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Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-06553
PROSPECTUS
S F X Broadcasting, Inc.
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON AUGUST 14, 1996, UNLESS EXTENDED, PROVIDED IT MAY NOT BE
EXTENDED BEYOND AUGUST 27, 1996.
SFX Broadcasting, Inc., a Delaware corporation (the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitutes the "Exchange Offer"), to exchange $1,000 principal
amount of its 10 3/4% Senior Subordinated Notes due 2006, Series B (the
"Series B Notes") for each $1,000 principal amount of its outstanding 10 3/4%
Senior Subordinated Notes due 2006, Series A (the "Series A Notes") of which
$450.0 million in aggregate principal amount are outstanding as of the date
hereof, which exchange has been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a registration statement of
which this Prospectus is a part (the "Registration Statement"). The form and
terms of the Series B Notes are the same as the form and terms of the Series A
Notes except that (i) the exchange will have been registered under the
Securities Act and therefore the Series B Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Series B Notes will
not be entitled to certain rights of holders of the Series A Notes under the
Registration Rights Agreement (as defined herein), which rights will terminate
upon the consummation of the Exchange Offer. The Series B Notes will evidence
the same debt as the Series A Notes (which they replace) and will be entitled
to the benefits of an indenture dated as of May 31, 1996 governing the Series
A Notes and the Series B Notes (the "Indenture"). The Series A Notes and the
Series B Notes are sometimes referred to herein collectively as the "Notes."
See "The Exchange Offer" and "Description of Notes."
The Company will accept for exchange any and all validly
tendered Series A Notes not withdrawn prior to 5:00 p.m., New York City time,
on August 14, 1996 unless extended by the Company, in its sole discretion (the
"Expiration Date"). Tenders of Series A Notes may be withdrawn at any time
prior to the Expiration Date. The Exchange Offer is subject to certain
customary conditions. Series A Notes may be tendered only in integral
multiples of $1,000. See "The Exchange Offer--Conditions."
(continued on the next page)
SEE "RISK FACTORS" FROM PAGES 12 TO 20 FOR A DISCUSSION OF
CERTAIN FACTORS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR SERIES A NOTES IN
THE EXCHANGE OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
The date of this Prospectus is July 17, 1996.
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The Series B Notes will bear interest at the same rate and
on the same terms as the Series A Notes. Consequently, interest on the Notes
will be payable semi-annually on May 15 and November 15 of each year,
commencing November 15, 1996, at the rate of 10 3/4% per annum. The Series B
Notes will bear interest from and including May 31, 1996, the date of issuance
of the Series A Notes. Holders whose Series A Notes are accepted for exchange
will be deemed to have waived the right to receive any interest accrued on the
Series A Notes.
The Notes are redeemable, in whole or in part, at the option
of the Company on or after May 15, 2001 at the redemption prices set forth
herein plus accrued interest to the date of redemption. In addition, until May
31, 1999, the Company may, on any one or more occasions, redeem up to $154.0
million in aggregate principal amount of Notes at a redemption price of
110.75% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages (as defined herein), if any, thereon to the redemption
date, with the net proceeds of an offering of common equity; provided that at
least $286.0 million in aggregate principal amount of Notes must remain
outstanding immediately after the occurrence of each such redemption; and
provided, further that any such redemption shall occur within 75 days of the
date of closing of such offering of common equity of the Company.
The Notes are general unsecured obligations of the Company
and are subordinated in right of payment to all existing and future Senior
Debt (as defined herein) of the Company. The Notes are guaranteed on a senior
subordinated basis by each of the Company's existing and future subsidiaries
(the "Subsidiary Guarantors"). The Subsidiary Guarantees (as defined herein)
are general unsecured obligations of the Subsidiary Guarantors and are
subordinated in right of payment to all existing and future Guarantor Senior
Debt (as defined herein). As of March 31, 1996, on a pro forma basis after
giving effect to the Transactions (as defined herein), the Company would have
had no Senior Debt and the Subsidiary Guarantors would have had no Guarantor
Senior Debt.
Upon a Change of Control (as defined herein), each holder of
Notes has the right to require the Company to repurchase such holder's Notes
at a price equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of repurchase. In
addition, the Company is obligated to offer to repurchase the Notes at 100% of
the principal amount thereof plus accrued interest and Liquidated Damages, if
any, to the date of repurchase in the event of certain asset sales. See
"Description of Notes."
Based upon no-action letters issued by the staff of the
Securities and Exchange Commission (the "Commission") to third parties, the
Company believes that the Series B Notes issued pursuant to the Exchange Offer
in exchange for Series A Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than any holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act or a
holder that is a broker-dealer who acquires Series B Notes to resell pursuant
to Rule 144A or any other available exemption under the Securities Act),
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Series B Notes are acquired in the
ordinary course of such holders' business and such holder is not
participating, does not intent to participate, and has no arrangement with any
person to participate in the distribution of such Series B Notes. However, the
Commission has not considered the Exchange Offer in the context of a no-action
letter and there can be no assurance that the staff of the Commission would
make a similar determination with respect to the Exchange Offer as in such
other circumstances. Holders of Series A Notes wishing to accept the Exchange
Offer must represent to the Company, that such conditions have been met. Each
broker-dealer that receives Series B Notes for its own account pursuant to the
Exchange Offer where it acquired the Series A Notes exchanged for such Series
B Notes for its own account as a result of market-making or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with the resale of such Series B Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. 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
Series B Notes received in exchange for Series A Notes where such Series A
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale.
See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange
Offer and will pay all the expenses incident thereto. Tenders of Series A
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and
does not accept for exchange any Series A Notes, the Company will promptly
return the Series A Notes to the holders thereof. See "The Exchange Offer."
(continued on next page)
ii
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Prior to this Exchange Offer, there has been no public
market for the Notes. The Company does not intend to list the Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Notes will develop. To the extent that a market for the Notes does develop,
the market value of the Notes will depend on the market conditions (such as
yields on alternative investments), general economic conditions, the Company's
financial condition and other conditions. Such conditions might cause the
Notes, to the extent that they are actively traded, to trade at a significant
discount from face value. See "Risk Factors--Absence of Public Market."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE
COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF SERIES A NOTES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
iii
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-4 under the Securities Act with respect to the Series B Notes being
offered by this Prospectus. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain items of which are contained in exhibits
and schedules to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Series B Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto, and the financial
statements and notes filed as a part thereof. Statements made in this
Prospectus concerning the contents of any contract, agreement or other
document filed with the Commission as an exhibit are not necessarily complete.
With respect to each such contract, agreement or other document filed with the
Commission as an exhibit, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, New York, New York 10048 and the Northwestern Atrium Center, 500
West Madison Street, Room 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. In the event the Company is not required to be subject to the reporting
requirements of the Exchange Act in the future, the Company has agreed that,
for so long as any of the Notes remain outstanding, it will furnish to the
applicable trustee or transfer agent and the holders of the Notes, as
applicable, and file with the Commission (unless the Commission will not
accept such a filing) (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company was required to file such forms, including a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company was required to file such reports.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus and made a
part hereof:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1995, as amended;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, as amended; and
(iii) the Company's Current Reports on Form 8-K filed on April 19, 1996, May
8, 1996, May 9, 1996, May 24, 1996, May 30, 1996, June 21, 1996 and July
10, 1996, respectively.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the Exchange Offer shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statements so modified or superseded,
except as so modified or superseded, shall not be deemed to constitute a part
of this Prospectus.
THIS PROSPECTUS INCORPORATES THE DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM CYNTHIA A. BOND, 150 EAST 58TH STREET, 19TH FLOOR, NEW YORK, NEW
YORK 10155, TELEPHONE (212) 407-9191. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE AT LEAST FIVE BUSINESS DAYS PRIOR
TO THE DATE ON WHICH A FINAL INVESTMENT DECISION IS TO BE MADE.
2
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial
statements and notes thereto appearing elsewhere in this Prospectus, and in
the documents incorporated herein by reference. Certain capitalized terms used
herein have the meanings assigned to them in the Glossary appearing on pages
10 and 11 in this Prospectus. As used in this Prospectus, except under the
caption "Description of Notes" or where the context otherwise requires, the
"Company" refers to SFX Broadcasting, Inc., a Delaware corporation, and its
subsidiaries, after giving effect to the Pending Acquisitions and the Pending
Dispositions. The timing and completion of the Pending Acquisitions and the
Pending Dispositions are subject to a number of conditions, certain of which
are beyond the Company's control, and there can be no assurance that such
transactions will be approved by the Federal Communications Commission (the
"FCC") or completed on the terms described herein or at all. Investors should
consider carefully the information set forth under "Risk Factors."
THE COMPANY
The Company, founded in 1992, currently owns and operates, provides
programming to or sells advertising on behalf of 54 radio stations in 18
markets. Upon consummation of the Pending Acquisitions and the Pending
Dispositions (as defined herein), the Company will own and operate, provide
programming to or sell advertising on behalf of 64 radio stations (49 FM and
15 AM stations located in 21 markets) and will be one of the largest companies
in terms of the number of stations in the United States exclusively devoted to
radio broadcasting. The Company's principal executive offices are located at
150 East 58th Street, 19th Floor, New York, New York 10155, and its telephone
number at such offices is (212) 407-9191.
RECENTLY COMPLETED ACQUISITIONS AND DISPOSITIONS
On July 9, 1996, the Company purchased from Prism Radio Partners L.P.
substantially all of the assets used in the operation of eight FM and five AM
radio stations (the "Prism Stations") located in four markets: Jacksonville,
Florida; Raleigh, North Carolina; Tucson, Arizona and Wichita, Kansas (the
"Prism Acquisition").
On July 1, 1996, the Company consummated the purchase of all of the
issued and outstanding capital stock of Liberty Broadcasting, Incorporated
which owns and operates, provides programming to or sells advertising on
behalf of 14 FM and six AM radio stations located in six markets: Washington,
DC/Baltimore, Maryland; Nassau-Suffolk, New York; Providence, Rhode Island;
Hartford, Connecticut; Albany, New York and Richmond, Virginia (the "Liberty
Acquisition"). On July 3, 1996, the Company sold three of the radio stations
acquired in the Liberty Acquisition operating in the Washington, DC/Baltimore,
Maryland market (the "Washington Dispositions"). Pursuant to the MMR Merger
Agreement (as defined herein), the Company anticipates entering into a local
marketing agreement with Multi-Market Radio, Inc. ("MMR") pursuant to which
MMR will provide programming on and sell advertising on behalf of eight FM and
four AM radio stations acquired in the Liberty Acquisition and located in four
markets: Providence, Rhode Island; Hartford, Connecticut; Albany, New York and
Richmond, Virginia. The local marketing agreement provides that substantially
all of the Broadcast Cash Flow generated by these stations will be paid by MMR
to the Company.
On June 28, 1996, the Company purchased substantially all of the assets
used in the operation of radio stations WMFR-AM, WMAG-FM and WTCK-AM, each
operating in the Greensboro, North Carolina market,
and WTRG-FM and WRDU-FM, both operating in the Raleigh, North Carolina market
(the "HMW Acquisition").
On June 25, 1996, the Company purchased substantially all of the assets
used in the operation of radio station WROQ-FM, operating in the
Greenville-Spartanburg, South Carolina market (the "Greenville Acquisition").
The Prism Acquisition, the Liberty Acquisition, the HMW Acquisition and
the Greenville Acquisition are collectively referred to herein as the
"Completed Acquisitions." The Completed Acquisitions were consummated on
substantially the same terms as set forth in the acquisition agreements.
PENDING ACQUISITIONS AND DISPOSITIONS
In connection with the Prism Acquisition, the Company has agreed to
purchase from Prism Radio Partners L.P. substantially all of the assets used
in the operation of two FM radio stations and one AM radio station, each
operating in the Louisville, Kentucky market (the "Louisville Stations"), upon
the renewal of the FCC licenses of such stations (the "Louisville
Acquisition"). The Company has entered into two separate agreements to sell
the Louisville Stations upon the acquisition of such stations (the "Louisville
Dispositions").
3
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In April 1996, the Company entered into an agreement and plan of merger
(as amended, the "MMR Merger Agreement") pursuant to which it has agreed to
acquire MMR (the "MMR Merger"), which currently owns and operates, provides
programming to or sells advertising on behalf of 13 FM radio stations and one
AM radio station located in eight markets: New Haven, Connecticut;
Springfield/Northampton, Massachusetts; Daytona Beach, Florida; Augusta,
Georgia; Biloxi, Mississippi; Little Rock, Arkansas, Myrtle Beach, South
Carolina and Jackson, Mississippi. MMR has entered into agreements to acquire
WKSS-FM, Hartford, Connecticut (the "MMR Hartford Acquisition"), and WMYB-FM,
Myrtle Beach, South Carolina (the "MMR Myrtle Beach Acquisition"), and has
entered into an agreement to sell KOLL-FM, Little Rock, Arkansas to Triathlon
Broadcasting Company ("Triathlon") (collectively, the "MMR Dispositions").
Except where the context otherwise requires, the term "MMR Merger" as used
herein gives effect to the MMR Hartford Acquisition, the MMR Myrtle Beach
Acquisition and the consummation of the MMR Dispositions. In addition, MMR is
currently negotiating the termination of a joint sales agreement with respect
to WCHZ-FM, Augusta, Georgia, and has assigned its rights under an acquisition
agreement and a local marketing agreement with respect to WAEG-FM and WAEJ-FM,
both operating in Augusta, Georgia. The MMR Hartford Acquisition, the MMR
Myrtle Beach Acquisition and the MMR Dispositions are anticipated to be
completed prior to the consummation of the MMR Merger. MMR was organized in
1992 by Robert F.X. Sillerman, Chief Executive Officer and controlling
stockholder of the Company, Michael G. Ferrel and Howard J. Tytel, a Director
and Executive Vice President of the Company. Mr. Sillerman owns a substantial
equity interest in MMR which will be exchanged for common stock of the Company
upon the consummation of the MMR Merger.
The Company has agreed to acquire substantially all of the assets of
WJDX-FM, WSTZ-FM and WZRX-AM, each operating in Jackson, Mississippi, and,
pursuant to a separate agreement, has exercised its option to acquire WHSL-FM,
operating in Greensboro, North Carolina (collectively, the "Additional
Acquisitions"). In addition, the Company has entered into an agreement to
exchange radio station KRLD-AM, operating in Dallas, Texas, and the Texas
State Networks for radio station KKRW-FM, operating in Houston, Texas (the
"Houston Exchange"), and has entered into an agreement to sell radio station
KTCK-AM, operating in Dallas, Texas (the "Dallas Disposition").
The Company has entered into an agreement with Chancellor Broadcasting
Company ("Chancellor") to exchange three FM radio stations and one AM radio
station, each operating in the Nassau/Suffolk, New York market, acquired in
the Liberty Acquisition for two FM radio stations, both operating in the
Jacksonville, Florida market, and a payment to the Company in the amount of
$11.0 million (the "Jacksonville Exchange"). Until the consummation of the
Jacksonville Exchange, the Company and Chancellor will provide programming and
sell advertising pursuant to local marketing agreements on the Jacksonville
radio stations and the Nassau/Suffolk radio stations, respectively.
The Louisville Acquisition, MMR Merger, the Additional Acquisitions,
the Houston Exchange and the Jacksonville Exchange are referred to herein
collectively as the "Pending Acquisitions." The Pending Acquisitions and the
Completed Acquisitions are herein collectively referred to as the
"Acquisitions." The Louisville Dispositions and the Dallas Disposition are
referred to herein collectively as the "Pending Dispositions." The Pending
Dispositions and the Washington Disposition are referred to herein
collectively as the "Dispositions."
RECENT TRANSACTIONS
Note Offering, Preferred Stock Offering and New Credit Agreement. On
May 31, 1996, the Company consummated a private placement of $450.0 million in
aggregate principal amount of the Series A Notes (the "Note Offering") and
$149.5 million in aggregate amount (the "Preferred Stock Offering") of its 6
1/2% Series D Cumulative Convertible Preferred Stock due May 31, 2007 (the
"Series D Preferred Stock"). In addition, the Company has received a
commitment from its lender to increase amounts available under its senior
credit facility from $50.0 million to $150.0 million and expects to enter into
a definitive credit agreement (the "New Credit Agreement") with respect to
such facility. There can be no assurance, however, that the Company will be
able to enter into the New Credit Agreement on a timely basis or at all. The
private placement of the Series A Notes and the Preferred Stock are herein
referred to as the Financings.
Agreement with SCMC. In April 1996, the Company and Sillerman
Communications Management Corporation ("SCMC"), a corporation controlled by
Mr. Sillerman, entered into an agreement to terminate SCMC's financial
consulting services to the Company in exchange for the cancellation of certain
indebtedness owing from SCMC to the Company and the grant to SCMC of warrants
to purchase common stock of the Company (the "SCMC Termination Agreement").
Pursuant to such agreement, SCMC has also assigned to the Company its rights
to receive certain fees payable by MMR and Triathlon, a publicly-traded radio
company of which affiliates of Mr. Sillerman own a substantial non-voting
equity interest and which operates in small and medium-sized markets in the
Midwest and the West, for services that SCMC provides in connection with
consulting agreements between SCMC and such companies. In addition, pursuant
to the SCMC Termination Agreement, SCMC has agreed to continue to provide
financial consulting services to MMR (until completion of the MMR Merger) and
to Triathlon at SCMC's expense.
4
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Tender Offer and Consent Solicitation. On May 31, 1996, the Company
also purchased for cash (the "Tender Offer") $79,406,000 in principal amount
of its 113/8% Senior Subordinated Notes due 2000 (the "Old Notes") and
finalized a related solicitation of consents to modify certain terms of the
indenture under which the Old Notes were issued (the "Old Indenture").
Currently $594,000 in principal amount of the Old Notes remain outstanding.
Management. On June 19, 1996, the Company entered into an Amended and
Restated Agreement with R. Steven Hicks, the President, Chief Executive
Officer and Chief Operating Officer of the Company (the "Amended Hicks
Agreement") which supersedes the agreement entered into between the Company
and Mr. Hicks on April 15, 1996 (the "Hicks Agreement"). Pursuant to the
Amended Hicks Agreement, Mr. Hicks, among other things, resigned as an officer
and Director of the Company and the Company repurchased all of Mr. Hicks'
securities of the Company. In addition, Mr. Hicks agreed not to compete with
the Company for the period of approximately one year with the Company or MMR
in certain of the markets in which the Company or MMR currently owns,
operates, provides programming to or sells advertising on behalf of radio
stations and any eight additional markets in which the Company or MMR has
entered into agreements to purchase one or more radio stations on or before
the consummation of the MMR Merger. Pursuant to the Amended Hicks Agreement,
the Company paid Mr. Hicks an aggregate amount of $18.7 million and agreed to
forgive on June 19, 1999 a $2.0 million loan to Mr. Hicks, plus accrued and
unpaid interest of $0.3 million, if Mr. Hicks has complied with certain
provisions of the agreement. Upon the resignation of Mr. Hicks, Robert F.X.
Sillerman reassumed the position of the sole Chief Executive Officer of the
Company and D. Geoffrey Armstrong, the Chief Financial Officer of the Company,
was appointed the Chief Operating Officer. In addition, the Company entered
into an agreement effective as of June 24, 1996 with Thomas P. Benson pursuant
to which Mr. Benson was appointed the Vice President of Financial Affairs.
Pursuant to the agreement the Company agreed to appoint Mr. Benson as the
Chief Financial Officer upon the resignation by Mr. Armstrong as the Chief
Financial Officer. The Company anticipates that Mr. Armstrong will resign as
the Chief Financial Officer of the Company upon the consummation of the MMR
Merger.
The Acquisitions, the Dispositions, the Financing, the Tender Offer and
the implementation of each of the SCMC Termination Agreement, the Hicks
Agreement and the Armstrong Agreement are collectively referred to hereinafter
as the "Transactions."
THE EXCHANGE OFFER
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<S> <C>
The Exchange Offer................... The Company is offering to exchange $1,000 principal amount of Series
B Notes for each $1,000 principal amount of Series A Notes that are
properly tendered and accepted. The issuance of the Series B Notes are
intended to satisfy obligations of the Company contained in the
Registration Rights Agreement. Subject to certain conditions, a holder
who wishes to tender must transmit a properly completed and duly
executed Letter of Transmittal to The Chase Manhattan Bank (the
"Exchange Agent") on or prior to the Expiration Date. For procedures for
tendering, see "The Exchange Offer."
Based upon no-action letters issued by the staff of the Commission to third
parties, the Company believes that the Series B Notes issued pursuant to
the Exchange Offer in exchange for Series A Notes may be offered for
resale, resold and otherwise transferred by a holder thereof (other than any
holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act or a holder that is a broker-dealer who
acquires Series B Notes to resell pursuant to Rule 144A or any other
available exemption under the Securities Act), without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such Series B Notes are acquired in the ordinary course of
such holders' business and such holder is not participating, does not intend
to participate, and has no arrangement with any person to participate in the
distribution of such Series B Notes. However, the Commission has not considered
the Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Holders of
Series A Notes wishing to accept the Exchange Offer must represent to the Company
that such conditions have been met. Each broker-dealer that receives Series B Notes
for its own account pursuant to the Exchange Offer where it acquired the Series A
Notes exchanged for such Series B Notes for its own account as a result of market-making
or other trading activities, must acknowledge that it will deliver a prospectus
in connection with the resale of such Series B Notes.
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Registration Rights Agreement;
Tenders ........................... The Series A Notes were sold by the Company on May 31, 1996 to BT
Securities Corporation, Goldman Sachs & Co. and Lehman Brothers, Inc.
(collectively, the "Initial Purchasers") pursuant to a Purchase Agreement
dated May 31, 1996 by and among the Company, the Subsidiary
Guarantors, and the Initial Purchasers (the "Purchase Agreement").
