indirect Participant may be exchanged for Certificated Notes upon request to
DTC, by such Direct Participant (for itself or on behalf of an Indirect
Participant) or to the trustee in accordance with customary DTC procedures.
Certificated Notes delivered in exchange for any beneficial interests in any
Global Note will be registered in the names, and issued in any approved
denominations, requested by DTC on behalf of such Direct Participants or
Indirect Participants (in accordance with DTC's customary procedures).
None of Emmis, the Guarantors or the trustee will be liable for any delay
by the holder of any Global Note or DTC in identifying the beneficial owners of
notes, and Emmis and the trustee may conclusively rely on, and will be protected
in relying on, instructions from the holder of the Global Note or DTC for all
purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the notes represented by
the Global Notes (including principal, premium, if any, interest and liquidated
damages, if any) be made by wire transfer of immediately available same day
funds to the accounts specified by the holder of interests in such Global Note.
With respect to Certificated Notes, Emmis will make all payments of principal,
premium, if any, interest and liquidated damages, if any by wire transfer of
immediately available same day funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. Emmis expects the secondary trading in the
Certificated Notes will also be settled in immediately available funds.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such other person
is merged with or into or became a Subsidiary of such specified person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other person merging with or into, or becoming a
Subsidiary of, such specified person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified person.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business consistent with past practices; provided that the sale,
conveyance or other disposition of all or substantially all of the
assets of Emmis and its Restricted Subsidiaries taken as a whole will
be governed by the provisions of the Indenture described above under
the caption "-- Change of Control" and/or the provisions described
above under the caption "-- Merger, Consolidation or Sale of Assets"
and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of Emmis' Restricted
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries,
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $1.0 million;
or (b) results in net proceeds to Emmis and its Restricted Subsidiaries
of less than $1.0 million;
(2) a transfer of assets between or among Emmis and any of its Guarantors;
(3) an issuance of Equity Interests by a Guarantor to Emmis or to a
Guarantor;
(4) a transfer by Emmis of assets in a transaction that qualifies as a
charitable contribution or donation and which does not exceed $2.0
million in the aggregate; and
(5) a Restricted Payment that is permitted by the covenant described above
under the caption "-- Restricted Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with generally accepted
accounting principles.
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
generally accepted accounting principles.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than six
months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits,
in each case, with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank Watch Rating of
"B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Emmis and
its Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Jeffrey H. Smulyan
or a Related Party of Jeffrey H. Smulyan;
(2) the adoption of a plan relating to the liquidation or dissolution of
Emmis;
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(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than Jeffrey H. Smulyan and his Related Parties,
becomes the beneficial owner, directly or indirectly, of more than 35%
of the voting stock of Emmis, measured by voting power rather than
number of shares;
(4) the first day on which a majority of the members of the board of
directors of Emmis are not Continuing Directors; or
(5) Emmis consolidates with, or merges with or into, any person, or any
person consolidates with, or merges with or into, Emmis, in any such
event pursuant to a transaction in which any of the outstanding voting
stock of Emmis is converted into or exchanged for cash, securities or
other property, other than any such transaction where the voting stock
of Emmis outstanding immediately prior to such transaction is converted
into or exchanged for voting stock (other than Disqualified Stock) of
the surviving or transferee person constituting a majority of the
outstanding shares of such voting stock of such surviving or transferee
person immediately after giving effect to such issuance.
"Consolidated EBITDA" means, with respect to any person for any period, the
Consolidated Net Income of such person for such period plus:
(1) an amount equal to any extraordinary loss on an after tax basis plus
any loss realized in connection with an Asset Sale or any refinancing
of a Credit Facility on an after tax basis, to the extent such losses
were deducted in computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net
payments, if any, pursuant to Hedging Obligations), to the extent that
any such expense was deducted in computing such Consolidated Net
Income; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; plus
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(5) all one-time cash compensation payments in connection with employment
agreements as in effect on the date of the Indenture; minus
(6) non-cash items increasing such Consolidated Net Income for such period,
other than items that were accrued in the ordinary course of business,
in each case, on a consolidated basis and determined in accordance with
generally accepted accounting principles.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of Emmis shall be added to Consolidated Net Income to
compute Consolidated EBITDA of Emmis only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to Emmis
by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified person for
any period, the aggregate of the Net Income of such person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with generally accepted accounting principles; provided that:
(1) the Net Income or loss of any person that is not a Restricted
Subsidiary or Unrestricted Subsidiary or that is accounted for by the
equity method of accounting shall be excluded; provided, however, that
such Net Income shall be included to the extent of the amount of
dividends or distributions paid in cash to the specified person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the Net Income or loss of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified person or one of
its Subsidiaries; and
(5) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any person as of any date,
the sum of:
(1) the consolidated equity of the common stockholders of such person and
its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such person's balance sheet as of
such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its
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terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the year
of such declaration and payment, but only to the extent of any cash
received by such person upon issuance of such preferred stock.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of Emmis who:
(1) was a member of such board of directors on the date of the Indenture;
or
(2) was nominated for election or elected to such board of directors with
the approval of a majority of the Continuing Directors who were members
of such board at the time of such nomination or election.
"Credit Agreement" means the Second Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of July 16, 1998, as amended, among Emmis, the
lenders named therein, Toronto Dominion (Texas), Inc., as Administrative Agent,
BankBoston, N.A., as Documentation Agent and First Union National Bank, as
Syndication Agent, as further amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) and/or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Senior Debt" means (i) any and all Indebtedness (including all
principal, premium, interest, fees, expenses and other obligations and
liabilities) outstanding under the Credit Agreement and all Hedging Obligations
with respect thereto and (ii) any Senior Debt permitted under the Indenture the
principal amount of which is $25.0 million or more and that has been designated
by Emmis as "Designated Senior Debt"; provided, however, that so long as the
Credit Agreement remains in effect, lenders holding a majority of the loan
commitments or outstanding loans thereunder shall have consented in writing to
such designation by Emmis of additional Indebtedness as Designated Senior Debt.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require Emmis to repurchase such Capital Stock
upon the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that Emmis may not
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repurchase or redeem any such Capital Stock pursuant to such provisions unless
such repurchase or redemption complies with the covenant described above under
the caption "-- Certain Covenants -- Restricted Payments."
"Domestic Restricted Subsidiary" means any Restricted Subsidiary organized
under or incorporated in any State of the United States or the District of
Columbia and has its principal place of business in the United States.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means up to $0.5 million in aggregate principal
amount of Indebtedness of Emmis and its Restricted Subsidiaries in existence on
the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments, if any, pursuant to Hedging
Obligations; plus
(2) the consolidated interest of such person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another person that is
Guaranteed by such person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon and
limited to the amount of such Guarantee or the fair market value of the
property secured by such Lien, as the case may be.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) the Subsidiary Guarantors and
(2) any other Subsidiary of Emmis that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture;
and their respective successors and assigns.
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"Hedging Obligations" means, with respect to any person, the obligations of
such person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Indebtedness" means, without duplication, with respect to any specified
person, any indebtedness of such person, whether or not contingent, in respect
of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified person prepared in accordance with generally accepted accounting
principles. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified person (whether or not
such Indebtedness is assumed by the specified person) (limited to the fair
market value of the property securing such Lien) and, to the extent not
otherwise included, the Guarantee by such person of any indebtedness of any
other person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any person, all investments by such
person in other persons (including affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with
generally accepted accounting principles. If Emmis or any Restricted Subsidiary
of Emmis sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of Emmis such that, after giving effect to any
such sale or disposition, such person is no longer a Restricted Subsidiary of
Emmis, Emmis shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market
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value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant
described above under the caption "Certain Covenants -- Restricted Payments."
"Leverage Ratio" means, with respect to any specified person on any date of
determination (the "Calculation Date"), the ratio, on a pro forma basis, of (1)
the sum of the aggregate outstanding amount of Indebtedness and Disqualified
Stock of such person and its Restricted Subsidiaries as of the Calculation Date
determined on a consolidated basis in accordance with generally accepted
accounting principles to (2) the Consolidated EBITDA of such person and its
Restricted Subsidiaries attributable to continuing operations and businesses
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of) for the Reference Period. For purposes of
calculating the Leverage Ratio:
(1) acquisitions that have been made by the specified person or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the Reference
Period or subsequent to such Reference Period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of
the Reference Period and Consolidated EBITDA for such Reference Period
shall be calculated without giving effect to clause (3) of the proviso
set forth in the definition of Consolidated Net Income; and
(2) 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.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Marketable Securities" means publicly traded debt or equity securities
that are listed for trading on a national securities exchange and that were
issued by a corporation with debt securities are rated at least "AAA-" from
Standard & Poor's Corporation or "Aaa3" from Moody's Investors Service, Inc.
"Net Income" means, with respect to any person, the net income (loss) of
such person and its Restricted Subsidiaries, determined in accordance with
generally accepted accounting principles and before any reduction in respect of
preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with: (a) any Asset
Sale; or (b) the disposition of any securities by such person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness
of such person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by Emmis or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash
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received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of the direct costs relating to such Asset
Sale, including, without limitation, legal, accounting and investment banking
fees, and sales commissions, and any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof, in each case after taking
into account any available tax credits or deductions and any tax sharing
arrangements and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Emmis nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder
of any other Indebtedness (other than the notes) of Emmis or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Emmis or any of its
Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, including, without limitation,
post-petition interest whether or not allowed as a claim in any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Indebtedness.
"Permitted Business" means any business in which Emmis and its Restricted
Subsidiaries are engaged on the date of the Indenture or any business reasonably
related, incidental, complementary or ancillary thereto.
"Permitted Investments" means:
(1) any Investment in Emmis or in a Restricted Subsidiary of Emmis;
(2) any Investment in Cash Equivalents;
(3) any Investment by Emmis or any Restricted Subsidiary of Emmis in a
person, if as a result of such Investment:
(a) such person becomes a Restricted Subsidiary of Emmis or
(b) such person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, Emmis or a Restricted Subsidiary of Emmis;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales";
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(5) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of Emmis;
(6) other Investments in any person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (6) since the date of
the Indenture, not to exceed $15 million in the aggregate;
(7) Investments in Permitted Joint Ventures, provided that, at the time of
and immediately after giving pro forma effect to such Investment (and
any related transaction or series of transactions), the Leverage Ratio
would be less than or equal to the Leverage Ratio immediately prior to
such Investment; and
(8) any Investment in the form of loans or advances to employees of Emmis
not to exceed $3.0 million in aggregate principal amount at any one
time outstanding.
"Permitted Joint Ventures" means a corporation, partnership or other entity
(other than a Subsidiary) engaged in one or more Permitted Businesses in respect
of which Emmis or a Restricted Subsidiary (a) beneficially owns at least 20% of
the Capital Stock of such entity and (b) either is a party to an agreement
empowering one or more parties to such agreement (which may or may not be Emmis
or a Subsidiary), or is a member of a group that, pursuant to the constituent
documents of the applicable corporation, partnership or other entity, has the
power, to direct the policies, management and affairs of such entity.
"Permitted Junior Securities" means: (1) Equity Interests in Emmis or any
Guarantor; or (2) debt securities of Emmis or any Guarantor that are unsecured
and subordinated to all Senior Debt (and any debt securities issued in exchange
for Senior Debt), to substantially the same extent as, or to a greater extent
than, the notes and the Subsidiary Guarantees are subordinated to Senior Debt
pursuant to the Indenture. Without limiting the foregoing, such Permitted Junior
Securities shall have no required principal payments or equity redemption
requirements until after the final maturity of the Senior Debt.
"Permitted Liens" means:
(1) Liens on the assets of Emmis and any Guarantor securing Senior Debt and
Indebtedness and other Obligations under Credit Facilities to the
extent such Indebtedness was permitted by the terms of the Indenture to
be incurred;
(2) Liens in favor of Emmis or the Guarantors;
(3) Liens on property of a person existing at the time such person is
merged with or into or consolidated with Emmis or any Restricted
Subsidiary of Emmis; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the person merged into or
consolidated with Emmis or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by Emmis
or any Restricted Subsidiary of Emmis, provided that such Liens were in
existence prior to the contemplation of such acquisition;
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(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock"
covering only the assets acquired with such Indebtedness;
(7) Liens existing on the date of the Indenture;
(8) Liens on Assets of Guarantors to secure Senior Debt of such Guarantor
to the extent that such Lien was permitted by the Indenture to be
incurred;
(9) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with generally accepted accounting principles
shall have been made therefor; and
(10) Liens incurred in the ordinary course of business of Emmis or any
Restricted Subsidiary of Emmis with respect to obligations that do not
exceed $5.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of Emmis or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Emmis or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
of (or accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of
payment to, the notes on terms at least as favorable to the holders of
notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by Emmis or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
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"Productive Assets" means assets (including Capital Stock) that are used or
usable by Emmis and its Restricted Subsidiaries in Permitted Businesses;
provided that for any Capital Stock to qualify as Productive Assets, it must,
after giving pro forma effect to the transaction in which it was acquired, be
Capital Stock of a Restricted Subsidiary.
"Public Equity Offering" means any underwritten public offering of common
stock of Emmis in which the net proceeds to Emmis are at least $25.0 million.
"Reference Period" means, with regard to any person, 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 or calculation
is to be made pursuant to the terms of the Indenture.
"Related Party" with respect to Jeffrey H. Smulyan means:
(1) any 80% or more owned Subsidiary, or spouse or immediate family member
of Jeffrey H. Smulyan; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or persons beneficially holding an 80%
or more controlling interest of which consist of Jeffrey H. Smulyan
and/or such other persons referred to in the immediately preceding
clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a person means any Subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"Senior Debt" means:
(1) all principal, premium, interest, fees, expenses and other obligations
and liabilities of any kind outstanding under the Credit Facilities and
any Guarantees thereof, together with available undrawn amounts under
letters of credit issued thereunder and any other Indebtedness
outstanding under the Credit Facilities (including, without limitation,
post-petition interest whether or not allowed as a claim in any
bankruptcy, reorganization, insolvency, receivership or similar
proceeding with respect to Indebtedness outstanding under the Credit
Facilities) and all Hedging Obligations with respect thereto;
(2) any other Indebtedness permitted to be incurred by Emmis under the
terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the notes; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will not
include:
(1) any liability for federal, state, local or other taxes owed or owing by
Emmis;
(2) any Indebtedness of Emmis to any of its Subsidiaries or other
affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of the Indenture.
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"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such person or one or
more of the other Subsidiaries of that person (or a combination
thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such person or a Subsidiary of such person or (b)
the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Unrestricted Subsidiary" means Radio Hungaria Co. Ltd. and any other
Subsidiary of Emmis that is designated by the board of directors of Emmis as an
Unrestricted Subsidiary pursuant to a board resolution, but only to the extent
that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with Emmis or any Restricted Subsidiary of Emmis unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to Emmis or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not affiliates of Emmis;
(3) is a person with respect to which neither Emmis nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such person's financial condition or to cause such person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Emmis or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Emmis or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Emmis or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of Emmis as an Unrestricted Subsidiary
shall be evidenced to the trustee by filing with the trustee a certified copy of
the board resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
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"Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of Emmis as of such date and,
if such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock," Emmis shall be in default of such covenant. The board of
directors of Emmis may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of Emmis of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (1) such Indebtedness is permitted under the covenant
described under the caption "Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period;
and (2) no Default or Event of Default would be in existence following such
designation.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any person means a Restricted
Subsidiary of such person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such person and/or by one or more Wholly Owned Restricted
Subsidiaries of such person.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summary description of certain indebtedness of Emmis does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the various related agreements, certain of which are on file with
the Securities and Exchange Commission and to which reference is hereby made.
CREDIT FACILITY
Emmis amended and restated its senior credit facility with a syndicate of
banks and other financial institutions on July 16, 1998. Prior to the offering
of the outstanding notes, the Credit Facility provided availability of $750
million in loans, which could be increased to $1.0 billion with the consent of
the lenders. The Credit Facility provided for four lending facilities, as
follows:
- A $150 million senior secured revolving credit facility with a final
maturity date of August 31, 2006;
- A $250 million senior secured amortizing term loan with a final maturity
date of August 31, 2006;
- A $250 million senior secured amortizing term loan with a final maturity
date of February 28, 2007; and
- A $100 million senior secured acquisition revolving credit/term loan
facility with a final maturity date of August 31, 2006 which will
terminate if not utilized prior to July 1999.
The Credit Facility provides for letters of credit to be made available to
Emmis not to exceed $50 million. The aggregate amount of outstanding letters of
credit and amounts borrowed under the revolving credit facility cannot exceed
the revolving credit facility commitment.
All outstanding amounts under the Credit Facility bear interest, at the
option of Emmis, at a rate equal to the Eurodollar Rate or an alternative base
rate (as such terms are defined in the Credit Facility) plus a margin. The
margin over the Eurodollar Rate or the alternative base rate varies from time to
time, depending on our ratio of debt to earnings before interest, taxes,
depreciation and amortization (EBITDA), as defined in the Credit Facility.
Interest is due on a calendar quarter basis under the alternative base rate and
at least every three months under the Eurodollar Rate.
The Credit Facility requires Emmis to maintain interest rate protection
agreements through July 2001. The notional amount required varies based upon our
ratio of adjusted debt to EBITDA, as defined in the Credit Facility. The
notional amount of the agreements outstanding as of January 18, 1999 was $274
million. The agreements, which expire at various dates ranging from April 2000
to February 2001, establish ceilings of 6.5% to 8.0% on the London Interbank
Offered Rate ("LIBOR") interest rate.
The aggregate amount of the revolving credit facility under the Credit
Facility reduces quarterly beginning August 31, 2001. Amortization of the
outstanding principal amount under the term notes and revolving credit
facility/term loan facility is payable in quarterly installments beginning
August 31, 2001.
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Commencing with the fiscal year ending February 28, 2002, in addition to
the scheduled amortization/reduction under the Credit Facility, within 60 days
after the end of each fiscal year, the amount available for borrowing under the
Credit Facility is permanently reduced by 50% of our excess cash flow if the
ratio of adjusted debt (as defined in the Credit Facility) to EBITDA exceeds 4.5
to 1. Excess cash flow is generally defined as EBITDA reduced by the sum of net
cash tax payments, capital expenditures, required debt service, increases in
working capital (net of cash or cash equivalents) and $5 million. The net
proceeds of any sale of certain assets must also be used to permanently reduce
borrowings under the Credit Facility. If the ratio of adjusted debt to EBITDA is
less than 5.5 to 1 and certain other conditions are met, Emmis will be permitted
in certain circumstances to reborrow the amount of the net proceeds within nine
months solely for the purpose of funding an acquisition.
The Credit Facility contains various financial and operating covenants and
other restrictions with which Emmis must comply, including, among others,
restrictions on additional indebtedness, engaging in businesses other than
broadcasting and publishing, paying cash dividends, redeeming or repurchasing
our capital stock and use of borrowings, as well as requirements to maintain
certain financial ratios. The Credit Facility also prohibits Emmis, under
certain circumstances, from making acquisitions and disposing of certain assets
without the prior consent of the lenders, and provides that an event of default
will occur if Jeffrey H. Smulyan ceases to maintain (i) a significant equity
investment in Emmis (as specified in the Credit Facility), (ii) the ability to
elect a majority of our directors or (iii) control of a majority of shareholder
voting power. Substantially all of our assets, including the stock of our
subsidiaries, are pledged to secure the Credit Facility.
AMENDMENT TO CREDIT FACILITY
Concurrently with the offering of the outstanding notes, our lenders
amended the Credit Facility as follows:
- The $250 million senior secured amortizing term loan with a final
maturity date of August 31, 2006 was changed into a revolving credit
facility and the prepayment provisions were modified to permit Emmis to
reduce the outstanding balance on that facility with a portion of the
proceeds of the offering of the outstanding notes and then reborrow
these amounts as needed for acquisitions or other business needs;
- The limitation on subordinated indebtedness was increased to permit the
offering of the outstanding notes;
- The restrictions on payment of the SF Note were modified to permit Emmis
to retire the SF Note with a portion of the proceeds from the offering
of the outstanding notes; and
- Various financial covenants and acquisition restrictions were modified.
SF NOTE
In connection with our acquisition in 1998 of four television stations
representing substantially all of the assets of SF Broadcasting of Wisconsin,
Inc. and SF Multistations, Inc. and its subsidiaries, Emmis issued the $25
million SF Note for a portion of the purchase price.
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The SF Note was due July 15, 1999 and accrued interest at 8% per annum. The SF
Note was secured by a pledge of approximately $27 million of our Class A Common
Stock. At the option of Emmis, the SF Note could be paid in cash or an
equivalent amount of our Class A Common Stock. We paid this obligation in cash
with a portion of the net proceeds from the offering of the outstanding notes.
HUNGARIAN RADIO DEBT
Our 54% owned Hungarian subsidiary, Radio Hungaria Co. Ltd. (doing business
as Slager Radio), has certain obligations which are consolidated in our
financial statements due to our majority ownership interest. However, Emmis is
not a guarantor of or required to fund these obligations. In particular, Slager
Radio must pay, in Hungarian forints, an obligation for a radio broadcast
license to the Hungarian government in four equal annual installments commencing
November 2000. At November 30, 1998, this obligation (in U.S. dollars) was
approximately $13.1 million, which was net of an unamortized discount of
approximately $1.4 million. The obligation is subject to a monthly Hungarian
cost of living adjustment (which was 14.3% for the year ended December 31, 1998)
payable in Hungarian forints concurrently with the principal payments. At the
commencement of the obligation, Slager Radio recorded the obligation at its
present value giving consideration for the difference between the estimated
current annual cost of living adjustment and the estimated average cost of
borrowing. The amortization of this discount is reflected in interest expense
and will be paid in Hungarian forints concurrently with the principal payments.
In addition, Slager Radio is obligated to pay certain notes and bonds to
its shareholders. At November 30, 1998, bonds payable to the minority
shareholders were (in U.S. dollars) approximately $2.9 million. The bonds are
due at maturity in November 2004 and bear interest at the Hungarian State Bill
rate plus 3% (20.2% at November 30, 1998). Interest payments on the bonds are
semiannual. At November 30, 1998, notes payable to the minority shareholders
were (in U.S. dollars) approximately $0.8 million. The notes bear interest at
the Citibank prime rate plus 2% (9.75% at November 30, 1998). The notes and
accrued interest are due at maturity in September 1999.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain material United States federal
income tax consequences of the purchase, disposition and ownership of the notes
as of the date hereof, but is not purported to be a complete analysis of all
potential tax effects. Except where noted, it deals only with notes held as
capital assets and does not deal with special situations, such as those of
dealers in securities or currencies, tax exempt organizations, individual
retirement accounts and other tax deferred accounts, financial institutions,
life insurance companies, persons holding notes as a part of a hedging or
conversion transaction or a straddle, persons subject to the alternative minimum
tax or holders of notes whose "functional currency" is not the U.S. dollar.
Furthermore, the discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and
judicial decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified, either retroactively or prospectively, so as to
result in federal income tax consequences different from those discussed below.
In addition, except as otherwise indicated, the following does not consider the
effect of any applicable foreign, state, local or other tax laws or estate or
gift tax considerations. Persons considering the purchase, ownership or
disposition of notes should consult their own tax advisors concerning the
federal income tax consequences in light of their particular situations, as well
as any consequences arising under the laws of any other taxing jurisdiction.
EFFECT OF EXCHANGE OF OUTSTANDING NOTES FOR REGISTERED NOTES
Emmis believes that the exchange of outstanding notes for registered notes
pursuant to the registered exchange offer will not be treated as an "exchange"
for federal income tax purposes because the registered notes will not be
considered to differ materially in kind or extent from the outstanding notes.
Rather, the registered notes received by a holder will be treated as a
continuation of the outstanding notes in the hands of such holder. As a result,
holders will not recognize any taxable gain or loss or any interest income as a
result of exchanging outstanding notes for registered notes pursuant to the
exchange offer, the holding period of the registered notes will include the
holding period of the outstanding notes, and the basis of the registered notes
will equal the basis of the outstanding notes immediately before the exchange.
STATED INTEREST ON NOTES
Except as set forth below, interest on a note will generally be taxable to
a United States Holder as ordinary interest income from domestic sources at the
time it is accrued or received (in accordance with the United States Holder's
method of accounting for tax purposes). As used herein, a "United States Holder"
of a note means a holder that is a citizen or individual resident (as defined in
Section 7701(b) of the Code) of the United States; a corporation or partnership
(including any entity treated as a corporation or partnership for United States
federal income tax purposes) created or organized under the laws of the United
States, any state thereof or the District of Columbia unless, in the case of a
partnership, otherwise provided by regulation; an estate the income of which is
subject to United States federal income taxation regardless of its source; or a
trust if (i) a U.S. court is able to exercise primary supervision over the
administration of the trust, and (ii) one or more U.S. trustees or fiduciaries
have the authority to control all substantial decisions of the trust. A
"Non-United States Holder" is a holder that is not a United States Holder.
