As filed with the Securities and Exchange Commission on July 16, 1996
Registration No. 333-06553
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------------------------
SFX BROADCASTING, INC.
(Exact Name of Registrant as Specified in Its Charter)
-----------------------------
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DELAWARE 4832 13-3649750
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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150 EAST 58TH STREET, 19TH FLOOR
NEW YORK, NEW YORK 10155
(212) 407-9191
(Address, including zip code and telephone number, including area
code, of registrant's principal executive offices)
-----------------------------
ROBERT F.X. SILLERMAN
CHIEF EXECUTIVE OFFICER
150 EAST 58TH STREET, 19TH FLOOR
NEW YORK, NEW YORK 10155
(212) 407-9191
(Name, address, including zip code and telephone number, including area code,
of agent for service)
-----------------------------
COPIES TO:
HOWARD M. BERKOWER, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10122
(212) 751-5700
-----------------------------
Approximate date of commencement of proposed sale of the securities
to the public: As soon as practicable after this Registration Statement
becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box.[ ]
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- 1 -
<PAGE>
SFX BROADCASTING, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 404(A) AND ITEM 501(B) OF REGULATION S-K
ITEM AND HEADING ON FORM S-4
HEADING OR LOCATION IN PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
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1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus............. Cover Pages of Registration Statement and Prospectus; Cross
Reference Sheet
2. Inside Front and Outside Back Cover Pages of
Prospectus........................................... Inside Front and Outside Back Cover Pages of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information................................ Prospectus Summary; Summary Consolidated Financial Data; Risk
Factors
4. Terms of the Transaction............................. Prospectus Summary; The Exchange Offer; Certain Federal Income
Tax Considerations; Description of Notes
5. Pro Forma Financial Information...................... Summary Consolidated Financial Data
6. Material Contracts with the Company Being
Acquired............................................. Not Applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters......................................... Not Applicable
8. Interests of Named Experts and Counsel............... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities....... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants.......... Available Information; Prospectus Summary; Risk Factors; Use of
Proceeds
11. Incorporation of Certain Information By Reference.... Incorporation by Reference
12. Information with Respect to S-2 or S-3 Registrants... Not Applicable
13. Incorporation of Certain Information by Reference.... Not Applicable
14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants ......................... Not Applicable
<PAGE>
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3
Companies........................................... Not Applicable
16. Information with Respect to S-2 or S-3 Companies...... Not Applicable
17. Information with Respect to Companies Other Than S-3 or
S-2 Companies......................................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations
are to be Solicited................................... Not Applicable
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer....... Prospectus Summary; The Exchange Offer; Use of Proceeds
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION,
DATED JULY 16, 1996 PROSPECTUS
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
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1996, UNLESS EXTENDED, PROVIDED IT MAY NOT BE EXTENDED
BEYOND , 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 ,
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 c
onditions. 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.
-----------------------------
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 , 1996.
<PAGE>
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
(continued on next page)
ii
<PAGE>
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."
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 a 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;
(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
<PAGE>
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 currently 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), 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 on
behalf 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 the 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").
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
3
<PAGE>
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 optionto 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 Acquisitionfor 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 merger
with MMR.
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
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
Chemical 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.
5
<PAGE>
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 , 1996 (the "Expiration
Date") unless extended, provided it may not be
extended beyond , 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................ Chemical Bank is serving as Exchange Agent in
connection with the Exchange Offer.
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 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.
6
<PAGE>
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.
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 Pro Forma
for the for the
Recent Recent
Acquisitions Acquisitions
and the and the
Transactions Transactions
(other than the (7)
MMR Merger) (7)
1991 1992 1993 1994 1995 1995 1995
---- ---- ---- ---- ---- ---- ----
<S> <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, ....... 3,726 3,208 4,475 5,873 9,137 28,957 33,218
duopoly integration costs and
acquisition related costs(2)
Corporate expenses ................ 726 769 1,808 2,964 3,797 6,060 6,300
Corporate ......................... -- -- 13,980 -- -- -- --
expenses-non-recurring
charge(3)
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 ........ -- -- 1,665 -- -- -- --
retirement
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 CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------------------------------
Pro Forma for the Recent Pro Forma for the Recent
Acquisitions and the Transactions Acquisitions and the
(other than the MMR Merger)(7) Transactins (7)
(unaudited) (unaudited) --------------------------------- -----------------------
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 change
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) $ (0.5) $ (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
DECEMBER 31, FOR THE TRANSACTION
---------------------------------------------- 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 Companyof 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 serving 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.
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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-- Consequences 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.
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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 Compliant, 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 $19.5
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
Designationssetting 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
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voting power in the 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 reasona
bly 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 ti
me 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.
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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."
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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 __________, 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 _______, 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 _________, 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
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of Transmittal, to the Exchange Agent at one of the addresses set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition, either
(i) certificates for such 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.
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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.
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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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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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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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
Chemical 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.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
Delivery to: Chemical Bank
By Facsimile: By Mail, By Hand and Confirm by Telephone:
Overnight Courier:
(212) 638-7389 Chemical 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
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 Chemical
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 Securities and Exchange Commission (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) f
ollowing 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 Statem
ent, (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), 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),
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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. In addition,
until ___________, 1996 all dealers effecting transactions in the Series B
Notes may be required to deliver a prospectus.
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.
56
<PAGE>
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.
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............................................14
Use of Proceeds.........................................20
The Exchange Offer......................................22
Description of Notes....................................28
Certain Federal Income Tax Considerations...............53
Plan of Distribution....................................54
Legal Matters...........................................54
Experts.................................................54
------------------
Until _____, 1996 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Series B Notes, whether or not participating in
the Exchange Offer, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
SFX BROADCASTING, INC.
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2006, SERIES B
_____________
PROSPECTUS
_____________
____________, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware corporation to indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was an officer or director of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which he actually and reasonably incurred
in connection therewith.
SFX's Certificate of Incorporation provides that no director of SFX
shall be personally liable to SFX or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to SFX or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware or (iv) for any transaction from which the
director derived an improper personal benefit.
SFX's By-Laws provide that SFX shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of SFX) by reason of
the fact that he is, was or has agreed to become a director or officer of SFX,
or is or was serving or has agreed to serve at the request of SFX as a
director or officer of another company, partnership, joint venture, trust or
other enterprise, against costs, charges, expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of SFX,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of SFX, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
The By-laws also provide that SFX shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of SFX to procure a judgment in
its favor by reason of the fact that he is, was or has agreed to become a
director or officer of SFX, or is or was serving at the request of SFX as a
director or officer of another company, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any
appeal therefrom, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of SFX and except that
no such indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to SFX unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
II-1
<PAGE>
To the extent that a director or officer of SFX shall be successful
on the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding
referred to above, or in the defense of any claim, issue or matter therein, he
shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection therewith.
The By-Laws further provide that any indemnification (unless ordered
by a court) shall be paid by SFX as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth
in the By-Laws unless a determination is made that indemnification of the
director or officer is not proper in the circumstances because he has not met
the applicable standard of conduct set forth in the By-Laws. Such
determination shall be made (i) by the Board of Directors of SFX by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding shall be paid by SFX in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by SFX as authorized in the By-Laws.
The Board of Directors of SFX shall purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director or
officer of SFX, or is or was serving at the request of SFX as a director or
officer of another company, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him or
on his behalf in any such capacity, or arising out of his status as such,
whether or not SFX would have the power to indemnify him against such
liability under the provisions of the By-Laws, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote of
a majority of the Board of Directors.
The By-Laws also provide that the indemnification and advancement of
expenses provided by, or granted pursuant to, the By-Laws shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the estate, heirs, executors and administrators of such person.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
April 15, 1996, among SFX Broadcasting, Inc., SFX Merger
Company and Multi-Market Radio, Inc., including exhibits
(Incorporated by reference to Exhibit 2.1 to Form 8-K filed
May 8, 1996).
*2.2 Amendment No. 1 to Amended and Restated Agreement and Plan of
Merger, dated as of May 6, 1996, among SFX Broadcasting, Inc.,
SFX Merger Company and Multi-Market Radio, Inc.
3.1 Restated Certificate of Incorporation of the Company
(Incorporated by reference to Exhibit 3.1 to Amendment No. 3
to Registration Statement on Form S-1 (File No. 33-65442)
filed with the Commission on September 29, 1993).
3.2 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company filed with the Delaware Secretary
of State's office on July 29, 1994 (Incorporated by reference
to Exhibit 3.2 to Form 10-K for the period ending December 31,
1994).
II-2
<PAGE>
3.3 By-laws of the Company (Incorporated by reference to Exhibit
3.2 to Registration Statement on Form S-1 (File No. 33-65442)
filed with the Commission on July 2, 1993).
+3.4 Certificate of Designations of the Company's Series C
Redeemable Convertible Preferred Stock.
+3.5 Certificate of Designations of the Company's 6 1/2% Series D
Cumulative Convertible Exchangeable Preferred Stock.
4.1 Form of Certificate for shares of Class A Common Stock
(Incorporated by reference to Exhibit 4.1 to Amendment No. 3
to Registration Statement Form S-1 (File No. 33-65442) filed
with the Commission on September 29, 1993).
4.2 Voting Trust Agreement Between Mr. Sillerman, Mr. Tytel and
William J. Magee, Jr. (Incorporated by reference to Exhibit 9
to Amendment No. 1 to Registration Statement Form S-1 (File
No. 33- 65442) filed with the Commission on September 7,
1993).
+4.3 Indenture relating to the Company's 10 3/4% Senior
Subordinated Notes due 2006.
+4.4 Supplemental Indenture relating to the Company's 113/8% Senior
Subordinated Notes due 2000.
4.5 Offer to Purchase and Consent Solicitation, dated May 2, 1996,
of SFX Broadcasting, Inc. with respect to its 113/8 Senior
Subordinated Notes due 2000 (Incorporated by reference to
Exhibit 4.1 to Form 8-K filed May 9, 1996).
+5 Opinion of Baker & McKenzie with respect to the legality of
the securities being registered.
+8 Opinion of Baker & McKenzie with respect to the certain tax
matters.
+10.52 Form of Registration Rights Agreement between HMW
Communications, Inc. WWWB/WGLD Operating Company, Inc.
WWWB/WGLD License Subsidiary, Inc. and SFX Communications,
Inc.
+10.53 Amendment No. 1 To Amended And Restated Financial Consulting
And Marketing Agreement dated March __, 1996 between Sillerman
Communications Management Corporation and SFX Broadcasting,
Inc.
+10.54 Supplement to the Termination and Assignment Agreement dated
May 21, 1996 by and between Sillerman Communications
Management Corporation and SFX Broadcasting, Inc.
+10.55 Registration Rights Agreement dated as of May 31, 1996
by and among SFX Broadcasting, Inc., the Guarantors and BT
Securities Corporation, Goldman Sachs & Co. and Lehman
Brothers, Inc.
+10.56 Registration Rights Agreement dated as of May 31, 1996 by and
among SFX Broadcasting, Inc., and Goldman Sachs & Co., Lehman
Brothers, Inc., and BT Securities Corporation.
+10.57 Lock-up letter dated May 21, 1996 from Robert F.X. Sillerman,
Sillerman Communications Management Corporation, R. Steven
Hicks, D. Geoffrey Armstrong, Howard J. Tytel, and Richard A.
Liese.
II-3
<PAGE>
*10.58 Asset Purchase Agreement dated as of _____, 1996 by and between
SFX Broadcasting of Texas (KTCK) Licensee, Inc. and SFX
Broadcasting of Texas (KTCK), Inc. and KRBE Co.
*10.59 Exchange Agreement dated July 1, 1996 between Chancellor Radio
Broadcasting Company and SFX
Broadcasting, Inc.
*10.60 First Amendment to Asset Purchase Agreement dated as of the
28th day of June, 1996 by and between HMW Communications, Inc.
and SFX Broadcasting, Inc.
*10.61 Second Amendment to Asset Purchase Agreement dated as of the
28th day of June, 1996 by and between HMW Communications, Inc.
and Multi-Market Radio, Inc.
+11.1 Statement Regarding Calculation of Per Share Earnings.
+21 List of subsidiaries of the Company.
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Coopers & Lybrand LLP.
*23.3 Consent of KPMG Peat Marwick LLP.
*23.4 Consent of Cheely Burcham Edding Rokenbrod & Carroll.
23.5 Consent of Baker & McKenzie (contained in Exhibit 5).
*23.6 Consent of Fisher Wayland Cooper Leader & Zaragoza L.L.P.
+25 Statement of Eligibility of Chemical Bank; Form T-1.
+99.1 Letter of Transmittal relating to the Exchange Offer.
+99.2 Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees relating to the Exchange Offer.
+99.3 Letter to Clients relating to the Exchange Offer.
+99.4 Notice of Guaranteed Delivery relating to the Exchange Offer.
---------
* Filed herewith
+ Previously filed
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of
this registration statement, by any person or party who is deemed to
be an
II-4
<PAGE>
underwriter within the meaning of Rule 145(c) under the
Securities Act of 1933, as amended (the "Securities Act"), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the
applicable form.
(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is
used in connection with an offering of securities subject to Rule 415
under the Securities Act, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment
is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(f) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof)
II-5
<PAGE>
which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, State of New York, on the 16th day of July, 1996.
SFX BROADCASTING, INC.
By: /s/ Howard J. Tytel
----------------------------
Howard J. Tytel
Executive Vice President
In accordance with the requirements of the Securities Act of 1933,
this Amendment No. 1 to the registration statement has been signed by the
following person on behalf of the registrant in the capacities and on the
dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board of Directors, July 16, 1996
--------------------------------- Chief Executive Officer and Director
Robert F.X. Sillerman (principal executive officer)
* Executive Vice President, Treasurer, July 16, 1996
--------------------------------- Chief Operating Officer, Chief
D. Geoffrey Armstrong Financial Officer and Director
(principal financial and accounting
officer)
/s/ Howard J. Tytel Executive Vice President, July 16, 1996
--------------------------------- Secretary and Director
Howard J. Tytel
* Vice President and Director July 16, 1996
---------------------------------
Richard A. Liese
* Director July 16, 1996
----------------------------------
James F. O'Grady, Jr.
* Director July 16, 1996
---------------------------------
Paul Kramer
*By /s/ Howard J. Tytel
- -----------------------------------
Howard J. Tytel
Attorney-in-Fact
</TABLE>
<PAGE>
AMENDMENT NO. 1 TO THE AMENDED AND
RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
(the "Amendment") is entered into as of the 6th day of May, 1996, by and
among SFX BROADCASTING, INC., a Delaware corporation ("SFX"), SFX MERGER
COMPANY, a Delaware corporation and a direct wholly-owned subsidiary of SFX
("Acquisition Sub"), and MULTI-MARKET RADIO, INC., a Delaware corporation
("MMR") (SFX, Acquisition Sub and MMR collectively the "Parties").
WITNESSETH
WHEREAS, the Parties have entered into that certain Amended and Restated
Agreement and Plan of Merger as of the 15th day of April, 1996 (the
"Agreement");
WHEREAS, the parties wish to amend the Agreement, by this Amendment, and
as more specifically described herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Section 8.01(1)(B) of the Agreement shall be deleted in its entirety,
and replaced by the following new Section 8.01(1)(B):
"(B) by MMR or the Independent Committee of MMR during the period
commencing on the end of the fifteenth (15th) business day following the
delivery of the SFX Disclosure Schedules (the "Huff Termination Date") and
ending on the twentieth (20th) business day following the delivery of the
SFX Disclosure Schedules if a binding, definitive agreement is not
reached, by the close of business on the Huff Termination Date, with
respect to the repayment and redemption in full at or prior to the
Effective Time of the Subordinated Debentures and the MMR Senior Preferred
Stock;"
2. All other terms and conditions of the Agreement shall remain unchanged.
<PAGE>
IN WITNESS WHEREOF, the Parties have set their hands to this Amendment as
of the year and day first above written.
SFX Broadcasting, Inc.
By: /s/ Robert F.X. Sillerman
---------------------------------
Name: Robert F.X. Sillerman
Title: Executive Chairman
SFX Merger Company
By: /s/ Robert F. X. Sillerman
---------------------------------
Name: Robert F. X. Sillerman
Title: President
Multi-Market Radio, Inc.
By: /s/ Michael G. Ferrel
---------------------------------
Name: Michael G. Ferrel
Title: Chief Executive Officer
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of ___________, 1996 by and
between SFX BROADCASTING OF TEXAS (KTCK) LICENSEE, INC. and SFX BROADCASTING
OF TEXAS (KTCK), INC., Delaware corporations (collectively referred to as
"Seller"), and KRBE Co., a Texas corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the licensee of, and owns and operates, AM Radio
Station KTCK, Dallas, Texas ("Station"); and
WHEREAS, Seller desires to sell, assign, transfer and deliver, and Buyer
desires to purchase, certain assets used or useful in the operation of the
Station under the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
TRANSFER OF ASSETS
1.1 Transfer of Assets. Upon the terms and subject to the conditions
contained herein, on the Closing Date (as defined in Article 8), Seller shall
transfer to Buyer, by instruments of transfer and conveyance reasonably
acceptable to counsel for Buyer and counsel for Seller, and Buyer shall
purchase from Seller, to the extent permitted by law, all of Seller's right,
title and interest in the Assets (as defined in the next sentence), free and
clear of any and
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all liens, encumbrances, claims, charges or other liabilities. The term
"Assets" shall mean all of the following property of Seller used or useful to
the business or operation of the Station:
(a) Licenses. The right to hold and utilize all of the licenses, permits
and authorizations issued by the Federal Communications Commission ("FCC")
listed in Schedule 1.1(a) together with all other licenses, permits or
authorizations necessary for the operation of the Station now or hereafter
acquired ("Licenses").
(b) Included Equipment. The Station's transmitter and studio equipment,
as well as transmitting and receiving equipment, radio broadcast antennas and
those items of equipment related thereto as are located on or about the
Station's studio or transmitter building, as described in Schedule 1.1(b)
("Included Equipment").
(c) Other Tangible Personal Property. All items of tangible personal
property owned by Seller other than the Included Equipment ("Other Tangible
Property").