Pursuant to the Purchase Agreement, the Company, the Subsidiary
Guarantors and the Initial Purchasers entered into a Registration Rights
Agreement dated as of May 31, 1996 which grants the holders of the
Series A Notes certain exchange and registration rights. See "The
Exchange Offer." This Exchange Offer is intended to satisfy such rights,
which terminate upon the consummation of the Exchange Offer. The
holders of the Series B Notes are not entitled to any exchange or
registration rights with respect to the Series B Notes. The Series A Notes
are subject to the payment of liquidated damages ("Liquidated Damages")
under certain circumstances if the Company and the Subsidiary
Guarantors are not in compliance with their obligations under the
Registration Rights Agreement. See "Description of Notes--Registration
Rights; Liquidated Damages."
Expiration Date;
Withdrawal......................... The Exchange Offer will expire at 5:00 p.m., New York City time, on
August 14, 1996 (the "Expiration Date") unless extended, provided it may
not be extended beyond August 27, 1996. The tender of Series A Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date by sending a written notice of withdrawal to the Exchange
Agent. Any Series A Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer.
Any shares of Series A Notes not accepted for exchange for any reason
will be returned without expense to the tendering holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer. See "The Exchange Offer."
Certain Conditions to the
Exchange Offer..................... The Exchange Offer is subject to certain customary conditions, which may
be waived by the Company. See "The Exchange Offer--Certain
Conditions to the Exchange Offer."
Federal Income Tax
Consequences...................... For Federal income tax purposes, the exchange pursuant to the Exchange
Offer should not result in any income, gain or loss to the holders or the
Company. See "Certain Federal Income Tax Considerations."
Use of Proceeds...................... There will be no proceeds to the Company from the exchange pursuant to
the Exchange Offer.
Exchange Agent....................... The Chase Manhattan Bank is serving as Exchange Agent in connection
with the Exchange Offer.
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THE SERIES B NOTES
The form and terms of the Series B Notes are the same as the form and
terms of the Series A Notes except that (i) the exchange will have been
registered under the Securities Act and therefore the Series B Notes will not
bear legends restricting the transfer thereof, and (ii) holders of the Series
B Notes will not be entitled to certain rights of holders of the Series A
Notes under the Registration Rights Agreement (as defined herein), which
rights will terminate upon the consummation of the Exchange Offer. The Series
B Notes will evidence the same debt as the Series A Notes (which they replace)
and will be entitled to the benefits of the Indenture governing the Series A
Notes and the Series B Notes. See "Description of Notes" for further
information and for definitions of certain capitalized terms used below.
In the Exchange Offer, the holders of Series A Notes (the "Holders")
will receive Series B Notes with the same interest rate. The Series B Notes
issued in exchange for Series A Notes will accrue interest from May 31, 1996,
the date of the issuance of the
6
<PAGE>
Series A Notes (the "Issue Date"). Holders whose Series A Notes are accepted
for exchange will be deemed to have waived the right to receive any interest
accrued on the Series A Notes.
<TABLE>
<CAPTION>
<S> <C>
Maturity Date........................ May 15, 2006.
Interest Payment Dates............... Interest on the Series B Notes is payable semi-annually on each May 15
and November 15, commencing November 15, 1996.
Ranking.............................. The Series B Notes are general unsecured obligations of the Company and
are subordinated in right of payment to all existing and future Senior Debt
of the Company. The Series B Notes rank pari passu with any future
senior subordinated indebtedness of the Company and rank senior to all
other subordinated indebtedness of the Company. As of March 31, 1996,
on a pro forma basis after giving effect to the Transactions, the Company
would have had no Senior Debt.
Optional Redemption.................. The Series B Notes are redeemable, in whole or in part, at the option of
the Company on or after May 15, 2001, at the redemption prices set forth
herein plus accrued and unpaid interest to the date of redemption. In
addition, until May 31, 1999, the Company may, on any one or more
occasions, redeem up to $154.0 million in aggregate principal amount of
Series B Notes at a redemption price of 110.75% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net proceeds of an offering of
common equity; provided that at least $286.0 million in aggregate
principal amount of Series B Notes must remain outstanding immediately
after the occurrence of each such redemption; and provided, further that
any such redemption shall occur within 75 days of the date of closing of
such offering of common equity of the Company.
Change of Control.................... Upon a Change of Control, each holder has the right to require the
Company to repurchase such holder's Series B Notes at a price equal to
101% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of repurchase.
Guarantees........................... The Series B Notes are guaranteed (the "Subsidiary Guarantees") on a
senior subordinated basis by the Subsidiary Guarantors. The Subsidiary
Guarantees are general unsecured obligations of the Subsidiary Guarantors
and are subordinated in right of payment to all existing and future
Guarantor Senior Debt. As of March 31, 1996, on a pro forma basis after
giving effect to the Transactions, the Subsidiary Guarantors collectively
would have had no Guarantor Senior Debt.
Certain Covenants.................... The Indenture governing the Series B Notes contains certain covenants
that limit the ability of the Company and certain of its subsidiaries to,
among other things, incur additional indebtedness, pay dividends or make
certain other restricted payments, consummate certain asset sales, enter
into certain transactions with affiliates, incur indebtedness that is
subordinate in right of payment to any Senior Debt and senior in right of
payment to the Series B Notes, incur liens, impose restrictions on the
ability of a subsidiary to pay dividends or make certain payments to the
Company and its subsidiaries, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company.
</TABLE>
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
The Summary Consolidated Financial Data of the Company and predecessors
include the historical financial statements of Capstar Communications, Inc.
("Capstar") and the historical financial statements of the Company since its
formation on February 26, 1992. The Summary Consolidated Financial Data as of
March 31, 1996 and for the three months ended March 31, 1996 and 1995 have
been derived from the unaudited consolidated financial statements and notes
thereto of the Company which are incorporated herein by reference. The pro
forma summary data as of March 31, 1996, and for the year ended December 31,
1995, and the three months ended March 31, 1996 and 1995 are derived from the
unaudited pro forma condensed combined financial statements which, in the
opinion of the Company, reflect all adjustments necessary for a fair
presentation of the Transactions. Operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that may be
achieved for the fiscal year ending December 31, 1996. The historical
consolidated financial results for the Company are not comparable from year to
year because of the acquisition and disposition of various radio stations by
the Company during the periods covered. See "Available Information" and
"Incorporation by Reference."
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------
Pro forma
for the
Recent
Acquisitions Pro Forma
and the for the
Transactions Recent
(other than Acquisitions
the MMR and the
Merger)(7) Transactions(7)
1991 1992 1993 1994 1995 1995 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(1) ................ $ 13,442 $ 15,003 $ 34,233 $ 55,556 $ 76,830 $ 168,542 $ 191,508
Station operating expenses ..... 9,105 9,624 21,555 33,956 51,039 109,140 122,032
Depreciation, amortization,
duopoly integration costs and
acquisition related costs(2) .. 3,726 3,208 4,475 5,873 9,137 28,957 33,218
Corporate expenses ............. 726 769 1,808 2,964 3,797 6,060 6,300
Corporate expenses-
non-recurring charge(3)........ -- -- 13,980 -- -- -- --
Write down of
broadcast rights
agreement and other ......... -- -- -- -- 5,000 -- 281
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) ........ (115) 1,402 (7,585) 12,763 7,857 24,385 29,677
Other (income) loss net ........ (124) (17) 121 (650) (1,549) (1,549) 3
Interest expense,
including amortization
of deferred financing
costs ....................... 4,241 3,610 7,351 9,332 12,903 50,243 50,243
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before
income taxes
extraordinary item and
cumulative effect of a
change in accounting
principle ................... (4,232) (2,208) (14,919) 3,310 (4,396) (24,309) (19,017)
Income tax expense ............. -- -- 1,015 1,474 -- -- --
Extraordinary loss on
debt retirement................ -- -- 1,665 -- -- -- --
Cumulative effect of a
change in accounting
principle...................... -- -- 182 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) .............. (4,232) (2,208) (17,781) 1,836 (4,396) (24,309) (19,017)
Redeemable preferred
stock dividends and accretion(4) 302 385 557 348 291 10,009 10,009
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)applicable to
common stock................... $ (4,534) $ (2,593) $ (18,338) $ 1,488 $ (4,687) $ (34,318) $ (29,026)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share .... $ (3.85) $ (2.20) $ (7.08) $ 0.26 $ (0.71) $ (4.60) $ (3.07)
--------- --------- --------- --------- --------- --------- ---------
Weighted average common
shares outstanding ............ 1,179 1,179 2,589 5,792 6,596 7,458 9,459
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to
fixed charges (5).............. -- -- -- 1.4x -- -- --
Ratio of earnings to
combined fixed
charges and preferred
stock dividends(5) .......... -- -- -- 1.3x -- -- --
Other Operating Data:
Broadcast Cash Flow(6) ......... $ 4,337 $ 5,379 $ 12,678 $ 21,600 $ 25,791 $ 59,402 $ 69,476
EBITDA (6) ..................... 3,611 4,610 10,870 18,636 21,994 53,342 63,176
</TABLE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------------------------------
Pro Forma for the Pro Forma
Recent Acquisitions and for the Recent
the Transactions (other Acquisitions and the
(unaudited) (uanudited) than the MMR Merger)(7) Transactions(7)
1995 1996 1995 1996 1995 1996
--------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(1) ................ $ 13,717 $ 19,800 $ 35,191 $ 39,032 $ 40,167 $ 44,112
Station operating expenses ..... 9,676 14,056 27,186 25,901 30,311 28,803
Depreciation, amortization,
duopoly integration costs and
acquisition related costs(2) .. 1,697 2,299 7,093 6,981 8,188 7,941
Corporate expenses ............. 807 1,210 1,423 1,759 1,483 1,819
Corporate expenses-
non-recurring charge(3)........ -- -- -- -- -- --
Write down of
broadcast rights
agreement and other ......... -- -- (37) -- 43 65
--------- ---------- ---------- --------- --------- ---------
Operating income (loss) ........ 1,537 2,235 (474) 4,391 142 5,484
Other (income) loss net ........ 3 (164) (71) (475) (71) (475)
Interest expense,
including amortization
of deferred financing
costs ....................... 2,432 3,384 12,561 12,561 12,561 12,561
--------- ---------- ---------- --------- --------- ---------
Income (loss) before
income taxes
extraordinary item and
cumulative effect of a
change in accounting
principle ................... (898) (985) (12,964) (7,695) (12,348) (6,602)
Income tax expense ............. (377) -- -- -- -- --
Extraordinary loss on
debt retirement................ -- -- -- -- -- --
Cumulative effect of a
changes in accounting
principle...................... -- -- -- -- -- --
--------- ---------- ---------- --------- --------- ---------
Net income (loss) .............. (521) (985) (12,964) (7,695) (12,348) (6,602)
Redeemable preferred
stock dividends and accretion(4) 71 136 2,500 2,565 2,500 2,565
--------- ---------- ---------- --------- --------- ---------
Net income (loss)applicable to
common stock................... $ (592) $ (1,121) $ (15,464) $ (10,260) $ (14,848) $ (9,167)
--------- ---------- ---------- --------- --------- ---------
Net income (loss) per share .... $ (0.10) $ (0.15) $ (2.07) $ (1.38) $ (1.57) $ (0.97)
--------- ---------- ---------- --------- --------- ---------
Weighted average common
shares outstanding ............ 5,916 7,458 7,458 7,458 9,459 9,459
--------- ---------- ---------- --------- --------- ---------
Ratio of earnings to
fixed charges (5) .............. -- -- -- -- -- --
Ratio of earnings to
combined fixed
charges and preferred
stock dividends(5) .......... -- -- -- -- -- --
Other Operating Data:
Broadcast Cash Flow(6) ......... $ 4,041 $ 5,744 $ 8,005 $ 13,131 $ 9,856 $ 15,309
EBITDA (6) ..................... 3,234 4,534 6,582 11,372 8,373 13,490
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
March 31, 1996
-------------------------------------------
Pro Forma
for the
Transaction
December 31, (other than the Pro Forma for the
1991 1992 1993 1994 1995 Actual MMR Merger(8) Transactions(8)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents........ $ 96 $ 657 $ 10,287 $ 3,194 $ 11,893 $ 3,349 $ 87,304 $ 35,737
Current assets ..... 3,065 4,515 31,273 28,367 32,505 22,750 132,794 79,694
Total assets ....... 37,367 36,127 152,871 145,808 187,337 202,852 707,728 799,288
Long-term debt ..... 38,828 39,011 81,627 81,516 81,850 98,500 450,594 450,594
Redeemable preferred
stock:
Series A Preferred
Stock............. 2,839 3,892 917 -- -- -- -- --
Series B Preferred
Stock............. 133 -- 2,784 2,466 1,735 1,806 1,806 1,806
Series C Preferred
Stock............. -- -- -- -- 1,550 1,550 -- --
Series D Cumulative
Convertible
Preferred Stock ... -- -- -- -- -- -- 149,500 149,500
Stockholders' equity (6,951) (9,411) 48,598 48,856 83,061 81,940 36,024 108,024
</TABLE>
- ---------------
(1) Net revenues on a pro forma basis includes $3,584,000 and $2,645,000 of
fees from Triathlon for the year ended December 31, 1995 and three months
ended March 31, 1996, respectively, that would have been received by the
Company pursuant to the SCMC Termination Agreement. Future fees may be
lesser or greater based upon future acquisition and financing activities
of Triathlon.
(2) Includes $1,400,000 of duopoly integration costs during the year ended
December 31, 1995 and $277,000 of acquisition related costs during the
three months ended March 31, 1996.
(3) Represents the 1993 non-cash non-recurring charge related to the valuation
of the common stock issued to the Company's founders at the Company's
initial public offering in September 1993 and certain pooling costs
related to the merger of Capstar with and into a subsidiary of the
Company.
(4) Includes dividends on preferred stock which the Company redeemed in 1993,
accretion on outstanding redeemable preferred stock and assumed dividends
on the Series D Preferred Stock.
(5) For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends and the ratio of earnings to fixed charges,
"earnings" consists of earnings before income taxes and fixed charges.
"Fixed charges and preferred stock dividends" consists of interest on all
indebtedness, amortization of deferred financing costs and preferred stock
dividends. "Fixed charges" consists of interest on all indebtedness and
amortization of deferred financing costs. Earnings were insufficient to
cover combined fixed charges and preferred stock dividends by $1,121,000,
$969,000, $4,687,000, $15,476,000, $2,593,000 and $4,534,000 for the three
months ended March 31, 1996 and 1995 and the years ended December 31,
1995, 1993, 1992 and 1991, respectively. Pro forma earnings for the three
months ended March 31, 1996 and 1995 and the year ended December 31, 1995
would have been insufficient to cover combined fixed charges and preferred
stock dividends by $10,260,000 $15,464,000 and $34,318,000, respectively,
pro forma for the Recent Acquisitions and the Transactions other than the
MMR Merger, and $9,167,000, $14,848,000 and $29,026,000, respectively, pro
forma for the Recent Acquisitions and the Transactions. Earnings were
insufficient to cover fixed charges by $985,000, $898,000, $4,396,000,
$14,919,000, $2,208,000 and $4,232,000 during the three months ended March
31, 1996 and 1995 and the years ended December 31, 1995, 1993, 1992 and
1991, respectively. Pro forma earnings for the three months ended March
31, 1996 and 1995 and the year ended December 31, 1995 would have been
insufficient to cover fixed charges by $7,695,000, $12,964,000 and
$24,309,000, respectively, pro forma for the Recent Acquisitions and the
Transactions other than the MMR Merger and $6,602,000, $12,348,000 and
$19,017,000, respectively, pro forma for the Recent Acquisitions and the
Transactions.
For the year ended December 31, 1995, Broadcast Cash Flow exceeded fixed
charges and preferred stock dividends by $12,597,000 for the Company, had
a deficiency of $850,000 pro forma for the Recent Acquisitions and the
Transactions other than the MMR Merger, and exceeded by $9,224,000 pro
forma for the Recent Acquisitions and the Transactions. For the three
months ended March 31, 1996, Broadcast Cash Flow exceeded fixed charges
and preferred stock dividends by $2,224,000 for the Company, and had a
deficiency of $1,995,000 pro forma for the Recent Acquisitions and the
Transactions other than the MMR Merger and exceeded by $183,000 for the
Recent Acquisitions and the Transactions.
(6) Broadcast Cash Flow is defined as net revenues (including where
applicable, fees earned by the Company pursuant to the SCMC Termination
Agreement) less station operating expenses. EBITDA is defined as net
income (loss) before (i) extraordinary items, (ii) provisions for income
taxes, (iii) interest (income) expense, (iv) other (income) expense, (v)
cumulative effects of changes in accounting principles, (vi) depreciation,
amortization, duopoly integration costs and acquisition related costs and
(vii) non-recurring charges related to the write-down of the Texas Rangers
broadcast rights and the valuation charge related to the Founders' Stock.
The difference between Broadcast Cash Flow and EBITDA is that EBITDA
includes corporate expenses. Although Broadcast Cash Flow and EBITDA are
not measures of performance calculated in accordance with GAAP, the
Company believes that Broadcast Cash Flow and EBITDA are accepted by the
broadcasting industry as generally recognized measures of performance and
are used by analysts who report publicly on the performance of
broadcasting companies. In addition, EBITDA is the basis for determining
compliance with several covenants in certain of the Company's debt
instruments. Nevertheless, these measures should not be considered in
isolation or as a substitute for operating income, net income, net cash
provided by operating activities or any other measure for
determining the Company's operating performance or liquidity which is
calculated in accordance with GAAP.
(7) The Unaudited Pro Forma Statement of Operations Data for the three months
ended March 31, 1996 and 1995 and the year ended December 31, 1995 are
presented as if the Company had completed the Recent Acquisitions and the
Transactions as of January 1, 1995.
(8) The Unaudited Pro Forma Balance Sheet Data at March 31, 1996 is presented
as if the Company had completed the Transactions as of March 31, 1996.
9
<PAGE>
GLOSSARY
"Acquisitions" refers collectively to the Completed Acquisitions
and the Pending Acquisitions.
"Additional Acquisitions" refers collectively to the acquisitions
by the Company of all the assets of WJDX-FM, WSTZ-FM and WZRX-AM, each
operating in Jackson, Mississippi, and, pursuant to the exercise under an
option agreement, of all of the assets of WHSL-FM, operating in Greensboro,
North Carolina.
"Broadcast Cash Flow" is defined as net revenues (including where
applicable, fees earned by the Company pursuant to the SCMC Termination
Agreement) less station operating expenses. EBITDA is defined as net income
(loss) before (i) extraordinary items, (ii) provisions for income taxes, (iii)
interest (income) expense, (iv) other (income) expense, (v) cumulative effects
of changes in accounting principles, (vi) depreciation, amortization, duopoly
integration costs and acquisition related costs and (vii) non-recurring
charges related to the write-down of the Texas Rangers broadcast rights and
the valuation charge related to the Founders' Stock. The difference between
Broadcast Cash Flow and EBITDA is that EBITDA includes corporate expenses.
Although Broadcast Cash Flow and EBITDA are not measures of performance
calculated in accordance with generally accepted accounting principles
("GAAP"), the Company believes that Broadcast Cash Flow and EBITDA are
accepted by the broadcasting industry as generally recognized measures of
performance and are used by analysts who report publicly on the performance of
broadcasting companies. In addition, EBITDA is the basis for determining
compliance with several covenants in certain of the Company's debt
instruments. Nevertheless, these measures should not be considered in
isolation or as a substitute for operating income, net income, net cash
provided by operating activities or any other measure for determining the
Company's operating performance or liquidity which is calculated in accordance
with GAAP.
"Charlotte Acquisition" refers to the Company's recent
acquisition of WTDR-FM and WLYT-FM, both operating in Charlotte, North
Carolina.
"Completed Acquisitions" refers to the Company's recent
consummation of the Liberty Acquisition, the Prism Acquisition, the HMW
Acquisition and the Greenville Acquisition.
"Dallas Acquisition" refers to the Company's recent acquisition
of KTCK-AM, operating in Dallas, Texas.
"Dallas Disposition" refers to the sale of radio station KTCK-AM,
operating in Dallas, Texas.
"Dispositions" refers collectively to the Washington Dispositions
and the Pending Dispositions.
"EBITDA" refers to the definition set forth under Broadcast
Cash Flow.
"Financing" refers collectively to the Note Offering and the
Preferred Stock Offering.
"Greenville Acquisition" refers to the acquisition on June 25,
1996 of substantially all of the assets used in the operation of radio station
WROQ-FM, operating in the Greenville-Spartanburg, South Carolina market.
"Houston Exchange" refers to the exchange of the Company's radio
station KRLD-AM, operating in Dallas, Texas, and the Company's Texas State
Networks for radio station KKRW-FM, operating in Houston, Texas.
"HMW Acquisition" refers to the acquisition on June 28, 1996 of
substantially all of the assets used in the operation of radio stations
WMFR-AM, WMAG-FM and WTCK-AM, each operating in the Greensboro, North Carolina
market, WTRG- FM and WRDU-FM, both operating in the Raleigh, North Carolina
market.
"Jacksonville Exchange" refers to the exchange of the Company's
four radio stations operating in the Nassau/Suffolk market for two radio
stations operating in the Jacksonville, Florida market, and a payment to the
Company in the amount of $11.0 million.
10
<PAGE>
"Liberty Acquisition" refers to the acquisition on July 1, 1996 of
Liberty Broadcasting, Incorporated, which owns and operates, provides
programming to or sells advertising on behalf of 14 FM and six AM radio
stations located in six markets: Washington, DC/Baltimore, Maryland;
Nassau-Suffolk, New York; Providence, Rhode Island; Hartford, Connecticut;
Albany, New York and Richmond, Virginia.
"Louisville Acquisition" refers to the agreement to purchase from Prism
Radio Partners L.P. substantially all of the assets used in the operation of
three radio stations, operating in the Louisville, Kentucky market.
"Louisville Dispositions" refers collectively to the sale of three of the
stations to be acquired from Prism Radio Partners L.P., each operating in the
Louisville, Kentucky market.