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Failure of Emmis to consummate this exchange offer or to file or cause to
be declared effective the shelf registration statement as described under "The
Exchange Offer -- Purpose and Effect of the Exchange Offer" will cause
liquidated damages to accrue on the outstanding notes in the manner described
therein and in the same manner as additional interest. According to Treasury
regulations, the possibility of a change in the interest rate will not affect
the amount of interest income recognized by a United States Holder (or the
timing of such recognition) if the likelihood of the change, as of the date the
notes are issued, is remote. Emmis believes that the likelihood of a change in
the interest rate on the notes is remote and does not intend to treat the
possibility of a change in the interest rate as affecting the yield to maturity
of any note. In the unlikely event that the interest rate on the notes is
increased, then such increased interest may be treated as original issue
discount, includible by a United States Holder in income as such interest
accrues, in advance of receipt of any cash payment thereof. Because the issue
price of the notes was equal to their stated principal amount, and because the
likelihood of a change in the interest rate is remote, the notes were not issued
with original issue discount.
MARKET DISCOUNT
If a United States Holder purchases a note subsequent to its original
issuance for an amount that is less than its stated redemption price at
maturity, the amount of the difference will be treated as "market discount" for
U.S. federal income tax purposes, unless such difference is less than a
specified de minimis amount. Under the market discount rules, a United States
Holder will be required to treat any partial principal payment on, or any gain
on the sale, exchange, redemption, retirement or other disposition of a note as
ordinary income to the extent of the market discount which has not previously
been included in income, and such income is treated as having accrued on such
note at the time of such payment or disposition. In addition, the United States
Holder may be required to defer, until the maturity of the note or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or continued to purchase or carry
such note.
Any market discount will be considered to accrue on a straight-line basis
during the period from the date of acquisition to the maturity date of the note,
unless the United States Holder elects to accrue on a constant interest method.
A United States Holder of a Note may elect to include market discount in income
currently as it accrues (on either a straight-line or constant interest method).
If the United States Holder of a note makes such an election, the foregoing
rules with respect to the recognition of ordinary income on sales and other
dispositions of such instruments, and with respect to the deferral of interest
deductions on debt incurred or maintained to purchase or carry such debt
instruments, would not apply. This election to include market discount in income
currently once made applies to all market discount obligations acquired on or
after the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service.
AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a note for an amount in excess of the
principal amount will be considered to have purchased the note at a "premium." A
United States Holder generally may elect to amortize the premium over the
remaining term of the note on a constant yield method (or, if a smaller
amortization allowance would result, by computing such allowance
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with reference to the amount payable on an earlier call date and amortizing such
allowance over the shorter period to such call date). The amount amortized in
any year will be treated as a reduction of the United States Holder's interest
income from the note. Bond premium on a note held by a United States Holder that
does not make such an election will decrease the gain or increase the loss
otherwise recognized on disposition of the note. The election to amortize
premium on a constant yield method, once made, applies to all debt obligations
held or subsequently acquired by the electing United States Holder on or after
the first day of the first taxable year to which the election applies and may
not be revoked without the consent of the Internal Revenue Service.
SALE, EXCHANGE AND REDEMPTION OF NOTES
Upon the sale, exchange, redemption, retirement or other disposition of a
note, a United States Holder generally will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, redemption,
retirement or other disposition and such holder's adjusted tax basis in the
note. A United States Holder's adjusted tax basis in a note will, in general, be
the United States Holder's cost therefor, increased by market discount
previously included in income by the United States Holder and reduced by any
amortized premium previously deducted from income by the United States Holder.
Except as described above with respect to market discount or except to the
extent the gain or loss is attributable to accrued but unpaid stated interest,
such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if, at the time of sale, exchange, redemption, retirement or other
disposition, the note has been held for more than one year.
United States Holders that are corporations will generally be taxed on net
capital gains at a maximum rate of 35%. In contrast, United States Holders that
are individuals will generally be taxed on net capital gains at a maximum rate
of (i) 39.6% for property held for 12 months or less, and (ii) 20% for property
held for more than 12 months. Special rules (and generally lower maximum rates)
apply for individuals in lower tax brackets. Any capital losses realized by a
United States Holder that is a corporation generally may be used only to offset
capital gains. Any capital losses realized by a United States Holder that is an
individual generally may be used only to offset capital gains plus $3,000 of
other income per year.
NON-UNITED STATES HOLDERS
Under present United States federal income tax law, and, subject to the
discussion below concerning backup withholding, no United States federal
withholding tax will be imposed with respect to the payment by Emmis or a paying
agent of principal or interest on a note owned by a Non-United States Holder
(the "Portfolio Interest Exception"), provided (i) that such Non-United States
Holder does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of Emmis entitled to vote within the
meaning of Section 871(h)(3) of the Code and the regulations thereunder, (ii)
such Non-United States Holder is not a controlled foreign corporation that is
related, directly or indirectly, to Emmis through stock ownership, (iii) such
Non-United States Holder is not a bank whose receipt of interest on a note is
described in Section 881(c)(3)(A) of the Code, and (iv) such Non-United States
Holder satisfies the statement requirement (described generally below) set forth
in Section 871(h) and Section 881(c) of the Code and the regulations thereunder.
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To satisfy the requirement referred to in clause (iv) above, the beneficial
owner of such note, or a financial institution holding the note on behalf of
such owner, must provide, in accordance with specified procedures, Emmis or its
paying agent with a statement to the effect that the beneficial owner is not a
United States Holder. Pursuant to current temporary Treasury regulations, these
requirements will be met if (i) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States Holder (which certification may be made on an Internal Revenue Service
Form W-8 (or successor form)), or (ii) a financial institution, holding the note
in the ordinary course of its trade or business on behalf of the beneficial
owner, certifies under penalties of perjury that such statement has been
received by it or by a financial institution between it and the beneficial owner
and furnishes Emmis or its agent with a copy thereof. Such certification is
effective with respect to payments of interest made after the issuance of the
certificate in the calendar year of its issuance and the two immediately
succeeding calendar years.
On October 6, 1997, final regulations were adopted by the issuance of T.D.
8734 (the "1997 Final Regulations") that affect the United States federal income
taxation of Non-United States Holders. The 1997 Final Regulations are effective
for payments after December 31, 1999, regardless of the issue date of the
instrument with respect to which such payments are made, subject to certain
transition rules discussed below. The discussion under this heading and under
"Information Reporting and Backup Withholding" below is not intended to be a
complete discussion of the provisions of the 1997 Final Regulations. Holders of
the notes are urged to consult their tax advisors concerning the tax
consequences of their investment in light of the 1997 Final Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. Qualified intermediaries include persons that are
parties to a withholding agreement with the Internal Revenue Service where such
persons are: (i) foreign financial institutions or foreign clearing
organizations (other than a United States branch or United States office of such
institution or organization), (ii) foreign branches or offices of United States
financial institutions or foreign branches or offices of United States clearing
organizations, (iii) foreign corporations for purposes of presenting claims of
benefits under income tax treaties on behalf of their shareholders or (iv) any
other persons acceptable to the Internal Revenue Service. In addition to certain
other requirements, qualified intermediaries must obtain withholding
certificates, such as revised Internal Revenue Service Form W-8 (discussed
below), from each beneficial owner. Under another option, an authorized foreign
agent of a United States withholding agent will be permitted to act on behalf of
the United States withholding agent (including the receipt of withholding
certificates, the payment of amounts of income subject to withholding and the
deposit of tax withheld), provided that certain conditions are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat as the beneficial owners of payments on a note those persons
that, under United States federal
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income tax principles, are the taxpayers with respect to such payments, rather
than persons such as nominees or agents legally entitled to such payments. In
the case of payments to an entity classified as a foreign partnership under
United States tax principles, the partners, rather than the partnership,
generally must provide the required certifications to qualify for the
withholding tax exemption described above (unless the partnership has entered
into a special agreement with the Internal Revenue Service). A payment to a
United States partnership, however, is treated for these purposes as payment to
a United States payee, even if the partnership has one or more foreign partners.
The 1997 Final Regulations provide certain presumptions with respect to
withholding for holders not furnishing the required certifications to qualify
for the withholding tax exemption described above. In addition, the 1997 Final
Regulations will replace a number of current tax certification forms (including
Internal Revenue Service Form W-8) with a series of revised Internal Revenue
Service Forms W-8 (which, in certain circumstances, require information in
addition to that previously required). Under the 1997 Final Regulations, these
revised Forms W-8 will remain valid until the last day of the third calendar
year following the year in which the certificate is signed.
The 1997 Final Regulations provide transition rules concerning existing
certificates, such as Internal Revenue Service Form W-8. Valid withholding
certificates that are held on December 31, 1999 will generally remain valid
until the earlier of December 31, 2000 or the date of their expiration. Existing
certificates that expire in 1999 will not be effective after their expiration.
Certificates dated prior to January 1, 1998 will generally remain valid until
the end of 1998, irrespective of the fact that their validity expires during
1998.
If a Non-United States Holder cannot satisfy the requirements of the
Portfolio Interest Exception described above in "-- Non-United States
Holders -- Interest," payments on a note made to such Non-United States Holder
will be subject to a 30% withholding tax unless the beneficial owner of the note
provides Emmis or its paying agent with a properly executed (i) Internal Revenue
Service Form 1001 (or successor form) claiming an exemption from withholding
under the benefit of a tax treaty, or (ii) Internal Revenue Service Form 4224
(or successor form) stating that interest paid on the note is not subject to
withholding tax because it is effectively connected with the beneficial owner's
conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest paid on a note is effectively connected with the
conduct of such trade or business, the Non-United States Holder, although exempt
from United States federal withholding tax as discussed above, will be subject
to United States federal income tax on such payment on a net income basis (that
is, after allowance for applicable deductions) at the graduated rates that are
applicable to United States Holders in essentially the same manner as if the
notes were held by a United States Holder, as discussed above. In addition, if
such Non-United States Holder is a corporation, it may be subject to a United
States federal branch profits tax (which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits) at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the Non-United States Holder
is a qualified resident of the treaty country. For this purpose, such payment on
a note will be included in such foreign corporation's earnings and profits.
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GAIN ON SALE OR OTHER DISPOSITION
Subject to special rules applicable to individuals as described below, a
Non-United States Holder will generally not be subject to regular United States
federal income or withholding tax on gain recognized on a sale or other
disposition of the notes, unless the gain is effectively connected with the
conduct of a trade or business within the United States of the Non-United States
Holder or of a partnership, trust or estate in which such Non-United States
Holder is a partner or beneficiary.
Gains realized by a Non-United States Holder that are effectively connected
with the conduct of a trade or business within the United States of the
Non-United States Holder will generally be taxed on a net income basis (that is,
after allowance for applicable deductions) at the graduated rates that are
applicable to United States Holders, as described above, unless exempt by an
applicable income tax treaty. In the case of a Non-United States Holder that is
a corporation, such income may also be subject to the United States federal
branch profits tax (which is generally imposed on a foreign corporation upon the
deemed repatriation from the United States of effectively connected earnings and
profits) at a 30% rate, unless the rate is reduced or eliminated by an
applicable income tax treaty and the Non-United States Holder is a qualified
resident of the treaty country.
In addition to being subject to the rules described above, an individual
Non-United States Holder who holds the notes as a capital asset will generally
be subject to tax at a 30% rate on any gain recognized on the sale or other
disposition of such notes if (i) such gain is not effectively connected with the
conduct of a trade or business within the United States of the Non-United States
Holder, and (ii) such individual is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and either (A) has a
"tax home" in the United States (as specially defined for purposes of the United
States federal income tax), or (B) maintains an office or other fixed place of
business in the United States and the gain from the sale or other disposition of
the Notes is attributable to such office or other fixed place of business.
Individual Non-United States Holders may also be subject to tax pursuant to
provisions of United States federal income tax law applicable to certain United
States expatriates (including certain former long-term residents of the United
States).
Under the 1997 Final Regulations, withholding of United States federal
income tax may apply to payments on a taxable sale or other disposition of the
notes by a Non-United States Holder who does not provide appropriate
certification to the withholding agent with respect to such transaction.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments on a
note and to the proceeds of the sale or other disposition of a note before
maturity if the sale is to United States Holders other than certain exempt
recipients (such as corporations). In addition, a 31% backup withholding tax
applies if a non-corporate person (i) fails to furnish such person's Taxpayer
Identification Number (which, for an individual, is his or her Social Security
Number) to the payor in the manner required, (ii) furnishes an incorrect
Taxpayer Identification Number and the payor is so notified by the Internal
Revenue Service, (iii) is notified by the Internal Revenue Service that such
person has failed properly to report payments of interest and dividends, or
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(iv) in certain circumstances, fails to certify, under penalties of perjury,
that such person has not been notified by the Internal Revenue Service that such
person is subject to backup withholding for failure properly to report interest
and dividend payments. Backup withholding does not apply to payments made to
certain exempt recipients, such as corporations and tax-exempt organizations.
No information reporting or backup withholding will be required with
respect to payments made by Emmis or its paying agent to Non-United States
Holders if either (i) a statement described in clause (iv) under "--Non-United
States Holders -- Interest" has been received and the payor does not have actual
knowledge that the beneficial owner is a United States person, or (ii) an
exemption has otherwise been established.
In addition, backup withholding and information reporting will not apply if
interest payments on a note are collected by a foreign office of a custodian,
nominee or other foreign agent on behalf of the beneficial owner of such note,
or if a foreign office of a broker (as defined in applicable Treasury
regulations) pays the proceeds of the sale or other disposition of a note to the
owner thereof. If, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, a United States person, a controlled
foreign corporation or a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a trade or business in the United
States for a specified three year period, such payments will be subject to
information reporting (but not backup withholding), unless (i) such custodian,
nominee, agent or broker has documentary evidence in its records that the
beneficial owner is not a United States person and certain other conditions are
met, or (ii) the beneficial owner otherwise establishes an exemption. The 1997
Final Regulations modify certain of the certification requirements for backup
withholding and expand the group of U.S. Related Persons. It is possible that
Emmis or its paying agent may request new withholding exemption forms from
holders of notes in order to qualify for continued exemption from backup
withholding when the 1997 Final Regulations become effective.
Payments on a note paid to the beneficial owner of a note by a United
States office of a custodian, nominee or agent, or the payment by the United
States office of a broker of the proceeds of sale of a note, will be subject to
both backup withholding and information reporting unless (a) the beneficial
owner provides the statement described in clause (iv) under "--Non-United States
Holders -- Interest" and the payor does not have actual knowledge that the
beneficial owner is a United States person, or (b) the beneficial owner
otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amount withheld under the
backup withholding rules will be allowed as a refund or a credit against such
holder's United States federal income tax liability provided the required
information is furnished to the Internal Revenue Service.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Emmis originally sold the outstanding notes to Donaldson, Lufkin & Jenrette
Securities Corporation, BancBoston Robertson Stephens Inc., First Union Capital
Markets Corp., Goldman. Sachs & Co. and TD Securities (USA) Inc. These initial
purchasers subsequently placed the outstanding notes with:
- qualified institutional buyers in reliance on Rule 144A under the
Securities Act; and
- qualified buyers outside the United States in reliance on Regulation S
under the Securities Act.
Emmis entered into a registration rights agreement with the initial
purchasers, as a condition to their purchase of the outstanding notes, pursuant
to which Emmis has agreed, for the benefit of the outstanding note holders, at
its own expense, to file a registration statement for this exchange offer, of
which this prospectus is a part, with the SEC on or before a date 30 days after
the date of the registration rights agreement. When the exchange offer
registration statement is declared effective, Emmis will offer the registered
notes in exchange for tender of the outstanding notes. For each outstanding note
tendered to Emmis pursuant to the exchange offer, the holder of such outstanding
note will receive a registered note having an original principal amount at
maturity equal to that of the tendered outstanding note.
Based upon interpretations by the SEC staff set forth in certain no-action
letters to third parties (including Exxon Capital Holdings Corp., SEC No-Action
Letter (April 13, 1989); Morgan Stanley & Co. Inc., SEC No-Action Letter (June
5, 1991); and Shearman & Sterling, SEC No-Action Letter (July 2, 1993)), Emmis
believes that the registered notes issued pursuant to this exchange offer in
exchange for the outstanding notes, in general, will be freely tradeable after
the exchange offer, without compliance with the registration and prospectus
delivery requirements of the Securities Act. However, any purchaser of
outstanding notes who is a Emmis "affiliate," within the meaning of Rule 405
under the Securities Act, who does not acquire the registered notes in the
ordinary course of business, or who tenders in the exchange offer for the
purpose of participating in a distribution of the registered notes, could not
rely on the SEC staff position enunciated in such no-action letters and, in the
absence of an applicable exemption, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. A holder's failure to comply with those requirements in such
an instance may result in that holder incurring liability under the Securities
Act which we will not indemnify.
As the above-mentioned no-action letters and the registration rights
agreement contemplate, each holder accepting the exchange offer is required to
represent to us, in a letter of transmittal, that:
- the holder or the person receiving the registered notes, whether or not
such person is the holder, will acquire those registered notes in the
ordinary course of business;
- the holder or any other acquiror is not engaging in a distribution of
the registered notes;
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- the holder or any other acquiror has no arrangement or understanding
with any person to participate in a distribution of the registered
notes;
- neither the holder nor any other acquiror is an Emmis affiliate within
the meaning of Rule 405 under the Securities Act; and
- the holder or any other acquiror acknowledges that if that holder or
other acquiror participates in the exchange offer for the purpose of
distributing the registered notes, it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection
with any such resale and cannot rely on the above-mentioned no-action
letters.
As indicated above, each broker-dealer that receives for its own account a
registered note in exchange for outstanding notes must acknowledge that it:
- acquired the outstanding notes for its own account as a result of
market-making activities or other trading activities;
- has not entered into any arrangement or understanding with Emmis or any
Emmis "affiliate" to distribute the registered notes; and
- will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of the registered notes.
For a description of the procedures for resales by participating
broker-dealers, see "Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the SEC staff do not permit Emmis to effect this exchange offer, or if for any
other reason the exchange offer is commenced and not consummated within 30 days
after the exchange offer registration statement is declared effective, or in
certain other events involving holders of the notes who are not permitted to
participate in the exchange offer, Emmis will:
- file a shelf registration statement covering resales of the outstanding
notes;
- use reasonable best efforts to cause the shelf registration statement to
be declared effective under the Securities Act; and
- use reasonable best efforts to keep effective the shelf registration
statement until the earlier of two years after the outstanding notes'
original issuance date, subject to extension under certain
circumstances, or such time as all of the applicable outstanding notes
have been sold.
Emmis will, if and when it files the shelf registration statement, provide
to each applicable holder of the outstanding notes copies of the prospectus
which is a part of the shelf registration statement. A holder that sells the
outstanding notes pursuant to the shelf registration statement generally:
- must be named as a selling security holder in the related prospectus;
- must deliver a prospectus to purchasers;
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- will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales; and
- will be bound by the provisions of the registration rights agreement
which are applicable to that holder, including certain indemnification
obligations.
In addition, each of the outstanding note holders must deliver information
to Emmis, to be used in connection with the shelf registration statement, in
order to have his or her outstanding notes included in the shelf registration
statement and to benefit from the provisions set forth in the foregoing
paragraph.
The registration rights agreement covering the outstanding notes provides
that Emmis will file an exchange offer registration statement with the SEC on or
before a date 30 days after the date of the registration rights agreement. In
the event that:
- by the 90(th) day after February 12, 1999 the exchange offer
registration statement is not declared effective; or
- by the 30th day after the exchange offer registration statement is
declared effective the exchange offer is not consummated; or
- if Emmis is obligated to file a shelf registration statement either
Emmis does not file the shelf registration within 30 days after notice
or the shelf registration statement is not declared effective within 60
days after filing; or
- after either the exchange offer registration statement or shelf
registration statement is declared effective, such registration
statement thereafter ceases to be effective or usable, subject to
certain exceptions, in connection with resales of the outstanding notes
or registered notes in accordance with and during the periods specified
in the registration rights agreement,
then Emmis will be required to pay to the holders of the notes liquidated
damages in amounts equal to $0.05 per week per $1,000 in principal amount of
notes held by such holders for each week or part of a week that the registration
default continues during the first 90-day period after the registration default
occurs. The amount of liquidated damages will increase by an additional $0.05
per week per $1,000 in principal amount of notes at the beginning of and for
each subsequent 90-day period until the registration defaults are cured, up to a
maximum amount of liquidated damages of $0.50 per week per $1,000 in principal
amount of the notes. Emmis will not be required to pay liquidated damages for
more than one registration default at any given time. Liquidated damages will
cease to accrue following the cure of all registration defaults. The sole remedy
available to the outstanding note holders will be the collection of these
liquidated damages. All liquidated damages payable because a registration
default occurred will be payable to the outstanding notes holders in cash on
each March 15 and September 15, commencing with the first such date occurring
after any such liquidated damages begin to accrue, until the registration
default is cured.
Outstanding note holders must:
- make certain representations to us in order to participate in the
exchange offer;
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- deliver information to be used in connection with the shelf registration
statement, if required; and
- provide comments on the shelf registration statement within the time
periods set forth in the registration rights agreement,
in order to have their outstanding notes included in the shelf registration
statement and to benefit from the provisions regarding liquidated damages
payable because a registration default occurred, as set forth above.
The preceding summary of the material provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the registration rights agreement, a copy
of which is filed as an exhibit to the exchange offer registration statement of
which this prospectus is a part.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal for the exchange offer, we will accept any and
all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the expiration date. See "-- Expiration Date; Extensions;
Amendments." Emmis will issue $1,000 original principal amount at maturity of
registered notes in exchange for each $1,000 original principal amount at
maturity of outstanding notes accepted in the exchange offer. Holders may tender
some or all of their outstanding notes pursuant to the exchange offer. However,
outstanding notes may be tendered only in integral multiples of $1,000.
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that:
- the registered notes have been registered under the Securities Act and
hence will not bear legends restricting their transfer; and
- the registered note holders will not be entitled to certain rights under
the registration rights agreement covering the outstanding notes,
including the provisions providing for an increase in the interest rate
on the outstanding notes in certain circumstances relating to the timing
of the exchange offer, all of which rights will terminate when the
exchange offer is terminated.
The registered notes will evidence the same debt as the outstanding notes
and will be entitled to the benefits of the indenture governing the outstanding
notes. As of the date of this prospectus, $300,000,000 aggregate principal
amount of notes were outstanding. We have fixed the close of business on
, 1999 as the record date for the exchange offer for purposes of
determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially.
Outstanding note holders do not have any appraisal or dissenters' rights
under the Indiana Business Corporation Law or the indenture in connection with
the exchange offer. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Exchange Act and the rules and regulations of
the SEC related to such offers.
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Emmis shall be deemed to have accepted validly tendered outstanding notes
when, as and if we give oral or written notice to IBJ Whitehall Bank and Trust
Company, which is the exchange agent. The exchange agent will act as agent for
the tendering holders for the purpose of receiving the registered notes from
Emmis.
If any tendered outstanding notes are not accepted for exchange either
because of an invalid tender, the occurrence of certain other events set forth
herein, or otherwise, the certificates for the unaccepted outstanding notes will
be returned, without expense, to the tendering holder as promptly as practicable
after the exchange offer's expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
We shall keep the exchange offer open for at least 30 days, or longer if
required by applicable law, including in connection with any material
modification or waiver of the terms or conditions of the exchange offer that
requires such extension, after the date that notice of the exchange offer is
mailed to outstanding note holders. The expiration date shall be 5:00 p.m., New
York City time, on , 1999, unless we, in our sole discretion, extend
the exchange offer, in which case the expiration date shall be the latest date
and time to which we extend the exchange offer.
If we decide to extend the exchange offer, we will notify IBJ Whitehall
Bank and Trust Company, which is the exchange agent, of the extension by oral or
written notice, and will mail an announcement of the extension to the registered
holders prior to 10:00 a.m., New York City time, on the next business day after
the previously scheduled expiration date.
Emmis reserves the right, in its sole discretion:
- to delay accepting any outstanding notes, to extend the exchange offer
or to terminate the exchange offer if any of the conditions set forth
below under "-- Conditions" shall not have been satisfied, by giving
oral or written notice of such delay, extension or termination to the
exchange agent; or
- to amend the terms of the exchange offer in any manner.
We will give oral or written notice of any delay in acceptance, extension,
termination or amendment to the registered holders as promptly as practicable.
PROCEDURES FOR TENDERING
Only an outstanding note holder may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if the letter of transmittal so requires, or transmit an
agent's message in connection with a book-entry transfer, and mail or otherwise
deliver the letter of transmittal or facsimile, or agent's message, together
with the
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outstanding notes and any other required documents, to IBJ Whitehall Bank and
Trust Company, which is the exchange agent, prior to 5:00 p.m., New York City
time, on the expiration date. In addition, either:
- the exchange agent must receive the letter of transmittal and
certificates for the outstanding notes prior to the expiration date;
- the exchange agent must receive a timely confirmation of a book-entry
transfer of the outstanding notes into the exchange agent's account at
The Depository Trust Company ("DTC") pursuant to the procedure for
book-entry transfer described below, prior to the expiration date; or
- the holder must comply with the guaranteed delivery procedures described
below.
For effective tender, the exchange agent must receive the outstanding notes
or book-entry confirmation, as the case may be, the letter of transmittal, and
other required documents, at the address set forth below under "-- Exchange
Agent" prior to 5:00 p.m., New York City time, on the expiration date. Delivery
of documents to the book entry transfer facility in accordance with its
procedure does not constitute delivery to the exchange agent.
DTC has authorized DTC participants that hold outstanding notes on behalf
of the outstanding notes' beneficial owners to tender their outstanding notes as
if they were holders. To effect a tender of outstanding notes, DTC participants
should either:
- complete and sign the letter of transmittal, or a manually signed
facsimile thereof, have the signature guaranteed if required by the
instructions, and mail or deliver the letter of transmittal, or the
manually signed facsimile, to the exchange agent pursuant to the
procedure set forth in "Procedures for Tendering;" or
- transmit their acceptance to DTC through the DTC automated tender offer
program for which the transaction will be eligible and follow the
procedure for book-entry transfer set forth in "-- Book-Entry Transfer."