(d) Contracts. All contracts, contract rights, agreements, leases of
real and personal property, commitments and understandings described in
Schedule 1.1(d) ("Contracts").
(e) Real Property. All parcels of real property together with easements
and licenses used in the operation of the Station and set forth on Schedule
1.1(e).
(f) Call Letters. The Station's call letters, KTCK ("Call Letters").
(g) Accounts Receivable. All accounts receivable of Seller arising
before the commencement of the Time Brokerage Agreement as hereinafter
defined.
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(h) Files and Logs. All files, records and logs of Seller relating to
the business and operation of the Station reasonably required in order to work
and operate the Station, including copies of all Contracts, copies or
originals of the licenses and all documents of title relating to the Assets
but not including documents required to be maintained as part of Seller's
corporate record books and/or tax returns.
The Assets do not include any of the following ("Excluded Assets"):
(i) Any cash and cash equivalents and cash items of Seller on hand
and in banks;
(ii) Any and all claims made by Seller with respect to transactions
before the Closing Date;
(iii) Any internal corporate books or tax records with respect to
the operation of the Station.
1.2 Limited Assumption of Liabilities. At the Closing (as defined in
Article 8) or except as expressly assumed under the Time Brokerage Agreement
("TBA") as defined in Section 15.15 of this Agreement, Buyer shall only assume
and undertake, pursuant to an instrument of assumption reasonably acceptable
to counsel for Buyer and counsel for Seller, to pay, satisfy or discharge all
remaining unfulfilled obligations arising from the operation of the Station
under the Contracts ("Obligations"); provided, however, that Buyer will assume
no Obligations under the Contracts to the extent those Obligations become due
and payable or are accrued before the Closing Date or (except as modified by
the TBA) any Contracts that are in default on the Closing Date and are not
cured within thirty (30) days thereafter, and Buyer will
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not assume any Obligations under any Contracts hereafter acquired not in the
ordinary courseof business, or unless Buyer has consented in writing to any
Contracts executed between the date hereof and the Closing;
1.3 Credit for Contracts Assumed. Seller agrees that to the extent that
Buyer assumes certain Contracts which it would not otherwise desire to assume,
Seller shall agree to retain $150,000 of liability for said Contracts.
1.4 No Other Liabilities Assumed. Except as expressly provided in
Section 1.2, Buyer shall not and does not assume any liability for any claims,
debts, defaults, duties, obligations or liabilities of Seller of any kind or
nature, whether known or unknown, contingent or fixed, all of which, to the
extent that they exist from and after the Closing, shall be retained by
Seller. Buyer shall not be required to defend any suit or claim arising out of
any condition created by Seller and existing before the Closing Date, in
connection with Seller's ownership or operation of the Station, and Seller
shall satisfy in due course all liabilities not assumed by Buyer and shall
indemnify and hold Buyer harmless pursuant to the provisions of Article 12.
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ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. The total purchase price for the Assets shall be
Fourteen Million Dollars ($14,000,000) (the "Purchase Price"), including the
funds to be deposited pursuant to Subsection 2.2 hereof.
2.2 Escrow Deposit; Liquidated Damages. Buyer shall cause to be
deposited the sum of Seven Hundred Thousand Dollars ($700,000) (the "Escrow
Deposit") with CoreStates Bank, N.A. (the "Escrow Agent") upon execution of
this Agreement. All funds are to be held by Escrow Agent for the account of
Buyer in an interest-bearing account until the Closing with all interest
thereon accruing to the benefit of Buyer, pursuant to the terms of an Escrow
Agreement in the form of Exhibit A hereto. At the Closing, Escrow Agent shall
deliver the Escrow Deposit to Seller.
In the event of termination of this Agreement by Seller in accordance
with Section 13.1(d), Buyer shall cause the Escrow Deposit to be paid to
Seller as liquidated damages, and not as a penalty, with all interest on the
Escrow Deposit after the date of termination accruing to the benefit of
Seller. The parties agree that the Escrow Deposit constitutes a reasonable sum
considering all of the circumstances existing on the date of this Agreement,
including the relationship of the sum to the range of harm to Seller that
could be reasonably anticipated and the anticipation that proof of actual
damages would be costly or inconvenient.
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In the event of termination of this Agreement for any reason other than
as set forth in the previous paragraph, the Escrow Deposit, together with any
and all interest accrued thereon, shall be returned to Buyer.
2.3 Balance of Purchase Price. At the Closing, in addition to the Escrow
Deposit to be delivered to Seller by the Escrow Agent pursuant to Subsection
2.2 hereof, Buyer shall deliver to Seller one or more certified or cashier's
checks or wire transfer payable as directed by Seller in the aggregate amount
of Thirteen Million Three Hundred Thousand Dollars ($13,300,000).
2.4 Prorations. The term "Adjustment Amounts" shall mean all unpaid
income, deferred expenses and costs pertaining to the conduct and operation of
the Station, including, but not limited to, real and personal property and ad
valorem taxes on the Assets, Rentals, telephone, power and utility charges and
water bills, accruing prior to or attributable to the period before Closing.
The Adjustment Amounts shall be prorated as of the Closing Date except to the
extent final prorations and adjustments have been made with respect to certain
items pursuant to the TBA. Final determination of such proration shall be
completed within forty five (45) days after the Closing Date. If Seller and
Buyer are unable to agree on the Adjustment Amounts, the question thereof
shall be submitted to the Philadelphia office of Arthur Anderson
("Accountant") for determination, and the decision of the Accountant shall be
mandatory and binding on Seller and Buyer, with any sums determined due as and
for any contested Adjustment Amounts being due and payable within ten (10)
days of the date of the Accountant's decision.
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2.5 Allocation of Purchase Price. Prior to the Closing, Seller and Buyer
shall use their best efforts to agree upon an allocation of the Purchase
Price. Failure to agree upon such an allocation shall not be grounds for
either party to delay the Closing. If Seller and Buyer are unable to agree on
the allocation within sixty (60) days after Closing, the question of
allocation shall be submitted to the Accountant for determination, and the
decision of the Accountant shall be mandatory and binding on Seller and Buyer.
The fees and expenses of the Accountant shall be paid one-half by Buyer and
one-half by Seller. Buyer and Seller shall use the final allocation for all
reporting purposes in connection with federal, state and local income and
franchise taxes. Buyer and Seller each agree to prepare and file their
respective tax returns reflecting such allocations.
ARTICLE 3
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is qualified to do business and in good standing in the State of Texas and has
full and complete authority to enter into and perform this Agreement. Seller
has the authority to own or lease its properties and to carry on its business
as it is now being conducted and as it will be conducted until the Closing.
3.2 Authorization and Binding Effect of Agreement. The execution and
delivery of, and the performance of its obligations under this Agreement by
Seller, and the consummation
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by Seller of the transactions contemplated hereby, have been duly authorized
and approved by all necessary action on the part of Seller. Seller has the
corporate power and corporate authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions hereby
contemplated. This Agreement constitutes, and each of the other documents to
be executed by Seller, when so executed and delivered, will constitute the
legal, binding and valid obligations of Seller enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights or remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.3 Absence of Conflicts. Except as set forth on Schedule 3.3 or
Schedule 3.9, the execution and delivery of, and the performance of its
obligations under this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby:
(a) Do not (with or without the giving of notice or the passage of time
or both) violate or result in the creation of any lien on any of the Assets
under any provision of law, rule or regulation or any order, judgment,
injunction, decree or ruling applicable to Seller;
(b) Do not conflict or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the corporate charters or bylaws of Seller or pursuant to any Contract
or other instrument to which Seller is a party or by which any of the Assets
may be bound, or result in the creation of any lien upon any of the Assets.
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3.4 Governmental Consents and Consents of Third Parties. Except for the
required consent of the FCC with respect to the Licenses and as set forth on
Schedule 3.4 or Schedule 1.1(d), the execution and delivery of, and the
performance of Seller's obligations under this Agreement and Seller's
consummation of the transactions contemplated hereby do not require the
consent, waiver, approval, permit, license, clearance or authorization of, or
any declaration or filing with, any court or public agency or other authority,
or the consent of any person under any agreement, arrangement or commitment of
any nature which Seller is a party to or bound by or which the Assets are
bound by or subject to, the failure of which to obtain would have a material
adverse effect on the operation of the Station.
3.5 Condition of Assets. Except as set forth on Schedule 3.5:
(a) Seller has good and valid title to all of the Assets free and clear
of all liens.
(b) The Equipment and Other Tangible Personal Property have been
maintained by Seller in accordance with industry practices and are operating
in conformance with the requirements of the Licenses and the applicable rules
of the FCC.
(c) Seller has no knowledge of any defect in the condition or operation
of any item of the Equipment or Other Tangible Personal Property which is
reasonably likely to have a material adverse effect on the operation of the
Station.
3.6 FCC Licenses. Seller is the holder of the Licenses. The Licenses (i)
are valid, in good standing and in full force and effect and constitute all of
the licenses, permits and authorizations required by the Communications Act of
1934, as amended ("Act") and the rules, policies and regulations thereunder or
by the FCC for or used in the operation of the
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Station as now operated, and (ii) constitute all the licenses and
authorizations issued by the FCC to Seller for or in connection with the
current operation of the Station. Seller has no knowledge of any condition
imposed by the FCC as part of any License which is neither set forth on the
face thereof as issued by the FCC nor contained in the rules, policies and
regulations of the FCC applicable generally to stations of the type, nature,
class or location of the Station. Except as set forth on Schedule 1.1(a),
Station is being operated in all material respects accordance with the terms
and conditions of the Licenses and in all material respects accordance with
the rules and regulations of the FCC and the Act, and is not in violation of
any provisions thereof. Seller has complied in all respects with all FCC
requirements to file reports, applications and other documents with the FCC
with respect to the Station, and all such reports, applications and documents
are complete and correct in all respects. Except as disclosed on Schedule 3.6,
Seller has no knowledge, after due inquiry of FCC Counsel, of any matters of
proceedings pending or threatened affecting Seller (i) which could reasonably
be expected to result in the suspension of revocation of or the refusal to
renew any of the FCC Licenses or the imposition of any fines or forfeitures by
the FCC, or (ii) which could reasonably be expected to result in the FCC's
refusal to grant approval of the assignment to Buyer of the FCC Licenses or
the imposition of any material adverse condition in connection with approval
of such assignment. Except as set forth on Section 3.6, there are not any
unsatisfied or other outstanding citations issued by the FCC with respect to
the Station or its operation. Complete and accurate copies of all Licenses
have been delivered to Seller by Buyer.
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3.7 Title to and Condition of Real Property. Schedule 1.1(e) contains a
complete and accurate description of all the Real Property including street
address, legal description and location of all improvements thereon and
Seller's interests therein (other than Seller's studio). The Real Property
listed on Schedule 1.1(e) comprises all real property interests necessary to
conduct the business or operations of the Stations as now conducted. Seller
has good and marketable fee simple title, insurable at standard rates, to all
of the fee estates (including the improvements thereon) included in the Real
Property, free and clear at Closing of all liens, mortgages, pledges,
covenants, easements, restrictions, encroachments, leases, charges, and other
claims and encumbrances of any nature whatsoever, and without reservation or
exclusion of any mineral, timber, or other rights or interests, except for
liens for real estate taxes not yet due and payable. Seller has not made any
other agreement for the sale or lease of, or given any other person an option
to purchase or lease or a right of first refusal to purchase or lease, all or
any part of the Real Property. All towers, guy anchors, and buildings and
other improvements included in the Assets are located entirely on the Real
Property listed in Schedule 1.1(e). Seller has delivered to Buyer true and
complete copies of all deeds pertaining to the Real Property (including any
amendments and other modifications of such instruments). All Real Property
(including the improvements thereon) (i) is in good condition and repair
consistent with its present use, (ii) is available for immediate use in the
conduct of the business or operations of the Station, (iii) complies with all
applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction, (iv) there are no notices or uncorrected
violations of the applicable housing, building safety or fire ordinances, and
(v) no
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portion of the Real Property or improvements thereon is the subject of any
condemnation or eminent domain proceeding previously instituted or pending and
Seller has not received notice from any condemning authority that such
proceedings are threatened. Seller has full legal and practical access to the
Real Property. All easements, rights-of-way, and real property licenses have
been properly recorded in the appropriate public recording offices.
3.8 Contracts.
(a) With respect to the Contracts, Schedule 1.1(d) sets forth accurate
and complete list of all amendments, modifications and supplements thereto by
which the Station or its Assets or properties are bound, except (A) each
contract (including trade agreements) for the sale of time at the Station, and
(B) contracts which are cancelable by Seller or its assignee without breach or
penalty on not more than sixty (60) days notice. Complete and correct copies
of all of the Contracts, including all amendments, modifications and
supplements thereto, have been delivered to Buyer.
(b) To the best of Seller's knowledge, (i) each Contract is legal, valid
and enforceable against Seller in accordance with its terms; (ii) neither
Seller nor any other party thereto, is in material breach of or in material
default under any Contract; and (iii) there has not occurred any event which,
after the giving of notice or the lapse of time or both, would constitute a
material default under or result in the material beach of any Contract.
(c) Schedule 1.1(d) indicates for each Contract listed thereon whether
consent or approval by any party thereto is required thereunder for
consummation of the transactions contemplated hereby.
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3.9 Litigation, Environmental Compliance and Compliance with Law.
(a) Litigation. To the best of Seller's knowledge, except as described
on Schedule 3.9, (i) there are no claims, investigations, actions, suits or
administrative, arbitration or other proceedings pending or threatened against
Seller which would, individually or in the aggregate if adversely determined,
have a material adverse effect on the financial condition or the operation of
the Station or which would give any third party the right to enjoin the
transactions contemplated by this Agreement, (ii) there is no basis for any
claim, investigation, action, suit or proceeding which would, individually or
in the aggregate if adversely determined, have a material adverse effect on
the financial condition or operation of the Station; and (iii) there are no
pending or threatened orders, judgments or decrees of any court or
governmental agency which would have a material adverse effect on the Station
or any of its material Assets.
(b) Environmental Compliance. The term "Environmental Laws" shall mean
any federal, state or local laws, statutes, ordinances, regulations or
policies relating to the environment, health and safety, or any Hazardous
Materials (including without limitation, the use, handling, transportation,
production, disposal, discharge or storage thereof). The term "Hazardous
Materials" means the existence in any form of (i) polychlorinated biphenyls;
(ii) asbestos or asbestos containing materials; (iii) urea formaldehyde foam
insulation; (iv) oil, gasoline or other petroleum products (other than for
vehicles operated in the ordinary course of business); (v) pesticides and
herbicides; (vi) any other chemical, material or substance to which exposure
is prohibited, limited or regulated by any Environmental Laws and any federal,
state, county, regional or local authority. Seller is not a party to any
litigation or administrative proceeding, nor, to Seller's knowledge, is any
litigation or
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administrative proceeding threatened against Seller with respect to the
Station or the Real Property which in either case asserts or alleges that (i)
Seller violated Environmental Laws or the rules and regulations of the
Occupational Safety and Health Administration, (ii) Seller is required to
clean up or to take remedial or other responsive action due to the disposal,
discharge or other release of any Hazardous Materials, or (iii) Seller is
required to contribute to the cost of any past, present or future clean up or
remedial or other responsive action which arises out of or is related to the
disposal, discharge or other release or alleged release of any Hazardous
Materials by Seller. To Seller's knowledge, except as disclosed on Schedule
3.9, Seller is not in violation of any Environmental Laws with respect to the
Assets.
(c) Environmental Assessment.
(1) Buyer may, at its option and expense commence a Phase I
environmental assessment of the Real Property by an independent environmental
consultant (the "Consultant") to identify potential or actual adverse
environmental conditions, if any, affecting the soil, air, surface waters and
ground water in, on or around the Site, the work required to remedy any such
adverse environmental conditions (the "Remedial Work") and an estimate of the
cost of the Remedial Work ("Estimated Cost"). Buyer shall furnish a copy of
the Phase I Report to Seller promptly after completion of the environmental
audit.
(2) Buyer shall have until fifteen (15) days after the Phase I
environmental assessment is delivered to Buyer to give notice to Seller that
Buyer desires a Phase II environmental assessment of the Real Property. In the
event Buyer desires that a Phase II
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environmental audit be conducted, the same terms and provisions that governed
the Phase I environmental audit (as set forth in the previous paragraph) shall
apply to the Phase II environmental audit.
(3) Buyer shall have fifteen (15) days after either the Phase I or
Phase II environmental assessment to give notice of whether there are any
adverse environmental conditions on, above, below, about or in the vicinity of
the Real Property which are identified in the Phase I or Phase II
environmental assessment and to which Buyer objects (an "Identified
Condition"). Seller shall correct such condition to Buyer's reasonable
satisfaction at least ten (10) days prior to Closing. If Seller is unwilling
or unable to correct any Identified Condition as provided in the previous
sentence, then Buyer shall have the option to (i) terminate this Agreement or
(ii) accept the Real Property notwithstanding the presence of the Identified
Condition and Seller agrees that the Survival Period set forth in section 12.1
shall not apply to such Identified Condition.
(d) Compliance with Law. Except as set forth on Schedule 3.9, to the
best of Seller's knowledge, the operation of the Station materially complies
with the applicable rules and regulations of the FCC and all federal, state,
local or other laws, statutes, ordinance, regulations, and any applicable
order, writ, injunction or decree of any court, commission, board, agency or
other instrumentality that affect Seller or the operation of the Station.
3.10 Labor Matters.
(a) Schedule 3.10 sets forth a true and complete list of all individuals
employed by Seller who primarily perform services with respect to the
operation of the Station and their
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individual compensation plans. Except as set forth on Schedule 3.10, Seller is
not a party to any written employment contract, agreement, commitment or
arrangement with any individual identified on said Schedule.