"MMR Dispositions" refers collectively to the sale by Multi-Market Radio,
Inc. of KOLL-FM, operating in Little Rock, Arkansas, and WRXR-FM and WKBG-FM,
both operating in Augusta, Georgia.
"MMR Hartford Acquisition" refers to the acquisition by Multi-Market
Radio, Inc. of WKSS-FM, operating in Hartford, Connecticut."
"MMR Merger" refers to the acquisition by merger of Multi-Market Radio,
Inc. after giving effect to the MMR Hartford Acquisition, the MMR Myrtle Beach
Acquisition and the MMR Dispositions.
"MMR Myrtle Beach Acquisition" refers to the acquisition by Multi-Market
Radio, Inc. of WMYB-FM, Myrtle Beach, South Carolina.
"Pending Acquisitions" refers collectively to the Louisville
Acquisition, MMR Merger, the Additional Acquisitions, the Houston Exchange and
the Jacksonville Exchange.
"Pending Dispositions" refers to the Louisville Dispositions and the
Dallas Disposition.
"Prism Acquisition" refers to the acquisition on July 9, 1996 of
substantially all of the assets of Prism Radio Partners L.P. used in the
operation of eight FM and five AM radio stations located in four markets:
Jacksonville, Florida; Raleigh, North Carolina; Tucson, Arizona and Wichita,
Kansas.
"Recent Acquisitions" refers to the Charlotte Acquisition, the
Dallas Acquisition and the San Diego Acquisition.
"Recent Legislation" refers to the recently enacted Telecommunications
Act of 1996.
"San Diego Acquisition" refers to the Company's recent
acquisition of KYXY-FM, operating in San Diego, California.
"Tender Offer" refers to the purchase for cash by the Company on
May 31, 1996, of $79,406,000 of the Old Notes.
"Transactions" refers collectively to the Acquisitions, the
Dispositions, the Tender Offer, the Financing and the implementation of each
of the Amended Hicks Agreement, the Armstrong Agreement and the SCMC
Termination Agreement.
"Washington Dispositions" refers to the sale of three of the
stations on July 3, 1996 which were acquired in the Liberty Acquisition and
which are each operating in the Washington, DC/Baltimore, Maryland market.
11
<PAGE>
RISK FACTORS
Holders of Series A Notes should consider carefully all the
information contained in this Prospectus (including the financial statements
and notes thereto), before tendering their Series A Notes in the Exchange
Offer. Prospective investors should consider the lack of a public market for
the Notes and the high leverage of the Company. Many of the statements in this
Prospectus are forward-looking in nature and, accordingly, whether they prove
to be accurate is subject to many risks and uncertainties. The actual results
that the Company achieves may differ materially from any forward-looking
statements in this Prospectus. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and those
contained elsewhere in this Prospectus and in the documents incorporated
herein by reference.
Consequences of Failure to Exchange Series A Notes
The Series B Notes will be issued in exchange for Series A Notes only
after timely receipt by the Exchange Agent of such Series A Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Series A Notes desiring to tender such Series
A Notes in exchange for Series B Notes should allow sufficient time to ensure
timely delivery. Neither the Exchange Agent nor the Company is under any duty
to give notification of defects or irregularities with respect to tenders of
Series A Notes for exchange. Holders of Series A Notes who do not exchange
their Series A Notes for Series B Notes pursuant to the Exchange Offer will
continue to be subject to the restrictions on transfer of such Series A Notes
as set forth in the legend thereon as a consequence of the issuance of the
Series A Notes pursuant to exemption from, or in transactions not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. In general, the Series A Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. In addition, any holder of Series A Notes who tenders
in the Exchange Offer for the purpose of participating in a distribution of
the Series B Notes will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Series B Notes for its
own account in exchange for Series A Notes, where such Series A Notes were
acquired by such broker-dealer as a result of market-making activities or any
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such Series B Notes. See "Plan of
Distribution," "Description of Notes--Registration Rights; Liquidated Damages"
and "The Exchange Offer-- Consequence of Failure to Exchange."
Absence of Public Market
The Series B Notes are being offered to the holders of the Series A
Notes. The Series A Notes were resold in May 1996 to qualified institutional
buyers as defined in Rule 144A of the Securities Act and institutional
accredited investors within the meaning of Rule 501 (a) (1), (2), (3) or (7)
of the Securities Act and are trading in the Private Offering, Resale and
Trading through Automated Linkages (PORTAL) Market, the National Association
of Securities Dealers' screen based, automated market for trading of
securities eligible for resale under Rule 144A. The Series B Notes are new
securities for which there currently is no market. Although the Initial
Purchasers have advised the Company that they currently intend to make a
market in the Series B Notes, they are not obligated to do so and may
discontinue such market making at any time without notice. The Company does
not currently intend to list the Notes on a national securities exchange or to
seek the admission thereof to trading in the National Association of
Securities Dealers Automated Quotation System. Accordingly, no assurance can
be given that an active market will develop for any of the Notes or as to the
liquidity of the trading market for any of the Notes. If a trading market does
not develop or is not maintained, holders of the Notes may experience
difficulty in reselling such Notes or may be unable to sell them at all. If a
market for the Notes develops, any such market may be discontinued at any
time. If a trading market develops for the Notes, future trading prices of
such Notes will depend on many factors, including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the Notes may trade at a discount from their principal amount.
12
<PAGE>
Risks Related to the Pending Acquisitions and the Pending Dispositions
Consummation of each of the Pending Acquisitions and the Pending
Dispositions is subject to a number of closing conditions, certain of which
are beyond the Company's control. In particular, consummation of each of the
Pending Acquisitions and the Pending Dispositions is dependent upon the prior
approval by the FCC of the assignments or transfers of control of operating
licenses issued by the FCC and the continued operating performance of the
stations to be acquired or disposed such that there is no material adverse
change in such stations that would prevent consummation of any such
transactions. Furthermore, as a result of the Recent Legislation, certain of
the Pending Acquisitions and the Pending Dispositions may be subject to
antitrust review by the Federal Trade Commission and the U.S. Department of
Justice, Antitrust Division (the "Antitrust Agencies"), even if approved by
the FCC, and there can be no assurance that the Antitrust Agencies will
approve such Pending Acquisitions and Pending Dispositions. In addition, the
consummation of the MMR Merger is also dependent upon the transaction being
approved by the stockholders of each of the Company and MMR and also requires
the approval of the holders of certain indebtedness of MMR and the approval of
the Antitrust Agencies. The failure to satisfy such conditions would permit
the parties thereto to refuse to consummate the respective Pending
Acquisitions and Pending Dispositions. Copies of the agreements have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part.
In a Complaint dated April 18, 1996, Paul Pops, who purports to be a
stockholder of MMR, brought suit in the Supreme Court of the State of New
York, County of New York (Index No. 96602056), against MMR, each of the
directors of MMR, the Company and Robert F.X. Sillerman, seeking, among other
things, to enjoin the MMR Merger and monetary damages. The suit alleges that
the consideration to be paid to the MMR stockholders in the MMR Merger is
unfair and grossly inadequate. The suit alleges that in connection with
entering into the MMR Merger Agreement the directors of MMR violated their
fiduciary duties to MMR and its stockholders, and that the Company and Mr.
Sillerman aided and abetted such violation. In his Complaint, the plaintiff
alleges that he is seeking to have his action certified as a class action
representing the interests of the stockholders of MMR. MMR and the Company
believe the suit to be without merit and intend to vigorously defend the
action, which is still in its pleading stage.
As a result of the foregoing, there can be no assurance as to when
the Pending Acquisitions or the Pending Dispositions will be consummated or
that they will be consummated on the terms described herein or at all.
Furthermore, the Company cannot predict whether the consummation of the
Pending Acquisitions or the Pending Dispositions will conform to the
assumptions used in the preparation of the Unaudited Pro Forma Condensed
Combined Financial Statements incorporated herein by reference. In analyzing
the Unaudited Pro Forma Condensed Combined Financial Statements and
information contained herein, prospective investors should consider that the
Pending Acquisitions or the Pending Dispositions may not be consummated at all
or on the terms described herein, and that the Pending Acquisitions or the
Pending Dispositions, if consummated, may be subject to substantial delay. In
the event the Pending Dispositions are not completed in a timely manner, the
Company may be required to seek additional financing. There can be no
assurance that such financing will be available to the Company on commercially
acceptable terms, if at all. In the event that the Pending Acquisitions are
not consummated due to a material breach by the Company, the Company may lose
deposits in the aggregate amount of approximately $3.5 million. In addition,
the Company will be required to pay MMR $1.0 million in the event that the
majority of the combined voting power of the Company votes with respect to,
but does not vote in favor of, the MMR Merger.
Risks Associated with Integration of the Stations to be Acquired
The Company's plans with respect to the radio stations acquired or to
be acquired in the Acquisitions involve, to a substantial degree, strategies
to increase net revenue while at the same time reducing operating expenses, as
well as the implementation of a new regional management structure and a
modified senior management team. Although the Company believes that its
strategies are reasonable, there can be no assurance that it will be able to
implement its plans without delay or that, when implemented, its efforts will
result in the increased Broadcast Cash Flow or other benefits currently
anticipated by the Company. In addition, there can be no assurance that the
Company will not encounter unanticipated problems or liabilities in connection
with the implementation of the new management changes or the operation of the
radio stations acquired or to be acquired in the Acquisitions. The integration
of such stations into the Company will require substantial attention from
members of the Company's senior management, which will limit the amount of
time such members have available to devote to the Company's existing
operations.
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Substantial Leverage; Inability to Service Obligations
The Company has incurred and will incur a significant amount of
indebtedness. As of March 31, 1996, the Company's indebtedness would have been
approximately $450.6 million on a pro forma basis after giving effect to the
Transactions. In addition, subject to the restrictions in the New Credit
Agreement, the Old Indenture, the Indenture, and the Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions thereof setting forth the term of the Company's Series D
Preferred Stock (the "Certificate of Designations") the Company may incur
additional indebtedness from time to time to finance acquisitions, for capital
expenditures or for other purposes. See "--Expansion Strategy; Need for
Additional Funds." For the year ended December 31, 1995 and the three months
ended March 31, 1996, on a pro forma basis after giving effect to the Recent
Acquisitions and the Transactions (other than the MMR Merger), as if all such
transactions had occurred on January 1, 1995, the Company's earnings would
have been insufficient to cover its fixed charges by $24.3 million and $7.7
million, respectively, and would have been insufficient to cover its combined
fixed charges and preferred stock dividends by $34.3 million and $10.3
million, respectively. In addition, for the year ended December 31, 1995 and
the three months ended March 31, 1996, on a pro forma basis after giving
effect to the Recent Acquisitions and the Transactions, as if all such
transactions had occurred on January 1, 1995, the Company's earnings would
have been insufficient to cover its fixed charges by $19.0 million and $6.6
million, respectively, and would have been insufficient to cover its combined
fixed charges and preferred stock dividends by $29.0 million and $9.2 million,
respectively.
The degree to which the Company is leveraged could have material
consequences to the Company and the holders of the Company's securities,
including, but not limited to, the following: (i) the Company's ability to
obtain additional financing in the future for acquisitions, working capital,
capital expenditures, general corporate or other purposes may be impaired,
(ii) a substantial portion of the Company's cash flow from operations will be
dedicated to the payment of the principal and interest on its debt and
dividends on the Series D Preferred Stock and will not be available for other
purposes, (iii) certain of the Company's borrowings may be at variable rates
of interest, which could result in higher interest expense in the event of
increases in interest rates and (iv) the agreements governing the Company's
long-term debt will contain restrictive financial and operating covenants, and
the failure by the Company to comply with such covenants could result in an
event of default under the applicable instruments, which could permit
acceleration of the debt under such instrument and in some cases acceleration
of debt under other instruments that contain cross-default or
cross-acceleration provisions. Certain of the Company's competitors operate on
a less leveraged basis, and have significantly greater operating and financial
flexibility, than the Company. See "Description of Notes."
The Company's ability to make scheduled payments of principal of, or
to pay interest on or to refinance, its debt (including the Old Notes and the
Notes), to make dividend payments on or Conversion Payments (as defined
herein) with respect to the Series D Preferred Stock and to redeem the Series
B Preferred Stock depends on its future financial performance, which, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors beyond its control, as well as the
success of the radio stations acquired or to be acquired and the integration
of such stations into the Company's operations. Based upon the Company's
current level of operations and anticipated improvements, management believes
that cash flow from operations, together with the net proceeds of the
Financing, the Pending Dispositions, the MMR Dispositions, the exercise of the
MMR Class A Warrants and available borrowings under the New Credit Agreement,
will be adequate to meet the Company's anticipated future requirements for
working capital, capital expenditures and scheduled payments of interest on
its debt and to make dividend payments on the Series D Preferred Stock and to
redeem the Series B Preferred Stock. There can be no assurance that the
Pending Dispositions and the exercise of the MMR Class A Warrants will occur
or that the Company's business will generate sufficient cash flow from
operations, that anticipated improvements in operating results will be
achieved or that future working capital borrowings will be available in an
amount sufficient to enable the Company to service its debt, to make dividend
payments on or Conversion Payments with respect to the Series D Preferred
Stock, to redeem the Series B Preferred Stock or to make necessary capital or
other expenditures. The Company may be required to refinance the Old Notes and
the Notes or the aggregate liquidation preference of the Series D Preferred
Stock prior to their respective maturities. There can be no assurance that the
Company will be able to raise additional capital through the sale of
securities, the disposition of radio stations or otherwise for any such
refinancing.
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Subordination of the Notes; Subsidiary Guarantees
The Notes and the Subsidiary Guarantees are subordinated in right of
payment to all Senior Debt of the Company and Guarantor Senior Debt of the
Subsidiary Guarantors, respectively. In the event of bankruptcy, liquidation
or reorganization of the Company or the Subsidiary Guarantors, the assets of
the Company or the Subsidiary Guarantors will be available to pay obligations
on the Notes only after all Senior Debt or Guarantor Senior Debt, as the case
may be, has been paid in full and there may not be sufficient assets remaining
to pay amounts due on any or all of the Notes then outstanding. In addition,
indebtedness outstanding under the New Credit Agreement is expected to be
secured by substantially all of the assets of the Company and its subsidiaries
in which a security interest may lawfully be granted. As of March 31, 1996, on
a pro forma basis after giving effect to the Transactions, the Company would
have had no Senior Debt and the Subsidiary Guarantors would have no Guarantor
Senior Debt. Senior Debt and Guarantor Senior Debt may be incurred by the
Company and the Subsidiary Guarantors from time to time subject to certain
restrictions contained in the New Credit Agreement and the Indenture. See
"Description of Notes."
Holding Company Structure; Dependence Upon Operations of Subsidiaries
Substantially all of the assets of the Company are held by the
Company's subsidiaries, and all of the Company's operating revenues are
derived from operations of such subsidiaries. In addition, future acquisitions
may be made through present or future subsidiaries of the Company. Therefore,
the Company's ability to pay interest and principal when due to holders of the
Notes is dependent upon the earnings of its subsidiaries and the distribution
of sufficient funds from its direct and indirect subsidiaries. The Company's
subsidiaries will have no obligation, contingent or otherwise, to make any
funds available to the Company for payment of principal of or interest on the
Notes. Under the Indenture and the New Credit Agreement, the Company's
subsidiaries will be restricted in their ability to incur debt in the future.
See "Description of Notes--Certain Covenants."
Historical Losses
Although the Company had net income of $1.8 million for the year
ended December 31, 1994, the Company had net losses of $985,000, $4.4 million
(including a charge of $5.0 million relating to the write-down of the Texas
Rangers broadcast rights) and $17.8 million (including a non-recurring charge
of approximately $14.0 million, substantially all of which was non-cash) for
the three months ended March 31, 1996 and the years ended December 31, 1995
and 1993, respectively. On a pro forma basis, after giving effect to the
Recent Acquisitions and the Transactions, as if such transactions had occurred
on January 1, 1995, for the year ended December 31, 1995 and the three months
ended March 31, 1996, the Company would have had a net loss of approximately
$19.0 million and $6.6 million, respectively. In connection with the SCMC
Termination Agreement, the Company has agreed to the cancellation of $2.0
million of indebtedness plus accrued interest thereon owing from SCMC to the
Company and has issued warrants to SCMC to purchase up to 600,000 shares of
Class A Common Stock at an exercise price of $33 3/4 per share. In connection
with such agreement, the Company will recognize a non-cash charge to earnings
of approximately $4.5 million during the three-month period ended June 30,
1996 and $1.1 million upon completion of the MMR Merger. Approximately $23.5
million of the net proceeds of the Financing has been allocated to make
certain payments to R. Steven Hicks, the former President and Chief Executive
Officer of the Company, and D. Geoffrey Armstrong, the current Executive Vice
President, Chief Operating Officer and Chief Financial Officer of the Company,
and in connection therewith, the Company will recognize a non-recurring charge
to earnings of approximately $19.4 million during the three-month period ended
June 30, 1996. In addition, the Company will recognize an extraordinary loss
of approximately $14.7 million relating to the write-off of deferred financing
costs of the Old Credit Agreement and the costs of the Tender Offer during the
three month period ended June 30, 1996. Depreciation and amortization relating
to past acquisitions and future acquisitions, interest expenses under the
Company's debt and dividend payments on the Series D Preferred Stock will
continue to affect the Company's net income (loss) in the future.
Change of Control
The Indenture and the Old Indenture provide that, upon the occurrence
of a Change of Control, the holders of the Notes and the Old Notes will have
the right to require the Company to repurchase their notes at a price equal to
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101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of repurchase. In
addition, a Change of Control may constitute a default under the New Credit
Agreement. Unless waived or cured, any such default could create a default
under the Notes, the Old Notes and the Series D Preferred Stock. If a Change
of Control were to occur, due to the highly leveraged nature of the Company,
the Company may not have the financial resources to repay all of its
obligations under any indebtedness that would become payable upon the
occurrence of such Change of Control. The Company's failure to make a required
repurchase in the event of a Change of Control would create an Event of
Default under the Notes and the Old Notes. In addition, the Communications Act
of 1934, as amended, and FCC rules require the prior consent of the FCC to any
change of control of the Company. See "--Substantial Leverage; Inability to
Service Obligations" and "Description of Notes--Repurchase at the Option of
Holders--Change of Control."
Expansion Strategy; Need for Additional Funds
The Company's principal growth strategy is to operate and acquire
highly-ranked radio stations with attractive audience demographics in major
and medium-sized markets located throughout the United States. The Company
regularly explores acquisition opportunities; however, with the exception of
the Pending Acquisitions, the Company has no agreements or understandings
regarding such possible future acquisitions. There can be no assurance that
the Company will consummate the Pending Acquisitions or be able to identify
stations to acquire in the future. Each acquisition will be subject to the
prior approval of the FCC and of the lenders under debt instruments to which
the Company is a party. Furthermore, as a result of the Recent Legislation,
future acquisitions may be subject to antitrust review by the Antitrust
Agencies, even if approved by the FCC. In addition, the Company may require
additional debt or equity financing to finance properties it may seek to
acquire in the future. The availability of additional acquisition financing
cannot be assured, and depending on the terms of proposed acquisitions and
financings, could be restricted by the terms of debt instruments to which the
Company is a party. There can be no assurance that any future acquisitions
will be successfully integrated into the Company's operations or that such
acquisitions will not have a material adverse effect on the Company's
financial condition and results of operations. See "-- Risks Associated with
Integration of the Stations to be Acquired" and "--Regulatory Matters."
Control by Management
Robert F.X. Sillerman holds approximately 52.5% of the combined
voting power of the Company. Mr. Sillerman and his affiliates, together with
other members of the Company's management, hold approximately 61.6% of the
combined voting power of the Company. Mr. Sillerman and his affiliates will
hold approximately 55.3% and Mr. Sillerman and his affiliates, together with
the Company's management, will hold approximately 57.5% of the combined voting
power of the Company following completion of the MMR Merger. The Class A
Common Stock, par value $.01 per share ("Class A Common Stock"), has one vote
per share on all matters, whereas the Class B Common Stock, par value $.01 per
share ("Class B Common Stock"), has ten votes per share except in certain
matters. Accordingly, management currently is, and following the MMR Merger
will be, able to control the vote on all matters except (i) in the election of
directors, with respect to which the holders of the Class A Common Stock will
be entitled to elect two of the Company's seven Directors (and three of the
Company's nine Directors following completion of the MMR Merger) by a class
vote, (ii) in connection with any proposed "going private" transaction between
the Company and Mr. Sillerman or his affiliates, with respect to which the
holders of the Class A Common Stock and Class B Common Stock vote as a single
class, with each share of Class A Common Stock and Class B Common Stock
entitled to one vote per share and (iii) as otherwise provided by law. In
addition, in the event dividends on the Series D Preferred Stock are in
arrears and unpaid in an aggregate amount equal to six full quarterly
dividends and in certain other circumstances, the holders of the Series D
Preferred Stock (voting separately as a class) will be entitled to elect two
additional members of the Board of Directors of the Company.
Potential Conflicts of Interest; Transactions with Affiliates
Mr. Sillerman and other members of the Company's management have
direct and indirect investments and interests in entities that own and operate
radio stations, including radio stations that are in certain of the same
markets as the Company's existing or proposed radio stations. These
investments and interests (and any similar investments and interests in the
future) may give rise to certain conflicts of interest as well as to potential
attribution under FCC rules
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or invocation of the FCC's cross-interest policy, which could restrict the
Company's ability to acquire radio stations in certain markets. See "--
Regulatory Matters."
SCMC, Mr. Sillerman and Howard J. Tytel, a Director and Executive
Vice President of the Company, have interests in entities that own and operate
radio stations other than the Company. Messrs. Sillerman and Tytel and their
affiliates hold a substantial equity interest in, and are parties to
consulting and marketing agreements with, each of MMR and Triathlon. Pursuant
to the consulting and marketing agreements, SCMC is obligated to offer to such
companies any radio broadcasting opportunities that come to their attention in
medium and small markets (defined in such agreements as those markets ranked
71st and smaller out of the radio markets summarized by Duncan's Radio Market
Guide (1995 ed.)). The Company does not intend to pursue acquisitions in the
medium-sized markets in the eastern United States that MMR primarily focuses
on until the consummation of the MMR Merger or in the small and medium-sized
markets in the Midwest and Western regions of the United States that Triathlon
primarily focuses on, except that the Company acquired in the Prism
Acquisition three radio stations in the Wichita, Kansas market, a market in
which Triathlon has radio station ownership interests.