By executing the letter of transmittal or an agent's message, each holder
will make to Emmis the representations set forth above in the third paragraph
under the heading "-- Purpose and Effect of the Exchange Offer."
Each holder's tender, and Emmis' acceptance, will constitute agreement
between such holder and Emmis in accordance with the terms, and subject to the
conditions, set forth herein and in the letter of transmittal or agent's
message.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE HOLDER'S ELECTION AND SOLE RISK. AS AN ALTERNATIVE TO MAIL DELIVERY, HOLDERS
MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, HOLDERS
SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO
EMMIS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR THEM.
Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the
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registered holder promptly and instruct the registered holder to tender on the
beneficial owner's behalf. See "Instructions to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" included with
the letter of transmittal.
A member of the Medallion System must guarantee signatures on a letter of
transmittal or a notice of withdrawal, as the case may be, unless the
outstanding notes tendered pursuant thereto are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- for the account of a Medallion System member.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, must be guaranteed, such guarantee must be by a
Medallion System member.
If a person other than the registered holder of any outstanding notes
listed therein signs the accompanying letter of transmittal, the outstanding
notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder as his or name appears on the outstanding notes, with
the signature guaranteed by a Medallion System member.
If trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations, or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or bond powers,
such persons should so indicate when signing, and they must submit evidence
satisfactory to Emmis of their authority to so act, with the letter of
transmittal.
Emmis will determine, in its sole discretion, all questions as to the
validity, form, eligibility, including time of receipt, and acceptance and
withdrawal of tendered outstanding notes. This determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered, or any outstanding notes, Emmis' acceptance of which
would, in the opinion of Emmis' counsel, be unlawful. We also reserve the right,
in our sole discretion, to waive any defects, irregularities or conditions of
tender as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of outstanding notes must
be cured within such time as we shall determine. Although we intend to notify
holders of defects or irregularities with respect to tenders of outstanding
notes, neither Emmis, the exchange agent nor any other person shall incur any
liability for failure to give such notification. Tenders of outstanding notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. If the exchange agent receives any outstanding notes that
are not properly tendered, and as to which the defects or irregularities have
not been cured or waived, the exchange agent will return them to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF REGISTERED NOTES
For each outstanding note Emmis accepts for exchange, the holder will
receive a registered note having a principal amount at maturity equal to that of
the surrendered outstanding note. For purposes of the exchange offer, Emmis
shall be deemed to have accepted properly tendered
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outstanding notes for exchange when, as and if Emmis has given oral or written
notice thereof to IBJ Whitehall Bank and Trust Company, as exchange agent.
In all cases, Emmis will issue registered notes for outstanding notes that
are accepted for exchange pursuant to the exchange offer only after the exchange
agent's timely receipt of certificates for such outstanding notes, or a timely
book-entry confirmation of the outstanding notes into the exchange agent's
account at the book-entry transfer facility, plus a properly completed and duly
executed letter of transmittal or agent's message and all other required
documents. If Emmis does not accept any tendered outstanding notes for any
reason set forth in the terms and conditions of the exchange offer, we will
return the unaccepted or non-exchanged outstanding notes without expense to the
tendering holder, or, in the case of outstanding notes tendered by book-entry
transfer into the exchange agent's account, the non-exchanged outstanding notes
will be credited to an account maintained with the book-entry transfer facility,
as promptly as practicable after the expiration date.
BOOK-ENTRY TRANSFER
IBJ Whitehall Bank and Trust Company, as exchange agent, will establish a
new account or utilize an existing account at DTC for the outstanding notes
promptly after the date of this prospectus, and any financial institution that
is a participant in DTC and whose name appears on a security position listing as
the owner of outstanding notes may make a book-entry tender of outstanding notes
by causing DTC to transfer such outstanding notes into the exchange agent's
account in accordance with DTC's procedures for such transfer. However, the
exchange agent must receive, at its address set forth below under the caption
"Exchange Agent," on or prior to the expiration date, or the holders must comply
with the guaranteed delivery procedures described below to submit, the letter of
transmittal, or a manually signed facsimile thereof, properly completed and
validly executed, with any required signature guarantees, or an agent's message,
and any other required documents. Document delivery to DTC in accordance with
DTC's procedures does not constitute delivery to the exchange agent.
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent, forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the DTC
participant tendering the outstanding notes, stating:
- the aggregate principal amount of outstanding notes which have been
tendered by such participant;
- that such participant has received and agrees to be bound by the terms
of the letter of transmittal; and
- that Emmis may enforce that agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and:
- whose outstanding notes are not immediately available;
- who cannot deliver their outstanding notes, the letter of transmittal or
any other required documents, to IBJ Whitehall Bank and Trust Company,
which is the exchange agent; or
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- who cannot complete the procedures for book-entry transfer, prior to the
expiration date,
may effect a tender if:
(a) the tender is made through a firm which is a member of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having
an office or correspondent in the United States;
(b) prior to the expiration date, the exchange agent receives from an
institution listed in clause (a) above a properly completed and duly
executed Notice of Guaranteed Delivery, by facsimile transmission, mail
or hand delivery, setting forth the name and address of the holder, the
certificate number(s) of the outstanding notes and the principal amount
of outstanding notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange
trading days after the expiration date, the letter of transmittal, or
facsimile thereof, or an agent's message, together with the
certificate(s) representing the outstanding notes, or a confirmation of
book-entry transfer of the notes into the exchange agent's account at
the book-entry transfer facility, and any other documents required by
the letter of transmittal, will be deposited by the institution with
the exchange agent; and
(c) the exchange agent receives, no later than five New York Stock Exchange
trading days after the expiration date, the certificate(s) representing
all tendered outstanding notes in proper form for transfer, or a
confirmation of book-entry transfer of such outstanding notes into the
exchange agent's account at the book-entry transfer facility, together
with a letter of transmittal, or facsimile thereof, properly completed
and duly executed, with any required signature guarantees, or an
agent's message, and all other documents required by the letter of
transmittal.
Holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above may request that the exchange
agent send them a Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on ,
1999; otherwise such tenders are irrevocable.
To withdraw a tender of outstanding notes in the exchange offer IBJ
Whitehall Bank and Trust Company, which is the exchange agent, must receive a
telegram, telex, letter or facsimile transmission notice of withdrawal at its
address set forth herein prior to 5:00 p.m., New York City time, on the
expiration date. Any such notice of withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn, including the
certificate number(s) and principal amount of such outstanding notes,
or, in the case of outstanding notes transferred by book-entry transfer,
the name and number of the account at the book-entry transfer facility
to be credited;
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- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the outstanding notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the
outstanding notes register the transfer of such outstanding notes into
the name of the person withdrawing the tender; and
- specify the name in which to register the outstanding notes, if
different from that of the depositor.
Emmis will determine all questions as to the validity, form and
eligibility, including time of receipt, of the notices. This determination shall
be final and binding on all parties. Any outstanding notes so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer and
no registered notes will be issued with respect thereto unless the outstanding
notes so withdrawn are validly retendered. Emmis will return to the holder any
outstanding notes which have been tendered but which are not accepted for
exchange without expense to the holder, as soon as practicable after withdrawal,
rejection of tender, or termination of the exchange offer. Holders may retender
properly withdrawn outstanding notes by following one of the procedures
described above under "-- Procedures for Tendering" at any time prior to the
expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we shall not be
required to accept for exchange, or offer registered notes for, any outstanding
notes, and may terminate or amend the exchange offer as provided herein before
the acceptance of the outstanding notes, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our judgment, might impair materially our ability to proceed
with the exchange offer, or any material adverse development has
occurred in any existing action or proceeding with respect to Emmis or
any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the SEC staff
is proposed, adopted or enacted, which, in our judgment, might impair
materially our ability to proceed with the exchange offer, or impair
materially our contemplated benefits from the exchange offer; or
(c) any governmental approval has not been obtained, which approval we
shall, in our discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
If we determine in our discretion that any of the conditions are not
satisfied, we may:
- refuse to accept any outstanding notes and return all tendered
outstanding notes to the tendering holders;
- extend the exchange offer and retain all outstanding notes tendered
prior to the expiration of the exchange offer, subject, however, to the
holders' rights to withdraw the outstanding notes; or
117
<PAGE> 124
- waive the unsatisfied conditions and accept all properly tendered
outstanding notes which have not been withdrawn.
We shall keep the exchange offer open for at least 30 days, or longer if
applicable law so requires, including, in connection with any material
modification or waiver of the terms or conditions of the exchange offer that
requires such extension under applicable law, after the date we mail notice of
the exchange offer to outstanding note holders.
EXCHANGE AGENT
IBJ Whitehall Bank and Trust Company has been appointed as the exchange
agent for this exchange offer. Questions and requests for assistance, requests
for additional copies of this prospectus or of the letter of transmittal, and
requests for notice of guaranteed delivery should be directed to the exchange
agent, addressed as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or by Hand:
IBJ Whitehall Bank and Trust Company IBJ Whitehall Bank and Trust Company
1 State Street, 10th Floor 1 State Street, 10th Floor
New York, New York 10004 New York, New York 10004
Attn: Corporate Trust Administration Attn: Corporate Trust Administration
By Facsimile:
(212) 858-2952
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN THOSE SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
Emmis will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telecopy, telephone or in person by officers and regular employees
of Emmis and its affiliates or its agents.
Emmis has not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. Emmis, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of pocket expenses in connection with the exchange offer.
Emmis will pay the cash expenses incurred in connection with the exchange
offer. Such expenses include the exchange agent's and the trustee's fees and
expenses, accounting and legal fees, and printing costs, among others.
ACCOUNTING TREATMENT
The registered notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in Emmis's accounting
records on the date of exchange.
118
<PAGE> 125
Accordingly, Emmis will not recognize any gain or loss for accounting purposes.
The exchange offer expenses will be expensed over the term of the registered
notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for registered notes pursuant
to the exchange offer will remain restricted securities. Accordingly, such
outstanding notes may be resold only:
- to Emmis, upon redemption thereof or otherwise;
- so long as the outstanding notes are eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the
meaning of Rule 144A under the Securities Act in a transaction meeting
the requirements of Rule 144A, in accordance with Rule 144 under the
Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act, and based upon an opinion of counsel
reasonably acceptable to us;
- outside the United States to a foreign person in a transaction meeting
the requirements of Regulation S under the Securities Act; or
- pursuant to an effective registration statement under the Securities
Act.
Any resale of outstanding notes must comply with any applicable securities
laws of any state of the United States.
119
<PAGE> 126
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account
pursuant to the exchange offer, where its outstanding notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such registered notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of registered notes received in exchange for outstanding notes
where such outstanding notes were acquired as a result of market making or other
trading activities. Until , 1999 (90 days after the commencement of
the exchange offer), all dealers effecting transactions in the registered notes
may be required to deliver a prospectus.
Emmis will not receive any proceeds from any sales of the registered notes
by participating broker-dealers. Registered notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the registered notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such participating broker-dealer that resells the
registered notes, and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal for the exchange offer states that, by acknowledging
that it will deliver, and by delivering, a prospectus, a participating
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the expiration date, or until all
broker-dealers who exchange outstanding notes which were acquired as a result of
market-making activities for registered notes have sold all registered notes
held by them, we will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
such documents in the letter of transmittal. Emmis has agreed to pay all
expenses incident to the exchange offer. Emmis will indemnify the holders of the
registered notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act.
The registered notes will not be listed on any stock exchange. The notes
are designated for trading in The Portal Market.
120
<PAGE> 127
LEGAL MATTERS
Certain legal matters in connection with the registered notes will be
passed upon for Emmis by Bose McKinney & Evans, Indianapolis, Indiana. Ronald E.
Elberger, a partner in Bose McKinney & Evans, is an officer of Emmis
Communications Corporation.
EXPERTS
The audited consolidated financial statements and schedule of Emmis
Communications Corporation and Subsidiaries as of February 28, 1997 and 1998 and
for each of the three years in the period ended February 28, 1998, incorporated
by reference in this prospectus and elsewhere in the registration statement,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto and included herein in reliance
upon the authority of said firm as experts in giving said reports.
The audited financial statements of Tribune New York Radio, Inc. as of
December 28, 1997 and for each of the two years in the period ended December 28,
1997 incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto and included herein in reliance upon the authority of said firm
as experts in giving said reports.
The audited combined financial statements of SF Broadcasting of Wisconsin,
Inc. and SF Multistations, Inc. and Subsidiaries as of December 29, 1996 and
December 28, 1997 and for each of the three years in the period ended December
28, 1997, incorporated by reference in this prospectus, have been audited by
Ernst & Young LLP, independent auditors, as indicated in their report with
respect thereto incorporated by reference herein.
With respect to the unaudited interim financial information of Emmis
Communications Corporation and Subsidiaries for the quarters ended May 31, 1998
and 1997, August 31, 1998 and 1997, and November 30, 1998 and 1997, incorporated
by reference or included elsewhere in this prospectus, Arthur Andersen LLP, has
applied limited procedures in accordance with professional standards for a
review of that information. However, their separate reports thereon state that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is not
a "report" or a "part" of the registration statement prepared or certified by
the accountants within the meaning of Section 7 or 11 of the Act.
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<PAGE> 128
WHERE YOU CAN FIND MORE INFORMATION
Emmis filed a registration statement on Form S-4 with the SEC covering the
registered notes, and this prospectus is part of our registration statement. For
further information on Emmis and the notes, you should refer to our registration
statement and its exhibits. This prospectus summarizes material provisions of
contracts and other documents that we refer you to. Since the prospectus may not
contain all the information that you may find important, you should review the
full text of these documents. We have included copies of these documents as
exhibits to our registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York and Chicago. Please
call the SEC at 1-800-SEC-0330 for more information on the public reference
rooms and their copy charges. Our SEC filings are also available to the public
from the SEC's Web Site at http://www.sec.gov.
This prospectus is part of a registration statement we filed with the SEC.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all the
outstanding notes have been exchanged for registered notes or the exchange offer
is otherwise terminated.
- Our Annual Report on Form 10-K (file no. 0-23264) for the fiscal year
ended February 28, 1998.
- Our Quarterly Reports on Form 10-Q (file no. 0-23264) for the fiscal
quarters ended May 31, 1998, August 31, 1998, and November 30, 1998.
- Our Current Reports on Form 8-K (file no. 0-23264) filed May 7, 1998,
June 22, 1998, and July 31, 1998, December 2, 1998, and March 15, 1999,
and an amendment on Form 8-K/A (file no. 0-23264) filed September 29,
1998.
- Our proxy statement dated May 28, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Investor Relations
Emmis Communications Corporation
One Emmis Plaza, 7th Floor
40 Monument Circle
Indianapolis, Indiana 46204
Telephone: (317) 266-0100
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<PAGE> 129
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOGO
EMMIS COMMUNICATIONS CORPORATION
$300,000,000
OFFER TO EXCHANGE
8 1/8% SENIOR SUBORDINATED NOTES DUE 2009
-------------------------------
PROSPECTUS
-------------------------------
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU
WRITTEN INFORMATION OTHER THAN THIS PROSPECTUS OR TO MAKE REPRESENTATIONS AS TO
MATTERS NOT STATED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR
SOLICITATION OF YOUR OFFER TO BUY THE SECURITIES IN ANY JURISDICTION WHERE THAT
WOULD NOT BE PERMITTED OR LEGAL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALES MADE HEREUNDER AFTER THE DATE OF THIS PROSPECTUS SHALL CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THE AFFAIRS OF THE COMPANY
HAVE NOT CHANGED SINCE THE DATE HEREOF.
UNTIL , 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
BROKER-DEALERS THAT EFFECT TRANSACTIONS IN THE REGISTERED NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE BROKER-DEALERS' OBLIGATION TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO ANY UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
---------------, 1999
<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Emmis Communications Corporation is an Indiana corporation. Chapter 37 of
The Indiana Business Corporation Law (the "IBCL") requires a corporation, unless
its articles of incorporation provide otherwise, to indemnify a director or an
officer of the corporation who is wholly successful, on the merits or otherwise,
in the defense of any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, against reasonable expenses, including counsel fees,
incurred in connection with the proceeding. Emmis' Articles of Incorporation do
not contain any provision prohibiting such indemnification. Emmis' Amended and
Restated Articles of Incorporation expressly require such indemnification.
The IBCL also permits a corporation to indemnify a director, officer,
employee or agent who is made a party to a proceeding because the person was a
director, officer, employee or agent of the corporation or its subsidiary
against liability incurred in the proceeding if (i) the individual's conduct was
in good faith and (ii) the individual reasonably believed (A) in the case of
conduct in the individual 's official capacity with the corporation that the
conduct was in the corporation's best interests and (B) in all other cases that
the individual's conduct was at least not opposed to the corporation's best
interests and (iii) in the case of a criminal proceeding, the individual either
(A) had reasonable cause to believe the individual's conduct was lawful or (B)
had no reasonable cause to believe the individual's conduct was unlawful. The
IBCL also permits a corporation to pay for or reimburse reasonable expenses
incurred before the final disposition of the proceeding and permits a court of
competent jurisdiction to order a corporation to indemnify a director or officer
if the court determines that the person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the
person met the standards for indemnification otherwise provided in the IBCL.
Emmis' Amended and Restated Articles of Incorporation generally provide
that any director or officer of Emmis or any person who is serving at the
request of Emmis as a director, officer, employee or agent of another entity
shall be indemnified and held harmless by Emmis to the fullest extent authorized
by the IBCL. The Amended and Restated Articles of Incorporation also provide
such persons with certain rights to be paid by Emmis the expenses incurred in
defending proceedings in advance of their final disposition and authorize Emmis
to maintain insurance to protect itself and any director, officer, employee or
agent of Emmis or any person who is or was serving at the request of Emmis as a
director, officer, partner, trustee, employee or agent of another entity against
expense, liability or loss, whether or not Emmis would have the power to
indemnify such person against such expense, liability or loss under the Amended
and Restated Articles of Incorporation.
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<PAGE> 131
ITEM 21. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Emmis
Communications Corporation, as amended, incorporated by
reference to Exhibit 2.3 to Emmis' Registration Statement on
Form S-1, File No. 33-73218, as amended, and to Exhibit 3.1
to Emmis' Quarterly Report on Form 10-Q for the quarter
ended August 31, 1998.
3.2 Amended and Restated Bylaws of Emmis Communications
Corporation, as amended, incorporated by reference to
Exhibit 2.4 to Emmis' Quarterly Report on Form 10-Q for the
quarter ended May 31, 1995, and to Exhibit 3.2 to Emmis'
Quarterly Report on Form 10-Q for the quarter ended August
31, 1998.
4.1 Indenture, including as an exhibit thereto the form of note.
4.2 Registration Rights Agreement dated as of February 12, 1999,
by and among Emmis Communications Corporation and its
Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation, BancBoston Robertson Stephens Inc.,
First Union Capital Markets Corp., Goldman, Sachs & Co. and
TD Securities (USA) Inc.
5 Opinion and consent of Bose McKinney & Evans regarding the
legality of the securities being registered.
12 Statements re computation of ratios.
15 Letter re unaudited interim financial information.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Ernst & Young LLP.
24 Powers of Attorney.
25 Statement re eligibility of trustee.
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in
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<PAGE> 132
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 to Regulation S-X at the start
of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, provided that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (A)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or Rule 3-19 of
Regulation S-X if such financial statements and information are contained
in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities
II-3
<PAGE> 133
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
D. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
E. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Indianapolis, Indiana, on March 12,
1999.
EMMIS COMMUNICATIONS CORPORATION
/s/ J. SCOTT ENRIGHT
By:
--------------------------------------
J. Scott Enright
Vice President and Associate General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on March 12, 1999, by the following
persons in the capacities indicated.
II-4
<PAGE> 134
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
JEFFREY H. SMULYAN* Director and Chairman of the Board
- --------------------------------------------- (Principal Executive Officer)
Jeffrey H. Smulyan
DOYLE L. ROSE* Director and Radio Division President
- ---------------------------------------------
Doyle L. Rose
Director
- ---------------------------------------------
Susan B. Bayh
GARY L. KASEFF* Director
- ---------------------------------------------
Gary L. Kaseff
RICHARD A. LEVENTHAL* Director
- ---------------------------------------------
Richard A. Leventhal
GREG NATHANSON* Director
- ---------------------------------------------
Greg Nathanson
FRANK V. SICA* Director
- ---------------------------------------------
Frank V. Sica
Director
- ---------------------------------------------
Lawrence B. Sorrel
WALTER Z. BERGER* Vice President, Chief Financial Officer
- --------------------------------------------- and Treasurer
Walter Z. Berger (Principal Financial Officer and Principal
Accounting Officer)
*By /s/ J. SCOTT ENRIGHT
- ---------------------------------------------
J. Scott Enright
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 135
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Indianapolis, Indiana, on March 12,
1999.
EMMIS FM BROADCASTING CORPORATION OF INDIANAPOLIS
EMMIS FM RADIO CORPORATION OF INDIANAPOLIS
EMMIS FM BROADCASTING CORPORATION OF ST. LOUIS
KPWR, INC.
EMMIS BROADCASTING CORPORATION OF NEW YORK
EMMIS FM BROADCASTING CORPORATION OF CHICAGO
EMMIS MEADOWLANDS CORPORATION
EMMIS PUBLISHING CORPORATION
EMMIS AM RADIO CORPORATION OF INDIANAPOLIS
EMMIS 104.1 FM RADIO CORPORATION OF ST. LOUIS
EMMIS 106.5 FM BROADCASTING CORPORATION OF ST. LOUIS
EMMIS 1310 AM RADIO CORPORATION OF INDIANAPOLIS
EMMIS 105.7 FM RADIO CORPORATION OF INDIANAPOLIS
EMMIS DAR, INC.
EMMIS 1380 AM RADIO CORPORATION OF ST. LOUIS
MEDIATEX COMMUNICATIONS CORPORATION
MEDIATEX DEVELOPMENT CORPORATION
TEXAS MONTHLY, INC.
EMMIS FM HOLDING CORPORATION OF NEW YORK
EMMIS RADIO CORPORATION OF NEW YORK
EMMIS 101.9 FM RADIO CORPORATION OF NEW YORK
EMMIS INTERNATIONAL CORPORATION
EMMIS INTERNATIONAL BROADCASTING CORPORATION
/s/ J. SCOTT ENRIGHT
By:
--------------------------------------
J. Scott Enright
Vice President and Associate General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on March 12, 1999, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
JEFFREY H. SMULYAN* Director and Chairman of the Board
- --------------------------------------------- (Principal Executive Officer)
Jeffrey H. Smulyan
WALTER Z. BERGER* Vice President, Chief Financial Officer and Treasurer
- --------------------------------------------- (Principal Financial Officer and Principal Accounting
Walter Z. Berger Officer)
/s/ J. SCOTT ENRIGHT
*By: ---------------------------------------
J. Scott Enright
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 136
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Indianapolis, Indiana, on March 12,
1999.
EMMIS FM LICENSE CORPORATION OF INDIANAPOLIS
EMMIS FM LICENSE CORPORATION OF ST. LOUIS
KPWR LICENSE, INC.
EMMIS LICENSE CORPORATION OF NEW YORK
EMMIS FM LICENSE CORPORATION OF CHICAGO
EMMIS FM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS AM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS RADIO LICENSE CORPORATION OF NEW YORK
EMMIS 104.1 FM RADIO LICENSE CORPORATION OF ST. LOUIS
EMMIS 106.5 FM LICENSE CORPORATION OF ST. LOUIS
EMMIS 1310 AM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS 105.7 FM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS LICENSE CORPORATION
EMMIS 1480 AM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS 99.9 FM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS 105.5 FM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS TELEVISION LICENSE CORPORATION OF HONOLULU
EMMIS TELEVISION LICENSE CORPORATION OF MOBILE
EMMIS TELEVISION LICENSE CORPORATION OF CAPE CORAL
EMMIS TELEVISION LICENSE CORPORATION OF GREEN BAY
EMMIS TELEVISION LICENSE CORPORATION OF TERRE HAUTE
EMMIS TELEVISION LICENSE CORPORATION OF NEW ORLEANS
/s/ J. SCOTT ENRIGHT
By:
--------------------------------------
J. Scott Enright
Vice President and Associate General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on March 12, 1999, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
JEFFREY H. SMULYAN* Director and Chairman of the Board
- --------------------------------------------- (Principal Executive Officer)
Jeffrey H. Smulyan
DOYLE L. ROSE* Director and Radio Division President
- ---------------------------------------------
Doyle L. Rose
Director
- ---------------------------------------------
Richard F. Cummings
</TABLE>
II-7
<PAGE> 137
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
GARY L. KASEFF* Director
- ---------------------------------------------
Gary L. Kaseff
WALTER Z. BERGER* Vice President, Chief Financial Officer and Treasurer
- --------------------------------------------- (Principal Financial Officer and Principal Accounting
Walter Z. Berger Officer)
/s/ J. SCOTT ENRIGHT
*By: ---------------------------------------
J. Scott Enright
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 138
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Indianapolis, Indiana, on March 12,
1999.
EMMIS INDIANA BROADCASTING, L.P.
EMMIS TELEVISION BROADCASTING, L.P.
EMMIS PUBLISHING, L.P.