(b) Seller is not a party to any collective bargaining agreement, and
there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(c) Except as disclosed on Schedule 3.10:
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither ongoing nor, to the knowledge of Seller,
threatened, any suits, actions, administrative proceedings, union-organizing
activities, arbitrations, grievances or other proceedings between Seller and
any employees of the Station or any union representing such employees;
(iii) With respect to the Station, to the best of Seller's
knowledge, (A) Seller is in compliance in all material respects with all laws,
rules and regulations relating to the employment of labor and all employment
contractual obligations, including those relating to wages, hours, collective
bargaining, affirmative action, discrimination, sexual harassment, wrongful
discharge and the withholding and payment of taxes and contributions; (B)
Seller has withheld all amounts required by law or agreement to be withheld
from the wages or salaries of its employees; and (C) Seller is not liable to
any present or former employees or any
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governmental authority for damages, arrears of wages or any tax or penalty for
failure to comply with the foregoing;
(iv) Buyer's consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof shall not, as a result of or in
connection with the transactions contemplated hereby, impose upon Buyer the
obligation to hire any of Seller's employees or to pay any severance or
termination pay under agreement, plan or arrangement binding upon Seller.
(v) Employees hired by Buyer shall be entitled to participate in
Buyer's employee benefit plans in accordance with the terms of such plans.
Buyer shall advise Seller on the date that the TBA commences of the employees
which Buyer does not intend to hire. Seller agrees to be responsible for any
severance to which such employees not hired by Buyer may be entitled. Buyer
and Seller agree that for employees hired by Buyer any vacation time for 1996
will be prorated on a calendar year basis with adjustment being made at
Closing. Seller shall be entitled to a credit for vacation time used but not
accrued. Buyer shall be entitled to a credit for vacation time accrued but not
used. Buyer will not honor any accruals of vacation time or sick leave prior
to 1996.
3.11 Employee Benefit Plans. Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof shall not,
as a result of or in connection with the transactions contemplated hereby,
impose upon Buyer any obligation under any benefit plan, contract or
arrangement (regardless of whether they are written or unwritten and funded or
unfunded) covering employees or former employees of Seller in
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connection with their employment by Seller. For purposes of this Agreement,
"benefit plans" shall include without limitation employee benefit plans within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended, vacation benefits, employment and severance contracts, stock
option plans, bonus programs and plans for deferred compensation.
3.12 Financial Statements and Cash Flow Representation. Seller has
delivered to Buyer balance sheets for the Station for fiscal years ending as
of December 31, 1994 and 1995 and the related statements of income for the
years ended on each of those dates (the "Financial Statements"). In addition,
the Seller has delivered to Buyer the balance sheet and profit and loss
statement of the Station as of March 31, 1996 (the "March Financial
Statements"). The Financial Statements and the March Financial Statements,
together with the notes thereto, are substantially correct and were prepared
in conformity with generally accepted accounting principles applied on a
consistent basis.
3.13 Tax Returns and Payments. Seller has filed with the appropriate
federal, state, local, foreign and other governmental agencies all tax returns
and reports with respect to the Station required to be filed by it, if any,
and timely paid all taxes, if any, shown due thereon, other than for taxes
contested in good faith by appropriate proceedings. Seller has withheld any
tax required to be withheld under applicable law and regulations with respect
to the Station, and such withholdings have been paid to the proper
governmental agency or adequate provisions therefor have been made by Seller.
There are no sales, use or transfer taxes of any kind due on the transfer of
the Assets or on the consummation of the transactions contemplated
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by this Agreement. To the extent of any sales or use taxes are due on the
transactions contemplated by this Agreement, Seller shall be responsible for
such taxes.
3.14 Broker's or Finder's Fees. Other than a fee to Star Media Group
which shall be the responsibility of Seller, no agent, broker, investment
banker or other person or firm acting on behalf or under the authority of
Seller or any affiliate of Seller is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or indirectly,
in connection with the transactions contemplated by this Agreement.
3.15 Insurance. There are now in full force and effect with reputable
insurance companies policies of (i) fire and extended coverage insurance with
respect to all material tangible Assets and (ii) public liability insurance,
all in commercially reasonable amounts.
3.16 Accounts Receivable. Seller guarantees that Buyer will collect at
least $500,000 of the Accounts Receivable within 120 days after the Effective
Date of the Time Brokerage Agreement between the parties of even date
herewith. If Buyer has not collected $500,000 within such time, Seller will
pay to Buyer the difference between $500,000 and the amount collected.
3.17 No Material Omission. To the knowledge of Seller, this Agreement
and the Schedule hereto do not contain any untrue statement of material fact
or omit to state a material fact relating to the Assets or the Station or
necessary to make the statements contained herein, in light of the
circumstances under which they were made, not misleading. There are no facts
known to Seller which would have or could reasonably be expected to have a
material adverse effect on the Station which have not been set forth in this
Agreement or any Schedule or
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certificate attached hereto which was prepared by Seller or delivered by
Seller pursuant to this Agreement.
ARTICLE 4
BUYER'S REPRESENTATION AND WARRANTIES
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has full and complete authority to enter into and perform this Agreement.
Buyer has the authority to own or lease its properties and to carry on its
business as it is now being conducted and as it will be conducted at the
Closing.
4.2 Authorization and Binding Effect of Agreement. Buyer's execution and
delivery of, and the performance of its obligations under this Agreement and
the consummation by Buyer of the transactions contemplated hereby, have been
duly authorized and approved by all necessary corporate action on the part of
Buyer. Buyer has the corporate power and corporate authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions hereby contemplated. This Agreement constitutes the legal,
binding and valid obligation of Buyer enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights or
remedies generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
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4.3 Absence of Conflicts. Buyer's execution and delivery of, and the
performance of its obligations under this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby:
(a) Do not (with or without the giving of notice or the passage of time
or both) violate (or result in the creation of any claim, lien, charge or
encumbrance on any of the assets or properties of Buyer under) any provision
of law, rule or regulation or any order, judgment, injunction, decree or
ruling applicable to Buyer in any manner which would have a material adverse
effect on the assets, business, operation or financial condition or results of
operations of Buyer, or on the ability of Buyer to fulfill its obligations
under this Agreement and consummate the transactions contemplated by this
Agreement;
(b) Do not (with or without the giving of notice or the passage of time
or both) conflict with or result in a breach or termination of, or constitute
a default or give rise to a right of termination or acceleration under the
corporate charter or by-laws of Buyer or any agreement, commitment or other
instrument which Buyer is a party to or bound by or by which any of its assets
or properties may be bound.
4.4 Government Consents and Consents of Third Parties. Except for the
required consent of the FCC, Buyer's execution and delivery of, and
performance of its obligations under this Agreement and the consummation by
Buyer of the transactions contemplated hereby, do not require the consent,
waiver, approval, permit, license, clearance or authorization of, or any
declaration of filing with, any court or public agency or other
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authority, or the consent of any person under any agreement, arrangement or
commitment of any nature to which Buyer is a party or by which it is bound.
4.5 Broker's or Finder's Fees. No agent, broker, investment banker or
other person or firm acting on behalf of or under the authority of Buyer or
any affiliate of Buyer is or will be entitled to any broker's or finder's fee
or any other commission or similar fee, directly or indirectly, in connection
with the transactions contemplated by this Agreement.
4.6 FCC Qualifications. There is no reason why Buyer should not be found
to be qualified to become the assignee of the Licenses. Buyer knows of no
reason why the FCC will not unconditionally grant the applications of Buyer
and Seller to the FCC for consent to assignment of the Licenses.
4.7 No Material Omission. To the knowledge of Buyer, this Agreement does
not contain any untrue statement of material fact or omit to state a material
fact relating to Buyer or necessary to make the statements contained herein,
in light of the circumstances under which they were made, not misleading.
There are no facts known to Buyer which would have or could reasonably be
expected to have a material adverse effect on the Station which have not been
set forth in this Agreement or any Schedule or certificate attached hereto
which was prepared by Buyer or delivered by Buyer pursuant to this Agreement.
ARTICLE 5
COVENANTS
5.1 Seller's Negative Covenants. Between the date hereof and the Closing
Date, except as otherwise expressly required or contemplated by this Agreement
or the TBA or with
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Buyer's written consent which consent shall not be unreasonably withheld,
Seller covenants that it will not:
(a) Take any action or permit to exist any condition that would cause
any of Seller's representations and warranties contained in this Agreement to
be untrue in any material respect on the Closing Date;
(b) Enter into any agreement or undertaking affecting the Station or its
business that is not reasonably necessary to the conduct and operation of the
Station's business, the maintenance of the Assets or otherwise in the ordinary
course of business;
(c) Cause or permit any act, or failure to act, which causes the
Licenses to expire, be surrendered, adversely modified or otherwise
terminated, or which causes the FCC to institute any proceedings for the
suspension, revocation or adverse modification of any of the Licenses; fail to
prosecute with due diligence any pending applications to the FCC with respect
to the Licenses; or take any other action that would result in the Station
being in material noncompliance with the requirements of the Act, or the
rules, regulations and policies of the FCC;
(d) Abandon, sell or transfer any of the Assets unless such Assets are
either replaced with tangible personal property having equivalent value and
utility or is no longer useful to the operation of the Station;
(e) Encumber or mortgage any property or assets included in the Assets,
or permit any new lien or encumbrance to attach to any of such property or
assets (other than a refinancing with existing lenders); or
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(f) Default under any Contract unless such default is cured prior to
Closing or is the result of a good faith dispute with the other party to such
Contract.
5.2 Seller's Affirmative Covenants. Between the date hereof and the
Closing Date except as otherwise expressly required or contemplated by this
Agreement or the Time Brokerage Agreement, Seller covenants that it will:
(a) Maintain in force the existing hazard and liability insurance
policies, or comparable coverage, for the Station and whether or not covered
by such insurance, repair, replace or restore any of the Property that may be
damaged, destroyed or stolen;
(b) Take all reasonable actions at all time to maintain, preserve,
protect and keep in good repair and working order and condition, reasonable
wear and tear expected, all the Assets necessary to the conduct of the
Station's business;
(c) Timely file all reports pertaining to the Station that are required
to be filed with the FCC;
(d) To the extent that any of the Contracts are not assignable by their
terms without another party's consent, use its reasonable best efforts to
obtain, without any change in the terms thereof, the consent of the other
party to any such Contract to the assignment thereof to Buyer;
(e) Pay all wages, salaries, commissions and other sums due its employees
and
agents at the Station through the Closing Date;
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(f) (i) File all tax returns, estimates and reports with respect to the
Station required to be filed by Seller prior to the Closing Date or relating
to periods prior to the Closing Date, unless valid extensions therefore shall
have been obtained.
(ii) Pay all taxes shown thereon pertaining to the Assets or operation
of the Station prior to the Closing before the same shall be in default.
(g) Notify Buyer thirty (30) days prior to any Contract expiring.
5.3 Buyer's Covenants. Between the date hereof and the Closing Date,
Buyer covenants that, to the extent that any of the Contracts are not
assignable by their terms without another party's consent, it will furnish
such information as such other party may reasonably require and to otherwise
cooperate fully with Seller in obtaining the same.
5.4 Joint Covenants of Buyer and Seller. Following the execution of this
Agreement, Buyer and Seller each covenant to the other:
(a) To proceed diligently to prepare and file with the FCC within five
(5) business days after execution of this Agreement, their respective portions
of the FCC applications and other necessary instruments required to obtain the
FCC Consent and Final Order (as such terms are hereinafter defined), to
cooperate with each other and use their best, diligent and good faith efforts
to obtain the FCC Consent and Final Order. Buyer and Seller shall promptly
answer FCC inquiries and vigorously oppose any protests, petitions to deny,
petitions for reconsideration or appeal of the FCC Consent that may be filed
and shall make good faith efforts to avoid designation for hearing. Seller
shall cause the Station to broadcast such announcements as are required by the
FCC concerning the filing of the FCC applications
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and any amendments thereto. The cost of publication of the required newspaper
advertising concerning the filing of the FCC application and any amendments
thereto shall be paid by Seller. Buyer and Seller shall each bear its own
legal and other fees and expenses involved in the preparation and prosecution
of the FCC and other applications except for the FCC application filing fee
which they shall pay in equal shares;
(b) If any event should occur, either within or without the knowledge or
control of Buyer or Seller, that would prevent fulfillment of the conditions
upon the obligations of any party hereto to consummate the transactions
contemplated by this Agreement, Buyer and Seller shall use its or their good
faith efforts to cure the same as expeditiously as possible; and
(c) If the FCC Consent contains any materially adverse condition, the
party upon which that condition is imposed shall use its best, diligent and
good faith efforts to remove the same before the Closing Date; provided that,
as to any such condition that is or would be a condition to Seller's continued
operation of the Station, Seller shall comply therewith and shall bear all
related costs without limitation.
The term "FCC Consent" shall mean an order issued by the FCC consenting
to the acquisition by Buyer of the Station. The term "Final Order" shall mean
FCC Consent which is not reversed, stayed, enjoined, set aside, annulled or
suspended and with respect to which no timely filed request for administrative
or judicial review, reconsideration or stay is pending, and as to which the
time for filing any such request, or for the FCC to set aside the FCC Consent
on its own motion, has expired.
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5.5 Further Assistance. After the Closing of this Agreement, Buyer and
Seller shall take such actions and properly execute and deliver such further
instruments as, in the reasonable opinion of counsel for Buyer or Seller, as
the case may be, may be necessary or desirable to assure, complete and
evidence the transactions provided for in this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION
The obligation of Buyer to consummate the transactions contemplated by
this Agreement is subject to satisfaction, on or before the Closing Date, of
each of the following conditions, any or all of which Buyer shall have the
right to waive at its sole option and risk:
6.1 Representations and Warranties True. All representations and
warranties of Seller shall be true and correct in all material respects on and
as of the Closing Date except for changes caused or any omission by Buyer
after the effective date of the Time Brokerage Agreement.
6.2 Covenants and Conditions Satisfied. All of the terms, covenants and
conditions of this Agreement to be complied with, performed or satisfied by
Seller on or before the Closing Date shall have been complied with, performed
or satisfied in all material respects.
6.3 Certificate. Buyer shall have received a certificate dated as of the
Closing Date, executed by a duly authorized representative of Seller, stating
that (a) the representations and warranties of Seller contained in this
Agreement are true and complete in all material respects on and as of the
Closing Date as though made on and as of the Closing Date, except for changes
that are permitted by this Agreement and set forth in the Certificate; and (b)
between
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the date hereof and the Closing Date, Seller has complied with or performed
all covenants in all material respects contained in this Agreement required to
be complied with or performed by Seller.
6.4 FCC Final Order. The FCC Consent shall have been obtained and shall
have become a Final Order, unless Buyer and Seller mutually consent to a
Closing without waiting for the FCC Consent to become a Final Order.
6.5 Actions or Proceedings. No action, suit, proceeding or investigation
by or before any court, administrative agency or other government authority
shall have been instituted or threatened to restrain, prohibit or invalidate
the transactions contemplated by this Agreement.
6.6 Closing Deliveries. All of the requirements of Article 9 shall have
been met.
ARTICLE 7
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to satisfaction, on or before the Closing Date, of
each of the following conditions, any or all of which Seller shall have the
right to waive at its sole option and risk:
7.1 Representations and Warranties True. All representations and
warranties of Buyer shall be true and correct in all material respects on and
as of the Closing Date.
7.2 Covenants and Conditions Satisfied. All of the terms, covenants and
conditions of this Agreement to be complied with, performed or satisfied by
Buyer on or before the Closing Date shall have been complied with, performed
or satisfied in all material respects.
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7.3 Certificate. Seller shall have received a Certificate dated as of
the Closing Date, executed by a duly authorized representative of Buyer,
stating that (a) the representations and warranties of Buyer contained in this
Agreement are true and complete in all material respects on and as of the
Closing Date as though made on and as of Closing Date, except for changes that
are permitted by this Agreement and set forth in the Certificate; and (b)
between the date hereof and the Closing Date, Buyer has complied with or
performed all covenants in all material respects contained in this Agreement
required to be complied with or performed by Buyer.
7.4 Final Order. The FCC Consent shall have been obtained and shall have
become a Final Order, unless Buyer and Seller mutually consent to a Closing
without waiting for the consent to become a Final Order.
7.5 Actions or Proceedings. No action, suit, proceeding or investigation
by or before any court, administrative agency or other governmental authority
shall have been instituted or threatened to restrain, prohibit or invalidate
any of the transactions contemplated by this Agreement.
7.6 Closing Deliveries. All of the requirements of Article 10 shall have
been met.
ARTICLE 8
THE CLOSING
Subject to the terms and conditions of this Agreement, including,
without limitation, Section 6.4 and Section 7.4, the consummation of the
transactions contemplated by this Agreement ("Closing") shall take place in
New York, New York or such other place and on a
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date (the "Closing Date"), to be selected by mutual agreement of Buyer and
Seller, within ten (10) business days of the FCC Consent becoming a Final
Order.
ARTICLE 9
SELLER'S CLOSING DELIVERIES
On the Closing Date, Seller shall deliver or cause to be delivered to
Buyer possession of the Assets and the following:
9.1 Bills of Sale, Documents of Title. Such bills of sale, deeds,
endorsements, assignments and other instruments of transfer and conveyance as
shall be reasonably satisfactory in form and substance to counsel for Buyer
transferring and assigning to Buyer good and marketable title to all of the
Included Equipment and Other Tangible Personal Property, Real Property, free
and clear of any and all liens, attachments, claims or encumbrances of any
kind whatsoever.
9.2 Assignments. Assignments to Buyer, in form for recording, when
applicable, of the Licenses and Contracts.
9.3 Certified Resolutions. A copy of the resolutions adopted by the
Board of Directors of Seller authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, certified by a duly authorized representative of Seller.
9.4 Certificate. A certificate of Seller to the effect set forth in
Section 6.3.
9.5 Opinions.
(a) An opinion of Seller's counsel in form attached hereto as Exhibit B.
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(b) An opinion of Seller's FCC counsel in form attached hereto as
Exhibit C.
ARTICLE 10
BUYER'S CLOSING DELIVERIES
On the Closing Date, Buyer shall deliver or cause to be delivered to
Seller the following:
10.1 Purchase Price. The Purchase Price as set forth in Article 2 hereof
consisting of:
(a) Seven Hundred Thousand Dollars ($700,000) by cashier's check,
certified check or wire transfer at Seller's election from the Escrow Agent;
(b) Thirteen Million Three Hundred Thousand Dollars ($13,300,000) as the
balance of the Purchase Price payable by bank cashier's check, certified check
or wire transfer at Seller's election;
10.2 Limited Assumption of Liability. An assumption by Buyer of the
obligations set forth in Section 1.2.