SCMC has acted from time to time as the Company's financial advisor
since the Company's inception. SCMC is controlled by Mr. Sillerman, and
Messrs. Sillerman and Tytel are officers and directors of SCMC. SCMC acts in
similar capacities for each of MMR and Triathlon. These companies may seek to
participate in business opportunities which may be suitable for the Company.
In addition, SCMC provided advisory services to MMR and the Company in
connection with the MMR Merger. The MMR Merger was approved by independent
committees of the Board of Directors of each of MMR and the Company and both
the Company and MMR received opinions from nationally-recognized investment
banking firms that the MMR Merger was fair to their respective stockholders
from a financial point of view.
On April 15, 1996, the Company and SCMC entered into the SCMC
Termination Agreement pursuant to which SCMC assigned to the Company its
rights to receive fees for consulting and marketing services payable by each
of MMR and Triathlon in consideration of which SCMC received warrants to
purchase 600,000 shares of Class A Common Stock and the Company will forgive,
upon the consummation of the MMR Merger, a $2.0 million loan made to SCMC plus
accrued and unpaid interest thereon. In addition, pursuant to such agreement,
the Company and SCMC terminated the arrangement whereby SCMC performed
financial consulting services for the Company. Subsequent to the termination
of its current relationship with SCMC, the Company intends to perform
internally the functions performed by SCMC.
On June 19, 1996, the Company and Mr. Hicks entered into an agreement
pursuant to which Mr. Hicks resigned as an officer and Director of the Company
effective on that date and agreed not to compete with the Company for the
period of approximately one year with the Company or MMR in certain of the
markets in which the Company or MMR currently owns, operates, provides
programming to or sells advertising on behalf of radio stations and any eight
additional markets in which the Company or MMR has entered into agreements to
purchase one or more radio stations on or before the consummation of the MMR
Merger.
Reliance on Key Personnel
Following consummation of the Pending Acquisitions, the Company's
business will be dependent to a significant extent upon the performance of
certain key individuals, including Messrs. Sillerman, Ferrel and Armstrong.
Mr. Ferrel, Chief Executive Officer, President and Chief Operating Officer of
MMR, has agreed to become the Chief Executive Officer of the Company upon
consummation of the MMR Merger. The Company has entered into a five-year
employment agreement with each of Messrs. Sillerman and Armstrong, effective
as of April 1, 1995. In addition, the Company expects to enter into an
employment agreement with Mr. Ferrel, to be effective upon the consummation of
the MMR Merger. There can be no assurance that the services of Messrs.
Sillerman, Ferrel or Armstrong will continue to be provided for the term of
such agreements. Messrs. Sillerman's and Armstrong's employment agreements
require, and Mr. Ferrel's employment agreement will require, that they devote
substantially all of their business time to the business and affairs of the
Company, except that Mr. Sillerman's agreement permits him to fulfill his
obligations as a director and officer of companies in which he currently
serves in such capacities and to devote a portion of his business time to
personal, non-broadcast investments or commitments or to certain broadcast
investments. It is anticipated that
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in the event that the MMR Merger is not consummated, the services of Mr.
Ferrel will not be available to the Company and Mr. Sillerman will continue to
serve as the Chief Executive Officer of the Company.
The loss of the services of Messrs. Sillerman or Armstrong, or of Mr.
Ferrel (following the consummation of the MMR Merger), could have a material
adverse effect on the Company. The Company has obtained key-man insurance for
its benefit on the life of Mr. Sillerman, and intends to obtain such insurance
for Messrs. Ferrel and Armstrong effective upon the consummation of the MMR
Merger, in the amount of $5.0 million for each individual. In addition, the
Company has entered into employment agreements with several high-profile
on-air personalities. However, there can be no assurance that the Company will
be able to retain any of such employees or prevent them from competing with
the Company in the event of their departure.
Dependence on Economic Factors
Because the Company derives substantially all of its revenue from the
sale of advertising time, its revenues may be adversely affected by economic
conditions which impact advertisers. In particular, because approximately 75%
of the Company's revenue has generally been derived from local advertisers,
operating results in individual geographic markets will be adversely affected
by local or regional economic downturns. Such economic downturns might have an
adverse impact on the Company's financial condition and results of operations.
In addition, revenues of radio stations may be affected by many other factors
including: (i) the popularity of programming, including programming such as
sports programming where the Company makes long-term commitments; (ii)
regulatory restrictions on types of programming or advertising (such as beer
and wine advertising); (iii) competition within national, regional or local
markets from programming on other stations or from other media; (iv) loss of
market share to other technologies and (v) challenges to license renewals.
Regulatory Matters
The radio broadcasting industry is subject to extensive regulation by
the FCC. In particular, the Company's business is dependent upon its
continuing to hold, and, in connection with acquisitions of radio stations,
upon obtaining prior FCC consent to assignments or transfers of control of,
broadcasting station operating licenses issued by the FCC. Radio broadcasting
licenses may be granted for maximum terms of seven years, although the FCC has
proposed in a recent rulemaking raising the maximum term to eight years, as
permitted by the Recent Legislation. There can be no assurance that the
Company's licenses will be renewed or that the FCC will continue to approve
additional acquisitions or the Pending Dispositions, especially if third
parties challenge the Company's renewal, acquisition or disposition
applications. Third parties have challenged certain FCC applications of the
Company or the radio stations involved in the Acquisitions. Failure to obtain
the renewal of any of the Company's principal broadcast licenses or to obtain
FCC approval for an assignment or transfer of control to the Company of a
license in connection with a station acquisition could have a material adverse
effect on the Company's business and operations. In addition, the number and
locations of radio stations the Company may acquire is limited by FCC rules
and will vary depending upon whether the interests in other radio stations or
certain other media properties of certain individuals affiliated with the
Company are attributable to those individuals. Moreover, under the FCC's
cross-interest policy, the FCC in certain instances may prohibit one party
from acquiring an attributable interest in one media outlet and a substantial
non-attributable economic interest in another media outlet in the same market,
thereby prohibiting a particular acquisition by the Company. Also, the
activities of persons who are deemed by the FCC to control the Company could
adversely affect the Company's ability to obtain license renewals and to
acquire radio stations.
The issuance of shares of Class A Common Stock, including those
issuable upon conversion of shares of Series D Preferred Stock that would
cause Robert F.X. Sillerman not to hold directly voting stock of the Company
representing more than 50% of the total voting power of the Company would
require the Company to seek the prior consent of the FCC. The Company intends
to seek such consent at such time as it may be required. The Certificate of
Designations setting forth the terms of the Series D Preferred Stock provides
that the Company will use its best efforts to secure all necessary consents
and approvals, if any, and take all other commercially reasonable steps to
permit conversion of the Series D Preferred Stock. Presently, due to the
single majority stockholder exemption, stockholders holding 5% or more of the
total voting power of the Company do not have an attributable interest in the
Company because Mr. Sillerman owns more than 50% of the voting power of the
Company. In the event that Mr. Sillerman's voting power in the
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Company dropped to 50% or less, all stockholders holding 5% or more of the
total voting power of the Company would have an attributable interest in the
Company for purposes of the FCC's local ownership rules, which could adversely
affect the Company's ability to acquire or to hold interests in radio stations
in particular markets, depending upon the other media interests of those
stockholders. The FCC has outstanding a notice of proposed rule making that,
among other things, seeks comment on whether the FCC should modify its
attribution rules by (i) restricting the availability of the single majority
stockholder exemption and (ii) attributing under certain circumstances certain
interests such as non-voting stock or debt. The Company cannot predict the
outcome of this proceeding or how it will affect the Company's business.
As a result of the Recent Legislation, radio station acquisitions are
subject to antitrust review by the Antitrust Agencies, even if approved by the
FCC. The Antitrust Agencies have not articulated the standards that may be
applied in an antitrust review in the radio broadcasting industry. There can
be no assurance that the Antitrust Agencies will approve the Pending
Acquisitions and Pending Dispositions or that such antitrust review will not
otherwise impact the Company's business or its strategy.
There can be no assurance that there will not be changes in the
current regulatory requirements, the imposition of additional regulations or
the creation of new regulatory agencies, which changes would restrict or
curtail the ability of the Company to acquire, operate and dispose of stations
or, in general, to compete profitably with other operators of radio and other
media properties. Moreover, there can be no assurance that there will not be
other regulatory changes, including aspects of deregulation, that will result
in a decline in the value of broadcasting licenses held by the Company or
adversely affect the Company's competitive position.
Competition
The radio broadcasting industry is highly competitive. The financial
results of each of the Company's stations are dependent to a significant
degree upon its audience ratings and its share of the overall advertising
revenue within the station's geographic market. Each of the Company's stations
competes for audience share and advertising revenue directly with other FM and
AM radio stations, as well as with other media, within their respective
markets. The Company's audience ratings and market share are subject to change
and any adverse change in audience share and advertising ratings in any
particular market could have a material and adverse effect on the Company's
net revenues. The Recent Legislation will permit other radio broadcasting
companies to enter the markets in which the Company operates or may operate in
the future, some of which may be larger and have more financial resources than
the Company. The Company's stations also compete with other advertising media
such as newspapers, television, magazines, billboard advertising, transit
advertising and direct mail advertising. Radio broadcasting is also subject to
competition from new media technologies that are being developed or
introduced, such as the delivery of audio programming by cable television
systems or the introduction of digital audio broadcasting. Competition within
the radio broadcasting industry occurs primarily in individual markets, so
that a station in one market does not generally compete directly with stations
in other markets. Although the Company believes that each of its stations is
able to compete effectively in its market, there can be no assurance that any
of the Company's stations will be able to maintain or increase current
audience ratings and advertising revenue market share.
Fraudulent Transfer Statutes
The incurrence by the Company and the Subsidiary Guarantors of
indebtedness such as the Notes and the Subsidiary Guarantees to finance the
Acquisitions may be subject to review under relevant state and federal
fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by or
on behalf of unpaid creditors of the Company or the Subsidiary Guarantors.
Under these laws, if a court were to find that, after giving effect to the
sale of the Notes and the application of the net proceeds therefrom, either
(a) the Company or the Subsidiary Guarantors incurred such indebtedness with
the intent of hindering, delaying or defrauding creditors or (b) the Company
or the Subsidiary Guarantors received less than reasonably equivalent value or
consideration for incurring such indebtedness and (i) was insolvent or was
rendered insolvent by reason of such transactions, (ii) was engaged in a
business or transaction for which the property remaining with the Company or
the Subsidiary Guarantors constituted unreasonably small capital or (iii)
intended to incur, or believed that it would incur, debts beyond its ability
to pay such debts as they matured, such court may subordinate such
indebtedness to presently existing and future indebtedness of the Company or
the Subsidiary
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Guarantors, as the case may be, avoid the issuance of such indebtedness and
direct the repayment of any amounts paid thereunder to the Company's or the
Subsidiary Guarantors', as the case may be, creditors or take other action
detrimental to the holders of the Notes.
The definition of insolvency for purposes of determining whether a
transfer is avoidable as a fraudulent transfer may vary depending upon the law
of the jurisdiction which is being applied. Generally, however, a debtor would
be considered insolvent if the sum of all its liabilities, including
contingent liabilities, were greater than the value of all its property at a
fair valuation, or if the present fair saleable value of the debtor's assets
were less than the amount required to repay its probable liabilities on its
debt, including contingent liabilities, as they become absolute and matured.
There can be no assurance as to what standard a court would apply in
order to determine solvency. To the extent that proceeds from the sale of the
Notes are used to finance the Acquisitions, a court may find that the Company
or the Subsidiary Guarantors, as the case may be, did not receive fair
consideration or reasonably equivalent value for the incurrence of the
indebtedness represented thereby. In addition, if a court were to find that
any of the components of the Acquisitions constituted a fraudulent transfer,
to the extent that proceeds from the sale of the Notes are used to finance
such Acquisitions a court may find that the Company or the Subsidiary
Guarantors, as the case may be, did not receive fair consideration or
reasonably equivalent value for the incurrence of the indebtedness represented
by the Notes or the Subsidiary Guarantees, as the case may be. Pursuant to the
terms of the Subsidiary Guarantees, the liability of each Subsidiary Guarantor
is limited to the maximum amount of indebtedness permitted, at the time of the
grant of such Subsidiary Guarantee, to be incurred in compliance with
fraudulent conveyance or similar laws.
Each of the Company and the Subsidiary Guarantors believes that it
received reasonably equivalent value at the time the indebtedness under the
Notes and the Subsidiary Guarantees was incurred. It addition, neither the
Company nor the Subsidiary Guarantors believes that it, after giving effect to
the Financing and the application of the net proceeds therefrom, (i) was or
will be insolvent or rendered insolvent, (ii) was or will be engaged in a
business or transaction for which its remaining property constituted
unreasonably small capital or (iii) intends or intended to incur, or believes
or believed that it will or would incur, debts beyond its ability to pay such
debts as they mature. These beliefs are based on the Company's operating
history and analysis of internal cash flow projections and estimated values of
assets and liabilities of the Company and the Subsidiary Guarantors at the
time of the Note Offering. There can be no assurance, however, that a court
determining the merit of these issues would reach the same conclusion.
20
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the
Series B Notes or the consummation of the Exchange Offer or any sale of Series
B Notes by any broker-dealer.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
The Series A Notes were sold by the Company on May 31, 1996 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently placed the Series A Notes with qualified institutional buyers in
reliance on Rule 144A under the Securities Act and institutional accredited
investors pursuant to Rule 501(a) (1), (2), (3) or (7) under the Securities
Act. As a condition to the sale of the Series A Notes, the Company, the
Subsidiary Guarantors and the Initial Purchasers entered into the Registration
Rights Agreement on May 31, 1996. Pursuant to the Registration Rights
Agreement, the Company agreed that, unless the Exchange Offer is not permitted
by applicable law or Commission policy, it would (i) file with the Commission
a Registration Statement under the Securities Act with respect to the Series B
Notes by July 15, 1996, (ii) use its reasonable best efforts to cause such
Registration Statement to become effective under the Securities Act by
September 28, 1996 and (iii) upon effectiveness of the Registration Statement,
to commence the Exchange Offer and maintain the effectiveness of the
Registration Statement and keep the Exchange Offer open for at least 20
business days but in no event later than 30 business days. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Registration Statement of
which this Prospectus is a part is intended to satisfy certain of the
Company's obligations under the Registration Rights Agreement and the Purchase
Agreement.
Resale of the Series B Notes
With respect to the Series B Notes, based upon an interpretation by
the staff of the Commission set forth in certain no-action letters issued to
third parties, the Company believes that a holder (other than (i) a
broker-dealer who purchases such Series B Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) any such holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who exchanges the
Series A Notes for the Series B Notes in the ordinary course of business and
who is not participating, does not intend to participate, and has no
arrangement with any person to participate, in the distribution of the Series
B Notes, will be allowed to resell the Series B Notes to the public without
further registration under the Securities Act and without delivering to the
purchasers of the Series B Notes a prospectus that satisfies the requirements
of Section 10 of the Securities Act. However, if any holder acquires the
Series B Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the Series B Notes or is a broker-dealer,
such holder cannot rely on the position of the staff of the Commission
enumerated in certain no-action letters issued to third parties and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Each broker-dealer that receives
Series B Notes for its own account in exchange for Series A Notes, where such
Series A 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 Series B
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. 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 Series B Notes received in
exchange for Series A Notes where such Series A Notes were acquired by such
broker-dealer as a result of market-making or other trading activities.
Pursuant to the Registration Rights Agreement, the Company has agreed to make
this Prospectus, as it may be amended or supplemented from time to time,
available to broker-dealers for use in connection with any resale for a period
of 180 days after the Expiration Date. See "Plan of Distribution."
21
<PAGE>
Terms of the Exchange Offer; Period for Tendering Series A Notes
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitutes the Exchange Offer), the Company will accept for exchange any and
all Series A Notes which are properly tendered on or prior to the Expiration
Date and not withdrawn as permitted below. The Company will issue $1,000
principal amount of Series B Notes in exchange for each $1,000 principal
amount of outstanding Series A Notes surrendered pursuant to the Exchange
Offer. Series A Notes may be tendered only in integral multiples of $1,000. As
used herein, the term "Expiration Date" means 5:00 p.m., New York City time,
on August 14, 1996; provided, however, that if the Company, in its sole
discretion, has extended the period of time for which the Exchange Offer is
open, the term "Expiration Date" means the latest time and date to which the
Exchange Offer is extended; provided further that in no event will the
Exchange Offer be extended beyond August 27, 1996.
The form and terms of the Series B Notes are the same as the form and
terms of the Series A Notes except that (i) the exchange will be registered
under the Securities Act and hence the Series B Notes will not bear legends
restricting their transfer and (ii) holders of the Series B Notes will not be
entitled to the certain rights of holders of Series A Notes under the
Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The Series B Notes will evidence the same
debt as the Series A Notes (which they replace) and will be issued under, and
be entitled to the benefits of, the Indenture, which also authorized the
issuance of the Series A Notes, such that both series will be treated as a
single class of debt securities under the Indenture.
As of the date of this Prospectus, an aggregate of $450.0 million of
the Series A Notes is outstanding. This Prospectus, together with the Letter
of Transmittal, is first being sent on or about July 18, 1996, to all Holders
of Series A Notes known to the Company. The Company's obligation to accept
Series A Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth under "--Certain Conditions to the Exchange
Offer" below.
Holders of the Series A Notes do not have any appraisal or
dissenters' rights under the Indenture in connection with the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open,
and thereby delay acceptance for exchange of any Series A Notes, by giving
written notice of such extension to the Holders thereof as described below.
During any such extension, all Series A Notes previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by The Company.
Any Series A Notes not accepted for exchange for any reason will be returned
without expense to the tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Series A Notes not
theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "--Certain Conditions
to the Exchange Offer." The Company will give written notice of any extension,
amendment, nonacceptance or termination to the Holders of the Series A Notes
as promptly as practicable, such notice in the case of any extension to be
issued by means of a press release or other public announcement no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
Procedures for Tendering Series A Notes
The tender to the Company of Series A Notes by a Holder thereof as
set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a Holder who
wishes to tender Series A Notes for exchange pursuant to the Exchange Offer
must transmit a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to the
Exchange Agent at one of the addresses set forth below under "Exchange Agent"
on or prior to
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<PAGE>
the Expiration Date. In addition, either (i) certificates for such Series A
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Series A Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the Holder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF SERIES A NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE
USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR SERIES A NOTES SHOULD
BE SENT TO THE COMPANY.
Any beneficial owner whose Series A Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder of Series A Notes
promptly and instruct such registered holder of Series A Notes to tender on
behalf of the beneficial owner. If such beneficial owner wishes to tender on
its own behalf, such beneficial owner must, prior to completing and executing
the Letter of Transmittal and delivering its Series A Notes, either make
appropriate arrangements to register ownership of the Series A Notes in such
beneficial owner's name or obtain a properly completed bond power from the
registered holder of Series A Notes. The transfer of record ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Series A Notes surrendered for
exchange pursuant thereto is tendered (i) by a registered Holder of the Series
A Notes who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution (as defined herein below). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by a firm
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or by a commercial bank
or trust company having an office or correspondent in the United States
(collectively, "Eligible Institutions"). If Series A Notes are registered in
the name of a person other than a signer of the Letter of Transmittal, the
Series A Notes surrendered for exchange must be endorsed by, or be accompanied
by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered Holder with the signature thereon guaranteed by an
Eligible Institution.
All questions as to the validity, form, eligibility (including time
of receipt) and acceptance of Series A Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and
all tenders of any particular Series A Notes not properly tendered or to not
accept any particular Series A Notes which acceptance might, in the judgment
of the Company or its counsel, be unlawful. The Company also reserves the
absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Series A Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Series A Notes in the Exchange Offer). The interpretation
of the terms and conditions of the Exchange Offer as to any particular Series
A Notes either before or after the Expiration Date (including the Letter of
Transmittal and the instructions thereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Series A Notes for exchange must be cured within
such reasonable period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to
give notification of any defect or irregularity with respect to any tender of
Series A Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other
than the registered Holder or Holders of Series A Notes, such Series A Notes
must be endorsed or accompanied by appropriate powers of attorney, in either
case signed exactly as the name or names of the registered Holder or Holders
that appear on the Series A Notes.
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<PAGE>
If the Letter of Transmittal or any Series A Notes or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
By tendering, each holder will represent to the Company that, among
other things, (i) the Series B Notes to be acquired by the holder of the
Series A Notes in connection with the Exchange Offer are being acquired by the
holder in the ordinary course of business of the holder, (ii) the holder has
no arrangement or understanding with any person to participate in the
distribution of Series B Notes, (iii) the holder acknowledges and agrees that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purposes of distributing the
Series B Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Series B Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in certain no-action
letters, (iv) the holder understands that a secondary resale transaction
described in clause (iii) above and any resales of Series B Notes obtained by
such holder in exchange for Series A Notes acquired by such holder directly
from the Company should be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
Item 508, as applicable, of Regulation S-K of the Commission, and (v) the
holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of
the Company. If the holder is a broker-dealer that will receive Series B Notes
for its own account in exchange for Series A Notes that were acquired as a
result of market-making activities or other trading activities, the holder is
required to acknowledge in the Letter of Transmittal that it will deliver a
prospectus in connection with any resale of such Series B Notes; however, by
so acknowledging and by delivering a prospectus, the holder will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Acceptance of Series A Notes for Exchange; Delivery of Series B Notes
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Series
A Notes properly tendered and will issue the Series B Notes promptly after
acceptance of the Series A Notes. See "--Certain Conditions to the Exchange
Offer" below. For purposes of the Exchange Offer, the Company shall be deemed
to have accepted properly tendered Series A Notes for exchange when, as and if
the Company has given oral or written notice thereof to the Exchange Agent,
with written confirmation of any oral notice to be given promptly thereafter.