By: EMMIS COMMUNICATIONS CORPORATION
General Partner
/s/ J. SCOTT ENRIGHT
By:
--------------------------------------
J. Scott Enright
Vice President and Associate General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on March 12, 1999, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
JEFFREY H. SMULYAN* Director and Chairman of the Board
- --------------------------------------------- (Principal Executive Officer)
Jeffrey H. Smulyan
DOYLE L. ROSE* Director and Radio Division President
- ---------------------------------------------
Doyle L. Rose
Director
- ---------------------------------------------
Susan B. Bayh
GARY L. KASEFF* Director
- ---------------------------------------------
Gary L. Kaseff
RICHARD A. LEVENTHAL* Director
- ---------------------------------------------
Richard A. Leventhal
GREG NATHANSON* Director
- ---------------------------------------------
Greg Nathanson
FRANK V. SICA* Director
- ---------------------------------------------
Frank V. Sica
Director
- ---------------------------------------------
Lawrence B. Sorrel
WALTER Z. BERGER* Vice President, Chief Financial Officer and Treasurer
- --------------------------------------------- (Principal Financial Officer and Principal Accounting
Walter Z. Berger Officer)
/s/ J. SCOTT ENRIGHT
*By: ---------------------------------------
J. Scott Enright
Attorney-in-Fact
</TABLE>
II-9
<PAGE> 1
EXHIBIT 4.1
--------------------------------------------------------------------
EMMIS COMMUNICATIONS CORPORATION
8 1/8% SENIOR SUBORDINATED NOTES DUE 2009
--------------------------------
INDENTURE
Dated as of February 12, 1999
--------------------------------
--------------------------------
IBJ Whitehall Bank & Trust Company
Trustee
--------------------------------
--------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1).......................................... 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A.
(a)(5)............................................. 7.10
(b)................................................ 7.10
(c)................................................ N.A.
311 (a)............................................. 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312 (a)............................................. 2.05
(b)................................................ 12.03
(c)................................................ 12.03
313 (a)............................................. 7.06
(b)(1)............................................. 10.02
(b)(2)............................................. 7.07
(c)................................................ 7.06; 12.02
(d)................................................ 7.06
314 (a)............................................. 4.03; 12.05
(c)(1)............................................. 12.04
(c)(2)............................................. 12.04
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 11.05
(f)................................................ N.A.
315 (a)............................................. 7.01
(b)................................................ 7.05, 12.02
(c)................................................ 7.01
(d)................................................ 7.01
(e)................................................ 6.11
316 (a) (last sentence)............................. 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. N.A.
(b)................................................ 6.07
(c)................................................ 2.12
317 (a)(1).......................................... 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
318 (a)............................................. 12.01
(b)................................................ N.A.
(c)................................................ 12.01
</TABLE>
N.A. means not applicable.
* This Cross-Reference Table is not part of this Indenture.
<PAGE> 4
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<S> <C>
Section 1.01. Definitions.................................................... 1
Section 1.02. Other Definitions.............................................. 22
Section 1.03. Incorporation by Reference of Trust Indenture Act.............. 23
Section 1.04. Rules of Construction.......................................... 23
</TABLE>
ARTICLE 2 THE NOTES
<TABLE>
<S> <C>
Section 2.01. Form and Dating................................................ 24
Section 2.02. Execution and Authentication................................... 25
Section 2.03. Registrar and Paying Agent..................................... 26
Section 2.04. Paying Agent to Hold Money in Trust............................ 26
Section 2.05. Holder Lists................................................... 26
Section 2.06. Transfer and Exchange.......................................... 27
Section 2.07. Replacement Notes.............................................. 40
Section 2.08. Outstanding Notes.............................................. 41
Section 2.09. Treasury Notes................................................. 41
Section 2.10. Temporary Notes................................................ 41
Section 2.11. Cancellation................................................... 42
Section 2.12. Defaulted Interest............................................. 42
</TABLE>
ARTICLE 3 REDEMPTION AND PREPAYMENT
<TABLE>
<S> <C>
Section 3.01. Notices to Trustee........... ................................. 42
Section 3.02. Selection of Notes to Be Redeemed.............................. 42
Section 3.03. Notice of Redemption........................................... 43
Section 3.04. Effect of Notice of Redemption................................. 44
Section 3.05. Deposit of Redemption Price.................................... 44
3.06. Notes Redeemed in Part................................................. 44
Section 3.07. Optional Redemption............................................ 44
Section 3.08. Mandatory Redemption........................................... 45
Section 3.09. Offer to Purchase by Application of Excess Proceeds............ 45
</TABLE>
ARTICLE 4 COVENANTS
<TABLE>
<S> <C>
Section 4.01. Payment of Notes............................................... 47
Section 4.02. Maintenance of Office or Agency................................ 47
Section 4.03. Reports........................................................ 48
Section 4.04. Compliance Certificate......................................... 48
Section 4.05. Taxes.......................................................... 49
Section 4.06. Stay, Extension and Usury Laws................................. 49
</TABLE>
i
<PAGE> 5
Page
<TABLE>
<S> <C>
Section 4.07. Restricted Payments............................................ 50
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. 53
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..... 54
Section 4.10. Asset Sales.................................................... 56
Section 4.11. Transactions with Affiliates................................... 58
Section 4.12. Liens.......................................................... 59
Section 4.13. Corporate Existence............................................ 59
Section 4.14. Offer to Repurchase Upon Change of Control..................... 60
Section 4.15. No Senior Subordinated Debt.................................... 61
Section 4.16. Sale and Leaseback Transactions................................ 61
Section 4.17. Limitation on Issuances and Sales of Equity Interests in Wholly 61
Owned Subsidiaries.
Section 4.18. Limitation on Issuances of Guarantees of Indebtedness.......... 62
Section 4.19. Payments for Consent........................................... 62
Section 4.20. Additional Guarantees.......................................... 62
Section 4.21. Designation of Restricted and Unrestricted Subsidiaries........ 63
</TABLE>
ARTICLE 5 SUCCESSORS
<TABLE>
<S> <C>
Section 5.01. Merger, Consolidation, or Sale of Assets....................... 63
Section 5.02. Successor Corporation Substituted.............................. 64
</TABLE>
ARTICLE 6 DEFAULTS AND REMEDIES
<TABLE>
<S> <C>
Section 6.01. Events of Default.............................................. 64
Section 6.02. Acceleration................................................... 66
Section 6.03. Other Remedies................................................. 67
Section 6.04. Waiver of Past Defaults........................................ 67
Section 6.05. Control by Majority............................................ 68
Section 6.06. Limitation on Suits............................................ 68
Section 6.07. Rights of Holders of Notes to Receive Payment.................. 68
Section 6.08. Collection Suit by Trustee..................................... 68
Section 6.09. Trustee May File Proofs of Claim............................... 69
Section 6.10. Priorities..................................................... 69
Section 6.11. Undertaking for Costs.......................................... 70
</TABLE>
ARTICLE 7 TRUSTEE
<TABLE>
<S> <C>
Section 7.01. Duties of Trustee.............................................. 70
Section 7.02. Rights of Trustee.............................................. 71
Section 7.03. Individual Rights of Trustee................................... 72
Section 7.04. Trustee's Disclaimer........................................... 72
Section 7.05. Notice of Defaults............................................. 72
Section 7.06. Reports by Trustee to Holders of the Notes..................... 72
Section 7.07. Compensation and Indemnity..................................... 73
Section 7.08. Replacement of Trustee......................................... 73
</TABLE>
ii
<PAGE> 6
Page
<TABLE>
<S> <C>
Section 7.09. Successor Trustee by Merger, etc............................... 74
Section 7.10. Eligibility; Disqualification.................................. 74
Section 7.11. Preferential Collection of Claims Against Company.............. 75
</TABLE>
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<S> <C>
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....... 75
Section 8.02. Legal Defeasance and Discharge................................. 75
Section 8.03. Covenant Defeasance............................................ 76
Section 8.04. Conditions to Legal or Covenant Defeasance..................... 76
Section 8.05. Deposited Money and Government Securities to be Held in........ 77
Trust; Other Miscellaneous Provisions.
Section 8.06. Repayment to Company........................................... 78
Section 8.07. Reinstatement.................................................. 78
</TABLE>
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
<TABLE>
<S> <C>
Section 9.01. Without Consent of Holders of Notes............................ 79
Section 9.02. With Consent of Holders of Notes............................... 79
Section 9.03. Compliance with Trust Indenture Act............................ 81
Section 9.04. Revocation and Effect of Consents.............................. 81
Section 9.05. Notation on or Exchange of Notes............................... 81
Section 9.06. Trustee to Sign Amendments, etc................................ 82
</TABLE>
ARTICLE 10 SUBORDINATION
<TABLE>
<S> <C>
Section 10.01. Agreement to Subordinate...................................... 82
Section 10.02. Liquidation; Dissolution; Bankruptcy.......................... 82
Section 10.03. Default on Designated Senior Debt............................. 83
Section 10.04.Reinstatement of Payments...................................... 83
Section 10.05. Acceleration of Notes......................................... 84
Section 10.06. When Distribution Must Be Paid Over........................... 84
Section 10.07. Notice by Company............................................. 84
Section 10.08. Subrogation................................................... 84
Section 10.09. Relative Rights............................................... 85
Section 10.10. Subordination May Not Be Impaired by Company or Holders....... 85
Section 10.11. Distribution or Notice to Representatives..................... 86
Section 10.12. Rights of Trustee and Paying Agent............................ 86
Section 10.13. Authorization to Effect Subordination......................... 86
Section 10.14. Amendments.................................................... 87
</TABLE>
ARTICLE 11 NOTE GUARANTEES
<TABLE>
<S> <C>
Section 11.01. Guarantee..................................................... 87
Section 11.02. Subordination of Subsidiary Guaranties....................... 88
Section 11.03. Limitation on Guarantor Liability............................. 88
</TABLE>
iii
<PAGE> 7
Page
<TABLE>
<S> <C>
Section 11.04. Execution and Delivery of Note Guarantee...................... 88
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms............ 89
Section 11.06. Releases Following Sale of Assets............................. 90
</TABLE>
ARTICLE 12 MISCELLANEOUS
<TABLE>
<S> <C>
Section 12.01. Trust Indenture Act Controls.................................. 91
Section 12.02. Notices....................................................... 91
Section 12.03. Communication by Holders of Notes with Other Holders of Notes. 92
Section 12.04. Certificate and Opinion as to Conditions Precedent............ 92
Section 12.05. Statements Required in Certificate or Opinion................. 92
Section 12.06. Rules by Trustee and Agents................................... 93
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders............................................... 93
Section 12.08. Governing Law................................................. 93
Section 12.09. No Adverse Interpretation of Other Agreements................. 93
Section 12.10. Successors.................................................... 93
Section 12.11. Severability.................................................. 94
Section 12.12. Counterpart Originals......................................... 94
Section 12.13. Table of Contents, Headings, etc.............................. 94
</TABLE>
EXHIBITS
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
iv
<PAGE> 8
INDENTURE dated as of February 12, 1999 between Emmis Communications
Corporation, a Delaware corporation (the "Company" or "Emmis"), the Guarantors
listed on Schedule 1 hereto, and IBJ Whitehall Bank & Trust Company, a New York
banking corporation, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 8 1/8 % Senior Subordinated Notes due 2009 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global Note substantially in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of
such specified Person, whether or not such Indebtedness is
incurred in connection with, or in contemplation of, such
other Person merging with or into, or becoming a Subsidiary
of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"Additional Notes" means up to $100 million aggregate principal amount of
Notes (other than the Initial Notes) issued under this Indenture in accordance
with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial
Notes.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
1
<PAGE> 9
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets
or rights, other than sales of inventory in the ordinary
course of business consistent with past practices; provided
that the sale, conveyance or other disposition of all or
substantially all of the assets of Emmis and its Restricted
Subsidiaries taken as a whole will be governed by Sections
4.14 and 5.01 of this Indenture and not by the provisions of
Section 4.10 of this Indenture; and
(2) the issuance of Equity Interests by any of Emmis' Restricted
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that:
(a) involves assets having a fair market value of less than
$1.0 million; or (b) results in net proceeds to Emmis and its
Restricted Subsidiaries of less than $1.0 million;
(2) a transfer of assets between or among Emmis and any of its
Guarantors;
(3) an issuance of Equity Interests by a Guarantor to Emmis or to
a Guarantor;
(4) a transfer by Emmis of assets in a transaction that qualifies
as a charitable contribution or donation and which does not
exceed $2.0 million in the aggregate; and
(5) a Restricted Payment that is permitted by Section 4.07 of this
Indenture.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
2
<PAGE> 10
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully
guaranteed or insured by the United States government or any
agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from
the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case, with any domestic
commercial bank having capital and surplus in
3
<PAGE> 11
excess of $500.0 million and a Thompson Bank Watch Rating of
"B" or better;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses
(2) and (3) above entered into with any financial institution
meeting the qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's or S&P and in each case maturing within six months
after the date of acquisition; and
(6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses
(1) through (5) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following:
(1) the sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or
substantially all of the assets of The Company and its
Subsidiaries taken as a whole to any "person" (as such term
is used in Section 13(d)(3) of the Exchange Act) other than a
Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or
dissolution of The Company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the Beneficial
Owner, directly or indirectly, of more than 35% of the Voting
Stock of The Company, measured by voting power rather than
number of shares;
(4) the first day on which a majority of the members of the Board
of Directors of The Company are not Continuing Directors; or
(5) The Company consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or
into, The Company, in any such event pursuant to a transaction
in which any of the outstanding Voting Stock of The Company is
converted into or exchanged for cash, securities or other
property, other than any such transaction where the Voting
Stock of The Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock
(other than
4
<PAGE> 12
Disqualified Stock) of the surviving or transferee Person
constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person
immediately after giving effect to such issuance.
"Company" or "Emmis" means Emmis Communications Corporation, and any and
all successors thereto.
"Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss on an after tax
basis plus any loss realized in connection with an Asset Sale
or any refinancing of a Credit Facility on an after tax basis,
to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent
that such provision for taxes was deducted in computing such
Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, pursuant to Hedging
Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a
prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual
of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus
(5) all one-time cash compensation payments in connection with
employment agreements as in effect on the date of this
Indenture; minus
(6) non-cash items increasing such Consolidated Net Income for
such period, other than items that were accrued in the
ordinary course of business, in
5
<PAGE> 13
each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute Consolidated EBITDA of the Company only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income or loss of any Person that is
not a Restricted Subsidiary or Unrestricted Subsidiary or
that is accounted for by the equity method of accounting
shall be excluded; provided, however, that such Net Income
shall be included to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded
to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that
Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition shall be excluded;
(4) the Net Income or loss of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified Person
or one of its Subsidiaries; and
(5) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common
stockholders of such Person and its consolidated Subsidiaries
as of such date; plus
6
<PAGE> 14
(2) the respective amounts reported on such Person's balance sheet
as of such date with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not
entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of
the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of
such preferred stock.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Emmis who:
(1) was a member of such Board of Directors on the
date of this Indenture; or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Second Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of July 16, 1998, as amended, among Emmis, the
lenders named therein, Toronto Dominion (Texas), Inc., as Administrative Agent,
BankBoston, N.A., as Documentation Agent and First Union National Bank, as
Syndication Agent, as further amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) and/or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
7
<PAGE> 15
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Debt" means (i) any and all Indebtedness (including all
principal, premium, interest, fees, expenses and other obligations and
liabilities) outstanding under the Credit Agreement and all Hedging Obligations
with respect thereto and (ii) any Senior Debt permitted under this Indenture the
principal amount of which is $25 million or more and that has been designated by
the Company as "Designated Senior Debt"; provided, however, that so long as the
Credit Agreement remains in effect, lenders holding a majority of the loan
commitments or outstanding loans thereunder shall have consented in writing to
such designation by the Company of additional Indebtedness as Designated Senior
Debt.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07 of
this Indenture.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary organized
under or incorporated in any State of the United States or the District of
Columbia and has its principal place of business in the United States.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means those notes, having terms substantially identical to
the Notes, offered to the Holders of the Notes under the Exchange Offer
Registration Statement.
"Exchange Offer" means the offer made to the Holders of the Notes to
exchange their Notes for the Exchange Notes.
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<PAGE> 16
"Exchange Offer Registration Statement" means that certain registration
statement filed by Emmis with the Commission to register the Exchange Offer.
"Existing Indebtedness" means up to $0.5 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or
accrued, including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment
obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect
to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments, if any,
pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or
one of its Restricted Subsidiaries, whether or not such
Guarantee or Lien is called upon and limited to the amount of
such Guarantee or the fair market value of the property
secured by such Lien, as the case may be.
"GAAP" means 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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, substantially in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
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<PAGE> 17
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) the Company's Domestic Restricted Subsidiaries and
(2) any other Subsidiary of the Company that executes a Guarantee
in accordance with the provisions of this Indenture;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under: (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, without duplication, with respect to any specified
Person, any indebtedness of such Person, whether or not contingent, in respect
of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect
thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued
expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in
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<PAGE> 18
accordance with GAAP. In addition, the term "Indebtedness" includes all
Indebtedness of others secured by a Lien on any asset of the specified Person
(whether or not such Indebtedness is assumed by the specified Person) (limited
to the fair market value of the property securing such Lien) and, to the extent
not otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
(2) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Notes" means the first $300.0 million aggregate principal amount
of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.07 of this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
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"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Leverage Ratio" means, with respect to any specified Person on any date of
determination (the "Calculation Date"), the ratio, on a pro forma basis, of (1)
the sum of the aggregate outstanding amount of Indebtedness and Disqualified
Stock of such Person and its Restricted Subsidiaries as of the Calculation Date
determined on a consolidated basis in accordance with GAAP to (2) the
Consolidated EBITDA of such Person and its Restricted Subsidiaries attributable
to continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period. For purposes of calculating the Leverage Ratio:
(1) acquisitions that have been made by the specified Person or
any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing
transactions, during the Reference Period or subsequent to
such Reference Period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the
Reference Period and Consolidated EBITDA for such Reference
Period shall be calculated without giving effect to clause (3)
of the proviso set forth in the definition of Consolidated Net
Income; and
(2) 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.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Marketable Securities" means publicly traded debt or equity securities
that are listed for trading on a national securities exchange and that were
issued by a corporation with debt securities are rated at least "AAA-" from S&P
or "Aaa3" from Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however:
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<PAGE> 20
(1) any gain (but not loss), together with any related provision
for taxes on such gain (but not loss), realized in connection
with: (a) any Asset Sale; or (b) the disposition of any
securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by Emmis or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof, in each case after
taking into account any available tax credits or deductions and any tax sharing
arrangements and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable
as a guarantor or otherwise, or (c) constitutes the lender;
(2) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness
(other than the Notes) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.
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<PAGE> 21
"Notes" has the meaning assigned to it in the preamble to this Indenture.
The Initial Notes and the Additional Notes shall be treated as a single class
for all purposes under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness including, without limitation,
post-petition interest whether or not allowed as a claim in any bankruptcy,
reorganization, insolvency, receivership or similar proceedings with respect to
such Indebtedness.
"Offering" means the offering of $300.0 million in aggregate principal
amount of Notes pursuant to the Company's Offering Memorandum, dated February 9,
1999.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 12.05
hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means any business in which the Company and its
Restricted Subsidiaries are engaged on the date of this Indenture or any
business reasonably related, incidental, complementary or ancillary thereto.
"Permitted Investments" means:
(1) any Investment in the Company or in a
Restricted Subsidiary of Emmis;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted
Subsidiary of the Company; or
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<PAGE> 22
(b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a
Restricted Subsidiary of Emmis;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and
in compliance with Section 4.10 of this Indenture;
(5) any acquisition of assets solely in exchange for the issuance
of Equity Interests (other than Disqualified Stock) of the
Company;
(6) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in
value), when taken together with all other Investments made
pursuant to this clause (6) since the date of this Indenture,
not to exceed $15.0 million in the aggregate;
(7) Investments in Permitted Joint Ventures, provided that, at the
time of and immediately after giving pro forma effect to such
Investment (and any related transaction or series of
transactions), the Leverage Ratio would be less than or equal
to the Leverage Ratio immediately prior to such Investment;
and
(8) any Investment in the form of loans or advances to employees
of the Company not to exceed $3.0 million in aggregate
principal amount at any one time outstanding.
"Permitted Joint Ventures" means a corporation, partnership or other entity
(other than a Subsidiary) engaged in one or more Permitted Businesses in respect
of which the Company or a Restricted Subsidiary (a) beneficially owns at least
20% of the Capital Stock of such entity and (b) either is a party to an
agreement empowering one or more parties to such agreement (which may or may not
be the Company or a Subsidiary), or is a member of a group that, pursuant to the
constituent documents of the applicable corporation, partnership or other
entity, has the power, to direct the policies, management and affairs of such
entity.
"Permitted Junior Securities" means: (1) Equity Interests in Emmis or any
Guarantor; or (2) debt securities of the Company or any Guarantor that are
unsecured and subordinated to all Senior Debt (and any debt securities issued in
exchange for Senior Debt), to substantially the same extent as, or to a greater
extent than, the Notes and the Guarantees are subordinated to Senior Debt
pursuant to this Indenture. Without limiting the foregoing, such Permitted
Junior Securities shall have no required principal payments or equity redemption
requirements until after the final maturity of the Senior Debt.
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<PAGE> 23
"Permitted Liens" means:
(1) Liens on the assets of the Company and any Guarantor securing
Senior Debt and Indebtedness and other Obligations under
Credit Facilities to the extent such Indebtedness was
permitted by the terms of this Indenture to be incurred;
(2) Liens in favor of the Company or the
Guarantors;
(3) Liens on property of a Person existing at the time such Person
is merged with or into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or
the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof
by Emmis or any Restricted Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation
of such acquisition;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations
of a like nature incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second paragraph
of Section 4.09 of this Indenture covering only the assets
acquired with such Indebtedness;
(7) Liens existing on the date of this Indenture;
(8) Liens on Assets of Guarantors to secure Senior Debt of such
Guarantor, to the extent such Senior Debt was permitted by the
terms of this Indenture to be incurred;
(9) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; and
(10) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any
one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used
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to extend, refinance, renew, replace, defease or refund other Indebtedness of
the Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date
of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof (including
any subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"Principal" means Jeffrey H. Smulyan.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.
"Productive Assets" means assets (including Capital Stock) that are used or
usable by the Company and its Restricted Subsidiaries in Permitted Businesses;
provided that for any Capital Stock to qualify as Productive Assets, it must,
after giving pro forma effect to the transaction in which it was acquired, be
Capital Stock of a Restricted Subsidiary.
"Public Equity Offering" means any underwritten public offering of common
stock of the Company in which the net proceeds to the Company are at least $25.0
million.
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<PAGE> 25
"Reference Period" means, with regard to any Person, 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 or calculation
is to be made pursuant to the terms of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means that certain agreement among the
Company and the Initial Purchasers requiring the Company to file the Exchange
Offer Registration Statement and the Shelf Registration Statement.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent Global Note in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary Global Note in the
form of Exhibit A2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder, 80% or more owned Subsidiary, or
spouse or immediate family member (in the case of an
individual) of such Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of
which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause (1).
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate
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<PAGE> 26
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"S&P" means Standard & Poor's Corporation.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means:
(1) all principal, premium, interest, fees, expenses and other
obligations and liabilities of any kind outstanding under the
Credit Facilities and any Guarantees thereof, together with
available undrawn amounts under letters of credit issued
thereunder and any other Indebtedness outstanding under the
Credit Facilities (including, without limitation,
post-petition interest whether or not allowed as a claim in
any bankruptcy, reorganization, insolvency, receivership or
similar proceeding with respect to Indebtedness outstanding
under the Credit Facilities) and all Hedging Obligations with
respect thereto;
(2) any other Indebtedness permitted to be incurred by the Company
under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the
Notes; and
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(3) all Obligations with respect to the items listed in the
preceding clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will not
include:
(1) any liability for federal, state, local or other taxes owed or
owing by the Company;
(2) any Indebtedness of the Company to any of its Subsidiaries or
other Affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of this
Indenture.
"Senior Guarantees" means the Guarantees by the Guarantors of Obligations
under the Senior Debt.