10.3 Certified Resolutions. A copy of the resolutions adopted by the
Board of Directors of Buyer authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby, certified by a duly authorized representative
of the Buyer.
10.4 Certificate. A certificate of Buyer as set forth in Section 7.3.
10.5 Opinion. An opinion of Buyer's counsel in form attached hereto as
Exhibit D.
ARTICLE 11
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RISK OF LOSS
11.1 Risk of Loss. The risk of loss, damage or destruction to any of the
Assets from fire or other casualty or cause shall be borne by the Seller at
all times prior to 12:01 a.m. on the Closing Date. Upon the occurrence of any
loss or damage to any material portion of the Assets as a result of a fire,
casualty or other cause prior to Closing, Seller shall notify Buyer of same in
writing immediately, stating with particularity the extent of such loss or
damage incurred, the cause thereof if known, and the extent to which
restoration, replacement and repair of the Assets lost or destroyed will be
reimbursed under any insurance policy with respect thereto. Subject to the
provisions hereof,
(a) In the event the loss or damage does not exceed Twenty-Five Thousand
Dollars ($25,000), Buyer shall consummate the Closing and accept the property
in its "then" condition, as soon as the Station is able to broadcast in
compliance with the Licenses, in which event Seller shall at the Closing
assign all rights under any insurance claim covering the loss and pay over any
proceeds under any such insurance policy theretofore received by Seller with
respect thereto;
(b) In the event the loss or damage exceeds Twenty-Five Thousand Dollars
($25,000) and the property cannot be substantially repaired or restored within
thirty (30) days, Buyer shall have the option (but not the obligation),
exercisable within ten (10) days after receipt of such notice from Seller, to:
(i) postpone the Closing until such time as the property has been completely
repaired, replaced or restored, unless the same cannot be reasonably effected
within two (2) months of notification (in which event clause (ii) shall apply
only); or
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(ii) elect to consummate the Closing and accept the property in its "then"
condition, as soon as the Station is able to broadcast in compliance with the
Licenses, in which event Seller shall at the Closing assign all rights under
any insurance claim covering the loss and pay over any proceeds under any such
insurance policy theretofore received by Seller with respect thereto or (iii)
terminate the Agreement. In the event Buyer elects to postpone the Closing
Date as provided in clause (i) of this Section 11.1(b), the parties hereto
will cooperate to extend the time during which this Agreement must be closed
as specified in the FCC Consent.
ARTICLE 12
INDEMNIFICATION
12.1 Survival of Representations and Warranties. All covenants and
agreements pertaining to matters to be performed after Closing and all
representations and warranties contained in this Agreement shall survive for a
period not to exceed one (1) year after the Closing Date (the "Survival
Period") except that the representations and warranties with respect to title
shall continue indefinitely and except as provided in Section 3.9(c)(3). No
claim may be brought under this Agreement or with respect to the transactions
described herein unless written notice describing in reasonable detail the
nature and basis of such claim is given on or prior to the last day of the
Survival Period. In the event such notice is so given, the right to
indemnification with respect thereto under this Article 12 shall survive the
Survival Period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied.
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12.2 Indemnification by Seller. (a) Seller agrees to pay and discharge
and to save and protect Buyer and its officers, directors, shareholders and
affiliates free and harmless from all obligations, claims and demands
(including reasonable attorneys' fees incurred by Buyer with respect thereto)
(collectively "Seller's Obligations") against, arising out of or in connection
with (a) any lease, contract or other agreement of Seller not assumed by Buyer
pursuant to this Agreement; (b) the ownership of the Station or the Assets
prior to the Closing and (c) any material breach or violation by Seller of any
covenant, agreement or warranty herein contained, or the material inaccuracy
of any representation of Seller made in this Agreement; (d) any claim by a
third party relating to the Assets or Station as a result of actions of
Seller.
(b) Notwithstanding anything contained herein to the contrary, Seller
shall not be obligated to indemnify Buyer pursuant to Subsection (a) above (i)
for any amounts in excess of the Purchase Price in the aggregate, or (ii)
unless and until the aggregate amount of Seller's Obligations exceeds Fifty
Thousand Dollars ($50,000) unless the subject matter of indemnification
relates to Seller's non-payment of bills due in the ordinary course of
business and/or sales and/or use taxes relates to this transaction, in which
event the basket herein contained shall not be applicable.
12.3 Indemnification of Buyer. Buyer agrees to pay and discharge and to
save and protect Seller and its officers, directors, shareholders and
affiliates free and harmless from all obligations, claims, and demands
(including but not limited to attorney fees incurred by Seller with respect
thereto) against, arising out of or in connection with (a) any obligation
after
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Closing under any lease, contract, or other agreement of Seller to be assumed
by Buyer pursuant to this Agreement; (b) the ownership or operation of the
Station and the Assets from and after the Closing; and (c) any material breach
or violation by Buyer of any covenant, agreement or warranty herein contained
or the material inaccuracy of any representation of Buyer made in this
Agreement.
12.4 Indemnification Procedure. In the event that any party hereto
asserts a claim for indemnification hereunder, such party seeking
indemnification shall give written notice to the indemnifying party specifying
the nature and the amount, if known, of the claim asserted. The indemnifying
party shall then have the right, using counsel reasonably satisfactory to the
party seeking indemnification, to investigate, secure, contest or settle the
claim alleged by such third party (hereinafter called a "Contest"), provided
that the party seeking indemnification may participate voluntarily, at its own
expense, in any such Contest through representatives and counsel of its own
choice, and, provided further, that any such action by the indemnifying party
relating to the Contest shall be without prejudice to the party seeking
indemnification.
Except as provided otherwise in the immediately preceding sentence, the
indemnifying party shall bear all costs of such Contests and shall indemnify
and hold the party seeking indemnification harmless against and from all
costs, fees and expenses of such Contest. Unless and until the indemnifying
party elects to prosecute the Contest, the party seeking indemnification shall
have the full right, at its option, to do so and to look to the indemnifying
party under the provisions of this Agreement for the amount of the costs, if
any, of prosecuting the Contest. The failure of the indemnifying party to
respond in writing to the
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aforesaid notice of the party seeking indemnification with respect to such
contest within twenty (20) days after the receipt thereof shall be deemed an
election not to prosecute the same. If the indemnifying party fails to
prosecute the Contest and the party seeking indemnification does not prosecute
the Contest or does so and the decision is rendered against it, the amount
paid by the party seeking indemnification to the third party in settlement or
satisfaction of the Contest shall be deemed a valid claim hereunder.
The parties hereto shall make mutually available to each other all
relevant information in their possession relating to any such Contest and
shall cooperate in the defense thereof.
ARTICLE 13
TERMINATION BEFORE CLOSING; DEFAULT AND REMEDIES
13.1 Termination before Closing. If Closing shall not have previously
occurred, this Agreement may be terminated:
(a) Upon ten (10) days prior written notice by either party to the other
party if the Closing Date shall not have occurred on or before March 31, 1997;
provided, however, that if on said date FCC Consent has been obtained but has
not become a Final Order and all other conditions of the obligations of the
parties to this Agreement have been or could be satisfied or waived, then such
date shall be extended until the earlier of May 31, 1997 or ten (10) business
days after the FCC Consent becomes a Final Order.
(b) Upon ten (10) days prior written notice by either party to the other
party at any time following a determination by the FCC that the application
for consent to assignment of the FCC Licenses has been designated for hearing;
provided that the party whose actions or
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omissions resulted in the designation for hearing shall not have the right to
terminate this Agreement by reason of such designation for hearing.
(c) By Buyer, upon the occurrence of a Seller's Event of Default (as
defined in Section 13.2) or upon failure of a condition precedent to Buyer's
obligation to close set forth in Article 6; or
(d) By Seller, upon the occurrence of a Buyer's Event of Default (as
defined in Section 13.2) or upon failure of a condition precedent to Seller's
obligation to close set forth in Article 7, other than the conditions set
forth in Section 7.4 and 7.5.
In the event of termination pursuant to Section 13.1(d) above, Seller
shall be entitled to retain the Escrow Deposit as liquidated damages as
provided in Section 2.2 hereto. In the event of termination of this Agreement
for any other reason, Buyer shall be entitled to return of the Escrow Deposit
as provided in Section 2.2 hereof.
13.2 Default and Remedies.
(a) The occurrence of any one or more of the following events shall
constitute a material default of this Agreement by Buyer ("Buyer's Event of
Default"):
(i) The breach of any representation or warranty by Buyer hereunder
unless such breach is cured prior to the Closing Date;
(ii) The failure by Buyer to consummate the transactions
contemplated by this Agreement in violation of the provisions of this
Agreement;
(iii) The failure by Buyer to perform any other of its obligations
under this Agreement, where such failure shall continue for a period of twenty
(20) days after delivery of
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written notice of demand therefor from Seller to Buyer; provided, however,
that if more that twenty (20) days are reasonably required to cure such
failure, then Buyer shall not be deemed to be in default thereof if Buyer, in
good faith, has commenced such cure within said twenty (20) day period and
thereafter diligently prosecutes such cure to completion and completes such
cure prior to Closing.
(b) The occurrence of any one or more of the following events shall
constitute a material default of this Agreement by Seller ("Seller's Event of
Default"):
(i) The breach of any representation or warranty by Seller
hereunder unless such breach is cured prior to the Closing Date;
(ii) The failure by Seller to consummate the transactions
contemplated by this Agreement in violation of the provisions of this
Agreement;
(iii) The failure by Seller to perform any other of its obligations
under this Agreement, where such failure shall continue for a period of twenty
(20) days after delivery of written notice of demand therefor from Buyer to
Seller; provided, however, that if more that twenty (20) days are reasonably
required to cure such failure, then Seller shall not be deemed to be in
default thereof if Seller, in good faith, has commenced such cure within said
twenty (20) day period and thereafter diligently prosecutes such cure to
completion and completes such cure prior to Closing.
(c) Seller acknowledges that the Station is of a special, unique, and
extraordinary character, and that any breach of this Agreement by Seller could
not be compensated for by damages. Accordingly, upon the occurrence of a
Seller's Event of Default, Buyer shall be
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entitled, in addition to any other remedies that it may have, to enforcement
of this Agreement (subject to obtaining any required approval of the FCC) by a
decree of specific performance or injunctive relief requiring Seller to
fulfill its obligations under this Agreement. In any action to specifically
enforce Seller's obligation to close the transaction contemplated by this
Agreement, Seller shall waive the defense that there is an adequate remedy at
law or in equity and agrees that Buyer shall be entitled to obtain specific
performance of Seller's obligation to close hereunder without being required
to prove actual damages. As a condition to seeking specific performance, Buyer
shall not be required to tender the Purchase Price but shall be required to
demonstrate that Buyer is ready, willing and able to tender the Purchase Price
and consummate the purchase of the Station as contemplated hereunder.
(d) Upon the occurrence of a Buyer's Event of Default, Seller shall have
only the rights set forth in Section 13.1 and Section 2.2.
ARTICLE 14
CONTROL OF STATION
Between the date of this Agreement and the Closing Date, other than as
permitted under the Time Brokerage Agreement, Buyer shall not control, manage
or supervise the operation of the Station or the conduct of its business, all
of which shall remain the sole responsibility and under the control of Seller,
provided that this Article shall not be deemed to be consent by Buyer to
Seller's noncompliance (if any) with this Agreement.
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ARTICLE 15
MISCELLANEOUS
15.1 Further Actions. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
15.2 Access After the Closing Date. After the Closing, Buyer shall
provide Seller with reasonable access during normal business hours to the
books and records of the Station pertaining to transactions occurring prior to
the Closing Date when requested by Seller, and Buyer shall retain such books
and records for the normal document retention period of Buyer. At the request
and expense of Seller, Buyer shall deliver copies of any such books and
records to Seller, promptly after such request.
15.3 Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
overnight delivery service or sent by registered or certified mail, first
class, postage prepaid, or by telegram, telecopy or similar written means of
communication, addressed as follows:
(a) if to Buyer, to:
Susquehanna Radio Corporation
140 East Market Street
York, PA 17401
Facsimile No.: (717)771-1436
Attention: David E. Kennedy, President
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copy to:
Craig Bremer, Esquire
140 East Market Street
York, PA 17401
Facsimile No.: (717)771-1440
(b) if to Buyer to:
SFX Broadcasting, Inc.
600 Congress Avenue
Suite 1270
Austin, TX 78701
ATT: D. Geoffrey Armstrong, COO
Facsimile No.: (512)477-7388
with copy to :
Richard A. Liese, Esquire
SFX Broadcasting, Inc.
150 E. 58th Street
19th Floor
New York, NY 10155
Facsimile No.: (212)753-3188
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date so
mailed, and (ii) if personally delivered or otherwise sent as provided above,
on the date delivered or sent, if sent by telecopy and on the next business
date after the date sent in all other cases.
15.4 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto constitute the entire agreement and understanding between the parties
hereto with respect to
41
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the subject matter hereof and supersede any prior negotiations, agreements,
understandings or arrangements between the parties hereto with respect to the
subject matter hereof.
15.5 Binding Effect; Benefits. Except as otherwise provided herein, this
Agreement and all other documents to be executed in connection herewith shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors or assigns. Except to the extent specified herein,
nothing in this Agreement, express or implied, shall confer on any person
other than the parties hereto and their respective successors or assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
15.6 Assignment. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the
other party; and provided, further that any such assignment by Seller or Buyer
shall not cause a delay in obtaining the consent of the FCC to the transfer of
the Licenses. Notwithstanding the foregoing, Buyer may assign this Agreement
to a wholly owned subsidiary of Buyer. Any assignment of the rights and
privileges hereunder shall not relieve Buyer of any responsibility or
liability hereunder.
15.7 Arbitration. Any controversy or claim arising out of or relating to
this Agreement (other than a dispute to be resolved by the Accountant as
provided herein), any of its Exhibits, or the breach thereof shall be settled
by arbitration in Philadelphia, Pennsylvania, by one (1) arbitrator (unless
the parties mutually agree to accept multiple arbitrators) in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof. The cost of any such arbitration shall be
borne equally by the parties
42
<PAGE>
involved unless the arbitrator(s) deems such division of costs to be
inequitable, in which event the arbitrator(s) may allocate the costs of
arbitration among the parties thereto as they deem just and equitable under
the circumstances.
15.8 Attorney's Fees; Prejudgment Interest. In the event of commencement
of either arbitration or suit by either party to enforce the provisions of
this Agreement, the prevailing party shall be entitled to receive such
attorneys' fees and costs as may be adjudged reasonable in addition to any
other relief granted. Any award of damages as a result of the breach of this
Agreement or any of its provisions shall include an award of prejudgment
interest from the date of the breach at the maximum rate of interest allowed
by law.
15.9 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Texas, including all
matters of construction, validity and performance.
15.10 Bulk Sales. Buyer hereby waives compliance by Seller with the
provisions of the Bulk Sales Act and similar laws of any state or
jurisdiction, if applicable.
15.11 Amendments and Waivers. No term or provision of this Agreement may
be amended, waived, discharged or terminated orally but only by an instrument
in writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
15.12 Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability
43
<PAGE>
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto hereby waive any provision of
law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
15.13 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
15.15 Time Brokerage Agreement. Simultaneously with the execution of
this Agreement, the parties will enter into a Time Brokerage Agreement in the
form attached hereto as Exhibit E which shall commence ______________.
15.16 Schedules and Exhibits: Recording. Unless otherwise specified
herein, each Schedule and Exhibit referred to in this Agreement is attached
hereto, and each such Schedule and Exhibit is hereby incorporated by reference
and made a part hereof as if fully set forth herein. To the extent permitted
by the FCC, the Schedules shall not be filed with the FCC or otherwise
disclosed or made public.
44
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the date first written above.
KRBE CO.
By: /s/ David E. Kennedy
-------------------------
President
SFX BROADCASTING OF TEXAS
(KTCK) LICENSEE, INC.
By: /s/ Richard A. Liese
-------------------------
Vice President
SFX BROADCASTING OF TEXAS
(KTCK), INC.
By: /s/ Richard A. Liese
--------------------------
Vice President
45
E X C H A N G E A G R E E M E N T
BETWEEN
CHANCELLOR RADIO BROADCASTING COMPANY
WAPE-FM JACKSONVILLE, FLORIDA
WFYV-FM ATLANTIC BEACH, FLORIDA
AND
SFX BROADCASTING, INC.
WBLI, INC.
WBLI-FM, INC.
WBLI-FM PATCHOGUE, NEW YORK
WHFM, INC.
WHFM-FM SOUTHAMPTON, NEW YORK
WBAB, INC.
WBAB-FM BABYLON, NEW YORK
WGBB, INC.