The Series B Notes bear interest at a rate equal to 10 3/4% per
annum. Interest on the Series B Notes is payable semi-annually on each May 15
and November 15, commencing on November 15, 1996. Holders of Series B Notes
will receive interest on November 15, 1996 from the date of initial issuance
of the Series B Notes, plus an amount equal to the accrued interest on the
Series A Notes from May 31, 1996 to the date of exchange thereof for Series B
Notes. Holders of Series A Notes that are accepted for exchange will be deemed
to have waived the right to receive any interest accrued on the Series A
Notes.
In all cases, the issuance of Series B Notes for Series A Notes that
is accepted for exchange pursuant to the Exchange Offer will be made only
after timely receipt by the Exchange Agent of certificates for such Series A
Notes or a timely Book-Entry Confirmation of such Series A Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal and all other required
documents. If any tendered Series A Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer, or if Series A Notes
are submitted for a greater amount than the Holder desires to exchange, such
unaccepted or non- exchanged Series A Notes will be returned without expense
to the tendering Holder thereof (or, in the case of Series A Notes tendered by
book-entry procedures described below, such non exchanged Series A Notes will
be credited to an account maintained with such Book-Entry Transfer Facility)
designated by the tendering Holder as promptly as practicable after the
expiration or termination of the Exchange Offer.
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<PAGE>
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with
respect to the Series A Notes at the Book- Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Series
A Notes by causing the Book-Entry Facility to transfer such Series A Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures for transfer.
However, although delivery of Series A Notes may be effected through
book-entry transfer at the Book- Entry Transfer Facility, the Letter of
Transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to and
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
Guaranteed Delivery Procedures
If a registered Holder of the Series A Notes desires to tender such
Series A Notes and the Series A Notes is not immediately available, or time
will not permit such Holder's Series A Notes or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent has received from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and notice of Guaranteed Delivery, substantially in the
form provided by the Company (by telegram, telex, facsimile transmission, mail
or hand delivery), setting forth the name and address of the Holder of the
Series A Notes and the amount of Series A Notes, stating that the tender is
being made thereby and guaranteeing that within five New York Stock Exchange
("NYSE") trading days after the date of execution of the Notice of Guaranteed
Delivery, the certificates for all physically tendered Series A Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Series A Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within five NYSE trading days after the date of execution of the Notice
of Guaranteed Delivery.
Withdrawal Rights
Tenders of Series A Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must
be received by the Exchange Agent at one of the addresses set forth below
under "Exchange Agent." Any such notice of withdrawal must specify the name of
the person having tendered the Series A Notes to be withdrawn, identify the
Series A Notes to be withdrawn (including the amount of such Series A Notes),
and (where certificates for Series A Notes have been transmitted) specify the
name in which such Series A Notes is registered, if different from that of the
withdrawing Holder. If certificates for Series A Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution. If Series A Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Series A Notes and otherwise comply
with the procedures of such facility. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company whose determination shall be final and binding on all parties.
Any Series A Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Series A Notes
which has been tendered for exchange but which is not exchanged for any reason
will be returned to the Holder thereof without cost to such Holder (or, in the
case of Series A Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Series A Notes will be credited to
an account with such Book-Entry Transfer Facility specified by the Holder) as
soon as practicable after withdrawal, rejection of tender or terminations of
the Exchange Offer. Properly withdrawn Series A Notes may
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<PAGE>
be retendered by following one of the procedures described under "--Procedures
for Tendering Series A Notes" above at any time on or prior to the Expiration
Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the
Company shall not be required to accept for exchange, or to issue Series B
Notes in exchange for, any Series A Notes and may terminate or amend the
Exchange Offer, if at any time before the acceptance of such Series A Notes
for exchange or the exchange of the Series B Notes for such Series A Notes,
any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to
restrain or prohibit the making or consummation of the Exchange Offer
or any other transaction contemplated by the Exchange Offer, or
assessing or seeking any damages as a result thereof, or (ii)
resulting in a material delay in the ability of the Company to accept
for exchange or exchange some or all of the Series A Notes pursuant
to the Exchange Offer; or any statute, rule, regulation, order or
injunction shall be sought, proposed, introduced, enacted,
promulgated or deemed applicable to the Exchange Offer or any other
transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have
been taken, proposed or threatened, by any government, governmental
authority, agency or court, domestic or foreign, that in the sole
judgment of the Company might directly or indirectly result in any of
the consequences referred to in clauses (i) or (ii) above or, in the
sole judgment of the Company might result in the holders of Series B
Notes having obligations with respect to resales and transfers to
Series B Notes which are greater than those described in the
interpretation of the Commission referred to on the cover page of
this Prospectus, or would otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or
general limitation on prices for, or trading in, securities on any
national securities exchange or in the over-the-counter market, (ii)
any limitation by any governmental agency or authority which may
adversely affect the ability of the Company to complete the
transactions contemplated by the Exchange Offer, (iii) a declaration
of a banking moratorium or any suspension of payments in respect of
banks in the United States or any limitation by any governmental
agency or authority which adversely affects the extension of credit
or (iv) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United
States, or, in the case of any of the foregoing existing at the time
of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties,
assets, liabilities, financial condition, operations, results of
operations or prospects of the Company and its subsidiaries taken as
a whole that, in the sole judgment of the Company, is or may be
adverse to the Company, or the Company shall have become aware of
facts that, in the sole judgment of the Company have or may have
adverse significance with respect to the value of the Series A Notes
or the Series B Notes;
which, in the sole judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.
To the Company's knowledge as of the date of this Prospectus none of
the foregoing events has occurred.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company
at any time to exercise any of the
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<PAGE>
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
In addition, the Company will not accept for exchange any Series A
Notes tendered, and no Series B Notes will be issued in exchange for any such
Series A Notes, if at such time any stop order shall be threatened or in
effect with respect to the Registration Statement of which this Prospectus
constitutes a part.
Exchange Agent and Information Agent
The Chase Manhattan Bank, the Trustee under the Indenture, has been
appointed as the Exchange Agent for the Exchange Offer. All executed Letters
of Transmittal should be directed to the Exchange Agent at the addresses set
forth below.
<TABLE>
<CAPTION>
Delivery to: The Chase Manhattan Bank
<S> <C> <C>
By Facsimile: By Mail, By Hand and Confirm by Telephone:
Overnight Courier:
(212) 638-7389 The Chase Manhattan Bank Carlos Esteves
(212) 344-9387 Corporate Trust-Securities Window (212) 638-0828
Room 234-North Building Sharon Lewis
55 Water Street (212) 638-0454
New York, NY 10041
</TABLE>
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF
TRANSMITTAL.
Georgeson & Company Inc. has been appointed as Information Agent for
the Exchange Offer. Any questions or requests for assistance or additional
copies of this Prospectus, the Letter of Transmittal and/or the Notice of
Guaranteed Delivery may be directed to the Information Agent at its telephone
number and address set forth below. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning
the Exchange Offer.
Georgeson & Company Inc.
Wall Street Plaza, New York, NY 10005
Toll Free Number: (800) 223-2064
Banks and Brokerage Firms
please call collect:
(212) 440-9800
Fees and Expenses
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
The estimated cash expenses to be incurred in connection with the
Exchange Offer will be paid by the Company and are estimated in the aggregate
to be approximately $75,000.
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Accounting Treatment
For accounting purposes, the Company will recognize no gain or loss
as a result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Series B Notes.
Transfer Taxes
Holders who tender their Series A Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that
Holders who instruct the Company to register Series B Notes in the name of, or
request that Series A Notes not tendered or not accepted in the Exchange Offer
be returned to, a person other than the registered tendering holder will be
responsible for the payment of any applicable transfer tax thereon.
Regulatory Matters
The Company is not aware of any governmental or regulatory approvals
that are required in order to consummate the Exchange Offer.
Consequences of Exchanging Series A Notes
Based upon no-action letters issued by the staff of the Commission to
third parties, the Company believes that Series B Notes issued pursuant to the
Exchange Offer in exchange for Series A Notes may be offered for resale,
resold or otherwise transferred by a Holder thereof (other than any Holder
which is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act or a holder that is a broker-dealer who acquires Series B
Notes to resell pursuant to Rule 144A or any other available exemption under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Series B Notes
are acquired in the ordinary course of such Holder's business and such Holder
is not participating, does not intend to participate, and has no arrangement
with any person to participate, in the distribution of such Series B Notes.
However, the Commission has not considered the Exchange Offer in the context
of a no-action letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. If any Holder is an affiliate of the
Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the Series B Notes to be
acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the
relevant determinations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that
receives Series B Notes for its own account in exchange for Series A Notes,
where such Series A 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 Series B
Notes. Pursuant to the Registration Rights Agreement, the Company has agreed
to make this Prospectus, as it may be amended or supplemented from time to
time, available to broker-dealers for use in connection with any resale for a
period of 180 days after the Expiration Date. Under certain circumstances, the
Company may cause the Prospectus to not be available for resale for a period
of up to 30 days. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the Series B Notes
may not be offered or sold unless it has been registered or qualified for sale
in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company has agreed to register or qualify
the sale of the Series B Notes in such jurisdictions only in limited
circumstances and subject to certain conditions.
Consequence of Failure to Exchange
Participation in the Exchange Offer is voluntary. Holders of the
Series A Notes are urged to consult their financial and tax advisors in making
their own decisions on what action to take.
The Series A Notes which are not exchanged for the Series B Notes
pursuant to the Exchange Offer will remain restricted securities. Accordingly,
such Series A Notes may be resold only (i) to a person whom the seller
reasonably
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believes is a qualified institutional buyer (as defined in Rule
144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A, (ii) in a transaction meeting the requirements of Rule 144 under
the Securities Act, (iii) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Securities Act or
(iv) 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), (v) to the Company or (vi) pursuant to an effective registration
statement and, in each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable jurisdiction. Under
certain circumstances, the Company is required to file a Shelf Registration
Statement. See "Description of Notes--Registration Rights; Liquidated
Damages."
Liquidated Damages
In the event of a Registration Default (as hereinafter defined), the
Company is required to pay liquidated damages. See "Description of
Notes--Registration Rights; Liquidated Damages."
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DESCRIPTION OF NOTES
General
The Series A Notes were and the Series B Notes will be issued
pursuant to an Indenture (the "Indenture") between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee") in a private transaction that was
not subject to the registration requirements of the Securities Act. See
"Notice to Investors." 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 "Trust Indenture Act"). The Notes are subject to
all such terms, and Holders of Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified
in its entirety by reference to the Indenture, including the definitions
therein of certain terms used below. Copies of the Indenture and Registration
Rights Agreement are available as set forth under "Additional Information" and
"Incorporation by Reference." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." The terms
of the Series B Notes and the Series A Notes are identical in all material
respects except for certain transfer restrictions and registration rights
relating to the Senior A Notes and except that, if the Exchange Offer is not
consummated by September 28, 1996, Holders of Series A Notes will be entitled
to certain Liquidated Damages. See "--Registration Rights; Liquidated
Damages."
The Notes rank senior in right of payment to all subordinated
Indebtedness of the Company issued in the future, if any. The Notes are
subordinated in right of payment to all Senior Debt, including borrowings
under the New Credit Agreement.
Certain operations of the Company are conducted through its
Subsidiaries and, therefore, the Company is dependent upon the cash flow of
its Subsidiaries to meet its obligations, including its obligations under the
Notes. The Notes are guaranteed on a senior subordinated basis by each of the
Company's current and future subsidiaries (the "Subsidiary Guarantors"). See
"--Subsidiary Guarantees."
As used in this "Description of Notes," the "Company" shall refer to
SFX Broadcasting, Inc., excluding its Subsidiaries.
Principal, Maturity and Interest
The Notes are limited in aggregate principal amount to $450.0 million
and mature on May 15, 2006. Interest on the Notes accrues at the rate of
10 3/4% per annum and is payable semi-annually in arrears on May 15 and November
15, commencing on November 15, 1996, to Holders of record on the immediately
preceding May 1 and November 1. The Series B Notes issued in exchange for
Series A Notes will accrue dividends, from May 31, 1996. Holders whose Series
A Notes are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the Series A Notes. Interest is computed on
the basis of a 360-day year comprised of twelve 30-day months. Principal,
premium, if any, and interest and Liquidated Damages, if any, on the Notes is
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check
mailed to the Holders of the Notes at their respective addresses set forth in
the register of Holders of Notes; provided that all payments with respect to
Global Notes and Certificated Securities the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's
office or agency in the City and State of New York will be the office of the
Trustee maintained for such purpose. The Notes are issued in denominations of
$1,000 and integral multiples thereof.
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Subordination
The payment of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes is subordinated in right of payment,
as set forth in the Indenture, to the prior payment in full of all Senior
Debt, whether outstanding on the date of the Indenture or thereafter incurred.
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, or
in an assignment for the benefit of creditors or any marshaling of Company's
assets and liabilities, the holders of Senior Debt are entitled to receive
payment in full 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, whether or not an allowable claim)
before the Holders are entitled to receive any payment with respect to the
Notes; and until all Obligations with respect to Senior Debt are paid in full,
any distribution to which the Holders will be entitled will be made to the
holders of Senior Debt (except that, in either case, Holders may receive (i)
securities that are subordinated at least to the same extent as the Notes to
Senior Debt and any securities issued in exchange for Senior Debt and (ii)
payments made from the trust described below under "--Legal Defeasance and
Covenant Defeasance").
The Company also may not make any payment upon or in respect of the
Notes (except as described above) if (i) a default in the payment of the
principal of, premium, if any, or interest on Designated Senior Debt occurs
and is continuing or (ii) any other default occurs and is continuing with
respect to Designated Senior Debt that permits holders of Designated Senior
Debt as to which such default relates to accelerate its maturity and the
trustee receives a notice of such default (a "Payment Blockage Notice") from
the Company or the holders of any Designated Senior Debt. Payments on the
Notes may and shall be resumed (a) in the case of a payment default, upon the
date on which such default is cured or waived and (b) in the case of a
nonpayment default, the earlier of the date on which such nonpayment default
is cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior Debt
has been accelerated. No new period of payment blockage may be commenced
unless and until (1) 360 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (2) all scheduled payments of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes that have come due have been paid in full. 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.
The Indenture further requires that the Company promptly notify the
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 liquidation or insolvency, Holders may recover less ratably than
creditors of the Company who are holders of Senior Debt or other creditors of
the Company who are not subordinated to holders of Senior Debt. As of March
31, 1996, after giving pro forma effect to the Transactions, the Company would
have had no Senior Debt and the Subsidiary Guarantors would have had no
Guarantor Senior Debt. The Indenture limits, subject to certain financial
tests, the amount of additional Indebtedness, including Senior Debt, that the
Company and its Subsidiaries may incur. See "--Certain Covenants--Incurrence
of Indebtedness and Issuance of Preferred Stock."
"Designated Senior Debt" means (i) so long as any Senior Bank Debt is
outstanding, the Senior Bank Debt and (ii) thereafter, any other Senior Debt
permitted under the Indenture, the principal amount of which is $25.0 million
or more and that has been designated by the Company as "Designated Senior
Debt."
"Senior Bank Debt" means any Indebtedness outstanding under, and any
other Obligations with respect to, Bank Facilities, to the extent that any
such Indebtedness and other Obligations are permitted by the Indenture to be
incurred.
"Senior Debt" means (a) the Senior Bank Debt, (b) all additional
Indebtedness that is permitted under the Indenture that is not by its terms
pari passu with or subordinated to the Notes, (c) all Obligations of the
Company with
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respect to the foregoing clauses (a) and (b), including post-petition interest
and (d) all (including all subsequent) renewals, extensions, amendments,
refinancings, repurchases or redemptions, modifications, replacements or
refundings thereto (whether or not coincident therewith) that are permitted by
the Indenture. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include (i) any Indebtedness of the Company to any of
its Subsidiaries, (ii) any Indebtedness incurred for the purchase of goods or
materials or for services obtained in the ordinary course of business (other
than with the proceeds of borrowings from banks or other financial
institutions) or (iii) any Indebtedness incurred in violation of the
Indenture.
Subsidiary Guarantees
The Company's payment obligations under the Notes is jointly and
severally guaranteed (the "Subsidiary Guarantees") by the Subsidiary
Guarantors. The Subsidiary Guarantee of each Subsidiary Guarantor is
subordinated to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor, which includes the amounts for which the Subsidiary
Guarantors will be liable under the guarantees issued from time to time with
respect to Senior Debt. The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee are limited so as not to constitute a fraudulent
conveyance under applicable law. See, however, "Risk Factors--Fraudulent
Transfer Statutes."
The Indenture provides that no Subsidiary Guarantor may consolidate
with or merge with or into (whether or not such Subsidiary Guarantor is the
surviving Person) another corporation, Person or entity (except the Company or
another Subsidiary Guarantor) whether or not affiliated with such Subsidiary
Guarantor unless (i) subject to the provisions of the following paragraph, the
Person formed by or surviving any such consolidation or merger (if other than
such Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor under the Notes and the Indenture pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee; (ii)
other than with respect to the MMR Merger, immediately after giving effect to
such transaction, no Default or Event of Default exists; (iii) other than with
respect to the MMR Merger, such Subsidiary Guarantor, or any Person formed by
or surviving any such consolidation or merger, would have Consolidated Net
Worth (immediately after giving effect to such transaction) equal to or
greater than the Consolidated Net Worth of such Subsidiary Guarantor
immediately preceding the transaction; and (iv) other than with respect to the
MMR Merger, the Company would be permitted by virtue of the Company's pro
forma Debt to Cash Flow Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness (other than
Permitted Debt) pursuant to the covenant described below under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock."
The Indenture provides that in the event of a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of
merger, consolidation or otherwise, or a sale or other disposition of all of
the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Subsidiary
Guarantor) or the corporation acquiring the property (in the event of a sale
or other disposition of all of the assets of such Subsidiary Guarantor) will
be released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture. See
"--Repurchase at the Option of Holders--Asset Sales."
"Subsidiary Guarantors" means each of the Company's current
Subsidiaries and any other Subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture, and their respective
successors and assigns.
Optional Redemption
The Notes are not redeemable at the Company's option prior to May 15,
2001. Thereafter, the Notes are subject to redemption at the option of the
Company, 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, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15 of the years indicated below:
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YEAR PERCENTAGE
2001................................... 105.375%
2002................................... 103.583%
2003................................... 101.792%
2004 and thereafter.................... 100.000%
Notwithstanding the foregoing, until May 31, 1999, the Company may,
on any one or more occasions, redeem up to $154.0 million in aggregate
principal amount of Notes at a redemption price of 110.750% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the redemption date, with the net proceeds of an offering of
common equity; provided that at least $286.0 million in aggregate principal
amount of Notes must remain outstanding immediately after the occurrence of
each such redemption; and provided, further that any such redemption shall
occur within 75 days of the date of closing of such offering of common equity
of the Company.
Selection and Notice
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee 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 by such method as the Trustee shall deem fair and
appropriate; provided that 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. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes has
the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase (the "Change of Control Payment"). Within ten days following any
Change of Control, the Company will mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company 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 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
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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. The Indenture will provide that, prior to complying with the
provisions of this covenant, but in any event within 90 days following a
Change of Control, the Company 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. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
The Change of Control provisions described above are applicable
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 the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The New Credit Agreement will prohibit the Company from purchasing
any Notes prior to its maturity, and will also provide that certain change of
control events with respect to the Company would constitute a default
thereunder. Any future credit agreements or other agreements relating to
Senior Debt to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Change of Control occurs at a time
when the Company is prohibited from purchasing Notes, the Company could seek
the consent of its lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does
not obtain such a consent or repay such borrowings, the Company will remain
prohibited from purchasing Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default under the
Indenture which would, in turn, constitute a default under the New Credit
Agreement. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of Notes. See "Risk
Factors--Change of Control."
The Company is not 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 the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, 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 the Principal or his Related Parties (as defined
below), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) 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 Principal and his Related Parties,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, upon the happening of an event or otherwise), directly or
indirectly, of Voting Stock of the Company having more than 35% of the
combined voting power of all classes of Voting Stock of the Company then
outstanding, or (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
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 the Company and its Subsidiaries taken as
a whole. Although there is a developing 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 the Company to repurchase such Notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of
the Company and its Subsidiaries taken as a whole to another Person or group
may be uncertain.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the Indenture or (ii) 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.
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"Principal" means Robert F.X. Sillerman.
"Related Party" with respect to the Principal means (A) any spouse or
immediate family member (in the case of an individual) of the Principal or (B)
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 the Principal and/or such other
Persons referred to in the immediately preceding clause (A).
Asset Sales
The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, engage in any Asset Sale unless (i) the Company
(or the Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash; provided
that the amount of (x) any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet), of the Company or any Subsidiary
(other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Subsidiary from further liability
and (y) any notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the Company
or such Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to
permanently reduce Senior Debt (and to correspondingly reduce commitments with
respect thereto, in the case of Senior Debt that is revolving debt), or (b) to
the acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each
case, in the Broadcast Business. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce Senior Debt or otherwise invest
such Net Proceeds in any manner that is not prohibited by the Indenture. Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company will be required to make an offer to all Holders of Notes and the
holders of Pari Passu Debt, to the extent required by the terms thereof (an
"Asset Sale Offer"), to purchase the maximum principal amount of Notes and any
such Pari Passu Debt 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, if any, thereon to
the date of purchase, in accordance with the procedures set forth in the
Indenture or the agreements governing Pari Passu Debt, as applicable;
provided, however, that the Company may only purchase Pari Passu Debt in an
Asset Sale Offer that was issued pursuant to an indenture having a provision
substantially similar to the Asset Sale Offer provision contained in the
Indenture. To the extent that the aggregate amount of Notes and Pari Passu
Debt tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes and Pari Passu
Debt surrendered exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and Pari Passu Debt to be purchased on a pro rata basis,
based upon the principal amount thereof surrendered in such Asset Sale Offer.