"Shelf Registration Statement" means that certain shelf registration
statement filed by Emmis with the Commission to register resales of the Notes or
the Exchange Notes.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any
combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
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"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note substantially in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means Radio Hungaria Co. Ltd. and any other
Subsidiary of the Company that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse
Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of
the Company;
(3) is a Person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests or
(b) to maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of
operating results;
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries; and
(5) has at least one director on its board of directors that is
not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 of this Indenture. If, at
any time, any Unrestricted Subsidiary would fail to meet the preceding
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<PAGE> 29
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 of this Indenture, the Company shall
be in default of such section. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under Section 4.09 of this
Indenture, calculated on a pro forma basis as if such designation had occurred
at the beginning of the four-quarter reference period; and (2) no Default or
Event of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment;
by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and/or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
<S> <C>
Defined in
Term Section
---- ----------
"Affiliate Transaction".................... 4.11
"Asset Sale Offer"......................... 3.09
"Authentication Order"..................... 2.02
"Change of Control Offer".................. 4.14
"Change of Control Payment"................ 4.14
"Change of Control Payment Date"........... 4.14
"Covenant Defeasance"...................... 8.03
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
<S> <C>
Defined in
Term Section
---- ----------
"Event of Default"....................... 6.01
"Excess Proceeds"........................ 4.10
"incur".................................. 4.09
"Legal Defeasance"....................... 8.02
"Offer Amount"........................... 3.09
"Offer Period"........................... 3.09
"Paying Agent"........................... 2.03
"Permitted Debt"......................... 4.09
"Purchase Date".......................... 3.09
"Registrar".............................. 2.03
"Restricted Payments".................... 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
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<PAGE> 31
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include the
singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in the
form of Exhibits A1 or A2 attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the
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<PAGE> 32
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Cedel Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note or an IAI Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary Global
Note and the Regulation S Permanent Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may
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<PAGE> 33
do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and will notify
the Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may
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<PAGE> 34
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to
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<PAGE> 35
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities
Act. Upon consummation of an Exchange Offer by the Company in accordance
with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon receipt by the Registrar of
the instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
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<PAGE> 36
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
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<PAGE> 37
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto,
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<PAGE> 38
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
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<PAGE> 39
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
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(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note
or to transfer such Restricted Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate
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Restricted Global Note, in the case of clause (B) above, the 144A Global
Note, in the case of clause (C) above, the Regulation S Global Note, and,
in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
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Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
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(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance
with the Registration Rights Agreement, the Company shall issue and, upon
receipt of an
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Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they are
not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON, IS
NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED
TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES
ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY
BELIEVES IS A QIB
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PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A
QIB WILL BE REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR INTERESTS
THEREIN (OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT)
THROUGH ONE OF THE INITIAL PURCHASERS. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii),
(c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07
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<PAGE> 46
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE
BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF EMMIS COMMUNICATIONS CORPORATION."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).
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(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
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Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of Definitive Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
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Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased among the Holders of the Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected,
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unless otherwise provided herein, not less than 30 nor more than 60 days prior
to the redemption date by the Trustee from the outstanding Notes not previously
called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting
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that the Trustee give such notice and setting forth the information to be stated
in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to March 15, 2004. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................... 104.063%
2005........................... 102.708%
2006........................... 101.354%
2007 and thereafter............ 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to March 15, 2002 the Company may on any one or more occasions
redeem Notes with the net cash proceeds of one or more Public Equity Offerings
at a redemption price equal to 108.125% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the redemption date; provided that at least 65% in aggregate principal amount
of the Notes originally issued under this Indenture remain outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries) and that such redemption occurs within 45 days of
the date of the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice
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<PAGE> 53
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, any Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case
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<PAGE> 54
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. New York City Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
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<PAGE> 55
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the SEC, so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes, within the time
periods specified in the SEC's rules and regulations: (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the SEC on Forms 10-Q and 10-K if the Company were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report on the annual financial statements by the Company's certified independent
accountants; and (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries or if any Restricted Subsidiaries of the Company are not
Guarantors, then the quarterly and annual financial information required by the
preceding paragraph shall include a reasonably detailed presentation, either on
the face of the financial statements or in the footnotes thereto, and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the non-Guarantor Subsidiaries of the Company.
In addition, whether or not required by the SEC, the Company shall file a
copy of all of the information and reports referred to in clauses (i) and (ii)
above with the SEC for public availability within the time periods specified in
the SEC's rules and regulations (unless the SEC will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request. The Company shall at all times comply with TIA Section
314(a).
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is so
required under the TIA) shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing
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<PAGE> 56
such certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
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Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger
or consolidation involving the Company) any Equity Interests
of the Company or any direct or indirect parent of the Company
or any Restricted Subsidiary of the Company (other than any
such Equity Interests owned by the Company or any Restricted
Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes or the
Guarantees (other than the Notes or the Guarantees), except a
payment of interest or principal at the Stated Maturity
thereof; or
(4) make any Restricted Investment (all such
payments and other actions set forth in the foregoing clauses
(1) through (4) being collectively referred to as "Restricted
Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) the Company would, at the time of such
Restricted Payment and after giving pro forma effect thereto
as if such Restricted Payment had been made at the beginning
of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to
the Leverage Ratio test set forth in the first paragraph of
Section 4.09 of this Indenture; and
(3) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture
(excluding Restricted Payments permitted
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by clauses (2) and (3) of the next succeeding paragraph), is
less than the sum, without duplication, of:
(a) (i) the aggregate Consolidated EBITDA
of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the
time of such Restricted Payment (or, in the event
aggregate Consolidated EBITDA for such period is a
deficit, then minus such deficit) less (ii) 1.4 times
the aggregate Fixed Charges of the Company for the same
period; plus
(b) the aggregate net cash proceeds
received by the Company since the date of this Indenture
as a contribution to its common equity capital or from
the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale
of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the
Company that have been converted into or exchanged for
such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a
Subsidiary of the Company); plus
(c) to the extent that any Restricted
Investment is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (i) the cash return of
capital with respect to such Restricted Investment (less
the cost of disposition, if any) and (ii) the initial
amount of such Restricted Investment; plus
(d) if any Unrestricted Subsidiary (i) is
redesignated as a Restricted Subsidiary, the fair market
value of such redesignated Subsidiary (as determined in
good faith by the Board of Directors) as of the date of
its redesignation or (ii) pays any cash dividends or
cash distributions to the Company or any of its
Restricted Subsidiaries, 100% of any such cash dividends
or cash distributions made after the date of this
Indenture; plus
(e) $10 million.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this
Indenture;
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(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or
any Guarantor or of any Equity Interests of the Company or any
Restricted Subsidiary in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, Equity Interests of the Company
(other than Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (3)(b) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with
the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro
rata basis;
(5) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company or any
Restricted Subsidiary of the Company held by any former member
of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement or
stock option agreement in effect as of the date of this
Indenture; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $1 million in any twelve-month period; and
(6) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company (other than
those described in clause (5) above) in an amount not to
exceed $25 million in the aggregate.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $5 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
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Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock to the Company or any of the Company's Restricted
Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any
indebtedness owed to the Company or any of the Company's
Restricted Subsidiaries;
(2) make loans or advances to the Company or any of the Company's
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any
of the Company's Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of this
Indenture and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in such
Existing Indebtedness, as in effect on the date of this
Indenture;
(2) this Indenture and the Notes;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to
be incurred;
(5) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past
practices;
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(6) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the
property so acquired of the nature described in clause (3) of
the preceding paragraph;
(7) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by such
Restricted Subsidiary pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive,
taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of Section 4.12 of this Indenture
that limit the right of the Company or any of its Restricted
Subsidiaries to dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other
similar agreements entered into in the ordinary course of
business; and
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course
of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company and any Restricted Subsidiary may incur Indebtedness
(including Acquired Debt), and may issue Disqualified Stock, if the Leverage
Ratio of the Company for the Reference Period immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would not have been greater than 7.0 to 1, determined on a pro forma
basis (after giving pro forma effect to such incurrence or issuance and to the
application of the net proceeds therefrom) and in accordance with the definition
of Leverage Ratio.
So long as no Default shall have occurred and be continuing or would be
caused thereby, the first paragraph of this covenant shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by the Company and any Restricted Subsidiary of
Indebtedness under the Credit Agreement; provided that the
aggregate
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<PAGE> 62
principal amount of all Indebtedness of the Company and the
Restricted Subsidiaries outstanding under the Credit Agreement
after giving effect to such incurrence does not exceed an
amount equal to $750 million less the aggregate amount of all
Net Proceeds of Asset Sales required to be applied by the
Company or any of its Restricted Subsidiaries since the date
of this Indenture to repay Indebtedness under the Credit
Facilities pursuant to Section 4.10 of this Indenture;
(2) the incurrence by the Company and its Restricted Subsidiaries
of Existing Indebtedness;
(3) the incurrence by the Company and the
Guarantors of Indebtedness represented by the Notes issued in
this Offering and the Guarantees;
(4) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment
used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $5
million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to refund,
refinance or replace, Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph of this covenant or clauses
(2), (3), (4), (8) or (9) of this paragraph;
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the
Company and any Guarantor; provided, however, that:
(a) if the Company or any Guarantor is
the obligor on such Indebtedness, such Indebtedness must
be expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes, in the
case of the Company, or the Guarantee of such Guarantor,
in the case of a Guarantor; and
(b) (i) any subsequent issuance or
transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the
Company or a Guarantor and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not
either the Company or a Guarantor shall be deemed, in
each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by
this clause (6);
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(7) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the
purpose of fixing or hedging interest rate risk with respect
to any floating rate Indebtedness that is permitted by the
terms of this Indenture to be outstanding;
(8) the guarantee by the Company or any of the Restricted
Subsidiaries of Indebtedness of the Company or a Restricted
Subsidiary of the Company that is also a Guarantor that was
permitted to be incurred by another provision of this
covenant;
(9) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any
time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (9), not to
exceed $25.0 million;
(10) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (10);
(11) the accrual of interest, accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms
(provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued) , and the
payment of dividends on Disqualified Stock in the form of
additional shares of the same class of Disqualified Stock; and
(12) the incurrence by the Company and any
Restricted Subsidiary of up to an aggregate principal amount
of $250 million of Indebtedness under the Credit Facilities
for the purpose of acquiring Permitted Businesses.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (12) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall be permitted to classify such item of Indebtedness on the date of
its incurrence in any manner that complies with this covenant.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
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(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to
the Trustee; and
(3) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash.
For purposes of this provision, each of the following shall be
deemed to be cash:
(a) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent
balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the
Notes or any Guarantee) that are assumed by the
transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such
Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to
ordinary settlement periods) converted by the Company or
such Restricted Subsidiary into cash (to the extent of
the cash received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(1) to repay Senior Debt;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business
that is owned by the Company or a Guarantor;
(3) to make a capital expenditure; or
(4) to acquire other long-term assets that are used or useful in a
Permitted Business that is owned by the Company or a
Guarantor.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Notwithstanding
the immediately preceding paragraph, the Company and its Restricted Subsidiaries
will be permitted to consummate an Asset Sale without complying with such
paragraph to the extent (i) at least 80% of the consideration for such Asset
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Sale constitutes Productive Assets, cash, Cash Equivalents and/or Marketable
Securities and (ii) such Asset Sale is for fair market value (as determined in
good faith by the Board of Directors and certified to in an Officers'
Certificate); provided that any consideration not constituting Productive Assets
received by the Company or any of its Restricted Subsidiaries in connection with
any Asset Sale permitted to be consummated under this paragraph shall be subject
to the provisions of the preceding paragraph.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $5 million, the Company shall make
an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with
an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1
million, a resolution of the Board of Directors set forth
in an Officers' Certificate certifying that such
Affiliate Transaction complies with this covenant and
that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of
Directors; and
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(b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5
million, an opinion as to the fairness to the Holders of
such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking
firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such
Restricted Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company; and
(4) Restricted Payments that are permitted by Section 4.07 of this
Indenture.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness, Attributable Debt or trade
payables on any asset now owned or hereafter acquired, except Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Article Five hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
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Section 4.14. Offer to Repurchase Upon Change of Control.
If a Change of Control occurs, each Holder of Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to the Change of
Control Offer. In the Change of Control Offer, the Company shall offer a Change
of Control Payment in cash equal to 101% of the aggregate principal amount of
Notes repurchased plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase. Within ten days following any Change
of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the Change of Control Payment Date specified in such
notice, pursuant to the procedures required by this Indenture and described in
such notice. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being
purchased by the Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Company shall either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Notes required by this covenant. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The provisions of this Section 4.14 shall be applicable regardless of
whether or not any other provisions of this Indenture are applicable. Except to
the extent of the provisions of this Section 4.14, this Indenture does provide
for the right of the Holders of the Notes to require that the Company repurchase
or redeem the Notes in the event of a takeover, recapitalization or similar
transaction.
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Notwithstanding anything in this Section 4.14 to the contrary, the Company
shall not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.15. No Senior Subordinated Debt.
The Company shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in right of
payment to the Notes. No Guarantor will incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of such Guarantor and senior in any respect
in right of payment to such Guarantor's Guarantee.
Section 4.16. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Guarantor may enter into a sale and leaseback transaction if:
(1) the Company or that Guarantor, as applicable, could have (a)
incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction under the
Leverage Ratio test in the first paragraph of Section 4.09 of
this Indenture and (b) incurred a Lien to secure such
Indebtedness pursuant to Section 4.12 of this Indenture;
(2) the gross cash proceeds of that sale and leaseback transaction
are at least equal to the fair market value, as determined in
good faith by the Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee, of the
property that is the subject of such sale and leaseback
transaction; and
(3) the transfer of assets in that sale and leaseback transaction
is permitted by, and the Company applies the proceeds of such
transaction in compliance with Section 4.10 of this Indenture.
Section 4.17. Limitation on Issuances and Sales of Equity Interests in
Wholly Owned Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Wholly Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company), unless:
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(1) such transfer, conveyance, sale, lease or other disposition is
of all the Equity Interests in such Wholly Owned Restricted
Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with
Section 4.10 of this Indenture.
In addition, the Company shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
Section 4.18. Limitation on Issuances of Guarantees of Indebtedness.
The Company shall not permit any of its Restricted Subsidiaries, directly
or indirectly, to Guarantee or pledge any assets to secure the payment of any
other Indebtedness of the Company unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture providing for the
Guarantee of the payment of the Notes by such Restricted Subsidiary, which
Guarantee shall be senior to or pari passu with such Restricted Subsidiary's
Guarantee of or pledge to secure such other Indebtedness, unless such other
Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be
subordinated to the Guarantee of such Senior Debt to the same extent as the
Notes are subordinated to such Senior Debt.
Notwithstanding the preceding paragraph, any Guarantee of the Notes shall
provide by its terms that it will be automatically and unconditionally released
and discharged under the circumstances described in Article One of this
Indenture. The form of the Guarantee is attached as an exhibit to this
Indenture.
Section 4.19. Payments for Consent.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
Section 4.20. Additional Guarantees.
If the Company or any of its Restricted Subsidiaries acquires or creates
another Subsidiary after the date of this Indenture, then, unless such
Subsidiary either (1) is designated as an "Unrestricted Subsidiary" in
accordance with Section 4.21 of this Indenture or (2) is not a Domestic
Restricted Subsidiary, that newly acquired or created Restricted Subsidiary
shall become a Guarantor and execute a supplemental indenture satisfactory to
the Trustee and deliver an Opinion of Counsel to the Trustee within 10 Business
Days of the date on which it was acquired or created.
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Section 4.21. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be an Investment made as of the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of Section 4.07 of this Indenture or
Permitted Investments, as applicable. All such outstanding Investments will be
valued at their fair market value at the time of such designation. In addition,
such designation will only be permitted if such Restricted Payment would be
permitted at that time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions, to another Person; unless:
(1) either: (a) the Company is the surviving corporation; or (b)
the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the
District of Columbia;
(2) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such
sale, assignment, transfer, conveyance or other disposition
shall have been made assumes all the obligations of the
Company under the Notes and this Indenture pursuant to
agreements reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of
Default exists; and
(4) the Company or the Person formed by or
surviving any such consolidation or merger (if other than the
Company):
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(a) will have Consolidated Net Worth
immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company
immediately preceding the transaction; and
(b) will, on the date of such transaction
after giving pro forma effect thereto and any related
financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Leverage Ratio test set
forth in the first paragraph of Section 4.09 of this
Indenture.
In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation, or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the Company and any of its Wholly
Owned Subsidiaries.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" or "Emmis" shall refer
instead to the successor corporation and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein; provided,
however, that the predecessor Company shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale
of all of the Company's assets that meets the requirements of Section 5.01
hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes, whether or not prohibited by the
subordination provisions of this Indenture, and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption
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(including in connection with an offer to purchase) or otherwise, whether or
not prohibited by the subordination provisions of this Indenture;
(c) the Company or any of its Subsidiaries, as applicable, fails to comply
with any of the provisions of Section 4.07, 4.09, 4.10, 4.14 or 5.01 hereof;
(d) the Company or any of its Restricted Subsidiaries fails to observe or
perform any other covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default"), and (ii) results in the acceleration
of such Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5 million;
(g) the Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
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(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary or for all or substantially all of the property of the Company
or any of its Restricted Subsidiaries that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days;
or
(i) except as permitted by this Indenture, any Guarantee is held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under its Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 hereof with respect to the Company, any Restricted
Subsidiary that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Upon any such declaration, the Notes shall become
due and payable immediately. Notwithstanding the foregoing, if an Event of
Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after March 15, 2004 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the
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Notes, an equivalent premium shall also become and be immediately due and
payable, to the extent permitted by law, anything in this Indenture or in the
Notes to the contrary notwithstanding. If an Event of Default occurs prior to
March 15, 2004 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to such date, then, upon
acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
March 15 of the years set forth below, as set forth below (expressed as a
percentage of the principal amount of the Notes on the date of payment that
would otherwise be due but for the provisions of this sentence):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999 110.833%
2000 109.479%
2001 108.125%
2002 106.771%
2003 105.417%
</TABLE>
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium and Liquidated
Damages, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, or interest on, the Notes (including in connection
with an offer to purchase) (provided, however, that the Holders of a majority in
aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
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Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
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expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or direction.
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Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium or
Liquidated Damages, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA Section 313(d). The Company
shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
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Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of
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the then outstanding Notes may remove the Trustee by so notifying the Trustee
and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is
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authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $100.0 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and the
Guarantors shall, subject to the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to their
Guarantees on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium and Liquidated Damages, if any, and
interest on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes concerning issuing temporary Notes, registration of
Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payment and money for security payments held in trust, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's
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obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Section 8.02, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof and clause (iv)
of Section 5.01 hereof with respect to the outstanding Notes on and after the
date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(c) through 6.01(f) hereof shall not
constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, 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 and Liquidated Damages, if any,
and interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change
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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 the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this Article
Eight concurrently with such incurrence); or (b) insofar as Sections 6.01(g) or
6.01(h) hereof is concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound, including without limitation the Credit
Facilities;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that on the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in
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respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal, premium
and Liquidated Damages, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium and
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium and Liquidated Damages, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case
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may be; provided, however, that, if the Company makes any payment of principal
of, premium or Liquidated Damages, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture and except as otherwise
provided in Article Ten of this Indenture, the Company, the Guarantors and the
Trustee may amend or supplement this Indenture, the Note Guarantees or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article Two hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company pursuant
to Article Five hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Notes; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.14
hereof), the Guarantees and the Notes with the consent of the Holders of at
least a majority in principal
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amount of the Notes (including Additional Notes, if any) then outstanding voting
as a single class (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture, the
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including Additional
Notes, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). Without the consent of at least 75% in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, such Notes), no waiver or amendment to
this Indenture may make any change in the provisions of Article Ten hereof that
adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 4.10 and 4.14 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes (including Additional Notes, if any) and a waiver
of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of, or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 4.10 or 4.14 hereof); or
(h) make any change in the foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
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Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article Ten, to the prior payment in
full in cash of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Debt) before Holders of the Notes
shall be entitled to receive any payment with respect to the Notes (except
that Holders may receive and retain (A) Permitted Junior Securities and
(B) payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as provided
in clause (i) above) are paid in full in cash, any distribution to which
Holders would be entitled but for this Article Ten shall be made to
holders of Senior Debt (except that Holders of Notes may receive (A)
Permitted Junior Securities and (B) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof), as
their interests may appear.
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Section 10.03. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full in cash if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing; or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that permits holders of the Designated
Senior Debt currently or with the passage of time or the giving of
notices, to accelerate its maturity and the Trustee receives a notice of
the default (a "Payment Blockage Notice") from a Person who may give it
pursuant to Section 10.11 hereof. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until at least 360 days shall have
elapsed since the commencement of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 120 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) in the case of payment default, upon the date on which such
default is cured or waived in writing by the representatives of the
holders of Designated Senior Debt, and
(ii) in the case of a default referred to in clause (ii) of Section
10.03(a) hereof, upon the earlier of the date upon which the default is
cured or waived in writing by the representatives of the holders of
Designated Senior Debt or 179 days after the date on which the applicable
Payment Blockage Notice is received by the Trustee, unless the maturity of
any Designated Senior Debt has been accelerated.
Section 10.04. Reinstatement of Payments
To the extent any payment of Senior Debt (whether by or on behalf of the
Company or any Subsidiary, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set aside
or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt or part thereof
originally intended to be satisfied shall be
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deemed to be reinstated and outstanding as if such payment had not occurred. To
the extent the obligation to repay any Senior Debt is declared to be fraudulent,
invalid, or otherwise set aside under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then the obligations so declared
fraudulent, invalid or otherwise set aside (and all other amounts that would
come due with respect thereto had such obligation not been affected) shall be
deemed to be reinstated and outstanding as Senior Debt for all purposes hereof
as if such declaration, invalidity or setting aside had not occurred.
Section 10.05. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
Section 10.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when such payment is prohibited
by this Article Ten, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representatives under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in cash in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article Ten, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article Ten, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article Ten, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article Ten.
Section 10.08. Subrogation.
After all Senior Debt is paid in full in cash and until the Notes are paid
in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu
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with the Notes) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Holders of Notes have been applied to the payment of Senior Debt. A
distribution made under this Article Ten to holders of Senior Debt that
otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.
Section 10.09. Relative Rights.
This Article Ten defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium and Liquidated Damages, if any, and interest on the
Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article Ten to pay principal of,
premium and Liquidated Damages, if any, or interest on a Note on the due date,
the failure is still a Default or Event of Default.
Section 10.10. Subordination May Not Be Impaired by Company or Holders.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture. The Trustee and the Holders will not challenge or
contest the enforceability or validity of the Senior Debt or any obligation,
lien or encumbrance thereunder. As between the holders of the Senior Debt on the
one hand and the Trustee and Holders of the Notes on the other, the
subordination terms set forth in the Indenture shall govern even if all or part
of the Senior Debt or all liens and security interests securing the Senior Debt
are avoided, disallowed, subordinated, set aside or otherwise invalidated in any
judicial proceeding or otherwise, regardless of the theory upon which such
action is premised.
Without in any way limiting the generality of the foregoing, the holders of
Senior Debt may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders, without incurring responsibility to the
Trustee or the Holders and without impairing or releasing the subordination of
the Notes or the obligations of the Holders to the holders of Senior Debt, do
any one or more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, the Senior Debt,
the Credit
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Agreement or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding or secured, (b) sell, exchange, release, foreclose
against or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt, (c) release any person liable in any manner for the
collection of Senior Debt, and (d) exercise or refrain from exercising any
rights against Emmis, any Subsidiary of Emmis or any other Person.
Section 10.11. Distribution or Notice to Representatives.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representatives.
Upon any payment or distribution of assets of the Company referred to in
this Article Ten, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of any such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article Ten or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article Ten. Only the Company or a
Representative may give the notice. Nothing in this Article Ten shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Ten, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives of the Senior Debt are hereby authorized to file
an appropriate claim for and on behalf of the Holders of the Notes.
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Section 10.14. Amendments.
The provisions of this Article Ten shall not be amended or modified without
the written consent of the holders of all Senior Debt.
ARTICLE 11
NOTE GUARANTEES
Section 11.01. Guarantee.
Subject to this Article Eleven, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of, premium and Liquidated Damages, if any, and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of premium and Liquidated
Damages, if any, and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
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Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Six hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
Section 11.02. Subordination of Subsidiary Guaranties.
The Obligations of each Guarantor under its Guarantee pursuant to this
Article Eleven shall be general unsecured obligations and junior and
subordinated to the Senior Guarantee of such Guarantor on the same basis as the
Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article Ten hereof.
Section 11.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article Eleven,
result in the obligations of such Guarantor under its Note Guarantee not
constituting a fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 11.01, each Guarantor
hereby agrees that a notation of such Note Guarantee substantially in the form
included in Exhibit E shall be endorsed by an Officer of such Guarantor on each
Note authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents.
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Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note Guarantee
no longer holds that office at the time the Trustee authenticates the Note on
which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.2 hereof, the
Company shall cause such Subsidiaries to execute supplemental indentures to this
Indenture and Note Guarantees in accordance with Section 4.2 hereof and this
Article Eleven, to the extent applicable.
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in this Section 11.05, a Guarantor may not
sell or otherwise dispose of all or substantially all of its assets, or
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person), another Person unless:
(1) immediately after giving effect to that
transaction, no Default or Event of Default exists and either
(a) such Guarantor is the surviving corporation; or (b) the
Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) or to which such sale,
assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the
District of Columbia or the jurisdiction in which such
Guarantor is organized and under the laws of which it is
existing;
(2) the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or the Person to which
such sale, assignment, transfer, conveyance or other
disposition shall have been made assumes all the obligations
of such Guarantor under the Guarantees and this Indenture, as
applicable, pursuant to agreements reasonably satisfactory to
the Trustee;
(3) immediately after such transaction no Default or Event of
Default exists;
(4) such Guarantor or the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) shall
have Consolidated Net Worth immediately after the transaction
equal to or
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greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction; and
(5) the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of this
Indenture.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles Four and Five hereof, and notwithstanding
clauses 2 and 3 above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
The Guarantee of a Guarantor shall be released if the Company designates any
Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such designation, sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note Guarantee
shall remain liable for the full amount of principal of, premium and Liquidated
Damages, if any, and
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interest on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article Eleven.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company and/or any Guarantor:
Emmis Communications Corporation
One Emmis Plaza
40 Monument Circle
Suite 700
Indianapolis, IN 46204
Telecopier No.: (317) 631-3750
Attention: Chief Financial Officer
With a copy to:
Bose McKinney & Evans
135 North Pennsylvania Street
Indianapolis, IN 46204
Telecopier No.: (317) 684-5173
Attention: Alan Becker
If to the Trustee:
IBJ Whitehall Bank & Trust Company
1 State Street, 10th floor
New York, New York 10004
Telecopier No.: (212) 858-2952
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
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<PAGE> 99
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
92
<PAGE> 100
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the
Guarantees or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors. All agreements of each Guarantor in this Indenture shall bind its
successors, except as otherwise provided in Section 11.05.