WGBB-AM FREEPORT, NEW YORK
July 1, 1996
<PAGE>
EXCHANGE AGREEMENT
TABLE OF CONTENTS
Section 1. Asset Purchase Agreements............................-2-
1.1 Florida Agreement....................................-2-
Section 2. Exchange of Assets...................................-2-
2.1 Tax Free Exchange....................................-2-
2.2 Transfer of Assets to SFX............................-2-
2.2.1 FCC Licenses...................................-2-
2.2.2 Other Governmental Authorizations..............-3-
2.2.3 Tangible Personal Property.....................-3-
2.2.4 Contracts......................................-3-
2.2.5 Intellectual Property..........................-3-
2.2.6 Station Records................................-3-
2.2.7 Manufacturer/Vendor Warranties.................-3-
2.2.8 Real Estate....................................-4-
2.2.9 All Other Jacksonville Station Assets..........-4-
2.3 Excluded Jacksonville Assets.........................-4-
2.3.1 Cash...........................................-4-
2.3.2 Receivables....................................-4-
2.3.3 Consumed Property..............................-4-
2.3.4 Terminated Contracts...........................-4-
2.3.5 Corporate Records..............................-4-
2.3.6 Insurance......................................-4-
2.3.7 Employee Plans.................................-4-
2.3.8 Corporate Name.................................-5-
2.3.9 Excluded Assets. .............................-5-
2.3.1 Rights.........................................-5-
2.3.11 Tax Refunds...................................-5-
2.3.12...............................................-5-
2.4 Transfer of Assets to Chancellor.....................-5-
2.4.1 FCC Licenses...................................-5-
2.4.2 Other Governmental Authorizations..............-5-
2.4.3 Tangible Personal Property.....................-5-
2.4.4 Contracts......................................-5-
2.4.5 Intellectual Property..........................-6-
2.4.6 Station Records................................-6-
2.4.7 Manufacturer/Vendor Warranties.................-6-
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2.4.8 Real Estate....................................-6-
2.4.9 All Other Long Island Stations Assets..........-6-
2.5 Excluded Long Island Assets..........................-6-
2.5.1 Cash...........................................-6-
2.5.2 Receivables....................................-7-
2.5.3 Consumed Property..............................-7-
2.5.4 Terminated Contracts...........................-7-
2.5.5 Corporate Records..............................-7-
2.5.6 Insurance......................................-7-
2.5.7 Employee Plans.................................-7-
2.5.8................................................-7-
2.5.9................................................-7-
2.5.10...............................................-7-
2.5.11...............................................-7-
2.5.12...............................................-7-
2.6 Permitted Liens......................................-7-
2.6.1 Jacksonville Stations..........................-7-
2.6.2 Long Island Stations...........................-8-
Section 3 . Consideration........................................-8-
3.1 Consideration From Chancellor........................-8-
3.1.1 Florida Agreement..............................-8-
3.2 Consideration From SFX...............................-8-
3.2.1 Long Island Transaction Approved...............-8-
3.3 Adjustments to Cash Payments.........................-8-
3.3.1 Adjustments for Long Island Stations Operations-8-
3.3.2 Adjustments for Jacksonville Station Operations-8-
3.3.3 Definition of Buyer and Seller.................-9-
3.3.4 Items Subject to Adjustment....................-9-
3.3.5 Ad Valorem of Real Estate Taxes................-9-
3.3.6 Dispute Procedure for Allocations..............-9-
3.4 Allocation of Consideration. .......................-10-
3.4.1 Long Island Stations' Barter and Trade........-10-
3.4.2 Jacksonville Stations' Barter and Trade.......-10-
Section 4. Assumption of Obligations...........................-10-
4.1 Long Island Assumed Liabilities.....................-10-
4.2 Long Island Retained Liabilities. ..................-10-
4.3 Jacksonville Assumed Liabilities....................-11-
4.4 Florida Retained Liabilities........................-11-
Section 5. Sole Remedies.......................................-11-
5.1 Omni's Failure to Close.............................-11-
ii
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5.1.1...............................................-12-
5.1.2...............................................-12-
5.2 Chancellor's Failure to Transfer Jacksonville
Assets.............................................-12-
5.2.1...............................................-12-
5.2.2...............................................-13-
5.3 ....................................................-13-
5.3.1...............................................-13-
5.4 ....................................................-13-
Section 6. Government Consents.................................-13-
6.1 FCC Consent.........................................-13-
6.2 FCC Applications....................................-14-
6.3 Filings.............................................-14-
Section 7. Local Marketing Agreements..........................-14-
7.1 Long Island Local Marketing Agreement...............-14-
7.2 Jacksonville Local Marketing Agreement..............-15-
Section 8. Collection of Accounts Receivable...................-15-
8.1 Long Island Accounts Receivable.....................-15-
8.2 Jacksonville Accounts Receivable....................-16-
Section 9. Third Party Consents................................-17-
9.1 Long Island Consents................................-17-
9.2 Florida Consents....................................-17-
9.3 Failure to Obtain Consents..........................-17-
Section 10. Representations and Warranties of Chancellor........-18-
10.1 Organization and Standing...........................-18-
10.2 Authorization and Binding Obligation................-18-
10.3 Qualification.......................................-18-
10.4 Absence of Conflicting Agreements or
Required Consents..................................-18-
10.5 Litigation: Compliance with Law....................-18-
10.6 Broker/Finder Fees..................................-18-
10.7 Representations and Warranties as to the
Jacksonville Stations..............................-19-
Section 11. Representation and Warranties of SFX................-19-
11.1 Organization and Standing...........................-19-
11.2 Authorization and Binding Obligation................-19-
11.3 Qualification.......................................-19-
11.4 Absence of Conflicting Agreements or
Required Consents..................................-19-
11.5 Litigation: Compliance with Law....................-20-
11.6 Broker/Finder Fees..................................-20-
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11.7 Representations and Warranties as to the Long
Island Stations....................................-20-
Section 12 Covenants of Chancellor.............................-20-
12.1 Conduct of Station:.................................-20-
12.2 ....................................................-22-
12.3 No Inconsistent Action..............................-22-
12.4 Updating of Schedules...............................-22-
12.5 Enforcement of Agreements...........................-23-
12.6 FCC Reports.........................................-23-
12.7 Notification........................................-23-
12.8 Post-Closing Access.................................-23-
12.9 ....................................................-23-
Section 13. Covenants of SFX....................................-23-
13.1 Conduct of Station..................................-24-
13.2 ....................................................-25-
13.3 No Inconsistent Action..............................-25-
13.4 Updating of Schedules...............................-25-
13.5 Enforcement of Agreements. .........................-26-
13.6 FCC Reports.........................................-26-
13.7 Notification........................................-26-
13.8 Post-Closing Access.................................-26-
13.9 ....................................................-26-
Section 14. Joint Covenants.....................................-26-
14.1 Confidentiality.....................................-27-
14.2 Cooperation.........................................-27-
14.3 Control of Stations.................................-27-
14.4 Bulk Sales Laws.....................................-27-
14.5 Public Announcements................................-27-
14.6 Hart-Scott-Rodino...................................-28-
14.7 Employee Matters....................................-28-
Section 15. Conditions of Closing by Chancellor.................-28-
15.1 Representations, Warranties and Covenants...........-28-
15.2 Compliance with Agreement...........................-29-
15.3 Third Party Consents and Approvals;
Estoppel Certificates..............................-29-
15.4 Closing Certificates................................-29-
15.5 Governmental Consents...............................-29-
15.6 Adverse Proceedings.................................-29-
15.7 Closing Documents...................................-29-
15.8 Environmental Condition.............................-30-
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<PAGE>
Section 16. Conditions of Closing by SFX........................-30-
16.1 Representations, Warranties and Covenants...........-30-
16.2 Compliance with Agreement...........................-30-
16.3 Third Party Consents and Approvals;
Estoppel Certificates..............................-30-
16.4 Closing Certificates................................-30-
16.5 Governmental Approval...............................-30-
16.6 Adverse Proceedings.................................-31-
16.7 Closing Documents...................................-31-
16.8 Environmental Condition.............................-31-
Section 17. Closing.............................................-31-
17.1 Time and Place......................................-31-
17.2 Deliveries By Chancellor............................-31-
17.3 Delivery By SFX.....................................-32-
Section 18. Survival of Representations and Warranties..........-32-
18.1 Survival of Representations and Warranties..........-32-
Section 19. Indemnification.....................................-32-
19.1 Indemnification by Chancellor.......................-33-
19.2 Indemnification by SFX..............................-33-
19.3 Limitation on Reimbursement.........................-33-
19.4 Procedure for Indemnification.......................-34-
Section 20. Termination.........................................-35-
20.1 Right to Terminate..................................-35-
Section 21. Expenses, Transfer Taxes, and Fees..................-36-
21.1 Expenses............................................-36-
21.2 Transfer Taxes and Similar Charges..................-36-
21.3 Governmental Filing or Grant Fees...................-36-
Section 22. Miscellaneous.......................................-36-
22.1 Risk of Loss........................................-36-
22.2 Assignment..........................................-36-
22.3 Amendments. ........................................-37-
22.4 Headings............................................-37-
22.5 Governing Law. .....................................-37-
22.6 Notices.............................................-37-
22.7 Schedules...........................................-38-
22.8 Entire Agreement....................................-38-
22.9 Severability........................................-38-
22.10 Counterparts.......................................-38-
v
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22.11 Binding Agreement..................................-39-
22.12 Governing Law. ....................................-39-
Signature Pages..................................................-40-
vi
<PAGE>
EXCHANGE AGREEMENT
This Exchange Agreement is made effective as of July 1, 1996 by and
among WBLI, Inc., a New York corporation, WBLI-FM, Inc, a Delaware
corporation, WHFM, Inc., a New York corporation, WBAB, Inc., a New York
corporation, and WGBB, Inc., a New York corporation, each subsidiaries of SFX
Broadcasting, Inc., a Delaware corporation (collectively, "SFX"), and
Chancellor Radio Broadcasting Company, a Delaware corporation ("Chancellor").
RECITALS
WHEREAS, SFX owns substantially all of the assets used or useful in the
operation of WBAB-FM, Babylon, New York; WBLI-FM, Patchogue, New York;
WGBB-AM, Freeport, New York; and WHFM-FM, Southampton, New York (the "Long
Island Stations"), including the related broadcast licenses and authorizations
issued by the Federal Communications Commission ("FCC");
WHEREAS, Chancellor is a party to a certain Asset Purchase Agreement
("Florida Agreement"), dated May 14, 1996 among Chancellor and Chancellor
Broadcasting Company and OmniAmerica Group, WAPE-FM License Partnership,
WFYV-FM License Partnership, WEAT-AM License Partnership, WEAT-FM License
Partnership, WXXL License Partnership, WOLL License Partnership and WJHM-FM
License Partnership (collectively, "Omni") contemplating, inter alia, the
purchase by Chancellor of substantially all of Omni's assets used or useful in
the operation of Station WAPE-FM, Jacksonville, Florida and Station WFYV-FM,
Atlantic Beach, Florida (collectively, the "Jacksonville Stations"), including
the related FCC broadcast licenses and authorizations;
WHEREAS, Chancellor and SFX desire to exchange the assets of the
Jacksonville Stations for the assets of the Long Island Stations plus a cash
payment by Chancellor as provided herein;
WHEREAS, the parties intend the exchange of the Jacksonville Stations
and the Long Island Stations to qualify as a tax free exchange of like-kind
assets pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, effective August 1, 1996, (the "Jacksonville LMA Commencement
Date"), (i) Chancellor and SFX shall enter into Local Marketing Agreements
("LMAs") with respect to the Jacksonville Stations ("Jacksonville Stations
LMA"); and (ii) effective July 1, 1996, (the "Long Island LMA Commencement
Date") Chancellor and SFX shall enter into an LMA with respect to the Long
Island Stations ("Long Island Stations LMA").
NOW THEREFORE, in contemplation of the recitals set out above and in
consideration of the mutual covenants and agreements contained herein, the
parties, intending to be contractually bound, agree as follows:
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SECTION 1. ASSET PURCHASE AGREEMENTS
1.1 Florida Agreement. Chancellor shall comply in a timely fashion
with all material requirements of the Florida Agreement and shall use its
reasonable best efforts to acquire the assets of the Jacksonville Stations
from Omni at the earliest practicable time and in the manner contemplated in
the Florida Agreement. Insofar as the Florida Agreement relates to the
Jacksonville Stations, Chancellor shall not amend in any material respect the
Florida Agreement or waive any right thereunder without the prior written
consent of SFX. This prior written consent shall not be unreasonably withheld
by SFX. Chancellor shall enforce any and all of its material rights under the
Florida Agreement and shall have the capacity and ability at all times to
perform its obligations under the Florida Agreement.
SECTION 2. EXCHANGE OF ASSETS
2.1 Tax Free Exchange. The parties intend for this transaction to
qualify as a tax-free exchange under Section 1031 of the Code. In order to
attain this goal, the parties will, to the extent possible, exchange (i)
depreciable personal property in the same General Asset Class or Product
Class, as those terms are used in Treas. Regulation 1.1031(a)-2(b); and (ii)
non-depreciable personal property and intangible personal property for other
property of a like kind. Additionally, at SFX's sole option, SFX may prior to
Closing elect to receive in lieu of the Long Island Cash Purchase Price (as
hereinafter defined), a conveyance of other investment or like-kind property
in order to qualify as a tax-deferred exchange under the non-recognition of
gain provisions of Internal Revenue Code Section 1031 and regulations
promulgated thereunder; provided, however, that the consummation of this
Agreement is not predicated or conditioned on such exchange. Further, in the
event SFX has not by Closing selected suitable like-kind property for such
exchange, SFX may elect to have Chancellor pay the Long Island Cash Purchase
Price to a third party independent escrow agent to retain such funds in
accordance with a suitable escrow agreement to be executed at such time.
Chancellor agrees to cooperate in such exchange procedures and to execute and
deliver such documents as may be reasonably requested by SFX or required to
effect any such exchange, including any assignments by SFX, of any of its
interest under this Agreement, provided that Chancellor shall incur no
additional costs, expenses, delays or liabilities in this transaction as a
result of or connected with the exchange; and provided further that SFX shall
reimburse and hold harmless Chancellor for all reasonable costs and expenses
attributable to their cooperation.
2.2 Transfer of Assets to SFX. Subject to the terms, conditions and
limitations contained herein, on the Closing Date as defined in Section 17.1,
Chancellor shall convey to SFX and SFX shall acquire from Chancellor (to the
extent Chancellor acquires the same from Omni) all of the following assets,
properties, interests and rights (the "Jacksonville Assets") free and clear of
liens and encumbrances except the Jacksonville Permitted Liens allowed under
Section 2.6.1.
2.2.1 FCC Licenses. All licenses, permits, special temporary
authority,
-2-
<PAGE>
program test authority and authorizations of any type whatsoever issued by the
FCC and used in connection with the Jacksonville Stations (the "Jacksonville
Licenses"), including those authorizations for the Jacksonville Stations
identified in the pertinent portions of Schedule 2.2.1 of this Agreement and
any renewals or modifications thereof;
2.2.2 Other Governmental Authorizations. All licenses, permits,
and other authorizations of any nature whatsoever issued by a governmental
authority and used in the operation of the Jacksonville Stations;
2.2.3 Tangible Personal Property. All equipment, office
furniture and fixtures, office materials and supplies, inventory, spare parts
and all other tangible personal property of every kind and description, and
Chancellor's rights therein, owned, leased or held by Chancellor and used in
connection with the operations of the Jacksonville Stations, including but not
limited to those items described or listed in Schedule 2.2.3, together with
any replacements thereof and additions thereto made before the Closing Date,
and less any retirements or dispositions thereof made before the Closing Date
in the ordinary course of business;
2.2.4 Contracts. All contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral, relating to the
operation of the Jacksonville Stations ("Jacksonville Contracts"), listed in
Schedule 2.2.4 or entered into before the Closing Date in the ordinary course
of business of the Jacksonville Stations and in accordance with this
Agreement;
2.2.5 Intellectual Property. All trademarks, trade names,
service marks (including the Call Signs WAPE-FM and WFYV-FM), franchises,
copyrights, Internet domain names and addresses, including registrations and
applications for registration of any of them, computer software programs and
programming material of whatever form or nature, jingles, slogans, the
Jacksonville Stations' logos and all other logos or licenses to use same and
all other intangible property rights of Chancellor, which are used exclusively
in connection with the operation of the Jacksonville Stations, including but
not limited to those listed in Schedule 2.2.5 (collectively, the "Jacksonville
Intellectual Property") together with any associated good will and any
additions thereto before the Closing Date;
2.2.6 Station Records. All of the files, documents, records,
and books of account relating to the operation of the Jacksonville Stations or
to the Jacksonville Assets, including without limitation the Jacksonville
Stations' public files, programming information and studies, technical
information and engineering data, news and advertising studies or consulting
reports, marketing studies, demographic data, sales correspondence, lists of
advertisers, promotional materials, credit and sales reports and filings with
the FCC, copies of all written Contracts to be assigned hereunder, logs,
software programs and books and records relating to employees, financial,
accounting and operation matters; but excluding records relating solely to any
Excluded Asset (as hereinafter defined);
2.2.7 Manufacturer/Vendor Warranties. All manufacturers' and
vendors'
-3-
<PAGE>
warranties relating to items included in the Jacksonville Assets and all
similar rights against third parties relating to items included in the
Jacksonville Assets;
2.2.8 Real EstatAll real property used in operating the
Jacksonville Stations together with all appurtenant easements thereunto and
all structures, fixtures and improvements located thereon as more fully
described in Schedule 2.2.8, together with any additions thereto before the
Closing Date ("the Jacksonville Real Estate"); and
2.2.9 All Other Jacksonville Station Assets. Except for
Excluded Jacksonville Assets, such other assets, properties, interests and
rights that are used exclusively in connection with the operation of the
Jacksonville Stations or that are located as of the Closing Date on the
Jacksonville Real Estate.
2.3 Excluded Jacksonville Assets. Notwithstanding anything to the
contrary contained herein, it is expressly understood and agreed that the
Jacksonville Assets shall not include the following assets along with all
rights, title and interest therein (the "Excluded Jacksonville Assets"):
2.3.1 Cash. All cash, marketable securities and cash
equivalents of Chancellor on hand and/or in banks;
2.3.2 Receivables. All accounts receivable or notes receivable
of Chancellor;
2.3.3 Consumed Property. All tangible and intangible personal
property related to the Jacksonville Stations disposed of or consumed in the
ordinary course of business of Chancellor or Omni before the Closing Date, or
as permitted hereunder;
2.3.4 Terminated Contracts. All non-assumed Contracts or
Contracts that have terminated or expired prior to the Closing Date in the
ordinary course of business of Chancellor or Omni as permitted hereunder;
2.3.5 Corporate Records. Chancellor's corporate seal, minute
books, charter documents, corporate stock record book and such other books and
records as pertain to the organization, existence or share capitalization of
Chancellor and duplicate copies of all books and records transferred to SFX
hereunder as are necessary to enable Chancellor to file its tax returns and
reports, as well as any other contracts, records or materials relating to
Chancellor or its business and not involving or relating to the Jacksonville
Assets or the operation or operations of the Jacksonville Stations;
2.3.6 Insurance. Contracts of insurance and all insurance
proceeds or claims made by Chancellor;
-4-
<PAGE>
2.3.7 Employee Plans. All pension, profit sharing or cash or
deferred (Section 401(k)) plans and trusts and the assets thereof and any
other employee benefit plan or arrangement and the assets thereof, if any,
maintained by Chancellor;
2.3.8 Corporate Name. Any right to use the names "Chancellor,"
"Chancellor Broadcasting Company," or "Chancellor Radio Broadcasting Company"
and any variations thereof;
2.3.9 Excluded Assets. Those specific assets identified on the
Excluded Assets Schedule attached to this Agreement as Schedule 2.3.9;
2.3.10 Rights. All of Chancellor's rights in and to all causes
of action;
2.3.11 Tax Refunds. All tax refunds relating to the period
prior to the Closing; and
2.3.12 Other Assets. All other assets or Contracts, including
but not limited to those assets or Contracts associated with the Florida
Agreement, that are not specifically listed in this Agreement as the
Jacksonville Assets or used or useful, as determined by Chancellor, in the
operation or operations of the Jacksonville Stations.