Upon completion of such offer to purchase, the amount of Excess Proceeds shall
be reset at zero. Notwithstanding the foregoing, in the event that a
Disposition or the exercise of the MMR Warrants occurs at a time when any
Disposition Debt is outstanding, then all of the Net Proceeds of such
Disposition or exercise of the MMR Warrants will be required to be applied to
redeem, substantially concurrently with such Disposition or exercise of the
MMR Warrants, such Disposition Debt.
Notwithstanding the immediately preceding paragraph, the Company and
its Subsidiaries are permitted to consummate an Asset Sale without complying
with such paragraph if (i) the Company or the applicable 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 other property sold, issued or
otherwise dispose of (as evidenced by a resolution of the Company's Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) and
(ii) at least 75% of the consideration for such Asset Sale
constitutes assets or other property of a kind usable by the Company and its
Subsidiaries in the business of the Company and its Subsidiaries as conducted
by the Company and its Subsidiaries on the date of the Indenture; provided
that any
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consideration not constituting assets or property of a kind usable by
the Company and its Subsidiaries in the business conducted by them on the date
of such Asset Sale received by the Company or any of its Subsidiaries in
connection with any Asset Sale permitted to be consummated under this
paragraph shall constitute Net Proceeds subject to the provisions of the two
succeeding paragraphs.
Certain Covenants
Restricted Payments
The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (including, without limitation, any payment in connection
with any merger or consolidation involving the Company) or to the direct or
indirect holders of the Company's Equity Interests in their capacity as such
(other than dividends or distributions payable in Capital Stock (other than
Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company or any direct
or indirect parent of the Company; (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except at final maturity; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) 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 (other
than Permitted Debt) pursuant to the Debt to Cash Flow Ratio test set
forth in the first paragraph of the covenant described below under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments declared or made after the date of the
Indenture (other than Restricted Payments permitted by clauses (2), (4),
(6) or (11) of the following paragraph) shall not exceed, at the date of
determination, the sum of (1) an amount equal to the Company's
Consolidated Cash Flow from the date of the Indenture to the end of the
Company's most recently ended full fiscal quarter for which internal
financial statements are available, taken as a single accounting period,
less the product of 1.4 times the Company's Consolidated Interest Expense
from the date of the Indenture to the end of the Company's most recently
ended full fiscal quarter, for which internal financial statements are
available, taken as a single accounting period, plus (2) an amount equal
to the net cash proceeds received by the Company from the issue or sale
after the date of the Indenture of Equity Interests (other than (i) in
the Preferred Stock Offering, (ii) sales of Disqualified Stock and (iii)
Equity Interests sold to any of the Company's Subsidiaries) or of debt
securities or Disqualified Stock (other than the Series D Preferred
Stock) of the Company that have been converted into such Equity Interests
plus (3) to the extent that any Restricted Investment that was made after
the date of the Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment.
If no Default or Event of Default shall have occurred and be
continuing immediately as a result thereof, the foregoing 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 or other acquisition of any Equity Interests of the Company in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (c)(2) of the
preceding paragraph; (3) cash payments made in respect of fractional shares of
Capital Stock not to exceed $100,000
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in the aggregate in any fiscal year; (4) the issuance of the Exchange Notes in
exchange for the Series D Preferred Stock; provided that such issuance is
permitted by the covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock;" (5) in the event that the
Company elects to issue the Exchange Notes in exchange for the Series D
Preferred Stock, cash payments made in lieu of the issuance of Exchange Notes
having a face amount less than $50 and any cash payments representing accrued
and unpaid liquidated damages and dividends in respect thereof, not to exceed
$100,000 in the aggregate in any fiscal year; (6) the defeasance, redemption
or repurchase of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or 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 or other acquisition shall be excluded from
clause (c)(2) of the preceding paragraph; (7) the payment of dividends on the
Series D Preferred Stock in accordance with the terms thereof as in effect on
the date of the Indenture; (8) the redemption by the Company of its Series B
Preferred Stock in accordance with the terms thereof as in effect on the date
of the Indenture; provided that payments made by the Company to redeem the
Series B Notes shall not exceed $1.0 million in any fiscal year or $2.0
million in the aggregate since the date of the Indenture; (9) the redemption
by the Company of its Series C Preferred Stock in accordance with the terms
thereof as in effect on the date of the Indenture in connection with the
Dallas Disposition; (10) payments made by the Company to SCMC for facilities
maintenance and other services and reimbursements pursuant to the Shared
Facilities Agreement in accordance with the terms thereof as in effect on the
date of the Indenture; and (11) payments by the Company pursuant to the
Management Termination Agreements in accordance with the terms thereof as in
effect on the date of the Indenture.
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) or securities proposed to be
transferred by the Company or such Subsidiary, as the case may be, pursuant to
the Restricted Payment. 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 covenant were computed, which
calculations may be based upon the Company's latest available financial
statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company 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 that the Company will not issue any
Disqualified Stock and will not permit any of its Subsidiaries to issue any
shares of Preferred Stock; provided, however, that (A) the Company may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
and (B) a Subsidiary Guarantor may issue shares of Preferred Stock (other than
shares of Preferred Stock that are convertible into or exchangeable for any
other class of Capital Stock) if, in either case, the Company's Debt to Cash
Flow Ratio at the time of incurrence of such Indebtedness or the issuance of
such Disqualified Stock or Preferred Stock, as the case may be, after giving
pro forma effect to such incurrence or issuance as of such date and to the use
of proceeds therefrom as if the same had occurred at the beginning of the most
recently ended four full fiscal quarter period of the Company for which
internal financial statements are available, would have been no greater than
7.0 to 1.
The foregoing provisions will not apply to the incurrence of any of
the following Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Subsidiaries of
Indebtedness pursuant to one or more Bank Facilities, so long as the aggregate
principal amount of all Indebtedness outstanding under all Bank Facilities
does not, at the time of incurrence, exceed an amount equal to the sum of (A)
$150.0 million less the aggregate amount of all Net Proceeds of Asset Sales
applied to reduce Senior Debt pursuant to clause (a) of the second paragraph
of the covenant described under the caption "--Repurchase at the Option of
Holders--Asset Sales" (other than repayments of Disposition Debt) plus (B) the
Permitted Disposition Amount;
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(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company and its Subsidiaries of the
Existing MMR Indebtedness; provided that, substantially concurrently with
such incurrence, the Existing MMR Indebtedness is repaid by the Company
with the proceeds of Indebtedness incurred under Bank Facilities;
(iv) the issuance of the Series D Preferred Stock;
(v) the issuance of Disqualified Stock by the Company that by its
terms would not require or permit any payment of dividends or other
distributions that would violate the covenant described above under the
caption "--Restricted Payments;"
(vi) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by the Notes and any Subsidiary Guarantees
thereof;
(vii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary prior to such acquisition by the
Company or one of its Subsidiaries and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or one of
its Subsidiaries and provided further that, after giving pro forma effect
to such incurrence of Indebtedness as of such date and to the use of
proceeds therefrom as if the same had occurred at the beginning of the
most recently ended four full fiscal quarter period for which internal
financial statements are available, the Company's Debt to Cash Flow Ratio
would have been no greater than 7.0 to 1;
(viii) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Indenture to be incurred;
(ix) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries; provided, however, that (i) if the Company is the obligor
on such Indebtedness, such Indebtedness is expressly subordinate to the
payment in full of all Obligations with respect to the Notes and (ii)(A)
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
Subsidiary and (B) any sale or other transfer of any such Indebtedness to
a Person that is not either the Company or a Subsidiary shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by the
Company or such Subsidiary, as the case may be;
(x) the incurrence by the Company or any of its 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; and
(xi) the incurrence by the Company and any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause
of this paragraph) in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding not to exceed $10.0 million.
Liens
The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness (other than Senior Debt) on any
asset now owned or hereafter acquired, or on any income or profits therefrom,
except Permitted Liens.
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Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i)(x) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (y) pay any indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Indenture, (b) the New Credit Agreement, in a form
substantially consistent with the terms of the Commitment Letter as in effect
as of the date of the Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, and any other agreement governing or relating to Senior
Debt, provided that all such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings and
other agreements are no more restrictive with respect to such dividend and
other payment restrictions than those contained in the New Credit Agreement,
in a form substantially consistent with the terms of the Commitment Letter as
in effect on the date of the Indenture, (c) the Indenture, the Notes and the
Subsidiary Guarantees, (d) applicable law, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of
its 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, (f) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and consistent with
past practices, or (g) Permitted Refinancing Debt, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Debt are no more restrictive than those contained in the agreements governing
the Indebtedness being refinanced.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, 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; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and the Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; (iv)
such transaction will not result in the loss or suspension or material
impairment of any Material Broadcast License; and (v) except in the case of a
merger of the Company with or into a Wholly Owned Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (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, at the time of such transaction and
after giving pro forma effect thereto as if such transaction 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 Debt to Cash Flow Ratio
test set forth in the first paragraph of the covenant described above under
the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its 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 contract,
agreement, understanding, loan, advance or guarantee with,
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or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) 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 $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a majority
of the members of the Board of Directors that are disinterested as to such
Affiliate Transaction 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 such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing; provided that (1)
transactions between or among the Company and/or its Wholly Owned
Subsidiaries, (2) the MMR Acquisition and transactions and agreements
specifically contemplated by the Agreement and Plan of Merger among the
Company, SFX Merger Company and MMR as in effect on the date of the Indenture
(3) the redemption or repurchase of the Existing MMR Indebtedness, (4)
transactions and agreements specifically contemplated by the Termination and
Assignment Agreement between the Company and SCMC as in effect on the date of
the Indenture, (5) payments required by the terms of the joint lease among the
Company, SCMC and the landlord thereunder for the Company's corporate
headquarters located at 150 East 58th Street, New York, New York and any
agreements directly related thereto, in each case, as the same are in effect
on the date of the Indenture and (6) Restricted Payments and Permitted
Investments that are permitted by the provisions of the Indenture described
above under the caption "--Certain Covenants--Restricted Payments," in each
case, shall not be deemed to be Affiliate Transactions.
Additional Subsidiary Guarantees
The Indenture provides that if the Company or any of its Subsidiaries
shall acquire or create another Subsidiary after the date of the Indenture,
then such newly acquired or created Subsidiary shall execute a Subsidiary
Guarantee and deliver an opinion of counsel, in accordance with the terms of
the Indenture.
No Senior Subordinated Debt
The Indenture provides that (i) the Company 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 and senior in
any respect in right of payment to the Notes, and (ii) no Subsidiary Guarantor
will incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to its
Senior Debt and senior in any respect in right of payment to its Subsidiary
Guarantee.
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit
any of its Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company may enter into a sale and leaseback transaction if
(i) the Company could have (a) incurred Indebtedness (other than Permitted
Debt) in an amount equal to the Attributable Debt relating to such sale and
leaseback transaction pursuant to the Debt to Cash Flow Ratio test set forth
in the first paragraph of the covenant described above under the caption
"--Certain Covenants--Incurrence of Additional Indebtedness and Issuance of
Preferred Stock" and (b) incurred a Lien to secure such Indebtedness pursuant
to the covenant described above under the caption "--Certain
Covenants--Liens," (ii) the gross cash proceeds of such 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 (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company applies the proceeds of
such transaction in compliance with, the covenant described above under the
caption "--Repurchase at the Option of Holders--Asset Sales."
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Limitation on Issuances and Sales of Capital Stock of Wholly Owned Subsidiaries
The Indenture provides that the Company (i) will not, and will not
permit any Wholly Owned Subsidiary of the Company to, transfer, convey, sell,
lease or otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Subsidiary of the Company), unless (a) such transfer, conveyance, sale, lease
or other disposition is of all the Capital Stock of such Wholly Owned
Subsidiary and (b) 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 "--Repurchase at the Option of
Holders--Asset Sales," and (ii) will not permit any Wholly Owned 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 Subsidiary of the Company.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage
in any business other than (i) the Broadcast Business and such business
activities as are incidental or related thereto, (ii) such other businesses as
the Company or its Subsidiaries are engaged in on the date of the Indenture.
Payments for Consent
The Indenture provides that neither the Company nor any of its
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid 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
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the
Company will furnish to the Trustee and to the Holders of Notes (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company 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 thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the
rules and regulations of the Commission, the Company will file a copy of all
such information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to the Holders, and to securities analysts
and prospective investors upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an
Event of Default: (i) default for 30 days in the payment when due of interest
on, or Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii) 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); (iii)
failure by the Company to comply with the provisions described under the
captions "--Repurchase at the Option of Holders--Change of
Control," "-- Repurchase at the Option of Holders--Asset Sales," "--Certain
Covenants--Restricted Payments," "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" or "--Certain Covenants--Merger,
Consolidation or Sale of Assets"; (iv) failure by the Company for 60 days
after notice to comply with any of its other agreements in the Indenture or
the Notes; (v) default under any mortgage, indenture or instrument under which
there
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may be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Subsidiaries (or the payment
of which is guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which 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") or (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 $10.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating
in excess of $10.0 million, which judgments are not paid, discharged or stayed
for a period of 60 days; (vii) 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 Subsidiary Guarantor, or any
Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm
its obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary.
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 immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. 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 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 or interest) if it determines that withholding notice
is in their interest.
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 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 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 May 15, 2001 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 May 15, 2001,
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.
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.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the
Company or the Subsidiary Guarantors, as such, shall have any liability for
any obligations of the Company or the Subsidiary Guarantors, as applicable,
under the Notes, the Subsidiary Guarantees or the Indenture, as applicable, 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. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
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Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on such Notes when such payments are due from the
trust referred to below, (ii) the Company's 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, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions
of the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company 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, interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity 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; (ii) in the case of Legal Defeasance, 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 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 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; (iii) in the case of
Covenant Defeasance, 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; (iv) no Default or Event of
Default shall have occurred and be continuing 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 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 (or greater period of time in
which any such deposit of trust funds may remain subject to bankruptcy or
insolvency laws insofar as those apply to the deposit by the Company); (v)
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 the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that, as of the date of such opinion, (A) the trust
funds will not be subject to rights of holders of Indebtedness other than the
Notes and (B) assuming no intervening bankruptcy of the Company between the
date of deposit and the 91st day following the deposit and assuming no Holder
of Notes is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effects of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally under any applicable United States or state law; (vii) the
Company must deliver 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 the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and
(viii) the Company must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
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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 the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or
exchange any Note selected for redemption. Also, the Company is not required
to transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.
Amendment, Supplement and Waiver
Except as provided in the next two 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 then outstanding Notes (including 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): (i)
reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) 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"),
(iii) reduce the rate of or change the time for payment of interest on any
Note, (iv) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest or Liquidated Damages, if any, 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), (v) make any Note
payable in money other than that stated in the Notes, (vi) 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 or Liquidated Damages, if any, on the Notes, (vii) 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 (viii) make any change in the foregoing amendment and
waiver provisions. In addition, any amendment to (a) the provisions of Article
10 of the Indenture (which relate to subordination) and (b) the covenants
described under the caption "--Repurchase at Option of Holders" including, in
each case, the related definitions will require the consent of the Holders of
at least 75% in aggregate principal amount of the Notes then outstanding if
such amendment would adversely affect the rights of Holders of Notes.
Notwithstanding the foregoing, without the consent of any Holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or
the Notes 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 obligations to Holders of Notes in
the case of a merger or consolidation, 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
to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee is permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Notes 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
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exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee is required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee is 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.
Book-Entry, Delivery and Form
All of the Series A Notes were initially issued in the form of one
Global Note (the "Series A Global Note"). The Series A Global Note was
deposited on May 31, 1996 with, or on behalf of, The Depository Trust Company
(the "Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Note
Holder"). Series B Notes which will be issued in exchange for the Series A
Notes will be issued in the form of one Global Note (the "Series B Global
Note") and deposited with, or on behalf of the Depositary and registered in
the name of the Global Note Holder.
The Depositary is a limited-purpose trust company that was created to
hold securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Series B Note, the Depositary will
credit the accounts of Participants designated by the Exchange Agent with
portions of the principal amount of the Series B Global Note and (ii)
ownership of the Series B Notes evidenced by the Series B Global Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer Series
B Notes evidenced by the Series B Global Note will be limited to such extent.
For certain other restrictions on the transferability of the Notes, see
"Notice to Investors."
So long as the Global Note Holder is the registered owner of any
Notes, the Global Note Holder will be considered the sole Holder under the
Indenture of any Notes evidenced by the Global Series A Note and the Global
Series B Note. Beneficial owners of Notes evidenced by the Global Series A
Note and the Global Series B Note will not be considered the owners or Holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
Neither the Company nor the Trustee has any responsibility or liability for
any aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest
and Liquidated Damages, if any, on any Notes registered in the name of the
Global Note Holder on the applicable record date will be payable by the
Trustee to or at the direction of the Global Note Holder in its capacity as
the registered Holder under the Indenture. Under the terms of the Indenture,
the Company and the Trustee may treat the persons in whose names Notes,
including the Global Senior Note, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither the Company nor the
Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes. The Company believes, however,
that it is currently the policy of the Depositary to immediately credit the
accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing
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instructions and customary practice and will be the responsibility of the
Depositary's Participants or the Depositary's Indirect Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial
interest in the Global Series A Note and the Global Series B Note may, upon
request to the Trustee, exchange such beneficial interest for Notes in the
form of a definitive registered certificate ("Certificated Securities"). Upon
any such issuance, the Trustee is required to register such Certificated
Securities in the name of, and cause the same to be delivered to, such person
or persons (or the nominee of any thereof) except that all certificated Series
A Notes would be subject to transfer restriction legend requirements. In
addition, if (i) the Company notifies the Trustee in writing that the
Depositary is no longer willing or able to act as a depositary and the Company
is unable to locate a qualified successor within 90 days or (ii) the Company,
at its option, notifies the Trustee in writing that it elects to cause the
issuance of Notes in the form of Certificated Securities under the Indenture,
then, upon surrender by the Global Note Holder of its Global Series A Note and
the Global Series B Note, Notes in such form will be issued to each person
that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by
the Global Note Holder or the Depositary in identifying the beneficial owners
of Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Same-Day Settlement and Payment
The Indenture requires that payments in respect of the Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available 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. The Notes represented by the Global
Series A Note are eligible to trade in the PORTAL Market and to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in Series A Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in the Certificated Securities will also be settled in
immediately available funds.
Registration Rights; Liquidated Damages
On May 31, 1996, the Company, the Subsidiary Guarantors and the
Initial Purchasers entered into the Registration Rights Agreement. Pursuant to
the Registration Rights Agreement, the Company and the Subsidiary Guarantors
agreed to file with the Commission the Registration Statement of which this
Prospectus is a part on the appropriate form under the Securities Act with
respect to the Series B Notes. Upon the effectiveness of this Registration
Statement, the Company will offer to the Holders of Series A Notes pursuant to
the Exchange Offer who are able to make certain representations the
opportunity to exchange their Series A Notes for Series B Notes. If (i) the
Company and the Subsidiary Guarantors are not required to file this
Registration Statement or permitted to consummate the Exchange Offer because
the Exchange Offer is not permitted by applicable law or Commission policy or
(ii) any Holder of Series A Notes notifies the Company within 20 business days
following consummation of the Exchange Offer that (A) it is prohibited by law
or Commission policy from participating in the Exchange Offer or (B) that it
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 this
Registration Statement is not appropriate or available for such resales or (C)
that it is a broker-dealer and owns Series A Notes acquired directly from the
Company or an affiliate of the Company, the Company and the Subsidiary
Guarantors will file with the Commission a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement") to cover resales of the Series A Notes by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company and the
Subsidiary Guarantors will use their reasonable best efforts to cause the
applicable registration
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statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Series A Note" means each Series A Note until
(i) the date on which such Series A Note has been exchanged by a person other
than a broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Series A Note for a
Series B Note, the date on which such Series B Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy
of the prospectus contained in this Registration Statement, (iii) the date on
which such Series A Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or
(iv) the date on which such Series A Note is distributed to the public
pursuant to Rule 144 under the Securities Act.
The Registration Rights Agreement provides that (i) the Company and
the Subsidiary Guarantors will file this Registration Statement with the
Commission on or prior to July 15, 1996, (ii) the Company and the Subsidiary
Guarantors will use their reasonable best efforts to have the Exchange Offer
Registration Statement declared effective by the Commission on or prior to
September 28, 1996, (iii) unless the Exchange Offer would not be permitted by
applicable law or Commission policy, the Company and the Subsidiary Guarantors
will commence the Exchange Offer and use their reasonable best efforts to
issue on or prior to 30 business days after the date on which the Exchange
Offer Registration Statement was declared effective by the Commission, Series
B Notes in exchange for all Series A Notes tendered prior thereto in the
Exchange Offer and (iv) if obligated to file the Shelf Registration Statement,
the Company and the Subsidiary Guarantors will use their best efforts to file
the Shelf Registration Statement with the Commission on or prior to 30 days
after such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to the later of 30 days after
such filing and September 28, 1996 and to cause the Shelf Registration
Statement to be continuously effective until May 31, 1999 or such earlier time
as such Notes have been sold pursuant to such Shelf Registration Statement.