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<PAGE> 101
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
Signatures on following page
94
<PAGE> 102
SIGNATURES
Dated as of February 12, 1999
EMMIS COMMUNICATIONS CORPORATION
BY: /s/ J. Scott Enright
___________________________________
NAME:
TITLE:
IBJ Whitehall Bank & Trust Company
BY: /s/ Stephen J. Giurlando
___________________________________
NAME: Stephen J. Giurlando
TITLE: Vice President
Emmis FM Broadcasting Corporation
of Indianapolis
Emmis FM Broadcasting Corporation
of St. Louis
KPWR, Inc.
Emmis Broadcasting Corporation of New York
<PAGE> 103
Emmis FM Broadcasting Corporation of Chicago
Emmis FM License Corporation of
Indianapolis
Emmis FM License Corporation of St. Louis
KPWR License, Inc.
Emmis License Corporation of New York
Emmis FM License Corporation of Chicago
2
<PAGE> 104
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis AM Radio Corporation of Indianapolis
Emmis FM Radio Corporation of Indianapolis
Emmis AM Radio License Corporation
of Indianapolis
Emmis FM Radio License Corporation
of Indianapolis
3
<PAGE> 105
Emmis Radio License Corporation of New York
Emmis 104.1 FM Radio Corporation
of St. Louis
Emmis 104.1 FM Radio License Corporation
of St. Louis
Emmis 106.5 FM Broadcasting Corporation
of St. Louis
Emmis 106.5 FM License Corporation
of St. Louis
Emmis 1310 AM Radio Corporation
of Indianapolis
4
<PAGE> 106
Emmis 1310 AM Radio License Corporation
of Indianapolis
Emmis 105.7 FM Radio Corporation
of Indianapolis
Mediatex Communications Corporation
Mediatex Development Corporation
Texas Monthly, Inc.
Emmis License Corporation
5
<PAGE> 107
Emmis International Broadcasting
Corporation
Emmis DAR, Inc.
Emmis International Corporation
Emmis 1380 AM Radio Corporation of St. Louis
6
<PAGE> 108
Emmis Television License Corporation
of Honolulu
Emmis Television License Corporation of
Mobile
Emmis Television License Corporation
of Cape Coral
Emmis Television License Corporation
of Green Bay
Emmis FM Holding Corporation of New York
Emmis 101.9 FM Radio Corporation
of New York
7
<PAGE> 109
Emmis Radio Corporation of New York
Emmis 1480 AM Radio License Corporation
of Terre Haute
Emmis Television License Corporation
of Terre Haute
Emmis 99.9 FM Radio License Corporation
of Terre Haute
Emmis 105.7 FM Radio License Corporation
of Indianapolis
Emmis Television License Corporation of
New Orleans
8
<PAGE> 110
Emmis 105.5 FM Radio License Corporation
of Terre Haute
BY: /s/ David L. Wills
------------------------------------
NAME: David L. Wills
TITLE: Assistant Secretary
Emmis Indiana Broadcasting, L.P.
Emmis Television Broadcasting, L.P.
Emmis Publishing, L.P.
By: Emmis Communications Corporation
General Partner of each of the above
limited partnerships
BY: /s/ David L. Wills
--------------------------------
NAME: David L. Wills
TITLE: Assistant Secretary
9
<PAGE> 111
EXHIBIT A-1
[Face of Note]
- -------------------------------------------------------------------------------
CUSIP/CINS ____________
8 1/8% Senior Subordinated Notes due 2009
No. ___ $____________
EMMIS COMMUNICATIONS CORPORATION
promises to pay to______________________________________________________________
or registered assigns,
the principal sum of___________________________________________________________
Dollars on _____________, 2009.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: _______________, ____
EMMIS COMMUNICATIONS CORPORATION
BY: _______________________________________
NAME:
TITLE:
This is one of the Notes referred to
in the within-mentioned Indenture:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:___________________________________
Authorized Signatory
- -------------------------------------------------------------------------------
A1-1
<PAGE> 112
EXHIBIT A1
[Back of Note]
- -------------------------------------------------------------------------------
8 1/8% Senior Subordinated Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Emmis Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8
1/8% per annum from February 12, 1999 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually in arrears on March 15 and September 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be September 15, 1999. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
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EXHIBIT A1
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank & Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
February 12, 1999 ("Indenture") among the Company, the Guarantors listed in
Schedule 1 thereto and the Trustee. The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Section Section 77aaa-77bbbb).
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $400 million in aggregate principal
amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding
Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to March 15, 2004.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004................................ 104.063%
2005................................ 102.708%
2006................................ 101.354%
2007 and thereafter................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to March 15, 2002, the Company may on one or more occasions
redeem Notes with the net cash proceeds of one or more Public Equity Offerings
at a redemption price equal to 108.125% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any;
provided that at least 65% in aggregate principal amount of the Notes originally
issued under the Indenture remain outstanding immediately after the occurrence
of such redemption (excluding Notes held by the Company and its Subsidiaries)
and that such redemption occurs within 45 days of the date of the closing of
such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
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EXHIBIT A1
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of Notes (as "Asset
Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes (including any Additional Notes) that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
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EXHIBIT A1
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class,
and any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes and Additional Notes,
if any, voting as a single class. Without the consent of any Holder of a Note,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or Guarantor's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, to provide for the
issuance of Additional Notes in accordance with the limitations set forth in the
Indenture, or to allow any Guarantor to execute a supplemental indenture to the
Indenture and/or a Note Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise; (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10, 4.14 or 5.01 of the
Indenture; (iv) failure by the Company for 60 days after notice to the Company
by the Trustee or the Holders of at least 25% in principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
to comply with certain other agreements in the Indenture, the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company which
default results in the acceleration of such Indebtedness prior to its express
maturity; (vi) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries;
and (ix) except as permitted by the Indenture, any Note Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor or any Person acting on
its behalf shall deny or disaffirm its obligations under such Guarantor's Note
Guarantee. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
A1-5
<PAGE> 116
EXHIBIT A1
Event of Default relating to the payment of principal, premium or Liquidated
Damages, if any, or interest) if it determines that withholding notice is in
their interest. The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall not have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Notes Guarantee or the Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of February, 1999, between the Company and the parties
named on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
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EXHIBIT A1
Emmis Communications Corporation
[Address]
Attention: ______________
A1-7
<PAGE> 118
EXHIBIT A1
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:___________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's Soc. Sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:__________________
Your Signature:______________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:_________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-8
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EXHIBIT A1
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.14 of the Indenture, check the appropriate box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you
elect to have purchased:
$__________________
Date:_______________________
Your Signature:________________________________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:________________________________________
Signature Guarantee*:___________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-9
<PAGE> 120
EXHIBIT A1
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease in Amount of increase in of this Global Note authorized officer of
Principal Amount Principal Amount following such decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE> 121
EXHIBIT A2
* This schedule should be included only if the Note is issued in global form.
[Face of Regulation S Temporary Global Note]
- --------------------------------------------------------------------------------
CUSIP/CINS __________
Series A 8 1/8% Senior Subordinated Notes due 2009
No. __ $______________
EMMIS COMMUNICATIONS CORPORATION
promises to pay to Cede & Co. or registered assigns, the principal sum of
______________________________________________________ Dollars on March 15,
2009.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: February 12, 1999
EMMIS COMMUNICATIONS CORPORATION
BY:
NAME:
TITLE:
This is one of the Notes referred to in the within-mentioned Indenture:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: __________________________________
Authorized Signatory
A2-1
<PAGE> 122
EXHIBIT A2
Back of Regulation S Temporary Global Note
8 1/8% Senior Subordinated Notes due 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS),
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EXHIBIT A2
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Emmis Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8
1/8% per annum from February 12, 1999 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually in arrears on March and September of each year, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 15, 1999. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or more
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the March 1 or September 1 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be
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EXHIBIT A2
required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank & Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
February 12, 1999 ("Indenture") among the Company, the Guarantors listed on a
Schedule thereto and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Section Section 77aaa-77bbbb).
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $400 million in aggregate principal
amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding
Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to March 15, 2004.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004............................ 104.063%
2005............................ 102.708%
2006............................ 101.354%
2007 and thereafter............. 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to March 15, 2002 the Company may on one or more occasions
redeem Notes with the net cash proceeds of one or more Public Equity Offerings
at a redemption price equal to 108.125% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any;
provided that at least 65% in aggregate principal amount of the Notes originally
issued under the Indenture remain outstanding immediately after the occurrence
of such redemption (excluding Notes held by the Company and its Subsidiaries)
and that such redemption occurs within 45 days of the date of the closing of
such Public Equity Offering.
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EXHIBIT A2
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of Notes (as "Asset
Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes (including any Additional Notes) that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange
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EXHIBIT A2
or register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Global Notes only (i) on or after the termination of the 40-day
restricted period (as defined in Regulation S) and (ii) upon presentation of
certificates (accompanied by an Opinion of Counsel, if applicable) required by
Article Two of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class,
and any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes and Additional Notes,
if any, voting as a single class. Without the consent of any Holder of a Note,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or Guarantor's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, to provide for the
issuance of Additional Notes in accordance with the limitations set forth in the
Indenture, or to allow any Guarantor to execute a supplemental indenture to the
Indenture and/or a Note Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10, 4.14 or 5.01 of the
Indenture, which failure remains uncured for 30 days; (iv) failure by the
Company for 60 days after notice to the Company by the Trustee or the Holders of
at least 25% in principal amount of the Notes then outstanding to comply with
certain other agreements in the Indenture, the Notes or the Pledge Agreement;
(v) default under certain other agreements relating to Indebtedness of the
Company which default results in the acceleration of such Indebtedness prior to
its express maturity; (vi) certain final judgments for the payment of money that
remain undischarged for a period of 60 days; (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) the breach of certain covenants in the Pledge Agreement
or the Pledge Agreement shall be held in any judicial
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EXHIBIT A2
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal, premium or Liquidated Damages, if any, or interest) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company is
required upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall not have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Notes Guaranteeor the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of February 12, 1999, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
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EXHIBIT A2
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Emmis Communications Corporation
Attention: ______________
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EXHIBIT A2
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:___________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________
Your Signature:__________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:_______________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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EXHIBIT A2
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$_______________
Date:__________________
Your Signature:____________________________________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:____________________________________________
Signature Guarantee*:________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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EXHIBIT A2
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in of this Signature of
Principal Amount Principal Amount Global Note authorized officer of
of of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
[Company address block]
[Registrar address block]
Re: [fill in full title of securities]
Reference is hereby made to the Indenture, dated as of February 12, 1999
(the "Indenture"), among Emmis Communications Corporation (the "Company"), as
issuer, the Guarantors listed on Schedule 1 thereto and IBJ Whitehall Bank &
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
___________________ (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither
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such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that
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such Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_________________________________________
[Insert Name of Transferor]
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By:_________________________________________
Name:
Title:
Dated:__________________
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP_____________), or
(ii) [ ] Regulation S Global Note (CUSIP_____________), or
(iii) [ ] IAI Global Note (CUSIP____________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP_________), or
(ii) [ ] Regulation S Global Note (CUSIP _____________), or
(iii) [ ] IAI Global Note (CUSIP_____________); or
(iv) [ ] Unrestricted Global Note (CUSIP_____________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
[Company address block]
[Registrar address block]
Re: [fill in full title of securities]
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of February 12, 1999
(the "Indenture"), among Emmis Communications Corporation, as issuer (the
"Company"), the Guarantors listed on Schedule 1 thereto and IBJ Whitehall Bank &
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
__________________________ (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive
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<PAGE> 138
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
[ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities
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<PAGE> 139
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________________________
[Insert Name of Transferor]
By: ________________________________________
Name:
Title:
Dated: _____________________
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<PAGE> 140
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
[Company address block]
[Registrar address block]
Re: [fill in full title of securities]
Reference is hereby made to the Indenture, dated as of February __, 1999
(the "Indenture"), among Emmis Communications Corporation, as issuer (the
"Company"), the Guarantors listed on Schedule 1 thereto and IBJ Whitehall Bank &
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate principal
amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
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<PAGE> 141
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_________________________________________
[Insert Name of Accredited Investor]
By: ________________________________________
Name:
Title:
Dated:___________________
D-2
<PAGE> 142
EXHIBIT E
[FORM OF NOTATION OF GUARANTEE]
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of February __, 1999 (the "Indenture")
among Emmis Communications Corporation, the Guarantors listed on Schedule I
thereto and IBJ Whitehall Bank & Trust Company, as trustee (the "Trustee"), (a)
the due and punctual payment of the principal of, premium and Liquidated
Damages, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium and Liquidated
Damages, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 11 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.
[Name of Guarantor(s)]
BY:_________________________________________
NAME:
TITLE:
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<PAGE> 143
EXHIBIT F
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS]
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Emmis Communications Corporation (or its permitted successor), a
[Delaware] corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and IBJ Whitehall Bank & Trust
Company, as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of February 12, 1999 providing for the
issuance of an aggregate principal amount of up to $400.0 million of 8 1/8%
Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, the
Notes or the obligations of the Company hereunder or thereunder, that:
(i) the principal of, premium and Liquidated Damages, if any,
and interest on the Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of, premium and Liquidated
Damages, if any, and interest on the Notes, if any, if
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<PAGE> 144
lawful, and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same
immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the Indenture,
the absence of any action to enforce the same, any waiver or consent by
any Holder of the Notes with respect to any provisions hereof or thereof,
the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(c) The following are hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture,
and the Guaranteeing Subsidiary accepts all obligations of a Guarantor
under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six of the
Indenture for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article Six
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Note Guarantee.
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<PAGE> 145
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed liabilities that
are relevant under any applicable Bankruptcy Law or fraudulent conveyance
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under Article 11 of
the Indenture, this new Note Guarantee shall be limited to the maximum
amount permissible such that the obligations of such Guarantor under this
Note Guarantee will not constitute a fraudulent transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Sections 11.04 and 11.05 of the Indenture, the
Person formed by or surviving any such consolidation or merger (if
other than a Guarantor or the Company) unconditionally assumes all
the obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on
the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form
to the Trustee, of the Note Guarantee endorsed upon the Notes and the due
and punctual performance of all of the covenants and conditions of the
Indenture to be performed by the Guarantor, such successor corporation
shall succeed to and be substituted for the Guarantor with the same effect
as if it had been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as though
all of such Note Guarantees had been issued at the date of the execution
hereof.
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<PAGE> 146
(c) Except as set forth in Articles 4 and 5 and Section 11.05 of
Article 11 of the Indenture, and notwithstanding clauses (a) and (b)
above, nothing contained in the Indenture or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an entirety
to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor, in each
case to a Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Company, then such Guarantor
(in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such Guarantor)
or the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor)
will be released and relieved of any obligations under its Note Guarantee;
provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the Indenture,
including without limitation Section 4.10 of the Indenture. Upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of the Indenture, including
without limitation Section 4.10 of the Indenture, the Trustee shall
execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under
the Indenture as provided in Article 11 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the SEC that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE
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<PAGE> 147
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
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<PAGE> 148
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[Guaranteeing Subsidiary]
BY: _______________________________
NAME:
TITLE:
EMMIS COMMUNICATIONS CORPORATION
BY: _______________________________
NAME:
TITLE:
[Existing Guarantors]
BY:_________________________________
NAME:
TITLE:
IBJ WHITEHALL BANK & TRUST COMPANY,
AS TRUSTEE
BY:________________________________
AUTHORIZED SIGNATORY
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<PAGE> 149
SCHEDULE I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of the
Issue Date:
Emmis FM Broadcasting Corporation of Indianapolis
Emmis FM Broadcasting Corporation of St. Louis
KPWR, Inc.
Emmis Broadcasting Corporation of New York
Emmis FM Broadcasting Corporation of Chicago
Emmis FM License Corporation of Indianapolis
Emmis FM License Corporation of St. Louis
KPWR License, Inc.
Emmis License Corporation of New York
Emmis FM License Corporation of Chicago
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis AM Radio Corporation of Indianapolis
Emmis FM Radio Corporation of Indianapolis
Emmis AM Radio License Corporation of Indianapolis
Emmis FM Radio License Corporation of Indianapolis
Emmis Radio License Corporation of New York
Emmis 104.1 FM Radio Corporation of St. Louis
Emmis 104.1 FM Radio License Corporation of St. Louis
Emmis 106.5 FM Broadcasting Corporation of St. Louis
Emmis 106.5 FM License Corporation of St. Louis
Emmis 1310 AM Radio Corporation of Indianapolis
Emmis 1310 AM Radio License Corporation of Indianapolis
Emmis 105.7 FM Radio Corporation of Indianapolis
Mediatex Communications Corporation
Mediatex Development Corporation
Texas Monthly, Inc.
Emmis License Corporation
Emmis International Broadcasting Corporation
Emmis DAR, Inc.
Emmis Publishing, L.P.
Emmis International Corporation
Emmis 1380 AM Radio Corporation of St. Louis
Emmis Television License Corporation of Honolulu
Emmis Television License Corporation of Mobile
Emmis Television License Corporation of Cape Coral
Emmis Television License Corporation of Green Bay
Emmis FM Holding Corporation of New York
<PAGE> 150
Emmis 101.9 FM Radio Corporation of New York
Emmis Radio Corporation of New York
Emmis 1480 AM Radio License Corporation of Terre Haute
Emmis Television License Corporation of Terre Haute
Emmis 99.9 FM Radio License Corporation of Terre Haute
Emmis 105.7 FM Radio License Corporation of Indianapolis
Emmis Television License Corporation of New Orleans
Emmis 105.5 FM Radio License Corporation of Terre Haute
Emmis Indiana Broadcasting, L.P.
Emmis Television Broadcasting, L.P.
<PAGE> 1
EXHIBIT 4.2
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of February 12, 1999
by and among
Emmis Communications Corporation
and its Subsidiary Guarantors
and
Donaldson, Lufkin & Jenrette Securities Corporation
BancBoston Robertson Stephens Inc.
First Union Capital Markets Corp.
Goldman, Sachs & Co.
TD Securities (USA) Inc.
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of February __, 1999, by and among Emmis Communications Corporation, an
Indiana corporation (the "COMPANY"), the subsidiaries of the Company identified
on Schedule A hereto (each a "GUARANTOR and collectively, the GUARANTORS"), and
Donaldson, Lufkin & Jenrette Securities Corporation, BancBoston Robertson
Stephens Inc., First Union Capital Markets Corp., Goldman, Sachs & Co. and TD
Securities (USA) Inc. (each an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's 8 1/8%
Series A Senior Subordinated Notes due 2009 (the "SERIES A NOTES") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated February
9, 1999, (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated February 12,
1999, between the Company and IBJ Whitewall Bank & Trust Company, as Trustee,
relating to the Series A Notes and the Series B Notes (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BUSINESS DAY: A day other than a Saturday, Sunday or other day on which
banking institutions in New York State are authorized or required by law to
close.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the Series B Notes
to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the period required pursuant to Section
3(b) hereof and (c) the delivery by the Company to the Registrar under the
Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
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EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto, including
post-effective amendments, and all exhibits and material incorporated by
reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 8 1/8% Series B Senior Subordinated Notes
due 2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer or
(ii) as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 6(b) hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest to
occur of (a) the date on which such Series A Note is exchanged in the Exchange
Offer for a Series B Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Series B Notes), or (c)
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the date on which such Series A Note is distributed to the public pursuant to
Rule 144 under the Act (and purchasers thereof have been issued Series B Notes)
and each Series B Note until the date on which such Series B Note is disposed of
by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 30 days after the Closing
Date (such 30th day being the "FILING DEADLINE"), (ii) use their respective best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 90 days after the
Closing Date (such 90th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period be
less than 20 Business Days. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Company and the Guarantors shall use their
respective best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 Business Days thereafter (such
30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose
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<PAGE> 5
the amount of Transfer Restricted Securities held by any such Broker-Dealer,
except to the extent required by the Commission as a result of a change in
policy, rules or regulations after the date of this Agreement. See the Shearman
& Sterling no-action letter (available July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto. The Company and the Guarantors shall provide
sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 60 days after the
Filing Deadline for the Shelf Registration Statement (such 60th day the
"EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
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To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(d)) following the Closing Date, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within two Business Days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within five Business Days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable, in the case of (iv) above, the
liquidated damages payable with
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respect to the Transfer Restricted Securities as a result of such clause (i),
(ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each interest payment date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay liquidated damages with respect to securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers such as the Exchange Offer,
that in the reasonable opinion of counsel to the Company raises a substantial
question as to whether the Exchange Offer is permitted by applicable federal
law, the Company and the Guarantors hereby agree to seek a no-action letter
or other favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company and the Guarantors hereby agree to pursue the
issuance of such a decision to the Commission staff level. In connection with
the foregoing, the Company and the Guarantors hereby agree to take all such
other actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation, any
Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company, (B)
it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and (C)
it is acquiring the Series B Notes in its ordinary course of business. As a
condition to its participation in the Exchange Offer, each Holder using the
Exchange Offer to participate in a distribution of the Series B Notes shall
acknowledge and agree that, if the resales are of Series B Notes obtained by
such Holder in exchange for Series A Notes acquired directly from the Company
or an Affiliate thereof, it (1) could not, under Commission policy as in
effect on the date of this Agreement, rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon
Capital Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (including, if applicable, any no-action letter obtained
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pursuant to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental letter
to the Commission (A) stating that the Company and the Guarantors are
registering the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that neither the Company nor any Guarantor has
entered into any arrangement or understanding with any Person to distribute
the Series B Notes to be received in the Exchange Offer and that, to the best
of the Company's and each Guarantor's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Series B Notes received in
the Exchange Offer and (C) any other undertaking or representation required
by the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use their
respective best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant
thereto the Company and the Guarantors will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain an
untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company and the Guarantors shall file
promptly an appropriate amendment to such Registration Statement curing such
defect, and, if Commission
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review is required, use their respective best efforts to cause such amendment
to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to comply
fully with Rules 424, 430A and 462, as applicable, under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus;
(iii) advise each Holder and their counsel, in connection with a Shelf
Registration Statement, and each Initial Purchaser and their counsel, in
connection with the Exchange Offer Registration Statement, promptly and, if
requested by such Holder, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any applicable Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, and
(D) of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the statements
therein not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company and the
Guarantors shall use their respective best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(v) furnish to each Holder and their counsel, in connection with a Shelf
Registration Statement, and each Initial Purchaser and their counsel, in
connection with the Exchange Offer Registration Statement, before filing with
the Commission, copies of any such Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Holders in connection with
such sale, if any, for a period of at least five Business Days, and the
Company will not file any such Registration Statement or Prospectus or any
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amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such
Holders shall reasonably object within five Business Days after the receipt
thereof. A Holder shall be deemed to have reasonably objected to such filing
if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading or fails to comply with the applicable
requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder and their counsel, in
connection with a Shelf Registration Statement, and each Initial Purchaser
and their counsel, in connection with the Exchange Offer Registration
Statement, make the Company's and the Guarantors' representatives available
for discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing thereof as
such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each Holder
and any attorney or accountant retained by such Holders, all financial and
other records, pertinent corporate documents of the Company and the
Guarantors and cause the Company's and the Guarantors' officers, directors
and employees to supply all information reasonably requested by any such
Holder, attorney or accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
(viii) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such information as
such Holders may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder and their counsel, in connection with a
Shelf Registration Statement, and each Initial Purchaser and their counsel,
in connection with the Exchange Offer Registration Statement, without charge,
at least one copy of such Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated by
this Agreement as may be reasonably requested by any Holder in connection
with any sale or resale pursuant to any applicable Registration Statement. In
such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3),use their respective best efforts to cause to be
furnished) to each Holder, upon Consummation of the
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Exchange Offer or upon the effectiveness of the Shelf Registration
Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company
and such Guarantor, confirming, as of the date thereof, the matters
set forth in Sections 6(x), 9(a) and 9(b) of the Purchase Agreement
and such other similar matters as such Holders may reasonably
request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company and the
Guarantors covering matters similar to those set forth in paragraph
(e) of Section 9 of the Purchase Agreement and such other matters as
such Holder may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company
and the Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and have considered
the matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such statements;
and that such counsel advises that, on the basis of the foregoing, no
facts came to such counsel's attention that caused such counsel to
believe that the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto became
effective and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the Exchange Offer,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date and, in the
case of the opinion dated the date of Consummation of the Exchange
Offer, as of the date of Consummation, contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date of Consummation
of the Exchange Offer, or as of the date of effectiveness of the
Shelf Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters
of the type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9(h) of
the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary conditions
contained in any agreement entered into by the Company and the Guarantors
pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling Holders
may request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable
10
<PAGE> 12
Registration Statement; provided, however, that neither the Company nor any
Guarantor shall be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject it
to the service of process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiv) use their respective best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are in
a form eligible for deposit with The Depository Trust Company;
(xvi) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xvii) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13, Section
14 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees
11
<PAGE> 13
that it will either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the Company
with more recently dated Prospectuses or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, the Guarantors and one counsel for the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Series B Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Dow, Lohnes &
Albertson, PLLC, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Series B Notes or registered Series A Notes, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not
12
<PAGE> 14
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors set forth in Section 8(a) above, but only with
reference to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the amount by which
the total amount received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages that such Holder, its directors, officers or any Person
who controls such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing, and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company and Guarantors, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than 20 Business Days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which
13
<PAGE> 15
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Guarantor, on the one hand, or by the Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
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<PAGE> 16
SECTION 9. RULE 144A AND RULE 144
The Company and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that any
failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's and the Guarantors' obligations
under Sections 3 and 4 hereof. The Company and the Guarantors further agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor will,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Neither the
Company nor any Guarantor has previously entered into any agreement granting any
registration rights with respect to its securities to any Person, except for
those rights provided under [the SF Note]. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's and the Guarantors' securities
under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. Each Holder shall be a third party beneficiary
to the agreements made hereunder between the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent it may deem such
enforcement necessary or advisable to protect its rights or the rights of other
Holders hereunder.