2.4 Transfer of Assets to Chancellor. Subject to the terms, conditions
and limitations contained herein, on the Closing Date, SFX shall convey to
Chancellor and Chancellor shall acquire from SFX all of the following assets,
properties, interests and rights (the "Long Island Assets") free and clear of
liens and encumbrances except the Long Island Permitted Liens under
Section 2.6.2:
2.4.1 FCC Licenses. All licenses, permits, special temporary
authority, program test authority and authorizations of any type whatsoever
issued by the FCC and used in connection with the Long Island Stations (the
"Long Island Licenses"), including those authorizations for the Long Island
Stations identified in Schedule 2.4.1 to this Agreement and any renewals or
modifications thereof.
2.4.2 Other Governmental Authorizations. All licenses,
permits, and other authorizations of any nature whatsoever issued by a
governmental authority and used in the operation of the Long Island Stations.
2.4.3 Tangible Personal Property. All equipment, office
furniture and fixtures, office materials and supplies, inventory, spare parts
and all other tangible personal property of every kind and description, and
SFX's rights therein, owned, leased or held by SFX and used in connection with
the operations of the Long Island Stations, including but not limited to those
items described or listed in Schedule 2.4.3, together with any replacements
thereof and additions thereto, made before the Closing Date, and less any
retirements or dispositions thereof made before the
-5-
<PAGE>
Closing Date in the ordinary course of business.
2.4.4 Contracts. All contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral, relating to the
operation of the Long Island Stations ("Long Island Contracts"), listed in
Schedule 2.4.4 or entered into before the Closing Date in the ordinary course
of business of the Long Island Stations, and in accordance with this
Agreement.
2.4.5 Intellectual Property. All trademarks, trade names,
service marks (including the Call Signs WBAB-FM, WBLI-FM, WGBB-FM and
WHFM-FM), franchises, copyrights, including registrations and applications for
registration of any of them, computer software programs and programming
material of whatever form or nature, jingles, slogans, the Long Island
Stations' logos and all other logos or licenses to use same and all other
intangible property rights of SFX, which are used exclusively in connection
with the operation of the Long Island Stations, including but not limited to
those listed Schedule 2.4.5 (collectively, the "Long Island Intellectual
Property") together with any associated good will and any additions thereto
before the Closing Date;
2.4.6 Station Records. All of the files, documents, records,
and books of account relating to the operation of the Long Island Stations or
to the Long Island Assets, including without limitation the Long Island
Stations' public files, programming information and studies, technical
information and engineering data, news and advertising studies or consulting
reports, marketing studies, demographic data, sales correspondence, lists of
advertisers, promotional materials, credit and sales reports and filings with
the FCC, copies of all written Contracts to be assigned hereunder, logs,
software programs and books and records relating to employees, financial,
accounting and operation matters; but excluding records relating solely to any
Excluded Long Island Assets;
2.4.7 Manufacturer/Vendor Warranties. All manufacturers' and
vendors' warranties relating to items included in the Long Island Assets and
all similar rights against third parties relating to items included in the
Long Island Assets;
2.4.8 Real EstatAll real property used in operating the Long
Island Stations together with all appurtenant easements thereunto and all
structures, fixtures and improvements located thereon as more fully described
in Schedule 2.4.8, together with any additions thereto before the Closing Date
(the "Long Island Real Estate"); and
2.4.9 All Other Long Island Stations Assets. Except for
Excluded Long Island Assets, such other assets, properties, interests and
rights that are used exclusively in connection with the operation of the Long
Island Stations or that are located as of the Closing Date on the Long Island
Real Estate.
2.5 Excluded Long Island Assets. Notwithstanding anything to the
contrary contained herein, it is expressly understood and agreed that the
Long Island Assets shall not include
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the following assets along with all rights, title and interest therein (the
"Excluded Long Island Assets"):
2.5.1 Cash. All cash, marketable securities and cash
equivalents of SFX on hand and/or in banks;
2.5.2 Receivables. All accounts receivable or notes receivable
of SFX;
2.5.3 Consumed Property. All tangible and intangible personal
property related to the Long Island Stations disposed of or consumed in the
ordinary course of business of SFX before the Closing Date, or as permitted
under the terms hereof;
2.5.4 Terminated Contracts. All non-assumed Contracts or
Contracts that have terminated or expired prior to the Closing Date in the
ordinary course of business of SFX and as permitted hereunder;
2.5.5 Corporate Records. SFX's corporate seal, minute books,
charter documents, corporate stock record book and such other books and
records as pertain to the organization, existence or share capitalization of
SFX and duplicate copies of all books and records transferred to Chancellor
hereunder as are necessary to enable SFX to file its tax returns and reports
as well as any other records or materials relating to SFX or its business and
not involving or relating to the Long Island Assets or the operation or
operations of the Long Island Stations;
2.5.6 Insurance. Contracts of insurance and all insurance
proceeds or claims made by SFX;
2.5.7 Employee Plans. All pension, profit sharing or cash or
deferred (Section 401(k)) plans and trusts and the assets thereof and any
other employee benefit plan or arrangement and the assets thereof, if any,
maintained by SFX; and
2.5.8 Any right, to use the name "SFX" or "SFX Broadcasting,
Inc." and any variations thereof;
2.5.9 Those specific assets identified on the Excluded Assets
Schedule attached to this Agreement as Schedule 2.5.9;
2.5.10 All of SFX's rights in and to all causes of action;
2.5.11 All tax refunds relating to the period prior to the
Closing; and
2.5.12 All other assets or Contracts, including but not limited
to those assets or Contracts associated with the Long Island Agreement that
are not specifically listed in this Agreement as the Long Island Assets or
used or useful, as determined by SFX, in the operation or
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operations of the Long Island Stations.
2.6 Permitted Liens.
2.6.1 Jacksonville Stations. The Jacksonville Assets shall be
conveyed to SFX free and clear of all liens and encumbrances except the liens
and encumbrances listed in Schedule 2.6.1 (the "Jacksonville Permitted
Liens").
2.6.2 Long Island Stations. The Long Island Assets shall be
conveyed to Chancellor free and clear of all liens and encumbrances except the
liens and encumbrances listed in Schedule 2.6.2 (the "Long Island Permitted
Liens").
SECTION 3. CONSIDERATION.
3.1 Consideration From Chancellor.
3.1.1 Florida Agreement. If the Florida Agreement closes and
Chancellor acquires the Jacksonville Assets and the FCC approves SFX's
acquisition of the Jacksonville Stations, then the consideration delivered by
Chancellor to SFX shall consist of (a) the Jacksonville Assets described in
Section 2.2; and (b) the sum of Eleven Million Dollars ($11,000,000), subject
to any adjustments provided herein (the "Long Island Cash Purchase Price").
This Long Island Cash Purchase Price shall be paid to SFX or its designee at
Closing by wire transfer of immediately available funds. Further and subject
to the limitations contained in Section 4.1, Chancellor shall assume the Long
Island Assumed Liabilities
3.2 Consideration From SFX.
3.2.1 Long Island Transaction Approved. If the FCC approves
Chancellor's acquisition of the Long Island Stations, the consideration
delivered by SFX to Chancellor shall consist of the Long Island Assets
described in Section 2.4 less any Excluded Long Island Assets described in
Section 2.5. Further and subject to the limitations contained in Section 4.3,
SFX shall assume the Jacksonville Assumed Liabilities.
3.3 Adjustments to Cash Payments. The cash payment(s) contemplated
in Sections 3.1 and 3.2 shall be adjusted as follows:
3.3.1 Adjustments for Long Island Stations Operations. Subject
to the Long Island Stations LMA to be entered into pursuant to Section 7.1
herein, income and expenses from the operation of the Long Island Stations
shall be allocated to the parties on the principle that (i) SFX shall be
entitled to all income attributable to, and shall be responsible for all
expenses arising out of, the operation of the Long Island Stations up to 11:59
PM on the Closing Date (the "Effective Time") and (ii) Chancellor shall be
entitled to all income attributable to, and shall be responsible for all
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expenses arising out of, the operation of the Long Island Stations after the
Effective Time. Overlapping items of income and expense shall be prorated as
of the Effective Time.
3.3.2 Adjustments for Jacksonville Station Operations. Subject
to the Jacksonville Stations LMA to be entered into pursuant to Section 7.2,
herein, income and expenses from the operation of the Jacksonville Stations
shall be allocated to the parties on the principle that (i) Chancellor shall
be entitled to all income attributable to, and shall be responsible for all
expenses arising out of, the operation of the Jacksonville Stations up to the
Effective Time and (ii) SFX shall be entitled to all income attributable to,
and shall be responsible for all expenses arising out of, the operation of the
Jacksonville Stations after the Effective Time. Overlapping items of income
and expense shall be prorated as of the Effective Time.
3.3.3 Definition of Buyer and Seller.
(a) For purposes of Section 3.3.3 - 3.3.6, only, Buyer
means (i) Chancellor with respect to the Long Island Stations and (ii) SFX with
respect to the Jacksonville Stations.
(b) For purposes of Section 3.3.3 - 3.3.6, only, Seller
means (i) SFX with respect to the Long Island Stations and (ii) Chancellor
with respect to the Jacksonville Stations.
3.3.4 Items Subject to Adjustment. Items subject to adjustment
pursuant to Sections 3.3.1 and 3.3.2 include, but are not limited to, expenses
for goods and services received both before and after the Effective Time,
utilities charges, ad valorem, real estate, property and other taxes (other
than income taxes, which shall be Seller's sole responsibility for all taxable
periods ending prior to and including the Closing Date, and those taxes
arising from the sale and transfer of any of the Jacksonville Assets or the
Long Island Assets, which shall be paid as set forth in Section 21.2), income
and expenses under the various assumed contracts (other than Trade
Agreements), prepaid expenses, music and other license fees (including any
retroactive adjustments thereof), wages, salaries, and other employee benefit
expenses (whether such wages, salaries or benefits are current or deferred
expenses) (including, without limitation, liabilities accrued up to the
Effective Time for bonuses, commissions, vacation pay, payroll taxes, workers'
compensation and social security taxes) and rents and similar prepaid and
deferred items.
3.3.5 Ad Valorem of Real Estate Taxes. Ad valorem and other
real estate taxes shall be apportioned on the basis of the taxes assessed for
the most recently-completed calendar year, with a reapportionment as promptly
as practicable after the tax rates and real property valuations for the
calendar year in which the Closing occurs can be ascertained. In addition,
Buyers shall be entitled to a credit in this proration process for the amount
of any taxes (or other governmental charges) that are due and payable by
Sellers, but are being contested in good faith in appropriate proceedings and
are secured by liens on the Long Island Assets or Jacksonville Assets that
have not been removed as of or before the Closing (but once such amounts are
finally
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determined, Buyers shall use such credit to remove such liens and return to
Sellers the excess of (i) the amount of such credit minus (ii) the amount of
such taxes or other governmental charges as finally determined, or Sellers
shall pay to Buyers the deficiency, as appropriate).
3.3.6 Dispute Procedure for Allocations. Allocation and
proration of the items set forth in Subsection 3.3.4 above to the extent
practicable shall be made by Buyers and Sellers on the Closing Date, but in no
event shall the allocation and proration of the items set forth in Subsection
3.3.4 above be made more than thirty (30) days after the Closing Date. If the
parties cannot reach agreement within thirty (30) days after the Closing Date
on the final allocation and proration, the matter shall be referred to Arthur
Andersen, L.L.P. (the "Independent Auditor") to resolve the matter, whose
decision will be final and binding on the parties, and whose fees and expenses
shall be borne by Buyers and Sellers in accordance with the following: each
party shall pay an amount equal to the sum of all fees and expenses of the
Independent Auditor on a proportional basis taking into account the amount of
the net allocation and proration proposed by each of Buyers and Sellers and
the amount of the final allocation and proration determined by the Independent
Auditor (for example, if Buyers proposed a payment of $10 to Sellers, Sellers
proposed a payment of $100, and the Independent Auditor proposed a payment of
$30, Buyers would pay 20/90ths of the Independent Auditor's fees and Sellers
would pay 70/90ths of those fees based on the $90 in dispute between the
parties).
3.4 Allocation of Consideration. The value of the consideration
(including cash) that each party is exchanging under this Exchange Agreement
is Fifty-four Million Dollars ($54,000,000). Forty-three Million Dollars
($43,000,000) of the consideration exchanged shall be allocated to the
Jacksonville Assets. The allocation of consideration among each item included
in the Long Island Assets and the Jacksonville Assets shall be made by Arthur
Andersen, L.L.P. on the basis of its independent appraisal of the Long Island
Assets and the Jacksonville Assets. This independent appraisal shall be paid
for equally by the parties and shall be considered binding by the parties. The
parties shall use such appraisal for all purposes, including for purposes of
the federal and state income tax returns.
3.4.1 Long Island Stations' Barter and Trade. If the value of
trade, barter and similar arrangements for the sale of advertising time for
other than cash that are assumed by Chancellor under this Agreement is $50,000
(or more) greater than the value of the consideration to be received by
Chancellor on or after the Long Island LMA Commencement Date with respect to
the Long Island Stations, SFX shall pay Chancellor the excess (other than the
first $50,000) within 30 days after the Long Island LMA Commencement Date.
3.4.2 Jacksonville Stations' Barter and Trade. If the value of
trade, barter and similar arrangements for the sale of advertising time for
other than cash that are assumed by SFX under this Agreement is $50,000 (or
more) greater than the value of the consideration to be received by SFX on or
after the Jacksonville LMA Commencement Date with respect to the Jacksonville
Stations, Chancellor shall pay SFX the excess (other than the first $50,000)
within 30 days after the Jacksonville LMA Commencement Date.
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SECTION 4. ASSUMPTION OF OBLIGATIONS
4.1 Long Island Assumed Liabilities. Subject to the provisions of
this Section 4, and subject to the Long Island Stations LMA as set forth in
Section 7.1, hereof, Chancellor shall assume the obligations of SFX arising or
to be performed under such of the Long Island Contracts as are listed in
Schedule 2.4.4 hereto and all liabilities and obligations from the ownership
or operation of the Stations Assets (the "Long Island Assumed Liabilities")
after the Closing Date.
4.2 Long Island Retained Liabilities. Notwithstanding anything
contained in this Agreement to the contrary, Chancellor expressly does not,
and shall not, assume or agree to pay, satisfy, discharge or perform and will
not be deemed by virtue of the execution and delivery of this Agreement to
have assumed or to have agreed to pay, satisfy, discharge or perform, any
liabilities, obligations or commitments of SFX of any nature whatsoever
whether accrued, absolute, contingent or otherwise and whether or not
disclosed to Chancellor, other than the Long Island Assumed Liabilities. All
of such liabilities and obligations shall be referred to herein collectively
as the "Long Island Retained Liabilities".
4.3 Jacksonville Assumed Liabilities. Subject to the provisions of
this Section 4, and subject to the Jacksonville Stations LMA, SFX shall assume
the obligations of Chancellor arising or to be performed on or after the
Closing Date under such of the Jacksonville Contracts as are listed in
Schedule 2.2.4 hereto and all liabilities and obligations from the ownership
or operation of the Stations Assets (the "Jacksonville Assumed Liabilities")
after the Closing Date. In addition, SFX shall assume Chancellor's
post-closing obligations under Article 11 of the Florida Agreement, however,
such obligations shall be limited to providing assistance to Chancellor and
the selling party, and SFX shall have no obligation to provide any payments
which Chancellor may be obligated to make under the Florida Agreement.
4.4 Florida Retained Liabilities. Notwithstanding anything
contained in this Agreement to the contrary, SFX expressly does not, and shall
not, assume or agree to pay, satisfy, discharge or perform and will not be
deemed by virtue of the execution and delivery of this Agreement to have
assumed or to have agreed to pay, satisfy, discharge or perform, any
liabilities, obligations or commitments of Chancellor of any nature whatsoever
whether accrued, absolute, contingent or otherwise and whether or not
disclosed to SFX, other than the Jacksonville Assumed Liabilities. All such
liabilities and obligations shall be referred to herein collectively as the
"Florida Retained Liabilities."
SECTION 5. SOLE REMEDIES
5.1 Omni's Failure to Close. In the event the Florida Agreement
between Chancellor and Omni fails to close and SFX is not in material breach
of this Agreement:
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(a) SFX has the right to compel Chancellor to use its
reasonable best efforts to close the Florida Agreement in the event all
conditions of Closing the Florida Agreement have been met. However, Chancellor
shall not have any obligation to waive any closing conditions or breaches of
Omni under the Florida Agreement.
(b) SFX has twelve (12) months to designate an alternative
radio broadcast station or stations to exchange under the terms similar to
this Agreement in substitution for the Jacksonville Stations and the parties
will delay closing on the Long Island Stations for this period of time. The
parties agree to extend the Long Island Stations LMA for this same period of
time. Further, SFX, has the right to extend this twelve month designation
period and the corresponding time periods under this Subsection for a period
not to exceed twelve additional months. During this time period, or extended
time period, SFX may increase the Long Island Stations LMA monthly payment fee
to Five Hundred Thousand Dollars ($500,000). In the event SFX fails to
designate an alternative radio broadcast station(s) as referred above, and/or
fails to close on said station(s) within the twenty-four (24) month period set
forth above, SFX agrees to transfer the Long Island Stations to Chancellor for
the cash consideration of Fifty-four Million Dollars ($54,000,000) subject to
any adjustments provided herein, to be paid by wire transfer of immediately
available funds at Closing;
5.1.1 The above remedies set forth in Subsections 5.1(a) and (b)
are independent and mutually exclusive.