The Company may cause the Shelf Registration Statement to not be available for
up to 120 days during the three year period, but in no event for more than 45
consecutive days or for more than 60 days in any calendar year. If (a) the
Company and the Subsidiary Guarantors fail to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for
such effectiveness (the "Effectiveness Target Date"), (c) the Company and the
Subsidiary Guarantors fail to Consummate the Exchange Offer within 30 business
days of the Effectiveness Target Date with respect to this Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Series A Notes during the
periods specified in the Registration Rights Agreement (each such event
referred to in clauses (a) through (d) above a "Registration Default"), then
the Company will pay Liquidated Damages to each Holder of Series A Notes, with
respect to the first 90-day period immediately following the occurrence of
such Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Series A Notes held by such Holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Series A Notes 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 principal amount of Series A
Notes. All accrued Liquidated Damages will be paid by the Company on each
interest payment date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or
by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Series A Notes will be required to make certain
representations to the Company (as described in the Registration Rights
Agreement) in order to participate in the Exchange Offer and will be required
to deliver information to be used in connection with the Shelf Registration
Statement and to provide comments on the Shelf Registration Statement within
the time periods set forth in the Registration Rights Agreement in order to
have their Series A Notes included in the Shelf Registration Statement and
benefit from the provisions regarding Liquidated Damages set forth above.
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.
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"Acquired Debt" means, with respect to any specified Person, (i)
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,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Advertising Business" means any business deriving substantially all
of its revenues from the (i) sale of advertisements and (ii) sale of products
or provision of services to any business described in clause (i) above.
"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"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), 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 securities of
a Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback or pursuant to an LMA or similar arrangement); provided that the
sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole will be
governed by the provisions of the Indenture described above under the caption
"--Repurchase at the Option of Holders--Change of Control" and/or the
provisions described above under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant, and (ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries, in the case of
either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a Fair Market Value in excess of $5.0
million or (b) for aggregate net proceeds in excess of $5.0 million.
Notwithstanding the foregoing: (i) to the extent that no Disposition Debt is
outstanding, the Washington Disposition, the Louisville Disposition and the
Dallas Disposition, (ii) the Houston Exchange, (iii) a transfer of assets by
the Company to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to
the Company or to another Wholly Owned Subsidiary, (iv) an issuance of Equity
Interests by a Wholly Owned Subsidiary to the Company or to another Wholly
Owned Subsidiary, (v) a Restricted Payment that is permitted by the covenant
described above under the caption "--Certain Covenants--Restricted Payments"
and (vi) sales of obsolete equipment in the ordinary course of business, will
not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP)
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).
"Bank Facilities" means, with respect to the Company, one or more
debt facilities (including, without limitation, the New 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)
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.
Indebtedness under Bank Facilities outstanding on the date on which the Notes
are first issued and authenticated under the Indenture shall be deemed to have
been incurred on such date in reliance on the exception provided by clause (i)
under the covenant described under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock."
"Broadcast Business" means any business, the majority of whose
revenues are derived from the broadcast of radio programming.
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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 such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) 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 (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) 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 lender
party to the New Credit Agreement or with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thomson Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) 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.
"Commitment Letter" means the Commitment Letter between the Company
and The Bank of New York relating to the New Credit Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale by such Person or any of its Subsidiaries during
such period (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent
that such provision for taxes was included in computing such Consolidated Net
Income, plus (iii) Consolidated Interest Expense of such Person for such
period, to the extent any such Consolidated Interest Expense was deducted in
computing such Consolidated Net Income, plus (iv) 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 charges (excluding any such non-cash charge to the extent that
it represents an accrual of or reserve for cash charges in any future period)
of such Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, less (v) all non-cash items increasing
Consolidated Net Income for such period (excluding any such non-cash income to
the extent it represents an accrual of cash income in any future period), in
each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Indebtedness" of any Person as of any date of
determination means the sum (without duplication) of (i) the total amount of
Indebtedness and Attributable Debt of such Person and its Subsidiaries, plus
(ii) the total amount of other Indebtedness shown on the balance sheet of the
primary obligor on such Indebtedness, to the extent that such Indebtedness has
been Guaranteed by such Person or one of its Subsidiaries, plus (iii) the
aggregate liquidation value or redemption amount (if larger) of all
Disqualified Stock of such Person and all preferred stock of Subsidiaries of
such Person, in each case, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for
any period, (i) the sum of the consolidated interest expense of such Person
and its Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of 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) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is guaranteed by such Person or
one of its Subsidiaries
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or secured by a Lien on assets of such Person or one of its Subsidiaries
(whether or not such Guarantee or Lien is called upon) and (iv) the product of
(a) all cash dividend payments (and non-cash dividend payments in the case of
a Person that is a Subsidiary) on any series of preferred stock of such
Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or to a Wholly Owned Subsidiary thereof
that is a Subsidiary Guarantor, (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that 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 Subsidiary or its stockholders,
(iii) 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 and (iv) 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 (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) 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, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Dallas Disposition" means the sale by the Company of KTCK-AM
(Dallas, TX) on substantially the terms set forth in the sale agreement as the
same is in effect on the date of the Indenture.
"Debt to Cash Flow Ratio" means, as of any date of determination, the
ratio of (a) the Consolidated Indebtedness as of such date to (b) the
Consolidated Cash Flow of the Company and its Subsidiaries on a consolidated
basis for the four most recent full fiscal quarters ending immediately prior
to such date for which internal financial statements are available. For
purposes of calculating Consolidated Cash Flow for the computation referred to
above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the date on which such
Ratio is being calculated (the "Calculation Date") shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect
to clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"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.
"Disposition" means the sale of any of (i) WVEZ-FM, WTFX-FM and
WWKY-AM operating in Louisville, Kentucky, (ii) KTCK-AM operating in Dallas,
Texas or (iii) WXVR-FM, WXTR-FM and WQSI-AM operating in Washington, DC and,
in each case, all assets related thereto.
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"Disposition Debt" means Indebtedness incurred pursuant to clause
(i)(B) of the second paragraph contained in the covenant described above under
the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock."
"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 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.
"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).
"Exchange Notes" means the Company's 6 1/2 % Convertible Subordinated
Exchange Notes due 2007 issuable in exchange for the Company's Series D
Preferred Stock.
"Existing Indebtedness" means all Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Agreement) in
existence on the date of the Indenture, until such amounts are repaid.
"Existing MMR Indebtedness" means all Indebtedness of MMR and its
Subsidiaries in existence at the closing of the MMR Merger, until such amounts
are repaid.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"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 on the date of the
Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States of
America is pledged.
"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, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"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.
"Houston Exchange" means the exchange by the Company of KRLD-AM
(Dallas, Texas) and the Texas State Networks for KKRW-FM (Houston, Texas) on
substantially the terms set forth in the exchange agreement as the same is in
effect on the date of the Indenture.
"Indebtedness" means, with respect to any Person, without
duplication, any indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
payment obligations under an LMA or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing (other than letters of credit and
Hedging Obligations)
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would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien
on any asset of such Person (whether or not such indebtedness is assumed by
such Person) and, to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person.
"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;
provided that an acquisition of assets, Equity Interests or other securities
by the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such Person is no longer a 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 Subsidiary not sold or disposed of.
"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).
"Local Marketing Agreement" or "LMA" means a local marketing
arrangement, sale agreement, time brokerage agreement, management agreement or
similar arrangement pursuant to which a Person, subject to customary
preemption rights and other limitations (i) obtains the right to sell at least
a majority of the advertising inventory of a radio station of which a third
party is the licensee, (ii) obtains the right to broadcast programming and
sell advertising time during a majority of the air time of a radio station or
(iii) manages the selling operations of a radio station with respect to at
least a majority of the advertising inventory of such station.
"Louisville Disposition" means the sale by the Company of each of
WVEZ-FM, WTFX-FM and WWXY-AM (Louisville, Kentucky) on substantially the terms
set forth in the sale agreement as the same is in effect on the date of the
Indenture.
"Management Termination Agreements" means each of (i) the termination
agreement between the Company and R. Steven Hicks, dated April 16, 1996, and
(ii) the amendment to the employment agreement between the Company and D.
Geoffrey Armstrong, effective as of April 15, 1996, in each case, as in effect
on the date of the Indenture.
"Material Broadcast License" means one or more authorizations issued
by the Federal Communications Commission for the operation of AM or FM radio
stations that individually or collectively are material to the financial
condition, results of operations or prospects of the Company and its
Subsidiaries taken as a whole.
"MMR" means Multi-Market Radio, Inc., a Delaware corporation.
"MMR Merger" means the merger of SFX Merger Company, a Wholly Owned
Subsidiary of the Company, with and into MMR, pursuant to which MMR will
become a Wholly Owned Subsidiary of the Company.
"MMR Stations" means the following radio stations: WPLR-FM and
WYBC-FM (New Haven, Connecticut); WHMP-FM, WPKX-FM and WHMP-AM
(Springfield/Northampton, Massachusetts); WGNE-FM (Daytona Beach, Florida);
WRXR-FM, WKBG-FM and WCHZ-FM (Augusta, Georgia); WKNN-FM and WMJY-FM (Biloxi,
Mississippi); and WYAK-FM and WVCO-FM (Myrtle Beach, South Carolina).
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"MMR Warrants" means MMR's outstanding Class A Warrants to purchase
1,840,000 shares of MMR's Class A Common Stock.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) 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 (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its 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 (after taking into account any available tax credits or
deductions and any tax sharing arrangements), 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 and any reserve
for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Credit Agreement" means that certain credit agreement to be
entered into by and among the Company, the Company's Subsidiaries and the
lenders party thereto, providing for $150.0 million of borrowings, including
any related notes, guarantees, collateral documents, and other agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Pari Passu Debt" means Indebtedness that ranks pari passu in right
of payment with the Notes.
"Permitted Disposition Amount" means the sum of (i) until the
consummation of the sale by the Company of WVEZ-FM, WTFX-FM and WWKY-AM
operating in Louisville, Kentucky, $19.5 million, plus (ii) until the
consummation of the sale by the Company of WXVR-FM, WXTR-FM and WQSI-AM
operating in Washington, DC, $25.0 million, plus (iii) until the
consummation of the sale by the Company of KTCK-FM operating in Dallas, Texas,
$9.5 million, plus (iv) prior to the exercise of the MMR Warrants, $13.6
million.
"Permitted Investments" means (a) any Investment in the Company or in
a Subsidiary of the Company that is a Subsidiary Guarantor; (b) any Investment
in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of
the Company in a Person, if after such Investment (i) such Person becomes a
Subsidiary of the Company and a Subsidiary Guarantor or (ii) 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
Subsidiary of the Company that is a Subsidiary Guarantor; (d) any Restricted
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;" (e) any obligations or shares of Capital Stock received
in connection with or as a result of a bankruptcy, workout or reorganization
of the issuer of such obligations or shares of Capital Stock; (f) any
Investment received involuntarily; (g) Investments in any Person (other than
an Affiliate of the Company that is not also a Subsidiary of the Company)
engaged in a Broadcast Business or an Advertising Business which Investments
have an aggregate fair market value (measured on the date each such Investment
was made and without giving effect to subsequent changes in value),
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when taken together with all other Investments made pursuant to this clause
(g) that are at the time outstanding, not to exceed $20.0 million and (h)
other Investments in any Person (other than an Affiliate of the Company that
is not also a Subsidiary of the Company) 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 (h) that are at the time outstanding,
not to exceed $15.0 million.
"Permitted Liens" means (i) Liens securing Senior Debt of the Company
or Senior Debt of any Subsidiary Guarantor that was permitted by the terms of
the Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens
on property of a Person existing at the time such Person is merged into or
consolidated with the Company or any 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; (iv) Liens on property existing
at the time of acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition and do not extend to any assets other than such assets so
acquired; (v) Liens existing on the date of the Indenture; (vi) 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 (vii) Liens incurred in the ordinary
course of business of the Company or any Subsidiary of the Company with
respect to obligations that do not exceed $10.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially
detract from the value of the property or materially impair the use thereof in
the operation of business by the Company or such Subsidiary.
"Permitted Refinancing Debt" means any Indebtedness of the Company or
any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) 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; (iii) 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 (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who was the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Preferred Stock" of any Person, means Capital Stock of such Person
of any class or series (however designated) that ranks prior, as to payment of
dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares
of Capital Stock of any other class or series of such Person.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"SCMC" means Sillerman Communications Management Company, a
Delaware corporation
"Series B Preferred Stock" means the Company's Series B Redeemable
Preferred Stock, par value $.01 per share.
"Series C Preferred Stock" means the Company's Series C Redeemable
Convertible Preferred Stock, par value $.01 per share.
"Series D Preferred Stock" means the Company's 6 1/2% Series D
Cumulative Convertible Exchangeable Preferred Stock due 2007.
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"SFX Merger Company" means SFX Merger Company, a Delaware corporation.
"Shared Facilities Agreement" means the Shared Facilities Agreement
between the Company and SCMC, as in effect on the date of the Indenture.
"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 hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Voting Stock 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 (ii) 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 of one or more Subsidiaries of such
Person (or any combination thereof).
"Voting Stock" means with respect to any specified Person, Capital
Stock with voting power, under ordinary circumstances and without regard to
the occurrence of any contingency, to elect the directors or other managers or
trustees of such Person.
"Washington Disposition" means the sale by the Company of each of
WXVR-FM, WXTR-FM and WQSI-AM (Washington, DC) on substantially the terms set
forth in the sale agreement as the same is in effect on the date of the
Indenture.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) 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 (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a 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 or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
It is the opinion of Baker & McKenzie, counsel to the Company, that
the material federal income tax consequences to holders whose Series A Notes
are exchanged for Series B Notes in the Exchange Offer are as described
herein, subject to the limitations and qualifications set forth below. Because
the Series B Notes should not be considered to differ materially either in
kind or in extent from the Series A Notes, the exchange of the Series B Notes
for the Series A Notes pursuant to the Exchange Offer should not be treated as
an "exchange" for federal income tax purposes pursuant to Section 1001 of the
Internal Revenue Code of 1986, as amended (the "Code"). As a result, no
material federal income tax consequences should result to holders exchanging
Series A Notes for Series B Notes. If, however, the exchange of Series A Notes
for Series B Notes were treated as a taxable event, such transaction should
constitute a recapitalization for federal income tax purposes and holders
would not recognize any gain or loss upon such exchange.
The foregoing opinion is based upon the current provisions of the
Code, applicable existing and proposed Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and
practice. There can be no assurance that the final Treasury Regulations will
not differ materially from those which are presently proposed nor that the
Internal Revenue Service (the "IRS") will not take a contrary view. No ruling
from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter
or modify the statements or conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and individuals who are not citizens or residents of the United
States) may be subject to special rules not discussed herein. AS A RESULT,
EACH HOLDER OF SERIES A NOTES SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH
RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF EXCHANGING HIS OR HER SERIES A
NOTES FOR SERIES B NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B 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 Series B Notes received
in exchange for Series A Notes where such Series A Notes was acquired as a
result of market-making activities or other trading activities. The Company
has agreed that for a period of 180 days after the Expiration Date, it will
make available a prospectus meeting the requirements of the Securities Act to
any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Series B
Notes by any broker-dealer. Series B Notes received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Series B Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Series B
Notes. Any broker-dealer that resells Series B Notes that was received by it
for its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Series B Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Series B 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 states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders (including any broker-dealers) and certain parties
related to the holders against certain liabilities, including liabilities
under the Securities Act.
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LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Baker &
McKenzie, New York, New York. Howard J. Tytel, Esq., who has an equity
interest in, and is an executive officer and director of, the Company, is Of
Counsel to Baker & McKenzie. Mr. Tytel holds options to purchase 5,000 shares
of Class A Common Stock of the Company at an exercise price of $21.25 per
share, 1,000 of which are exercisable within 60 days of this Prospectus.
Fisher Wayland Cooper Leader & Zaragoza L.L.P., Washington D.C. represented
the Company with respect to certain legal matters under the Communications Act
and the rules and regulations promulgated thereunder by the FCC.
EXPERTS
The consolidated financial statements of SFX Broadcasting, Inc. and
Subsidiaries at December 31, 1995 and 1994, and for each of the three years in
the period ended December 31, 1995, the consolidated financial statements of
Multi-Market Radio, Inc. at December 31, 1995 and 1994, and for the years then
ended, and the financial statements of KKRW-FM (a division of CBS, Inc.) at
December 31, 1995 and 1994, and for the years then ended all appearing in the
Company's Current Report on Form 8-K dated May 30, 1996, have been audited by
Ernst & Young LLP, independent auditors, as stated in their reports appearing
therein and are incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Liberty Broadcasting, Inc.
at December 31, 1995 and 1994, and for the years ended December 31, 1995,
1994, and the nine months ended December 31, 1993, and the combined financial
statements of HMW Communications, Inc-Selected Operations (combination of six
radio stations to be sold) as of December 31, 1995 and 1994, for the year
ended December 31, 1995, and various periods from January 6, 1994 to December
31, 1994, all appearing in the Company's Current Report on Form 8-K dated
May 9, 1996, have been audited by Coopers & Lybrand L.L.P., independent
auditors, as stated in their reports appearing therein and are incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The financial statements of Prism Radio Partners, L.P. as of December
31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995, all appearing in the Company's Current Report on Form 8-K
dated May 9, 1996, have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, to the extent and for the period indicated in
their report thereon and are incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The financial statements of ABS Greenville Partners, L.P. at December
31, 1995 and 1994 and for the year then ended, all appearing in the Company's
Current Report on Form 8-K dated May 9, 1996, have been audited by Cheely
Burcham Eddins Rokenbrod & Carroll, independent auditors, as stated in their
report appearing therein and are incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
57
<PAGE>
No dealer, salesperson or any other individual has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offer made hereby. If given or made, such
information or representation must not be relied upon as having been
authorized by The Company. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities offered hereby in any
jurisdiction in which or to any person to whom it is unlawful to make any such
offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that the
information set forth herein is correct as of any time subsequent to the date
hereof.
------------------
TABLE OF CONTENTS
Page
Available Information....................................2
Incorporation by Reference...............................2
Prospectus Summary.......................................3
Risk Factors............................................12
Use of Proceeds.........................................21
The Exchange Offer......................................21
Description of Notes....................................30
Certain Federal Income Tax Considerations...............56
Plan of Distribution....................................56
Legal Matters...........................................57
Experts.................................................57
S F X Broadcasting, Inc.
10 3/4% Senior Subordinated
Notes due 2006, Series B
PROSPECTUS
-------------
Exchange Agent:
The Chase Manhattan Bank
Corporate Trust-Securities Window
Room 234-North Building
55 Water Street
New York, NY 10041
Information Agent:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
(800)223-2064
Banks and Brokerage Firms please call collect: (212)440-9800
----------------------
July 17, 1996
LETTER OF TRANSMITTAL
[LOGO FOR S F X Broadcasting, Inc.]
OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
PURSUANT TO THE PROSPECTUS, DATED JULY 17, 1996
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON AUGUST 14, 1996 UNLESS EXTENDED, PROVIDED IT MAY
NOT BE EXTENDED BEYOND AUGUST 27, 1996.
- -------------------------------------------------------------------------------
Delivery to: The Chase Manhattan Bank, the Exchange Agent
By Facsimile: By Mail, By Hand and Confirm by Telephone:
Overnight Courier:
(212) 638-7380 Carlos Esteves
(212) 344-9387 The Chase Manhattan Bank (212) 638-0828
Corporate Trust-Securities Window
Room 234-North Building Sharon Lewis
55 Water Street (212) 638-0454
New York, NY 10041
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE
ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Georgeson & Company Inc. has been appointed as Information Agent for
the Exchange Offer. Any questions or requests for assistance or additional
copies of this Prospectus, the Letter of Transmittal and/or the Notice of
Guaranteed Delivery may be directed to the Information Agent at its telephone
number and address set forth below. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning
the Exchange Offer.
Georgeson & Company Inc.
Wall Street Plaza, New York, NY 10005
Toll Free Number: (800) 223-2064
Banks and Brokerage Firms
please call collect:
(212) 440-9800
The undersigned acknowledges that he or she has received the
Prospectus, dated July 17 , 1996 (the "Prospectus"), of SFX Broadcasting, Inc.
a Delaware corporation (the "Company"), and this Letter of Transmittal (this
"Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its outstanding 10 3/4% Senior
Subordinated Notes due 2006, Series B (the "Series B Notes") for each $1,000
principal amount of 10 3/4% Senior Subordinated Notes due 2006, Series A (the
"Series A Notes") of which $450.0 million in aggregate principal amount are
outstanding of the Company from the holders thereof.
With respect to the Series A Notes accepted for exchange, the
holders of such Series A Notes will receive Series B Notes which will bear
interest at the same rate and on the same terms as their Series A Notes.
Consequently, interest on the Series B Notes will be payable semi-annually on
May 15 and November 15, 1996, at the rate of 10 3/4% per annum. The Series B
Notes will bear interest from and including May 31, 1996, the date of issuance
of the Series A Notes. Holders whose Series A Notes are accepted for exchange
will be deemed to have waived the right to receive any interest accrued on the
Series A Notes.
This Letter is to be completed by a holder of Series A Notes either
if certificates are to be forwarded herewith or if a tender of certificates
for Series A Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus.
Holders of Series A Notes whose certificates are not immediately available, or
who are unable to deliver their certificates or confirmation of the book-entry
tender of their Series A Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Series A Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. See Instruction 1. Delivery of
Documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
<PAGE>
Any beneficial owner whose Series A Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder of Series A Notes
promptly and instruct such registered holder of Series A Notes to tender on
behalf of the beneficial owner. If such beneficial owner wishes to tender on
its own behalf, such beneficial owner must, prior to completing and executing
this Letter and delivering its Series A Notes, either make appropriate
arrangements to register ownership of the Series A Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
holder of Series A Notes. The transfer of record ownership may take
considerable time.
The undersigned has completed the appropriate boxes below and signed
this letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
List below the Series A Notes to which this Letter relates. If the
space provided below is inadequate, the certificate numbers and the aggregate
principal amount of the Series A Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF
SERIES A NOTES 1 2 3
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AGGREGATE AGGREGATE PRINCIPAL
(PLEASE FILL IN, IF BLANK) NUMBER(S)* PRINCIPAL AMOUNT AMOUNT TENDERED**
- ----------------------------------------------------------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
TOTAL
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed if Series A Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Series A Notes represented by the Series A
Notes indicated in column 2. See Instruction 2.