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<PAGE> 17
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Emmis Communications Corporation
40 Monument Circle, Suite 700
Indianapolis, IN 46204
Telecopier No.: 317-631-3750
Attention: Associate General Counsel
With a copy to:
Bose McKinney & Evans
135 N. Pennsylvania Street, Suite 2700
Indianapolis, IN 46204
Telecopier No.: 317-684-5173
Attention: Alan W. Becker
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
16
<PAGE> 18
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
17
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
EMMIS COMMUNICATIONS CORPORATION
By: /s/ HOWARD L. SCHROTT
______________________________
Name:
Title:
EMMIS COMMUNICATIONS CORPORATION
EMMIS FM BROADCASTING CORPORATION OF INDIANAPOLIS
EMMIS FM BROADCASTING CORPORATION OF ST. LOUIS
KPWR, INC.
EMMIS BROADCASTING CORPORATION OF NEW YORK
EMMIS FM BROADCASTING CORPORATION OF CHICAGO
EMMIS FM LICENSE CORPORATION OF INDIANAPOLIS
EMMIS FM LICENSE CORPORATION OF ST. LOUIS
KPWR LICENSE, INC.
EMMIS LICENSE CORPORATION OF NEW YORK
EMMIS FM LICENSE CORPORATION OF CHICAGO
EMMIS MEADOWLANDS CORPORATION
EMMIS PUBLISHING CORPORATION
EMMIS AM RADIO CORPORATION OF INDIANAPOLIS
EMMIS FM RADIO CORPORATION OF INDIANAPOLIS
EMMIS AM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS FM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS RADIO LICENSE CORPORATION OF NEW YORK
EMMIS 104.1 FM RADIO CORPORATION OF ST. LOUIS
EMMIS 104.1 FM RADIO LICENSE CORPORATION OF ST. LOUIS
EMMIS 106.5 FM BROADCASTING CORPORATION OF ST. LOUIS
EMMIS 106.5 FM LICENSE CORPORATION OF ST. LOUIS
EMMIS 1310 AM RADIO CORPORATION OF INDIANAPOLIS
EMMIS 1310 AM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS 105.7 FM RADIO CORPORATION OF INDIANAPOLIS
MEDIATEX COMMUNICATIONS CORPORATION
MEDIATEX DEVELOPMENT CORPORATION
TEXAS MONTHLY, INC.
EMMIS LICENSE CORPORATION
EMMIS INTERNATIONAL BROADCASTING CORPORATION
EMMIS DAR, INC.
EMMIS PUBLISHING, L.P.
EMMIS INTERNATIONAL CORPORATION
EMMIS 1380 AM RADIO CORPORATION OF ST. LOUIS
Registration Rights Agreement Page 1 of 2
EMMIS TELEVISION LICENSE CORPORATION OF HONOLULU
EMMIS TELEVISION LICENSE CORPORATION OF MOBILE
EMMIS TELEVISION LICENSE CORPORATION OF CAPE CORAL
<PAGE> 20
EMMIS TELEVISION LICENSE CORPORATION OF GREEN BAY
EMMIS FM HOLDING CORPORATION OF NEW YORK
EMMIS 101.9 FM RADIO CORPORATION OF NEW YORK
EMMIS RADIO CORPORATION OF NEW YORK
EMMIS 1480 AM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS TELEVISION LICENSE CORPORATION OF TERRE HAUTE
EMMIS 99.9 FM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS 105.7 FM RADIO LICENSE CORPORATION OF INDIANAPOLIS
EMMIS TELEVISION LICENSE CORPORATION OF NEW ORLEANS
EMMIS 105.5 FM RADIO LICENSE CORPORATION OF TERRE HAUTE
EMMIS INDIANA BROADCASTING, L.P.
EMMIS TELEVISION BROADCASTING, L.P.
By: /s/ Howard L. Schrott
________________________________
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCBOSTON ROBERTSON
STEPHENS INC.
FIRST UNION CAPITAL MARKETS CORP.
GOLDMAN, SACHS & CO.
TD SECURITIES (USA) INC.
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Robert A. Lockwood
_______________________________
Name: Robert A. Lockwood
Title: Vice President
Registration Rights Agreement Page 2 of 2
<PAGE> 21
SCHEDULE A
GUARANTORS
Emmis FM Broadcasting Corporation of Indianapolis
Emmis FM Broadcasting Corporation of St. Louis
KPWR, Inc.
Emmis Broadcasting Corporation of New York
Emmis FM Broadcasting Corporation of Chicago
Emmis FM License Corporation of Indianapolis
Emmis FM License Corporation of St. Louis
KPWR License, Inc.
Emmis License Corporation of New York
Emmis FM License Corporation of Chicago
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis AM Radio Corporation of Indianapolis
Emmis FM Radio Corporation of Indianapolis
Emmis AM Radio License Corporation of Indianapolis
Emmis FM Radio License Corporation of Indianapolis
Emmis Radio License Corporation of New York
Emmis 104.1 FM Radio Corporation of St. Louis
Emmis 104.1 FM Radio License Corporation of St. Louis
Emmis 106.5 FM Broadcasting Corporation of St. Louis
Emmis 106.5 FM License Corporation of St. Louis
Emmis 1310 AM Radio Corporation of Indianapolis
Emmis 1310 AM Radio License Corporation of Indianapolis
Emmis 105.7 FM Radio Corporation of Indianapolis
Mediatex Communications Corporation
Mediatex Development Corporation
Texas Monthly, Inc.
Emmis License Corporation
Emmis International Broadcasting Corporation
Emmis DAR, Inc.
Emmis Publishing, L.P.
Emmis International Corporation
Emmis 1380 AM Radio Corporation of St. Louis
Emmis Television License Corporation of Honolulu
Emmis Television License Corporation of Mobile
Emmis Television License Corporation of Cape Coral
Emmis Television License Corporation of Green Bay
Emmis FM Holding Corporation of New York
Emmis 101.9 FM Radio Corporation of New York
Emmis Radio Corporation of New York
Emmis 1480 AM Radio License Corporation of Terre Haute
Emmis Television License Corporation of Terre Haute
Emmis 99.9 FM Radio License Corporation of Terre Haute
Emmis 105.7 FM Radio License Corporation of Indianapolis
Emmis Television License Corporation of New Orleans
A-1
<PAGE> 22
Emmis 105.5 FM Radio License Corporation of Terre Haute
Emmis Indiana Broadcasting, L.P.
Emmis Television Broadcasting, L.P.
A-2
<PAGE> 1
Exhibit 5
BOSE McKINNEY & EVANS
2700 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, Indiana 46240
(317) 684-5000
March 11, 1999
Emmis Communications Corporation
40 Monument Circle
Indianapolis, Indiana 46204
Dear Sirs:
We are acting as counsel to Emmis Communications Corporation, an Indiana
corporation (the "Company"), and certain of its subsidiaries (the "Subsidiary
Guarantors") in connection with the registration by the Company under the
Securities Act of 1933, as amended, of its 8-1/8% Senior Subordinated Notes due
2009 (the "Exchange Notes") and the guarantees thereof (the "Guarantees") by the
Subsidiary Guarantors to be offered in exchange (the "Exchange Offer") for the
Company's outstanding 8-1/8% Senior Subordinated Notes due 2009 (the "Old
Notes") and the guarantees thereof by the Subsidiary Guarantors. The Old Notes
were issued under, and the Exchange Notes are to be issued under, an Indenture,
dated as of February 12, 1999, among the Company, the Subsidiary Guarantors and
IBJ Whitehall Bank & Trust Company, as Trustee (the "Indenture"). The Exchange
Notes and the Guarantees are the subject of a registration statement (the
"Registration Statement") on Form S-4 filed by the Company and the Subsidiary
Guarantors.
We have examined originals or copies of (i) the Indenture, (ii) the Registration
Rights Agreement, dated as of February 12, 1999 (the "Registration Rights
Agreement"), by and among the Company, the Subsidiary Guarantors, Donaldson,
Lufkin & Jenrette Securities Corporation, BancBoston Robertson Stephens Inc.,
First Union Capital Markets Corp., Goldman, Sachs & Co. and TD Securities (USA)
Inc. and (iii) the Registration Statement. We have also examined all such
records of the Company and the Subsidiary Guarantors and all such
agreements, certificates of public officials, certificates of officers or
representatives of the Company, the Subsidiary Guarantors and others, and such
other documents, certificates and corporate or other records as we have deemed
necessary or appropriate as a basis for the opinion set forth herein. In our
examination we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such latter documents. As to any facts relevant to the opinion expressed herein,
we have relied upon statements and representations of officers and other
representatives of the Company, the Subsidiary Guarantors and others (all of
which we assume to be true, complete and accurate in all respects).
<PAGE> 2
Emmis Communications Corporation
Page 2
Based upon the foregoing and subject to the other qualifications, assumptions
and limitations stated herein, we are of the opinion that (i) the Exchange Notes
have been duly authorized and when executed by the proper officers of the
Company, duly authenticated by the Trustee, and issued by the Company in
accordance with the provisions of the Indenture, against surrender and
cancellation of a like aggregate principal amount at maturity of Old Notes
pursuant to the Exchange Offer as contemplated in the Registration Rights
Agreement, will constitute the legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, and (ii)
the Guarantees have been duly authorized and when executed by the proper
officers of the Subsidiary Guarantors in accordance with the provisions of the
Indenture, against surrender and cancellation of a like aggregate principal
amount at maturity of guarantees of the Old Notes pursuant to the Exchange Offer
as contemplated in the Registration Rights Agreement, will constitute the legal,
valid and binding obligations of the Subsidiary Guarantors.
The foregoing opinions are limited to the extent that (a) the enforceability of
the Exchange Notes or the Guarantees may be limited by bankruptcy, insolvency,
reorganization, moratorium (whether general or specific), fraudulent conveyance
or other laws now or hereafter in effect affecting the enforcement of creditors'
rights and remedies generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be limited by equitable
defenses and the discretion of the court before which any proceeding therefor
may be brought (whether such proceeding is at law or in equity or in a
bankruptcy proceeding) or limited by other equitable principles of general
applicability, including without limitation concepts of materiality,
reasonableness, good faith, and fair dealing and the power of a court to declare
waivers as to usury, stay or extension laws to be unenforceable.
We do not hold ourselves out as being conversant with the laws of any
jurisdiction other than those of the United States and the State of Indiana and,
therefore, this opinion is limited to the laws of those jurisdictions.
We consent to the filing of this opinion as an exhibit to the Registration
Statement on Form S-4 filed under the Securities Act of 1933 relating to the
Exchange Notes and the Subsidiary Guarantees and to the reference to this firm
under the caption "Legal Matters" in the prospectus included in the Registration
Statement. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
/s/ BOSE McKINNEY & EVANS
<PAGE> 1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
EMMIS COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
PRO FORMA
FEBRUARY (29) 28, NOVEMBER 30, FEBRUARY 28, NOVEMBER 30,
-------------------------------------- --------------- -------------------------
1994 1995 1996 1997 1998 1997 1998 1998 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Pre tax income.................................. $343 $12,155 $17,908 $25,940 $14,884 $20,219 $23,711 $14,884 $23,711
Add:
Fixed charges.................................. 14,373 8,786 15,004 10,631 15,261 11,473 26,892 18,209 29,103
Loss from equity investments................... - 348 3,111 - - - - - -
Less:
Capitalized interest........................... - - - - - - 666 - 666
Minority loss in consolidated subsidiaries..... - - - - - - 1,875 - 1,875
------- ------- ------- ------- ------- ------- ------- ------- -------
Earnings........................................$14,716 $21,289 $36,023 $36,571 $30,145 $31,692 $48,062 $33,093 $50,273
------- ------- ------- ------- ------- ------- ------- ------- -------
FIXED CHARGES:
Interest expense (including amortization of
debt expenses).................................$13,588 $ 7,849 $13,540 $9,633 $13,772 $10,356 $24,942 $16,720 $27,153
Capitalized interest............................ - - - - - - 666 - 666
Portion of rents representative of the
interest factor................................ 785 937 1,464 998 1,489 1,117 1,284 1,489 1,284
------- ------- ------- ------- ------- ------- ------- ------- -------
Fixed Charges...................................$14,373 $ 8,786 $15,004 $10,631 $15,261 $11,473 $26,892 $18,209 $29,103
------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Earnings to Fixed Charges.............. 1.02 2.42 2.40 3.44 1.98 2.76 1.79 1.82 1.73
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 15
March 12, 1999
Mr. Walter Z. Berger
Chief Financial Officer
Emmis Communications Corporation
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, IN 46204
Dear Mr. Berger:
We are aware that Emmis Communications Corporation has incorporated by reference
in this registration statement its Form 10-Q for the quarter ended May 31, 1998,
which includes our report dated June 19, 1998, covering the unaudited interim
financial information contained therein, its Form 10-Q for the quarter ended
August 31, 1998, which includes our report dated October 7, 1998, covering the
unaudited interim financial information contained therein and its Form 10-Q
for the quarter ended November 30, 1998, which includes our report dated
December 17, 1998, covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933, those
reports are not considered a part of the registration statement prepared or
certified by our firm or reports prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
Arthur Andersen LLP
<PAGE> 1
EXHIBIT 23.1
CONSENTS OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated March 31, 1998,
on the consolidated financial statements of Emmis Communications Corporation for
the three years ended February 28, 1998, included in Emmis Communications
Corporation's Form 8-K to be filed on or about March 12, 1999 and to the
incorporation by reference of our reports dated May 1, 1998, on the financial
statements of Tribune New York Radio, Inc. included in Emmis Communications
Corporation's Form 8-K filed on May 7, 1998 and to all references to our Firm
included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
March 12, 1999.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Emmis Communications
Corporation for the registration of $300,000,000 of 8-1/8% Senior Subordinated
Notes due 2009 and to the incorporation by reference therein of our report dated
February 20, 1998 (except for Note 10, as to which the date is March 18, 1998)
with respect to the combined financial statements of SF Broadcasting of
Wisconsin, Inc. and SF Multistations, Inc. and Subsidiaries filed with the
Securities and Exchange Commission.
Ernst & Young LLP
New York, New York
March 12, 1999
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Walter Z. Berger, J. Scott Enright and
Norman H. Gurwitz, or any of them, his attorneys-in-fact and agents, with full
power of substitution and resubstitution for him in any and all capacities, to
sign a Registration Statement under the Securities Act of 1933, as amended (the
"Registration Statement"), for the registration of the exchange of 8-1/8% Senior
Subordinated Notes due 2009 of Emmis Communications Corporation (the "Company")
and guarantees thereof by certain subsidiaries for outstanding notes and
guarantees, any or all pre-effective amendments or post-effective amendments to
the Registration Statement (which amendments may make such changes in and
additions to the Registration Statement as such attorneys-in-fact may deem
necessary or appropriate), and any registration statement for the offering that
is to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of such attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary in
connection with such matters and hereby ratifying and confirming all that each
of such attorneys-in-fact and agents or his substitute or substitutes may do or
cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Jeffrey H. Smulyan
-------------------------
Jeffrey H. Smulyan
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger, J.
Scott Enright and Norman H. Gurwitz, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign a Registration Statement under the Securities Act of
1933, as amended (the "Registration Statement"), for the registration of the
exchange of 8-1/8% Senior Subordinated Notes due 2009 of Emmis Communications
Corporation (the "Company") and guarantees thereof by certain subsidiaries for
outstanding notes and guarantees, any or all pre-effective amendments or
post-effective amendments to the Registration Statement (which amendments may
make such changes in and additions to the Registration Statement as such
attorneys-in-fact may deem necessary or appropriate), and any registration
statement for the offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Richard A. Leventhal
-------------------------
Richard A. Leventhal
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger, J.
Scott Enright and Norman H. Gurwitz, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign a Registration Statement under the Securities Act of
1933, as amended (the "Registration Statement"), for the registration of the
exchange of 8-1/8% Senior Subordinated Notes due 2009 of Emmis Communications
Corporation (the "Company") and guarantees thereof by certain subsidiaries for
outstanding notes and guarantees, any or all pre-effective amendments or
post-effective amendments to the Registration Statement (which amendments may
make such changes in and additions to the Registration Statement as such
attorneys-in-fact may deem necessary or appropriate), and any registration
statement for the offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Doyle L. Rose
-------------------------
Doyle L. Rose
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger, J.
Scott Enright and Norman H. Gurwitz, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign a Registration Statement under the Securities Act of
1933, as amended (the "Registration Statement"), for the registration of the
exchange of 8-1/8% Senior Subordinated Notes due 2009 of Emmis Communications
Corporation (the "Company") and guarantees thereof by certain subsidiaries for
outstanding notes and guarantees, any or all pre-effective amendments or
post-effective amendments to the Registration Statement (which amendments may
make such changes in and additions to the Registration Statement as such
attorneys-in-fact may deem necessary or appropriate), and any registration
statement for the offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Gary L. Kaseff
-------------------------
Gary L. Kaseff
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger, J.
Scott Enright and Norman H. Gurwitz, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign a Registration Statement under the Securities Act of
1933, as amended (the "Registration Statement"), for the registration of the
exchange of 8-1/8% Senior Subordinated Notes due 2009 of Emmis Communications
Corporation (the "Company") and guarantees thereof by certain subsidiaries for
outstanding notes and guarantees, any or all pre-effective amendments or
post-effective amendments to the Registration Statement (which amendments may
make such changes in and additions to the Registration Statement as such
attorneys-in-fact may deem necessary or appropriate), and any registration
statement for the offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Frank V. Sica
-------------------------
Frank V. Sica
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger, J.
Scott Enright and Norman H. Gurwitz, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign a Registration Statement under the Securities Act of
1933, as amended (the "Registration Statement"), for the registration of the
exchange of 8-1/8% Senior Subordinated Notes due 2009 of Emmis Communications
Corporation (the "Company") and guarantees thereof by certain subsidiaries for
outstanding notes and guarantees, any or all pre-effective amendments or
post-effective amendments to the Registration Statement (which amendments may
make such changes in and additions to the Registration Statement as such
attorneys-in-fact may deem necessary or appropriate), and any registration
statement for the offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Greg Nathanson
-------------------------
Greg Nathanson
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, hereby constitutes and appoints Jeffrey H. Smulyan, J. Scott Enright and
Norman H. Gurwitz, or any of them, his attorneys-in-fact and agents, with full
power of substitution and resubstitution for him in any and all capacities, to
sign a Registration Statement under the Securities Act of 1933, as amended (the
"Registration Statement"), for the registration of the exchange of 8-1/8% Senior
Subordinated Notes due 2009 of Emmis Communications Corporation (the "Company")
and guarantees thereof by certain subsidiaries for outstanding notes and
guarantees, any or all pre-effective amendments or post-effective amendments to
the Registration Statement (which amendments may make such changes in and
additions to the Registration Statement as such attorneys-in-fact may deem
necessary or appropriate), and any registration statement for the offering that
is to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of such attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary in
connection with such matters and hereby ratifying and confirming all that each
of such attorneys-in-fact and agents or his substitute or substitutes may do or
cause to be done by virtue hereof.
Dated: March 9, 1999 /s/ Walter Z. Berger
-------------------------
Walter Z. Berger
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
IBJ WHITEHALL BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-6022258
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
</TABLE>
STEPHEN J. GIURLANDO, VICE PRESIDENT
IBJ WHITEHALL BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
Emmis Communications Corporation
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Indiana 35-1542018
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
40 Monument Circle
7th Floor
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip code)
</TABLE>
8.125% Senior Subordinated Notes Due 2009
(Title of indenture securities)
<PAGE> 2
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust
powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture.
Explain the nature of any such default.
None
2
<PAGE> 3
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligors are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series,
identify the indenture or series affected, and explain the
nature of any such default.
None
Item 16. List of exhibits.
List below all exhibits filed as part of this
statement of eligibility.
*1. A copy of the Charter of IBJ Whitehall
Bank & Trust Company as amended to date. (See
Exhibit 1A to Form T-1, Securities and Exchange
Commission File No 22-18460 and Exhibit 25.1 to Form
T-1, Securities and Exchange Commission File No.
333-46849).
*2. A copy of the Certificate of Authority of
the trustee to Commence Business (Included in Exhibit
1 above).
*3. A copy of the Authorization of the trustee
to exercise corporate trust powers, as amended to
date (See Exhibit 4 to Form T-1, Securities and
Exchange Commission File No. 22-19146).
*4. A copy of the existing By-Laws of the
trustee, as amended to date (See Exhibit 25.1 to Form
T-1, Securities and Exchange Commission File No.
333-46849).
5. Not Applicable
6. The consent of United States institutional
trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of
the trustee published pursuant to law or the
requirements of its supervising or examining
authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
3
<PAGE> 4
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its
directors or officers, the trustee has relied upon information
furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items
1, 2 and 16 of this form since to the best knowledge of the trustee as
indicated in Item 13, the obligor is not in default under any indenture
under which the applicant is trustee.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, IBJ Whitehall Bank & Trust Company, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 10th day of March, 1999.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/Stephen J. Giurlando
------------------------------
Stephen J. Giurlando
Vice President
<PAGE> 6
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, as amended, in connection with the issuance by Emmis
Communications Corporation, of its 8.125% Senior Subordinated Notes due 2009, we
hereby consent that reports of examinations by Federal, State, Territorial, or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/Stephen J. Giurlando
------------------------------
Stephen J. Giurlando
Vice President
Dated: March 10, 1999
<PAGE> 7
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
ASSETS
<S> <C>
1. Cash and balance due from depository institutions:
a. Non-interest-bearing balances and currency and coin ................................................$ 26,852
b. Interest-bearing balances.............................................................................$ 17,489
2. Securities:
a. Held-to-maturity securities...........................................................................$ -0-
b. Available-for-sale securities.........................................................................$ 207,069
3. Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries and
in IBFs
Federal Funds sold and Securities purchased under agreements to resell....................................$ 80,389
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income................................................$ 2,033,599
b. LESS: Allowance for loan and lease losses...............................................$ 62,853
c. LESS: Allocated transfer risk reserve...................................................$ -0-
d. Loans and leases, net of unearned income, allowance, and reserve......................................$ 1,970,746
5. Trading assets held in trading accounts...................................................................$ 848
6. Premises and fixed assets (including capitalized leases)..................................................$ 1,583
7. Other real estate owned...................................................................................$ -0-
8. Investments in unconsolidated subsidiaries and associated companies.......................................$ -0-
9. Customers' liability to this bank on acceptances outstanding..............................................$ 340
10. Intangible assets.........................................................................................$ 11,840
11. Other assets..............................................................................................$ 66,691
12. TOTAL ASSETS..............................................................................................$ 2,383,847
</TABLE>
<PAGE> 8
LIABILITIES
<TABLE>
<S> <C>
13. Deposits:
a. In domestic offices........................................................................$ 804,562
(1) Noninterest-bearing ..........................................................$ 168,822
(2) Interest-bearing .............................................................$ 635,740
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs..............................$ 885,076
(1) Noninterest-bearing ..........................................................$ 16,554
(2) Interest-bearing .............................................................$ 868,522
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal Funds purchased and Securities sold under agreements to repurchase.....................$ 225,000
15. a. Demand notes issued to the U.S. Treasury...................................................$ 674
b. Trading Liabilities........................................................................$ 560
16. Other borrowed money:
a. With a remaining maturity of one year or less..............................................$ 38,002
b. With a remaining maturity of more than one year............................................$ 1,375
c. With a remaining maturity of more than three years.........................................$ 1,550
17. Not applicable.
18. Bank's liability on acceptances executed and outstanding.......................................$ 340
19. Subordinated notes and debentures..............................................................$ 100,000
20. Other liabilities..............................................................................$ 74,502
21. TOTAL LIABILITIES..............................................................................$ 2,131,641
22. Limited-life preferred stock and related surplus...............................................$ N/A
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
23. Perpetual preferred stock and related surplus..................................................$ -0-
24. Common stock...................................................................................$ 28,958
25. Surplus (exclude all surplus related to preferred stock).......................................$ 210,319
26. a. Undivided profits and capital reserves.....................................................$ 11,655
b. Net unrealized gains (losses) on available-for-sale securities.............................$ 1,274
27. Cumulative foreign currency translation adjustments............................................$ -0-
28. TOTAL EQUITY CAPITAL...........................................................................$ 252,206
29. TOTAL LIABILITIES AND EQUITY CAPITAL...........................................................$ 2,383,847
</TABLE>
<PAGE> 1
EXHIBIT 99.1
PURSUANT TO THE PROSPECTUS DATED ______________, 1999,
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_________________, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE").