5.1.2 In the event Chancellor fails to cooperate with SFX
pursuant to Subsections 5.1 (a) or (b), then SFX has the right to bring suit
against Chancellor to seek direct compensatory damages up to an amount not to
exceed Twenty-five Million Dollars ($25,000,000) as a Break-up Fee.
5.2 Chancellor's Failure to Transfer Jacksonville Assets. Assuming
Chancellor has closed on the Florida Agreement, if all conditions of closing
this Agreement have been met (Chancellor shall not have any obligation to
waive any closing conditions or breaches of SFX under this Agreement), and
Chancellor fails to transfer the Jacksonville Assets under the terms and
conditions of this Agreement, for any reason other than the failure of the FCC
to grant its consent to the assignment of the licenses, or the time period for
all applicable notifications and waiting period requirements under the HSR Act
have not been satisfied, and SFX is not in material breach of this Agreement;
(a) SFX may bring suit against Chancellor to compel specific
performance by Chancellor of the terms of this Agreement; or
(b) SFX may bring suit against Chancellor to seek direct
compensatory damages in an amount not to exceed Twenty-five Million Dollars
($25,000,000) as a Break-up Fee; or
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(c) SFX may require Chancellor to sell to it the assets of
WALK AM/FM, Patchogue, New York, under terms similar to the terms herein but
for cash consideration of Seventy- Five Million Six Hundred Thousand Dollars
($75,600,000). In addition, the parties shall enter into an LMA which provides
that SFX will program WALK AM/FM under terms similar to the Long Island
Stations LMA with a Fair Market Value (FMV) monthly LMA fee. In the event the
parties cannot agree on an LMA fee, Arthur Andersen shall be retained to
determine said fee and the costs shall be borne equally by the parties.
(d) The Jacksonville Stations LMA and the Long Island Stations
LMA shall terminate upon SFX exercising its rights under subsection (a), (b)
or (c) above.
5.2.1 The above remedies set forth in Subsections 5.2(a), (b)
and (c) are independent and mutually exclusive.
5.2.2In the event SFX elects any of the above remedies set
forth in Section 5.2, the parties agree to extend the Long Island LMA until
such time as SFX closes on the Jacksonville Station or WALK AM/FM, and SFX may
increase the Long Island Stations LMA monthly payment fee to Five Hundred
Thousand Dollars ($500,000).
5.3 SFX's Failure to Transfer the Long Island Assets. If all
conditions of closing of this Agreement have been met (SFX shall not have any
obligation to waive any closing conditions or breaches of Chancellor under
this Agreement), and SFX fails to transfer the Long Island Assets under the
terms and conditions of this Agreement, for any reason other than the failure
of the FCC not granting consent to the assignment of licenses, or the time
period for all applicable notification and waiting period requirements under
the HSR Act have not been satisfied, and Chancellor is not in material breach
of this Agreement;
(a) Chancellor may bring suit against SFX to compel specific
performance by SFX of the terms of this Agreement; or
(b) Chancellor may bring suit against SFX to seek direct
compensatory damages in an amount not to exceed Twenty-five Million Dollars
($25,000,000) as a break-up fee; or
(c) Chancellor may require SFX to sell to it the assets of
radio stations WIVY-FM, WOKV-AM, WPDQ-AM and WKQL-FM, Jacksonville, Florida
(collectively referred to as the "Substitute Jacksonville Stations") under
terms similar to the terms herein for consideration of Eleven Million One
Hundred Thousand Dollars ($11,100,000). In addition, the parties shall enter
into an LMA which provides that Chancellor will program the Substitute
Jacksonville Stations under terms similar to the Jacksonville Stations LMA
with a FMV monthly LMA fee. In the event the parties cannot agree on an LMA
fee, Arthur Andersen shall be retained to determine said fee and the costs
shall be borne equally by the parties.
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(d) The Jacksonville Stations LMA and the Long Island Stations
LMA shall terminate upon Chancellor exercising its rights under subsection
(a), (b) or (c) above.
5.3.1The above remedies set forth in Subsections 5.3(a), (b)
and (c) are independent and mutually exclusive.
5.4 The remedies listed in this Section 5 are the sole and
exclusive remedies of the parties for failure to transfer either the
Jacksonville or the Long Island Stations' Assets. These remedies are
independent of the remedies available to the parties for breach of the
representations and warranties set forth in Section 19 herein.
SECTION 6. GOVERNMENT CONSENTS
6.1 FCC Consent. The closing on the purchase and sale of the Long
Island Assets and the Jacksonville Assets is subject to and conditioned upon
(a) the parties obtaining the prior consent of the FCC to the transaction
contemplated in this Agreement ("FCC Consent") and (b) the FCC action granting
its consent becoming a "Final Order," in essence, an action unappealable by
virtue of (x) the expiration of the period within which a timely request for
appeal, review or reconsideration could be filed and (y) the expiration of the
period within which the FCC or a Court could review the action on its own
motion, such periods having expired without the filing of any request for
appeal, review or reconsideration and without the review of the action on the
FCC's or Court's own motion.
6.2 FCC Applications. Within thirty (30) days after the execution
of this Agreement or such earlier time as shall be agreed to by all of the
parties hereto, Chancellor and SFX shall file the applications with the FCC
for FCC Consent ("FCC Applications") to assign the Long Island Stations'
Licenses to Chancellor and the Jacksonville Stations' Licenses to SFX.
Chancellor and SFX shall prosecute the FCC Applications with all reasonable
diligence and otherwise use their best efforts to obtain the FCC Consents as
expeditiously as practicable (but neither Chancellor nor SFX shall have any
obligation to satisfy complainants or the FCC by taking any steps which would
have a material adverse effect upon Chancellor or SFX, or upon any of their
Affiliates). If the FCC Consents impose any condition on Chancellor or SFX
such party shall use its reasonable efforts to comply with such condition;
provided, however, that neither Chancellor nor SFX shall be required hereunder
to comply with any condition that would have a material adverse effect upon it
or any of its Affiliates. If reconsideration or judicial review is sought with
respect to the FCC Consents, the party affected shall vigorously oppose such
efforts for reconsideration or judicial review; provided, however, that
nothing herein shall be construed to limit either party's right to terminate
this Agreement pursuant to Section 20 hereof.
6.3 Filings. As promptly as practicable after the execution of
this Agreement, Chancellor and SFX shall use their reasonable efforts to
obtain, and to cooperate with each other in
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obtaining, all authorizations, consents, orders and approvals of any
governmental authority that may be or become necessary in connection with the
consummation of the transactions contemplated by this Agreement, and to take
all reasonable actions to avoid the entry of any order or decree by any
governmental authority prohibiting the consummation of the transactions
contemplated hereby. These efforts shall include, without limitation, filing
any reports or notifications that may be required to be filed by Chancellor
and SFX under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") with the Federal Trade Commission and the Antitrust Division of the
Department of Justice. Each party shall furnish to one another all such
information in its possession as may be necessary for the completion of the
reports or notifications to be filed by the other.
SECTION 7. LOCAL MARKETING AGREEMENTS
7.1 Long Island Local Marketing Agreement. On or before July 1,
1996, the parties shall enter into a Long Island Local Marketing Agreement
(the "Long Island Stations LMA") substantially in the form of the LMA appended
hereto as Exhibit 7.1. Chancellor shall not have any claim or right,
including, without limitation, any right to terminate this Agreement or any
claim for damages to the extent that Chancellor's operation of the Long Island
Stations under or in accordance with the Long Island Stations LMA (i) causes
any representation or warranty of the SFX to be rendered inaccurate or (ii)
conflicts with any covenant to be complied with by SFX on or prior to the
Closing Date.
7.2 Jacksonville Local Marketing Agreement. On or before August 1,
1996, the parties shall enter into a Jacksonville Local Marketing Agreement
(the "Jacksonville Stations LMA") substantially in the form of the LMA
appended hereto as Exhibit 7.2. To the extent that Omni is required to be a
party to the Jacksonville Stations LMA to effectuate its purposes, Chancellor
shall use its commercially reasonable efforts to obtain Omni's execution and
performance of the Jacksonville Stations LMA and to assign or provide on terms
reasonably satisfactory to SFX, as soon as practicable after the execution of
the Agreement, but no sooner than August 1, 1996, the rights of Chancellor
under the Local Marketing Agreement, if executed, currently being negotiated
by Chancellor and Omni with respect to the Florida Stations. SFX shall not
have any claim or right, including, without limitation, any right to terminate
this Agreement or any claim for damages, to the extent that SFX's operation of
the Jacksonville Stations under or in accordance with the Jacksonville
Stations LMA (i) causes any representation or warranty of Chancellor to be
rendered inaccurate or (ii) conflicts with any covenant to be complied with by
Chancellor on or prior to the Closing Date.
SECTION 8. COLLECTION OF ACCOUNTS RECEIVABLE
8.1 Long Island Accounts Receivable.
(a) Within five (5) business days after the Long Island LMA
Commencement Date, SFX shall deliver to Chancellor a full and detailed list of
the accounts
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receivable relating to the Long Island Stations and its operations prior to
the Long Island LMA Commencement Date ("Long Island Accounts Receivable"),
designating with respect to each account receivable any portion thereof
attributable to services to be rendered by Chancellor after the Long Island
LMA Commencement Date. The Long Island Accounts Receivable shall not be
purchased by Chancellor and Chancellor agrees, however, that for a period of
one hundred twenty (120) days following the Commencement Date (the "Collection
Period"), it shall act as SFX's agent for purposes of the collection of the
Long Island Accounts Receivable and shall use reasonable efforts to collect
the Long Island Accounts Receivable for the benefit of SFX. Chancellor shall
remit to SFX all amounts collected by Chancellor for SFX's benefit within
fifteen (15) days after the end of each month. The collection responsibilities
imposed on Chancellor hereunder shall not require the institution of suit or
referral to a collection or similar agency, or the institution of any
proceeding against an account debtor under any bankruptcy, insolvency, or
similar law affecting the rights of creditors generally. Any of the Long
Island Accounts Receivable which shall remain uncollected by Chancellor at the
conclusion of the Collection Period shall remain SFX's assets and Chancellor's
obligations under this Section 8.1 shall terminate. Chancellor shall have no
liability to SFX for the uncollectability of any of the Long Island Accounts
Receivable.
(b) Chancellor agrees that it may not settle, discount payment
of, extend the terms of, or otherwise compromise any of the Long Island
Accounts Receivable, except as consented to in writing by SFX. If at the Long
Island LMA Commencement Date or at any time during the Collection Period an
account debtor is in bankruptcy, reorganization or similar proceeding, SFX
will assume the full collection responsibility as to such account and such
account will no longer be deemed a Long Island Account Receivable for purposes
of this Agreement. Following the Long Island LMA Commencement Date, Chancellor
will give prompt notice to SFX of any such bankruptcy, reorganization or other
proceeding affecting any debtor of the Long Island Accounts Receivable after
receiving notice thereof.
(c) During the Collection Period, any and all amounts paid to
Chancellor by an account debtor with respect to an account receivable shall be
applied first to payment of the Long Island Account Receivable, unless the
account debtor disputes such Long Island Account Receivable, appropriately
documents such dispute in writing, and prompt notice (including all written
documentation) of such dispute is given by Chancellor to SFX. After the end of
the Collection Period, Chancellor shall forward to SFX all payments received
that are reasonably identifiable (by invoice number, date of service or other
unambiguous reference) with the Long Island Accounts Receivable, within twenty
(20) days of receipt.
(d) Chancellor does not guarantee the collection of the whole
or any part of the Long Island Accounts Receivable.
8.2 Jacksonville Accounts Receivable.
(a) Within five (5) business days of the Jacksonville LMA
Commencement Date, Chancellor shall deliver to SFX a full and detailed list of
the accounts
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receivable relating to the Jacksonville Stations and its operations prior to
the Jacksonville LMA Commencement Date ("Jacksonville Accounts Receivable"),
designating with respect to each account receivable any portion thereof
attributable to services to be rendered by SFX after the Jacksonville LMA
Commencement Date. The Jacksonville Accounts Receivable shall not be purchased
by SFX and SFX agrees, however, that for a period of 120 days following the
Jacksonville LMA Commencement Date (the "Collection Period"), it shall act as
Chancellor's agent for purposes of the collection of the Jacksonville Accounts
Receivable and shall use reasonable efforts to collect the Jacksonville
Accounts Receivable for the benefit of the Chancellor. SFX shall remit to
Chancellor all amounts collected by SFX for Chancellor's benefit within
fifteen (15) days after the end of the month. The collection responsibilities
imposed on SFX hereunder shall not require the institution of suit or referral
to a collection or similar agency, or the institution of any proceeding
against an account debtor under any bankruptcy, insolvency, or similar law
affecting the rights of creditors generally. Any of the Jacksonville Accounts
Receivable which shall remain uncollected by SFX at the conclusion of the
Collection Period shall remain Chancellor's assets and SFX's obligations under
this Section 8.2 shall terminate. SFX shall have no liability to Chancellor
for the uncollectability of any of the Jacksonville Accounts Receivable.
(b) SFX agrees that it may not settle, discount payment of,
extend the terms of, or otherwise compromise any of the Jacksonville Accounts
Receivable, except as consented to in writing by Chancellor. If at the
Jacksonville LMA Commencement Date or at any time during the Collection Period
an account debtor is in bankruptcy, reorganization or similar proceeding,
Chancellor will assume the full collection responsibility as to such account
and such account will no longer be deemed a Jacksonville Account Receivable
for purposes of this Agreement. Following the Jacksonville LMA Commencement
Date, SFX will give prompt notice to Chancellor of any such bankruptcy,
reorganization or other proceeding affecting any debtor of the Jacksonville
Accounts Receivable after receiving notice thereof.
(c) During the Collection Period, any and all amounts paid to
SFX by an account debtor with respect to an account receivable shall be
applied first payment to the Jacksonville Accounts Receivable, unless the
account debtor disputes such Florida Account Receivable, appropriately
documents such dispute in writing, and prompt notice (including all written
documentation) of such dispute is given by SFX to Chancellor. After the end of
the Collection Period, SFX shall forward to Chancellor all payments received
that are reasonably identifiable (by invoice number, date of service or other
unambiguous reference) with the Jacksonville Accounts Receivable, within
twenty (20) days.
(d) SFX does not guarantee the collection of the whole or any
part of the Jacksonville Accounts Receivable.
SECTION 9. THIRD PARTY CONSENTS
9.1 Long Island Consents. SFX shall use its reasonable best
efforts to obtain all
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third party consents necessary for the conveyance of the Long Island Assets to
Chancellor without the imposition of any conditions that would be adverse to
Chancellor.
9.2 Florida Consents. Chancellor shall use its reasonable best
efforts to obtain all third party consents necessary for the conveyance of the
Jacksonville Assets to SFX without the imposition of any conditions that would
be adverse to SFX.
9.3 Failure to Obtain Consents.
(a) If Chancellor fails to obtain any of the Consents
referenced in Section 9.2, Chancellor shall use its reasonable best efforts
(i) to provide SFX the financial and business benefits SFX would have enjoyed
had the consent been given and (ii), upon the request of SFX, to enforce in
its name for the account of SFX any rights that would otherwise have been
available to SFX had the consent been granted.
(b) If SFX fails to obtain any of the Consents referenced in
Section 9.1, SFX shall use its reasonable best efforts (i) to provide
Chancellor the financial and business benefits Chancellor would have enjoyed
had the consent been given and (ii), upon the request of Chancellor, to
enforce in its name for the account of Chancellor any rights that would
otherwise have been available to Chancellor had the consent been granted.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF CHANCELLOR
10.1 Organization and Standing. Chancellor is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware.
10.2 Authorization and Binding Obligation. Chancellor has all
necessary corporate power and authority to enter into and perform this
Agreement and the transactions contemplated hereby. At the Closing,
Chancellor's execution, delivery and performance of this Agreement and the
transactions contemplated hereby will be duly and validly authorized by all
necessary corporate action on behalf of Chancellor and this Agreement will
constitute a valid and binding obligation of Chancellor, enforceable in
accordance with its terms.
10.3 Qualification. To Chancellor's knowledge (as used in this
Section 10 or Section 11, "knowledge" means to the best knowledge of the
Officers, Directors, and senior management of either party to this Agreement,
including Station Managers), there is no fact, allegation, condition, or
circumstance that could reasonably be expected to prevent the prompt grant of
the FCC Consent. Chancellor knows of no fact that would, under the
Communications Act of 1934, as amended, or the rules, regulations and policies
of the FCC, disqualify Chancellor from becoming the licensee of either the
Jacksonville Stations or the Long Island Stations. There are no proceedings,
complaints, notices of forfeiture, claims, or investigations pending or, to
the knowledge of Chancellor threatened against any or in respect of any of the
broadcast stations licensed to
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Chancellor or its affiliates that would materially impair the qualifications
of Chancellor to become a licensee of the Jacksonville Stations or the Long
Island Stations or that would delay the FCC's processing of the FCC
Applications.
10.4 Absence of Conflicting Agreements or Required Consents. Except
as set forth in Schedule 10.4 hereof, the execution, delivery and performance
of this Agreement by Chancellor: (a) do not violate or conflict with any of
the terms, conditions or provisions of the Certificate of Incorporation or
By-Laws of Chancellor; (b) do not require the consent of any third party not
affiliated with Chancellor; (c) will not violate any applicable law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority to which Chancellor is a party; and (d) will not either alone or
with the giving of notice or the passage of time, violate the terms,
conditions or provisions of, or constitute a default under, any agreement,
instrument, license or permit to which Chancellor is now subject.
10.5 Litigation: Compliance with Law. Except as disclosed in
Schedule 10.5, there is no litigation, administrative action, arbitration or
other proceeding, or petition, complaint or investigation before any court or
governmental body, pending against Chancellor that would adversely affect
Chancellor's ability to perform its obligations pursuant to this Agreement or
the agreements to be executed by Chancellor in connection herewith. Chancellor
has committed no violation of any applicable law, regulation or ordinance or
any other requirement of any governmental body or court which would have a
material adverse effect on Chancellor or its ability to perform their
respective obligations pursuant to this Agreement or the agreements to be
executed in connection herewith.