- -------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_____________________________________________
Account Number_____________ Transaction Code Number ______________________
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Names(s) of Registered Holder(s)_______________________________________________
Window Ticket Number (if any)__________________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________________
Name of Institution which Guaranteed Delivery-_________________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number_____________ Transaction Code Number ______________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL
COPIES OF THE PROSPECTUS AND TEN COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________________________
Address:_______________________________________________________________________
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer,
the undersigned hereby tenders to the Company the aggregate principal amount
of Series A Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Series A Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
rights, title and interest in and to such Series A Notes as is being tendered
hereby, and hereby appoints the Exchange Agent as the true and lawful agent
and attorney-in-fact (with full knowledge that the Exchange Agent also acts as
agent of the Company) of such holder of Series A Notes, or transfer ownership
of such Series Notes A Notes on the account books maintained by The Depositary
Trust Company (together, in any such case, with all accompanying evidences of
transfer and authenticity), to the Company, (ii) present and deliver such
Series A Notes for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights and incidents of beneficial
ownership with respect to such Series A Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Series A
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same is accepted by
the Company. The undersigned hereby further represents that any Series B Notes
acquired in exchange for Series A Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such
Series B Notes, whether or not such person is the undersigned, that neither
the holder of such Series A Notes nor any such other person has an arrangement
or understanding with any person to participate in the distribution of such
Series B Notes and that neither the holder of such Series A Notes nor any such
other person is an "affiliate," as defined in Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned hereby represents and warrants that (i) the
undersigned has a net long position within the meaning of Rule 14e-4 under the
Securities Exchange Act, as amended ("Rule 14e-4"), equal to or greater than
the principal amount of Series A Notes tendered hereby; and (ii) the tender of
such Series A Notes complies with Rule 14e-4 (to the extent that Rule 14e-4 is
applicable to such exchange).
The undersigned hereby further represents to the company that the
series b notes to be acquired by the undersigned in exchange for the series a
notes tendered hereby and any beneficial owner(s) of such series a notes in
connection with the exchange offer will be acquired by the undersigned and
such beneficial owner(s) in the ordinary course of business of the
undersigned, the undersigned (if not a broker-dealer referred to in the last
sentence of this paragraph) are not participating and do not intend to
participate in the distribution of the series b notes, the undersigned have no
arrangement or understanding with any person to participate in the
distribution of the series b notes, the undersigned and each beneficial owner
acknowledge and agree that any person participating in the exchange offer for
the purpose of distributing the series b notes must comply with the
registration and prospectus delivery requirements of the securities act in
connection with a secondary resale transaction of the series b notes acquired
by such person and cannot rely on the position of the staff of the commission
set forth in certain no-action letters, the undersigned and each beneficial
owner understand that a secondary resale transaction described in clause,
above should be covered by an effective registration statement containing the
selling security holder information required by item 507 or item 508, as
applicable, of regulation s-k of the commission and neither the undersigned
nor any beneficial owner is an "affiliate" of the company, as defined under
rule 405 under the securities act. If the undersigned is a broker-dealer that
will receive series b notes for its own account in exchange for series a notes
that were acquired as a result of market making activities or other trading
activities, it acknowledges that it will deliver a prospectus meeting the
requirements of the securities act in connection with any resale of such
series b notes received in respect of such series a notes pursuant to the
exchange offer; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the securities act.
The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Series A Notes tendered
hereby. All authority conferred or agreed to be conferred in this Letter and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
<PAGE>
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, please deliver the Series B Notes (and, if
applicable, substitute certificates representing Series A Notes for any Series
A Notes not exchanged) in the name of the undersigned or, in the case of a
book-entry delivery of Series A Notes, please credit the account indicated
above maintained at the Book-Entry Transfer Facility. Similarly, unless
otherwise indicated under the box entitled "Special Delivery Instructions"
below, please send the Series B Notes (and, if applicable, substitute
certificates representing Series A Notes for any Series A Notes not exchanged)
to the undersigned at the address shown above in the box entitled "Description
of Series A Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
SERIES A NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE SERIES A NOTES AS SET FORTH IN SUCH BOX ABOVE.
- ------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Series A Notes not exchanged
and/or Series B Notes are to be issued in the name of and sent to someone
other than the person or persons whose signature(s) appear(s) on this Letter
above, or if Series A Notes delivered by book-entry transfer which is not
accepted for exchange is to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account
Issue: Series B Notes and/or Series A Notes to:
Name(s)..........................................................
(PLEASE TYPE OR PRINT)
.................................................................
(PLEASE TYPE OR PRINT)
Address..........................................................
.................................................................
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Series A Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility set forth below.
- ------------------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Series A Notes not
exchanged and/or Series B Notes are to be sent to someone other than the
person or persons whose signature(s) appear(s) on this Letter above or to
such person or persons at an address other than shown in the box entitled
"Description of Series A Notes" on this Letter above.
Mail: Series B Notes and/or Series A Notes to:
Name(s).........................................................
(PLEASE TYPE OR PRINT)
................................................................
(PLEASE TYPE OR PRINT)
Address.........................................................
................................................................
(ZIP CODE)
- -----------------------------------------------------------------
IMPORTANT: THIS LETTER (TOGETHER WITH THE CERTIFICATES FOR SERIES A NOTES OR A
BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
- ------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Dated:................................................................. 1996
X .................................................................... 1996
X .................................................................... 1996
SIGNATURE(S) OF OWNERS DATE
Area Code and telephone Number .....................................
If a holder is tendering any Series A Notes, this Letter must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Series A Notes, or by any person(s) authorized to
become registered holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
officer or other person acting in a fiduciary or representative capacity,
please set forth full title. See Instruction 3.
Name(s): ..................................................
............................................................
(PLEASE TYPE OR PRINT)
Capacity: .................................................
Address: ..................................................
............................................................
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: ..................................
(AUTHORIZED SIGNATURE)
............................................................
(TITLE)
............................................................
(NAME AND FIRM)
............................................................
Dated: ............................................. , 1996
- -------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
OF SFX BROADCASTING, INC.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by securityholders either if
certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
"The Exchange Offer--Book-Entry Transfer" section of the Prospectus.
Certificates for all physically tendered Series A Notes, or Book-Entry
Confirmation, as the case may be, as well as a properly completed and duly
executed Letter (or manually signed facsimile hereof) and any other documents
required by this Letter, must be received by the Exchange Agent at the address
set forth herein on or prior to the Expiration Date, or the tendering holder
must comply with the guaranteed delivery procedures set forth below.
Securityholders whose certificates for Series A Notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date,
or who cannot complete the procedure for book-entry transfer on a timely
basis, may tender their Series A Notes pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures"
section of the Prospectus. Pursuant to such procedures, such tender must be
made through an Eligible Institution, prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly
completed and duly executed Letter (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Series A Notes and the amount of Series
A Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Series A Notes in proper format for
transfer, or a Book-Entry Confirmation as the case may be, and any other
documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and the certificates for all physically
tendered Series A Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within five NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Series A Notes, and all
other required documents is at the election and risk of the tendering holders,
but the delivery will be deemed made only when actually received or confirmed
by the Exchange Agent. If Series A Notes are sent by mail, it is suggested
that registered mail, properly insured, with return receipt requested, be used
and that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO SECURITYHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER).
If less than all of the Series A Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Series A Notes to be tendered in the box above
entitled "Description of Series A Notes--Aggregate Principle Amount Tendered."
A reissued certificate representing the balance of nontendered Series A Notes
will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration Date. ALL OF THE
SERIES A NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN
TENDERED UNLESS OTHERWISE INDICATED.
<PAGE>
3. SIGNATURES ON THIS LETTER; POWERS OF ATTORNEY AND ENDORSEMENTS; GUARANTEE
OF SIGNATURES.
If this Letter is signed by the registered holder of the Series A
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Series A Notes are owned of record by two or more
joint owners, all of such owners must sign this Letter.
If any tendered Series A Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of
the Series A Notes specified herein and tendered hereby, no endorsements of
certificates or separate powers of attorney are required. If, however, the
Series B Notes are to be issued, or any untendered Series A Notes are to be
reissued, to a person other than the registered holder, then endorsements of
any certificates transmitted hereby or separate powers of attorney are
required to be submitted together with the Certificates for Series A Notes.
Signatures on such certificate(s) must be guaranteed by an Eligible
Institution as defined below.
If this Letter is signed by a person or persons other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders appear(s) on the certificate(s) and signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter or any certificates or powers of attorney are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
ENDORSEMENTS ON CERTIFICATES FOR SERIES A NOTES OR SIGNATURES ON
POWERS OF ATTORNEY REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM
WHICH IS A MEMBER OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK
OR TRUST COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNTIED STATES (AN
"ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE SERIES A NOTES ARE TENDERED: BY A REGISTERED HOLDER
OF SERIES A NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES
ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS
ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH SERIES A NOTES) WHO HAS
NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL
DELIVERY INSTRUCTIONS" ON THIS LETTER, OR FOR THE ACCOUNT OF AN ELIGIBLE
INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Series A Notes should indicate in the
applicable box above the name and address to which Series B Notes issued
pursuant to the Exchange Offer and/or substitute certificates evidencing
Series A Notes not exchanged are to be issued or sent, if different from the
name or address of the person signing this Letter. In the case of issuance in
a different name, the employer identification or social security number of the
person named must also be indicated. Securityholders tendering Series A Notes
by book-entry transfer may request that Series A Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as
such securityholder may designate hereon. If no such instructions are given,
such Series A Notes not exchanged will be returned to the name or address of
the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder
whose Series A Notes are accepted for exchange must provide the Company (as
payor) with such holder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 below, which in the case of a tendering holder who is an
individual, is his or her social security number. If the Company is not
provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, delivery to such tendering holder of Series B
Notes may be subject to backup withholding in an amount equal to 31% of all
reportable payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
<PAGE>
Exempt holders of Series A Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"W-9 Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Series A
Notes must provide its correct TIN by completing the Substitute Form W-9 set
forth below, certifying that the TIN provided is correct (or that such holder
is awaiting a TIN) and that the holder is exempt from backup withholding, or
the holder has not been notified by the Internal Revenue Service that such
holder is subject to backup withholding as a result of a failure to report all
interest or dividends or the Internal Revenue Service has notified the holder
that such holder is no longer subject to backup withholding. If the tendering
holder of Series A Notes is a nonresident alien or foreign entity not subject
to backup withholding, such holder must give the Company a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained from the Exchange
Agent. If the Series A Notes are in more than one name or are not in the name
of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should (i) consult the W-9 Guidelines for instructions on applying for
a TIN, (ii) check the box in Part 2 of the Substitute Form W-9 and (iii) write
"applied for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such holder does
not provide its TIN to Holdings within 60 days, backup withholding will begin
and continue until such holder furnishes its TIN to Holdings.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Series A Notes to it or its order pursuant to the Exchange Offer.
If however, Series B Notes and/or substitute Series A Notes not exchanged are
to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Series A Notes tendered hereby,
or if tendered Series A Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is imposed for any
reason other than the transfer of Series A Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted herewith, the amount of such transfer
taxes will be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY
FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SERIES A NOTES SPECIFIED IN THIS
LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any
or all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Series A Notes, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their
Series A Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Series A Notes nor shall any of them incur any liability for failure
to give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED SERIES A PREFERRED STOCK.
Any holder whose Series A Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as
requests for additional copies of the Prospectus and this Letter, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: SFX BROADCASTING, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX TIN:________________________________
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND SOCIAL SECURITY NUMBER OR
DEPARTMENT OF THE TREASURY DATING BELOW EMPLOYER IDENTIFICATION NUMBER
INTERNAL REVENUE SERVICE
------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART 2--TIN Applied for [ ]
IDENTIFICATION NUMBER
("TIN") AND ------------------------------------------------------------------------------------------------
CERTIFICATION
11. CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me).
(2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of a failure to report all interest or dividends or
(c) the IRS has notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE................................ DATE.........................
</TABLE>
[FN]
- -----------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup
withholding because of underreporting of interest or dividends on your
tax return and you have not been notified by the IRS that you are no longer
subject to backup withholding.
- -----------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
___________________________________ _____________________________
Signature Date
- ------------------------------------------------------------------------------
NOTICE OF GUARANTEED DELIVERY FOR
SFX BROADCASTING, INC.
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of SFX Broadcasting, Inc. (the "Company") made pursuant to
the Prospectus, dated July 17, 1996 (the "Prospectus"), if certificates for 10
3/4% Senior Subordinated Notes due 2006, Series A (the "Series A Notes") of
the Company are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Company prior to 5:00 p.m., New York City
time, on the Expiration Date of the Exchange Offer. Such form may be delivered
or transmitted by mail, hand or overnight courier to The Chase Manhattan Bank
(the "Exchange Agent") as set forth below. In addition, in order to utilize
the guaranteed delivery procedure to tender the Series A Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal must also
be received by the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
Delivery To: The Chase Manhattan Bank, the Exchange Agent
By Facsimile: By Mail, By Hand and Confirm by Telephone:
Overnight Courier:
(212) 638-7380 The Chase Manhattan Bank Carlos Esteves
(212) 344-9387 Corporate Trust-Securities Window (212) 638-0828
Room 234-North Building
55 Water Street Sharon Lewis
New York, NY 10041 (212) 638-0454
Delivery of this instrument to an address other than as set forth above
or transmission of instructions via a facsimile number other than the one
listed above will not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the Aggregate Principal amount of Series A Notes set forth below,
pursuant to the guaranteed delivery procedure described in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus.
Aggregate Principal Amount of Series A Notes
tendered:
$____________________________________________
Certificate Nos. (if available):
_____________________________________________
Aggregate Principal Amount Represented by Old If Series A Notes will be
Certificates(s): delivered by book-entry transfer
to The Depository Trust Company,
provide account number.
$______________________________________ Account Number ________________________
<PAGE>
- -------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
X______________________________________ ____________ , 1996
X______________________________________ ____________ , 1996
Signature(s) of Owners(s) or Date
Authorized Signatory
Area Code and Telephone
Number:________________
Must be signed by the holder(s) of Series A Notes as their name(s)
appear(s) on certificates for Series A Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Capacity: ------------------------------------------------------------------
Address(es):------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange,
or a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
aggregate principal amount of Series A Notes tendered hereby in proper form
for transfer, or timely confirmation of the book-entry transfer of such Series
A Notes into the Exchange Agent's account at The Depository Trust Company
pursuant to the procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus, together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantee and any other
documents required by the Letter of Transmittal, will be received by the
Exchange Agent at the address set forth above, no later than five New York
Stock Exchange trading days after the date of execution hereof.
_______________________________________ ______________________________________
Name of Firm Authorized Signature
_______________________________________ ______________________________________
Address Title
_______________________________________ Name: ________________________________
Zip Code (Please Type or Print)
Area Code and Tel. No.________________ Dated: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR SERIES A NOTES WITH THIS FORM. CERTIFICATES
FOR SERIES A NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
SFX BROADCASTING, INC.
OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
TO: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
SFX Broadcasting, Inc. (the "Company") is offering, upon and subject to
the terms and conditions set forth in the Prospectus, dated July 17, 1996 (the
"Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") $1,000 principal amount of
its 10 3/4% Senior Subordinated Notes due 2006, Series B (the "Series B
Notes"), which exchange has been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a registration statement of
which this Prospectus is a part (the "Registration Statement") for each $1,000
principal amount of its outstanding 10 3/4% Senior Subordinated Notes due
2006, Series A (the "Series A Notes") of which $450.0 million in aggregate
principal amount are outstanding as of the date hereof. The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the Registration Rights Agreement dated May 31, 1996 among the Company and BT
Securities Corporation, Goldman, Sachs & Co., and Lehman Brothers Inc. (the
"Initial Purchasers").
We are requesting that you contact your clients for whom you hold Series
A Notes regarding the Exchange Offer. For your information and for forwarding
to your clients for whom you hold Series A Notes registered in your name or in
the name of your nominee, or who hold Series A Notes registered in their own
names, we are enclosing the following documents:
1. Prospectus dated July 17, 1996;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer, if certificates for Series A Notes are not immediately
available, or time will not permit all required documents to reach
the Exchange Agent prior to the Expiration Date (as defined below),
or if the procedure for book-entry transfer cannot be completed on a
timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Series A Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients'
instructions with regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Chase Manhattan Bank, Exchange
Agent for the Series A Notes.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on August 14, 1996, unless extended, provided it may
not be extended beyond August 27, 1996.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent, and certificates representing the Series A Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
<PAGE>
If holders of Series A Notes wish to tender, but it is impracticable for
them to forward their certificates for Series A Notes prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on
a timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Series A Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Series A Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or
requests for additional copies of the enclosed materials, should be directed
to The Chase Manhattan Bank, the Exchange Agent for the Series A Notes, at its
address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
SFX BROADCASTING, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF HOLDINGS OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS OF BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE
IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
<PAGE>
SFX BROADCASTING, INC.
OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated July 17, 1996 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of SFX
Broadcasting, Inc. (the "Company") to exchange (the "Exchange Offer") $1,000
principal amount of its 10 3/4% Senior Subordinated Notes due 2006, Series B
(the "Series B Notes"), which exchange has been registered under the
Securities Act of 1933, as amended, pursuant to a registration statement of
which the Prospectus is part for each $1,000 principal amount of its
outstanding 10 3/4% Senior Subordinated Notes due 2006, Series A (the "Series
A Notes") of which $450.0 million in aggregate principal amount are
outstanding as of the date hereof. The Exchange Offer is made upon the terms
and subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement
dated May 31, 1996, among the Company and BT Securities Corporation, Goldman,
Sachs & Co. and Lehman Brothers, Inc. (the "Initial Purchasers").
This material is being forwarded to you as the beneficial owner of the
Series A Notes carried by us in your account but not registered in your name.
A tender of such Series A Notes may only be made by us as the holder of record
and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to tender
on your behalf the Series A Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible
in order to permit us to tender the Series A Notes on your behalf in
accordance with the provisions of the Exchange Offer. The Exchange Offer will
expire at 5:00 p.m., New York City time, on August 14, 1996. Series A Notes
tendered pursuant to the Exchange Offer may be withdrawn at any time before
the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all of the outstanding Series A
Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain
Conditions to the Exchange Offer."
3. Any transfer taxes incident to the transfer of Series A Notes from
the holder to the Company will be paid by the Company, except as
otherwise provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
August 14, 1996, unless extended by the Company, provided it may not
be extended beyond August 27, 1996.
If you wish to have us tender your Series A Notes, please so instruct us
by completing, executing and returning to us the instruction form on the back
of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION
ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER SERIES A NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by SFX
Broadcasting, Inc. with respect to its Series A Notes.
This will instruct you to tender the Series A Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Series A Notes held by you for my account as indicated
below:
PRINCIPAL AMOUNT OF
SERIES A NOTES
10 3/4% Senior Subordinated Notes due
2006, Series A............ ----------------------------------------
[ ] Please do not tender any Series A
Notes held by you for my account.
Dated:___________________, 1996 --------------------------------------------
--------------------------------------------
Signature(s)
--------------------------------------------
--------------------------------------------
--------------------------------------------
Please print name(s) here
--------------------------------------------
--------------------------------------------
Address(es)
--------------------------------------------
--------------------------------------------
Area Code and Telephone Number
--------------------------------------------
Tax Identification or Social Security No(s).
None of the Series A Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Series A Notes held by
us for your account.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------------- -------------------------------------------------------------
GIVE THE GIVE THE NAME
FOR THIS TYPE OF ACCOUNT: NAME AND FOR THIS TYPE OF ACCOUNT: AND EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF -- NUMBER OF --
- -------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship The owner(4)
account
2. Two or more individuals The actual owner of the 9. A valid trust, estate, or The legal entity (Do not
(joint account) account or, if combined funds, pension trust furnish the identifying
the first individual on the number of the personal
account(1) representative or trustee
unless the legal entity
itself is not designated
in the account title.)(5)
3. Husband and wife (joint The actual owner of the 10. Corporate account The corporation
account) account or, if joint funds,
either person(1)
4. Custodian account of a The minor(2) 11. Religious, charitable, or The organization
minor (Uniform Gift to educational organization
Minors Act) account
5. Adult and minor (joint The adult or, if the minor is 12. Partnership account held The partnership
account) theonly contributor, the minor(1) in the name of the
business
6. Account in the name of The ward, minor, or 13. Association, club, or The organization
guardian or committee incompetent person(3) other tax-exempt
for a designated ward, organization
minor, or incompetent
person
7.a. The usual The grantor-trustee(1) 14. A broker or registered The broker or nominee
revocable savings nominee
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1) 15. Account with the The public entity
account that is not Department of
a legal or valid Agriculture in the name of
trust under state a public entity (such as a
law state or local government,
school district, or prison)
that receives agricultural
program payments
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) Show your individual name. You
may also enter your business name. You may use your Social Security
number or employer identification number.
(5) List first and circle the
name of the legal trust, estate or pension trust.
Note: If no name is circled
when there is more than one name, the number will be considered to be
that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP
WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under Section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
o The United States or any agency or instrumentality
thereof.
o A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
o An international organization or any agency or
instrumentality thereof.
o A registered dealer in securities or commodities registered in the
United States or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under
Section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-
exempt trust described in Section 4947(a)(1) of
the Code.
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under Section
1441 of the Code.
o Payments to partnerships not engaged in a trade or business in the
United States and which have at least one nonresident partner.
o Payments of patronage dividends where the
amount received is not paid in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup
withholding including the following:
o Payments of interest on obligations issued by
individuals. Note: You may be subject to backup
withholding if this interest is $600 or more and is
paid in the course of the taxpayer's trade or
business and you have not provided your correct
taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under Section 852 of the Code).
o Payments described in Section 6049(b)(5) of the
Code to nonresident aliens.
o Payments on tax-free covenant bonds under
Section 1451 of the Code.
o Payments made by certain foreign
organizations.
o Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N of the Code.
PRIVACY ACT NOTICE. -- Section 6109 of the Code require most recipients of
dividends, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividends, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER NUMBER. -- If you fail to furnish your
taxpayer identification number to a payer, you are subject to a penalty of $50
for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