EMMIS COMMUNICATIONS CORPORATION
LETTER OF TRANSMITTAL
8-1/8% SENIOR SUBORDINATED NOTES DUE 2009
To: IBJ Whitehall Bank & Trust Company, the Exchange Agent
By Registered or Certified Mail: By Overnight Courier or by Hand:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
1 State Street, 10TH Floor 1 State Street, 10TH Floor
New York, New York 10004 New York, New York 10004
Attn: Corporate Trust Administration Attn: Corporate Trust Administration
By Facsimile:
(212) 858-2952
Confirm by telephone:
(800)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF THIS INSTRUMENT VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated
___________________, 1999 (the "Prospectus") of Emmis Communications Corporation
(the "Issuer") and the related Letter of Transmittal (the "Letter of
Transmittal"), which together describe the Issuer's offer (the "Exchange Offer")
to exchange $1,000 principal amount at maturity of its 8-1/8% Senior
Subordinated Notes Due 2009 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement, for each $1,000 principal amount at maturity of its
outstanding 8-1/8% Senior Subordinated Notes Due 2009 (the "Old Notes"), of
which $300 million original principal amount at maturity is outstanding. The
term "Expiration Date" means 5:00 p.m., New York City time, on ________________
1999, unless the Issuer, in its sole discretion, extends the Exchange Offer, in
which case the term means the latest date and time to which the Exchange Offer
is extended. The term "Holder" with respect to the Exchange Offer means any
person: (i) in whose name Old Notes are registered on the books of the Issuer or
any other person who has obtained a properly completed bond power from the
registered Holder or (ii) whose Old Notes are held of record by The Depository
Trust Company ("DTC") and who desires to deliver such Old Notes by book-entry
transfer at DTC. Capitalized terms used but not defined herein have the
respective meanings set forth in the Prospectus.
<PAGE> 2
This Letter of Transmittal is to be used by Holders if: (i)
certificates representing Old Notes are to be physically delivered to the
Exchange Agent herewith by Holders; (ii) tender of Old Notes is to be made by
book-entry transfer to the Exchange Agent's account at DTC pursuant to the
procedures set forth in the Prospectus under "The Exchange Offer--Procedures for
Tendering" by any financial institution that is a participant in DTC and whose
name appears on a security position listing as the owner of Old Notes (such
participants, acting on behalf of Holders, are referred to herein as "Acting
Holders"); or (iii) tender of Old Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2 below.
Delivery of documents to DTC does not constitute delivery to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE
EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ________________________________________
DTC Book-Entry Account No.:____________________________________________
Transaction Code No.:__________________________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (SEE INSTRUCTION 2):
Name of Registered or Acting Holder(s):________________________________
Window Ticket No. (if any):____________________________________________
Date of Execution of Notice of Guaranteed Delivery:____________________
Name of Eligible Institution
that Guaranteed Delivery:______________________________________________
If Delivered by Book-Entry Transfer,
DTC Book-Entry Account No.:____________________________________________
Transaction Code Number:_______________________________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
PLEASE NOTE: THE ISSUER HAS AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER
THE EXPIRATION DATE, OR UNTIL ALL BROKER-DEALERS WHO EXCHANGE OLD NOTES
WHICH WERE ACQUIRED AS A RESULT OF MARKET MAKING ACTIVITIES FOR
EXCHANGE NOTES HAVE SOLD ALL EXCHANGE NOTES HELD BY THEM, THE ISSUER
WILL MAKE COPIES OF THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING
BROKER-DEALER FOR USE IN CONNECTION WITH RESALES OF THE EXCHANGE NOTES
(PROVIDED THAT SUCH BROKER-DEALER REQUESTS COPIES OF THE PROSPECTUS).
Name:__________________________________________________________________
Address:_______________________________________________________________
_______________________________________________________________________
Attention:_____________________________________________________________
2
<PAGE> 3
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX BELOW
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal amount
at maturity of Old Notes should be listed on a separate signed schedule affixed
hereto.
DESCRIPTION OF 8-1/8% SENIOR SUBORDINATED NOTES DUE 2009 (OLD NOTES)
Box 1
<TABLE>
<CAPTION>
- ------------------------------------ ------------------------ ------------------------ =============================
Name(s) and Aggregate Principal Principal Amount at
Address(es)of Amount at Maturity Maturity Tendered (must be
Registered Holder(s) Certificate Represented by in integral multiple of
(Please fill in, if blank) Number(s)** Certificate(s) $1,000)*
<S> <C> <C> <C>
- ------------------------------------ ------------------------ ------------------------ =============================
- ------------------------------------ ------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
------------------------ ------------------------ =============================
Total
- ------------------------------------ ------------------------ ------------------------ =============================
</TABLE>
* Need not be completed by Holders who wish to tender with respect to all Old
Notes listed. See Instruction 4.
If the space provided above is inadequate, list the certificate numbers and
Principal Amounts at Maturity on a separate signed schedule and affix the
list to this Letter of Transmittal.
** Need not be completed by Holders tendering by book-entry transfer.
Box 2
SPECIAL REGISTRATION INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a
principal amount at maturity not tendered, or Exchange
Notes issued in exchange for Old Notes accepted for
exchange, are to be issued in a name other than the
name appearing in Box 1 above.
Issue certificate(s) to:
Name _________________________________
(Please Print)
Address ______________________________
______________________________________
(Include Zip Code)
______________________________________
(Tax Identification or Social
Security Number)
Box 3
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a
principal amount at maturity not tendered, or Exchange
Notes issued in exchange for Old Notes accepted for
exchange, are to be sent to an address other than the
address appearing in Box 1 above, or if Box 2 is filled
in, to an address other than the address appearing in
Box 2.
Deliver certificate(s) to:
Name_________________________________
(Please Print)
Address______________________________
____________________________________
(Include Zip Code)
____________________________________
(Tax Identification or Social
Security Number)
Box 4
3
<PAGE> 4
BROKER-DEALER STATUS
[_] Check this box if the beneficial owner of the Old Notes is a
Participating Broker-Dealer and such Participating Broker-Dealer
acquired the Old Notes for its own account as a result of market-making
activities or other trading activities.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to Emmis Communications Corporation (the "Issuer")
the principal amount at maturity of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the
principal amount at maturity of Old Notes tendered in accordance with this
Letter of Transmittal, the undersigned sells, assigns and transfers to, or
upon the order of, the Issuer all right, title and interest in and to the Old
Notes tendered hereby. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent its agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as the agent of the Issuer) with
respect to the tendered Old Notes with the full power of substitution to (i)
present such Old Notes and all evidences of transfer and authenticity to, or
transfer ownership of, such Old Notes on the account books maintained by DTC
to, or upon, the order of, the Issuer, (ii) deliver certificates for such Old
Notes to the Issuer and deliver all accompanying evidences of transfer and
authenticity to, or upon the order of, the Issuer and (iii) present such Old
Notes for transfer on the books of the Issuer and receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all
in accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Issuer will acquire good, valid and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims, when the same are
acquired by the Issuer. The undersigned hereby further represents that (i)
the Exchange Notes are to be acquired by the Holder or the person receiving
such Exchange Notes, whether or not such person is the Holder, in the
ordinary course of business, (ii) the Holder or any such other person is not
engaging and does not intend to engage in the distribution of the Exchange
Notes, (iii) the Holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the
Exchange Notes, and (iv) neither the Holder nor any such other person is an
"affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act. As indicated above, each Participating Broker-Dealer that receives an
Exchange Note for its own account in exchange for Old Notes must acknowledge
that it (i) acquired the Old Notes for its own account as a result of
market-making activities or other trading activities, (ii) has not entered
into any arrangement or understanding with the Issuer or any "affiliate" of
the Issuer (within the meaning of Rule 405 under the Securities Act) to
distribute the Exchange Notes to be received in the Exchange Offer and (iii)
will deliver a Prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a Prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. If applicable, the undersigned shall use
its reasonable best efforts to notify the Issuer when it is no longer subject
to such Prospectus delivery requirements. Unless otherwise notified in
accordance with the instructions set forth herein in Box 4 under
"Broker-Dealer Status," the Issuer will assume that the undersigned is not a
Participating Broker-Dealer. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in and does not intend to
engage in, a distribution of Exchange Notes.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral
or written notice thereof to the Exchange Agent.
If any Old Notes tendered herewith are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted
Old Notes will be returned (except as noted below with respect to tenders
through DTC), without expense, to the undersigned at the address shown below
or to a different address as may be indicated herein in Box 3 under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the
4
<PAGE> 5
undersigned and the Issuer upon the terms and subject to the conditions of
the Exchange Offer, subject only to withdrawal of such tenders on the terms
set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal
of Tenders."
Unless otherwise indicated in Box 2 under "Special Registration
Instructions," please issue the certificates representing the Exchange Notes
issued in exchange for the Old Notes accepted for exchange and any
certificates for Old Notes not tendered or not exchanged, in the name(s) of
the registered Holder of the Old Notes appearing in Box 1 above (or in such
event in the case of Old Notes tendered by DTC, by credit to the account of
DTC). Similarly, unless otherwise indicated in Box 3 under "Special Delivery
Instructions," please send the certificates, if any, representing the Exchange
Notes issued in exchange for the Old Notes accepted for exchange and any
certificates for Old Notes not tendered or not exchanged (and accompanying
documents, as appropriate) to the undersigned at the address shown below in
the undersigned's signature(s), unless tender is being made through DTC. In
the event that the box entitled "Special Registration Instructions" and the
box entitled "Special Delivery Instructions" both are completed, please issue
the certificates representing the Exchange Notes issued in exchange for the
Old Notes accepted for exchange in the name(s) of, and return any certificates
for Old Notes not tendered or not exchanged to, the person(s) so indicated.
The undersigned understands that the Issuer has no obligation pursuant to the
"Special Registration Instructions" and "Special Delivery Instructions" to
transfer any Old Notes from the name of the registered Holder(s) thereof if
the Issuer does not accept for exchange any of the Old Notes so tendered.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver the Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The
Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
5
<PAGE> 6
The lines below must be signed by the registered Holder(s) exactly as their
name(s) appear(s) on the Old Notes or, if tendered by a participant in DTC,
exactly as such participant's name appears on a security position listing as
the owner of Old Notes, or by person(s) authorized to become registered
Holder(s) by a properly completed bond power from the registered Holder(s), a
copy of which must be transmitted with this Letter of Transmittal. If Old
Notes to which this Letter of Transmittal relate are held of record by two or
more joint Holders, then all such Holders must sign this Letter of
Transmittal.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
x
-------------------------------------------------------------- -------------
Date
x
-------------------------------------------------------------- -------------
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number: ___________________________
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, then such person must (i) set forth his
or her full title below and (ii) submit evidence satisfactory to the Issuer of
such person's authority so to act. See Instruction 5.
Name(s): _____________________________________________________________________
(Please Print)
Capacity: ____________________________________________________________________
Address: _____________________________________________________________________
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(If required by Instruction 5)
Certain Signatures must be Guaranteed by an Eligible Institution
Signature(s) Guaranteed by an Eligible Institution:
-----------------------------------------------------------------------------
(Authorized Signature)
-----------------------------------------------------------------------------
(Title)
-----------------------------------------------------------------------------
(Name of Firm)
-----------------------------------------------------------------------------
(Address, Include Zip Code)
-----------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: ____________, 1998
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR OLD NOTES
OR BOOK-ENTRY CONFIRMATIONS. Certificates representing the tendered Old Notes
(or a confirmation of book-entry transfer of such Old Notes into the Exchange
Agent's account with DTC), as well as a properly completed and duly executed
copy of this Letter of Transmittal (or facsimile thereof) (or, in the case of
a book-entry transfer, an Agent's Message), a Substitute Form W-9 (or
facsimile thereof) and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. The method of delivery of certificates
for Old Notes and all other required documents is at the election and sole
risk of the tendering Holder and delivery will be deemed made only when
actually received by the Exchange Agent. If delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended. As an
alternative to delivery by mail, the Holder may wish to use an overnight or
hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. Neither the Issuer nor the Exchange Agent is under an
obligation to notify any tendering Holder of the Issuer's acceptance of
tendered Old Notes prior to the completion of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes but whose Old Notes are not immediately available and who cannot deliver
their certificates for Old Notes (or comply with the procedures for book-entry
transfer prior to the Expiration Date), the Letter of Transmittal and any
other documents required by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date must tender their Old Notes according to the
guaranteed delivery procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution");
(ii) prior to the Expiration Date, the Exchange Agent must have received
from the Holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail,
or hand delivery) setting forth the name and address of the Holder, the
certificate number or numbers of the tendered Old Notes, and the principal
amount of tendered Old Notes and stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) (or, in the case of a book-entry transfer, an Agent's Message),
together with the tendered Old Notes (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account with DTC) and
any other required documents will be deposited by the Eligible Institution
with the Exchange Agent; and
(iii) the certificates representing the tendered Old Notes in proper
form for transfer (or a confirmation of book-entry transfer of such Old
Notes into the Exchange Agent's account with DTC), together with the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and all other documents required
by the Letter of Transmittal must be received by the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedure.
3. TENDER BY HOLDER. Only a Holder or Acting Holder of Old Notes may
tender such Old Notes in the Exchange Offer. Any beneficial owner of Old Notes
who is not the registered Holder and who wishes to tender should arrange with
such Holder to execute and deliver this Letter of Transmittal on such owner's
behalf or must, prior to completing and executing this Letter of Transmittal
and delivering such Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such owner's name or obtain a properly
completed bond power from the registered Holder.
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 principal amount at maturity. If less than the entire
principal amount at maturity of Old Notes is tendered, the tendering Holder
should fill in the principal amount at maturity tendered in the column labeled
"Principal Amount at Maturity Tendered" of the box entitled "Description of
Old Notes" (Box 1) above. The entire principal amount at maturity of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount at maturity of Old Notes
is not tendered, Old Notes for the principal amount at maturity of Old Notes
not tendered and Exchange Notes exchanged for any Old
8
<PAGE> 8
Notes tendered will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter
of Transmittal or unless tender is made through DTC, as soon as practicable
following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
MEDALLION GUARANTEE OF SIGNATURE. If this Letter of Transmittal is signed by
the registered Holder(s) of the Old Notes tendered herewith, the signatures
must correspond with the name(s) as written on the face of the tendered Old
Notes without alteration, enlargement, or any change whatsoever.
If any of the tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Old Notes are held in different names on several Old Notes, it will be
necessary to complete, sign, and submit as many separate copies of the Letter
of Transmittal documents as there are names in which tendered Old Notes are
held.
If this Letter of Transmittal is signed by the registered Holder, and
Exchange Notes are to be issued and any untendered or unaccepted principal
amount at maturity of Old Notes are to be reissued or returned to the
registered Holder, then the registered Holder need not and should not endorse
any tendered Old Notes nor provide a separate bond power. In any other case,
the registered Holder must either properly endorse the Old Notes tendered or
transmit a properly completed separate bond power with this Letter of
Transmittal (executed exactly as the name(s) of the registered Holder(s)
appear(s) on such Old Notes), with the signature(s) on the endorsement or bond
power guaranteed by an Eligible Institution unless such certificates or bond
powers are signed by an Eligible Institution.
If this Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and evidence satisfactory to the
Issuer of their authority to so act must be submitted with this Letter of
Transmittal.
No medallion signature guarantee is required if (i) this Letter of
Transmittal is signed by the registered Holder(s) of the Old Notes tendered
herewith and the issuance of Exchange Notes (and any Old Notes not tendered or
not accepted) are to be issued directly to such registered Holder(s) and
neither the "Special Registration Instructions" (Box 2) nor the "Special
Delivery Instructions" (Box 3) has been completed. In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box, the name and address in which the
Exchange Notes and/or substitute Old Notes for Principal Amounts at Maturity
not tendered or not accepted for exchange are to be sent, if different from
the name and address or account of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also
be indicated and the indicated and the tendering Holders should complete the
applicable box.
If no such instructions are given, the Exchange Notes (and any Old Notes
not tendered or not accepted) will be issued in the name of and sent to the
registered Holder of the Old Notes.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to the Issuer or its order
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the transfer and sale of Old Notes to the Issuer or its
order pursuant to the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the registered Holder or on any other person) will
be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exemption from such taxes is not submitted with this Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Under the federal income tax laws, payments
that may be made by the Issuer on account of Exchange Notes issued pursuant to
the Exchange Offer may be subject to backup withholding at the rate of 31%. In
order to avoid such backup withholding, each tendering Holder should complete
and sign the Substitute Form W-9 included in this Letter of Transmittal and
either (a) provide the correct taxpayer identification number ("TIN") and
certify, under penalties of perjury, that the TIN provided is correct and that
(i) the Holder has not been notified by the Internal Revenue Service (the
"IRS") that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the IRS has notified the Holder
that the Holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the tendering Holder has not been issued a
TIN and has applied for one, or intends to apply for one in the near future,
such holder should write "Applied For" in the space provided for the TIN in
Part I of the Substitute Form W-9, sign and date the Substitute Form W-9 and
sign the Certificate of Payee Awaiting Taxpayer Identification Number. If
"Applied For" is written in Part I, the Issuer (or the Exchange
9
<PAGE> 9
Agent with respect to the Exchange Notes or a broker or custodian) may still
withhold 31% of the amount of any payments made on account of the Exchange
Notes until the Holder furnishes the Issuer or the Exchange Agent with respect
to the Exchange Notes, broker or custodian with its TIN. In general, if a
Holder is an individual, the taxpayer identification number is the Social
Security number of such individual. If the Exchange Agent or the Issuer are
not provided with the correct TIN, the Holder may be subject to a $50 penalty
imposed by the IRS. Certain Holders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such Holder must submit a statement (generally, IRS Form
W-8), signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Exchange Agent.
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require the Issuer or the
Exchange Agent with respect to the Exchange Notes, broker or custodian to
withhold 31% of the amount of any payments made on account of the Exchange
Notes. Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of tendered Old Notes
will be determined by the Issuer, in its sole discretion, which determination
will be final and binding. The Issuer reserves the right to reject any and all
Old Notes not validly tendered or any Old Notes, the Issuer's acceptance of
which would, in the opinion of the Issuer or its counsel, be unlawful. The
Issuer also reserves the right to waive any conditions of the Exchange Offer
or defects or irregularities in tenders of Notes as to any ineligibility of
any Holder who seeks to tender Old Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer (including
this Letter of Transmittal and the instructions hereto) by the Issuer shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes must be cured within such time as the
Issuer shall determine. The Issuer will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old
Notes, but shall not incur any liability for failure to give such
notification.
10. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer in the case of any
tendered Old Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Old Notes will be accepted.
12. MUTILATED, LOST, STOLEN, OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen, or destroyed should contact
the Exchange Agent at the address indicated above for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address set forth on the first page of
this Letter of Transmittal. Holders may also contact their broker, dealer,
commercial bank, trust company, or other nominee for assistance concerning the
Exchange Offer.
14. ACCEPTANCE OF TENDERED OLD NOTES AND ISSUANCE OF EXCHANGE NOTES;
RETURN OF OLD NOTES. Subject to the terms and conditions of the Exchange
Offer, the Issuer will accept for exchange all validly tendered Old Notes as
soon as practicable after the Expiration Date and will issue Exchange Notes
therefor as soon as practicable thereafter. For purposes of the Exchange
Offer, the Issuer shall be deemed to have accepted tendered Old Notes when, as
and if the Issuer has given written and oral notice thereof to the Exchange
Agent. If any tendered Old Notes are not exchanged pursuant to the Exchange
Offer for any reason, such unexchanged Old Notes will be returned, without
expense, to the undersigned at the address shown above or at a different
address as may be indicated under "Special Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders."
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
- --------------------------------------- ------------------------------------- -------------------------------------
Certificate Old Notes Old Notes
Surrendered Tendered Accepted
- --------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
- --------------------------------------- ------------------------------------- -------------------------------------
- --------------------------------------- ------------------------------------- -------------------------------------
- --------------------------------------- ------------------------------------- -------------------------------------
- --------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
10
<PAGE> 10
Delivery Prepared By: _____________ Checked By: ______________ Date: _________
11
<PAGE> 11
================================================================================
PAYORS' NAMES:
EMMIS COMMUNICATIONS CORPORATION
================================================================================
SUBSTITUTE Name (if joint names, list first and circle the name
of the person or entity whose number you enter in Part
1 below. See instructions if your name has changed.)
FORM W-9
======================================================
Department of Address
the Treasury
======================================================
Internal Revenue City, State and ZIP Code
Service
------------------------------------------------------
Part 1 - PLEASE PROVIDE YOUR Social Security
TAXPAYER IDENTIFICATION Number or TIN
NUMBER ("TIN") IN THE BOX
AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW
------------------------------------------------------
Part 2 - Check the box if you are NOT subject to
backup withholding under the provisions of section
3408(a)(1)(C) of the Internal Revenue Code because
(1) you have not been notified that you are subject
to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal
Revenue Service has notified you that you are no
longer subject to backup withholding.
=====================================================
CERTIFICATION--UNDER THE PENALTIES OF Part 3 -
PERJURY, I CERTIFY THAT THE AWAITING TIN
INFORMATION PROVIDED ON THIS FORM
IS TRUE, CORRECT AND COMPLETE.
Signature: _________________ Date: ___________
- ------------------------- ---------------------------------------------------
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
- ------------------------------------------- -----------------------------
Signature Date
220629v1
12
<PAGE> 12
PAYORS' NAMES:
EMMIS COMMUNICATIONS CORPORATION
SUBSTITUTE Name (if joint names, list first and circle the name
of the person or entity whose number you enter in Part
1 below. See instructions if your name has changed.)
FORM W-9
======================================================
Department of Address
the Treasury
======================================================
Internal Revenue City, State and ZIP Code
Service
------------------------------------------------------
Part 1 - PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION Social Security
NUMBER ("TIN") IN THE BOX AT Number or TIN
RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW
------------------------------------------------------
Part 2 - Check the box if you are NOT subject to
backup withholding under the provisions of section
3408(a)(1)(C) of the Internal Revenue Code because
(1) you have not been notified that you are subject
to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal
Revenue Service has notified you that you are no
longer subject to backup withholding.
=====================================================
CERTIFICATION--UNDER THE
PENALTIES OF PERJURY, I
CERTIFY THAT Part 3 -
THE INFORMATION PROVIDED AWAITING TIN
ON THIS FORM IS TRUE,
CORRECT AND COMPLETE.
Signature: _________________ Date: ___________
- ------------------------- ----------------------------------------------------
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
----------------------------------------- -----------------------------
Signature Date
13
<PAGE> 1
EXHIBIT 99.2
Notice of Guaranteed Delivery
for
8-1/8% SENIOR SUBORDINATED NOTES DUE 2009
of
EMMIS COMMUNICATIONS CORPORATION
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Emmis Communicaitons Corporation (the "Issuer") made
pursuant to the Prospectus dated ______________________, 1999 (the "Prospectus")
if Holders of certificates for the 8-1/8% Senior Subordinated Notes Due 2009
(the "Old Notes") who wish to tender their Old Notes but whose Old Notes are not
immediately available and who cannot deliver their certificates for Old Notes
(or comply with the procedures for book-entry transfer prior to the Expiration
Date), the Letter of Transmittal and any other documents required by the Letter
of Transmittal to the Exchange Agent prior to 5:00 P.M., New York City time, on
the Expiration Date (as defined in the Prospectus). Such form may be delivered
by hand or transmitted by facsimile transmission, overnight courier or mail to
the Exchange Agent. Capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
To: IBJ Whitehall Bank & Trust Company, the Exchange Agent
By Registered or Certified Mail: By Overnight Courier or by Hand:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
1 State Street, 10TH Floor 1 State Street, 10TH Floor
New York, New York 10004 New York, New York 10004
Attn: Corporate Trust Administration Attn: Corporate Trust Administration
By Facsimile:
(212) 858-2952
Confirm by telephone:
(800)
Delivery of this instrument to an address, or transmission of
instructions via a facsimile other than as set forth above, does not constitute
a valid delivery.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal to be used to tender Old Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer, upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, ____________ (number of Old Notes) Old Notes pursuant to
the guaranteed delivery procedures set forth in Instruction 2 of the Letter of
Transmittal.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
Certificate No(s). for Old
Notes (if available) Name(s) of Record Holder(s)
____________________ _________________________________________
____________________ _________________________________________
Please Print or Type
Address:
_________________________________________
_________________________________________
Telephone. No.( )__________________________
Signature(s)_______________________________
___________________________________________
Dated:_____________________________________
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby (a) represents that the
above named person(s) own(s) the Old Notes tendered hereby and (b) guarantees
that delivery to the Exchange Agent of certificates for the Old Notes tendered
hereby, in proper form for transfer, with delivery of a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature and any other required documents, will be received by the
Exchange Agent at one of its addresses set forth above within five business days
after the Expiration Date.
Name of Firm: _____________________________________
Authorized Signature
_____________________________________
Address: Name___________________________________
_____________________________________ Please Print or Type
_____________________________________ Title__________________________________
Zip Code
Telephone. No.( )___________________ Date:_______________
Dated: , 1999
NOTE: DO NOT SEND OLD NOTES WITH THIS FORM; OLD NOTES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE EXCHANGE AGENT WITHIN
FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