10.6 Broker/Finder Fees. Star Media Group is the sole and exclusive
broker in this transaction. Chancellor has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders fees or agents'
commissions or other like payment in connection with this Agreement or the
transactions contemplated hereby for which SFX has any liability. Chancellor
is solely responsible for Star Media Group's fee.
10.7 Representations and Warranties as to the Jacksonville
Stations. Chancellor previously has delivered to SFX true, correct and
complete copies of the executed Florida Agreement together will all disclosure
schedules, exhibits, and annexes thereto. With respect to the Jacksonville
Stations, Chancellor to the best of its knowledge, hereby makes (as of the
date or dates on which those representations and warranties were made to
Chancellor by Omni) to SFX each and every of the representations and
warranties of Omni each of which is incorporated herein by reference as though
contained herein. Chancellor makes no additional representations or warranties
with respect to the Jacksonville Stations.
SECTION 11. REPRESENTATION AND WARRANTIES OF SFX
11.1 Organization and Standing. WBLI-FM, Inc. is a corporation duly
organized,
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validly existing and in good standing under the laws of the State of Delaware.
WBLI, Inc., WHFM, Inc., WBAB, Inc., and WGBB, Inc. are corporations duly
organized, validly existing and in good standing under the laws of the State
of New York.
11.2 Authorization and Binding Obligation. SFX has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. SFX's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on behalf of SFX and this
Agreement constitutes a valid and binding obligation of SFX, enforceable in
accordance with its terms.
11.3 Qualification. To SFX's knowledge, there is no fact,
allegation, condition, or circumstance that could reasonably be expected to
prevent the prompt grant of the FCC Consent. SFX knows of no fact that would,
under the Communications Act of 1934, as amended, or the rules, regulations
and policies of the FCC, disqualify SFX from becoming the licensee of the
Jacksonville Stations. There are no proceedings, complaints, notices of
forfeiture, claims, or investigations pending or, to the knowledge of SFX
threatened against any or in respect of any of the broadcast stations licensed
to SFX or its affiliates that would materially impair the qualifications of
SFX to become the licensee of the Jacksonville Stations or that would delay
the FCC's processing of the FCC Applications.
11.4 Absence of Conflicting Agreements or Required Consents. Except
as set forth in Schedule 11.4 hereof, the execution, delivery and performance
of this Agreement by SFX: (a) do not violate or conflict with any of the
terms, conditions or provisions of the Certificate of Incorporation or By-Laws
of SFX or any of its affiliates, WBLI, Inc., WBLI-FM, Inc., WHFM, Inc., WBAB,
Inc. and WGBB, Inc.; (b) do not require the consent of any third party not
affiliated with SFX; (c) will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority
to which SFX is a party; and (d) will not either alone or with the giving of
notice or the passage of time, violate the terms, conditions or provisions of,
or constitute a default under, any agreement, instrument, license or permit to
which SFX is now subject.
11.5 Litigation: Compliance with Law. Except as disclosed in
Schedule 11.5, there is no litigation, administrative action, arbitration or
other proceeding, or petition, complaint or investigation before any court or
governmental body, pending against SFX that would adversely affect SFX's
ability to perform its obligations pursuant to this Agreement or the
agreements to be executed by SFX in connection herewith. SFX has committed no
violation of any applicable law, regulation or ordinance or any other
requirement of any governmental body or court which would have a material
adverse effect on SFX or its ability to perform its respective obligations
pursuant to this Agreement or the agreements to be executed in connection
herewith.
11.6 Broker/Finder Fees. Star Media Group is the sole and exclusive
broker in this transaction. SFX has not incurred any obligation or liability,
contingent or otherwise, for brokerage or finders fees or agents' commissions
or other like payment in connection with this Agreement or
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the transactions contemplated hereby for which Chancellor has any liability.
Chancellor is solely responsible for Star Media Group's fee.
11.7 Representations and Warranties as to the Long Island Stations.
SFX previously has delivered to Chancellor true, correct and complete copies
of the executed agreements associated with the Long Island Stations together
will all disclosure schedules, exhibits, and annexes thereto. With respect to
the Long Island Stations, SFX to the best of its knowledge, hereby makes to
Chancellor each and every of the representations and warranties contained in
the Liberty Stock Purchase Agreement among Liberty Broadcasting, Incorporated,
et. al. and SFX Broadcasting, Inc., dated November 15, 1995 (the "Liberty
Agreement") which are incorporated herein by reference as though contained
herein. In addition, SFX makes each and every of the representations and
warranties contained in the Liberty Agreement to Chancellor for the period
after the Liberty Closing when SFX acquires the Long Island Stations and the
Closing Date hereunder, subject to the Long Island Stations LMA.
SECTION 12. COVENANTS OF CHANCELLOR
12.1 Conduct of Station:
12.1.Subject to the Jacksonville Stations LMA, Chancellor
covenants and agrees with SFX that between the date hereof and the
Jacksonville LMA Commencement Date (except as otherwise noted below),
Chancellor with respect to the Jacksonville Stations (to the extent that it is
programming the Jacksonville Stations pursuant to a local marketing agreement
with Omni and is authorized under that said local marketing agreement to do
so) shall:
(i) use commercially reasonable efforts to maintain the
Jacksonville Stations' present business organization, keep available the
services of the Jacksonville Stations' employees and independent contractors,
preserve the Jacksonville Stations' relationships with the Jacksonville
Stations' customers and others having business relationships with the
Jacksonville Stations, and refrain from materially and adversely changing any
of the Jacksonville Stations' business policies including but not limited to
advertising (including substantially the same amount of cash expenditure),
marketing, pricing, purchasing, personnel, sales, and budget policies);
(ii) maintain the Jacksonville Stations' books of account
and records in the usual and ordinary manner and in accordance with generally
accepted accounting principles;
(iii)operate the Jacksonville Stations in the usual and
ordinary course of business in accordance with past practice and conduct the
Jacksonville Stations' business in all material respects in compliance with
the terms of the Jacksonville Licenses and all applicable laws, rules, and
regulations, including, without limitation, the applicable rules and
regulations of the FCC through the Closing Date;
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(iv) use, repair, and, if necessary, replace any of
WAPE-FM's or WFYV-FM's studios and the Jacksonville Stations' transmission
assets in a reasonable manner consistent with historical practice and maintain
its assets in substantially their current condition, ordinary wear and tear
excepted;
(v) maintain appropriate insurance for the Jacksonville
Stations through the Closing Date;
(vi) not incur any debts or obligations to be performed
by SFX that exceeds Ten Thousand Dollars ($10,000) individually or Twenty-five
Thousand Dollars ($25,000) in the aggregate through the Closing Date;
(vii) not lease, mortgage, pledge, or subject to a lien,
claim, or encumbrance (other than Permitted Liens ) any of the Jacksonville
Assets or sell or transfer any of the Jacksonville Assets without replacing
such Jacksonville Assets with an asset of substantially the same value and
utility;
(viii) without the prior consent of SFX, which consent
shall not be unreasonably withheld or delayed, (x) not modify or extend any
Jacksonville Stations' Contracts or (y) enter into any new Jacksonville
Stations' Contract the payments under which exceeds Ten Thousand Dollars
($10,000) individually or Twenty-five Thousand Dollars ($25,000) in the
aggregate through the Commencement Date;
(ix) not make or grant any general wage or salary
increase or generally materially modify the Jacksonville Stations' employees'
terms and conditions of employment;
(x) not make any change in the Jacksonville Stations'
accounting principles, methods, or practices followed by it or depreciation or
amortization policies or rates;
(xi) not make any loans or make any dividends or
distributions other than of Excluded Assets of the Jacksonville Stations;
(xii) other than in the ordinary course of business, not
cancel or compromise any debt or claim, or waive or release any right, of
material value;
(xiii) enforce, in its own name and for the benefit of
SFX, all representations, warranties and covenants of Omni under the Florida
Agreement insofar as such representations, warranties and covenants affect or
relate to the Jacksonville Assets. The quantity, identity, character, quality
of and title to the Jacksonville Assets conveyed by Chancellor to SFX
hereunder shall be substantially the same as the quantity, identity, character
and quality of and title to the assets of the Jacksonville Stations received
by Chancellor from Omni pursuant to the Florida
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Agreement.
12.1.2 For purposes of compliance with Section 12.1, any
violation of the above-referenced covenants resulting in liabilities to SFX,
in the aggregate, less than the Indemnification Basket as defined in Section
19.3 below, shall not be deemed material. Such liabilities shall nevertheless
constitute Damages for purposes of the indemnification agreement contained in
the Section 19 hereof.
12.2 Chancellor shall give or cause the Jacksonville Stations to
(i) give SFX and SFX's counsel, accountants, engineers and other
representatives, including environmental consultants, reasonable access during
normal business hours to all of Chancellor's properties, books, Contracts,
Trade Agreements, reports and records including financial information and tax
returns relating to the Jacksonville Stations, and to all real estate,
buildings and equipment relating to the Jacksonville Stations, in order that
SFX may have full opportunity to make such investigation at the sole expense
of SFX, including but not limited to, environmental assessments, as it desires
of the affairs of the Jacksonville Stations and (ii) furnish SFX with
information, and copies of all documents and agreements including but not
limited to financial and operating data and other information concerning the
financial condition, results of operations and business of the Jacksonville
Stations, that SFX may reasonably request. The rights of SFX under this
Section shall not be exercised in such a manner as to interfere unreasonably
with the business of the Jacksonville Stations.
12.3 No Inconsistent Action. Chancellor shall not take any action
that is materially inconsistent with its obligations under this Agreement.
12.4 Updating of Schedules. From time to time prior to the Closing,
Chancellor will supplement or amend the Schedules delivered in connection
herewith with respect to any matter which exists or occurs after the date of
this Agreement and which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in such
Schedules or which is necessary to correct any information in such Schedules
which has been rendered inaccurate thereby. No matter so disclosed shall
affect the requirements of Section 16.1, but if the Closing hereunder shall
occur, no said matter disclosed pursuant to Section 12.3 shall have the basis
for any claims for indemnification hereunder.
12.5 Enforcement of Agreements. Chancellor shall use its reasonable
best efforts to perform and carry out all their respective obligations under,
and, if necessary, Chancellor shall seek the specific performance of the
transactions contemplated by the Florida Agreement. Chancellor shall use its
reasonable best efforts to perform and carry out, and to cause the other
parties thereto to perform and carry out, all their respective obligations
under the LMA's relating to the Jacksonville Stations.
12.6 FCC ReportFrom the Time of Closing on the Florida Agreement
until the Closing Date hereunder, Chancellor shall file on a current basis
until the Closing Date all material
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reports and documents required to be filed with the FCC with respect to the
Jacksonville Stations' Licenses. Copies of each such report and document filed
between the date hereof and the Closing Date shall be furnished to SFX
promptly after its filing.
12.7 NotificatiChancellor shall promptly notify SFX in writing of
(i) any litigation, arbitration or administrative proceeding pending or, to
its knowledge, threatened against Chancellor which challenges the transactions
contemplated hereby or (ii) the failure of Chancellor, or any employee or
agent of Chancellor to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder and (iii) the occurrence of any event that would
entitle SFX to terminate this Agreement pursuant to Section 20. No matter so
disclosed shall affect the requirements of Section 16.1, but if the Closing
hereunder shall occur, no said matter disclosed pursuant to Section 12.3 shall
have the basis for any claims for indemnification hereunder.
12.8 Post-Closing AcChancellor, for a period of five (5) years
following the Closing Date, shall make available during normal business hours
for audit and inspection by SFX and its representatives, for any reasonable
purpose and upon reasonable notice, all records, files, documents and
correspondence transferred to it hereunder relating to the pre-closing period.
Chancellor shall at no time dispose of or destroy any such records, files,
documents and correspondence without giving thirty (30) days prior notice to
SFX to permit SFX, at its expense, to examine, duplicate or take possession of
and title to such records, files, documents and correspondence. All
information, records, files, documents and correspondence made available or
disclosed to SFX under this Section 12.7 shall be kept confidential by SFX.
12.9 Chancellor will use commercially reasonable efforts to obtain
all necessary consents, authorizations, or approvals, in each case, required
for the consummation of the transactions contemplated by this Agreement.
SECTION 13. COVENANTS OF SFX
13.1 Conduct of Station:
13.1.Subject to the Long Island Stations LMA, SFX covenants
and agrees with Chancellor that between the date hereof (except as otherwise
noted below), SFX with respect to the Long Island Stations shall:
(i) use commercially reasonable efforts to maintain the
Long Island Stations' present business organization, keep available the
services of the Long Island Stations' employees and independent contractors,
preserve the Long Island Stations' relationships with the Long Island
Stations' customers and others having business relationships with the Long
Island Stations, and refrain from materially and adversely changing any of the
Long Island Stations'
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business policies including but not limited to advertising (including
substantially the same amount of cash expenditure), marketing, pricing,
purchasing, personnel, sales, and budget policies);
(ii) maintain the Long Island Stations' books of account
and records in the usual and ordinary manner and in accordance with generally
accepted accounting principles;
(iii) operate in the usual and ordinary course of business
in accordance with past practice and conduct the Long Island Stations'
business in all material respects in compliance with the terms of the Long
Island Licenses and all applicable laws, rules, and regulations, including,
without limitation, the applicable rules and regulations of the FCC through
the Closing Date;
(iv) use, repair, and, if necessary, replace any Long
Island Stations studio and transmission assets in a reasonable manner
consistent with historical practice and maintain its assets in substantially
their current condition, ordinary wear and tear excepted;
(v) maintain appropriate insurance for the Long Island
Stations through the Closing Date;
(vi) not incur any debts or obligations to be performed
by Chancellor that exceeds Ten Thousand Dollars ($10,000) individually or
Twenty-five Thousand Dollars ($25,000) in the aggregate through the Closing
Date;
(vii) not lease, mortgage, pledge, or subject to a lien,
claim, or encumbrance (other than Permitted Liens ) any of the Long Island
Assets or sell or transfer any of the Long Island Assets without replacing
such Long Island Assets with an asset of substantially the same value and
utility;
(viii) without the prior consent of Chancellor, which
consent shall not be unreasonably withheld or delayed, (x) not modify or
extend any Long Island Stations Contracts or (y) enter into any new Long
Island Stations Contract the payments under which exceeds Ten Thousand Dollars
($10,000) individually or Twenty-five Thousand Dollars ($25,000) in the
aggregate through the Commencement Date;
(ix) not make or grant any general wage or salary
increase or generally materially modify the Long Island Stations' employees'
terms and conditions of employment;
(x) not make any change in the Long Island Stations'
accounting principles, methods, or practices followed by it or depreciation or
amortization policies or rates;
(xi) not make any loans or make any dividends or
distributions
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other than of Excluded Assets of the Long Island Stations;
(xii) other than in the ordinary course of business, not
cancel or compromise any debt or claim, or waive or release any right, of
material value;
(xiii) SFX shall enforce, in its own name and for the
benefit of Chancellor, all representations, warranties and covenants insofar
as such representations, warranties and covenants affect or relate to the Long
Island Assets.
13.1.For purposes of compliance with Section 13.1, any
violation of the above-referenced covenants resulting in liabilities to
Chancellor, in the aggregate, less than the Indemnification Basket as defined
in Section 19.3 below, shall not be deemed material. Such liabilities shall
nevertheless constitute Damages for purposes of the indemnification agreement
contained in Section 19 hereof.
13.2 SFX shall give or cause the Long Island Stations to (i) give
Chancellor and Chancellor's counsel, accountants, engineers and other
representatives, including environmental consultants, reasonable access during
normal business hours to all of SFX's properties, books, Contracts, Trade
Agreements, reports and records including financial information and tax
returns relating to the Long Island Stations, and to all real estate,
buildings and equipment relating to the Long Island Stations, in order that
Chancellor may have full opportunity to make such investigation, including but
not limited to, environmental assessments, as it desires of the affairs of the
Long Island Stations and (ii) furnish Chancellor with information, and copies
of all documents and agreements including but not limited to financial and
operating data and other information concerning the financial condition,
results of operations and business of the Long Island Stations, that
Chancellor may reasonably request. The rights of Chancellor under this Section
shall not be exercised in such a manner as to interfere unreasonably with the
business of the Long Island Stations.
13.3 No Inconsistent Action. SFX shall not take any action that is
materially inconsistent with its obligations under this Agreement.
13.4 Updating of Schedules. From time to time prior to the Closing,
SFX will supplement or amend the Schedules delivered in connection herewith
with respect to any matter which exists or occurs after the date of this
Agreement and which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in such
Schedules or which is necessary to correct any information in such Schedules
which has been rendered inaccurate thereby. No matter so disclosed shall
affect the requirements of Section 16.1, but if the Closing hereunder shall
occur, no said matter disclosed pursuant to Section 12.3 shall have the basis
for any claims for indemnification hereunder.
13.5 Enforcement of Agreements. SFX shall use its reasonable best
efforts to perform and carry out all their respective obligations under this
Agreement. SFX shall use its reasonable best efforts to perform and carry out,
and to cause the other parties thereto to perform and
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carry out, all their respective obligations under the LMA's relating to the
Long Island Stations.
13.6 FCC Reports. From the Time of Closing on the Long Island
Stations until the Closing Date hereunder, SFX shall file on a current basis
until the Closing Date all material reports and documents required to be filed
with the FCC with respect to the Long Island Stations Licenses. Copies of each
such report and document filed between the date hereof and the Closing Date
shall be furnished to Chancellor promptly after its filing.
13.7 Notification. SFX shall promptly notify Chancellor in writing
of (i) any litigation, arbitration or administrative proceeding pending or, to
its knowledge, threatened against SFX which challenges the transactions
contemplated hereby or (ii) the failure of SFX, or any employee or agent of
SFX to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder and (iii) the occurrence of any event that would entitle Chancellor
to terminate this Agreement pursuant to Section 20. No matter so disclosed
shall affect the requirements of Section 16.1, but if the Closing hereunder
shall occur, no said matter disclosed pursuant to Section 12.3 shall have the
basis for any claims for indemnification hereunder.
13.8 Post-Closing Access. SFX, for a period of five (5) years
following the Closing Date, shall make available during normal business hours
for audit and inspection by Chancellor and its representatives, for any
reasonable purpose and upon reasonable notice, all records, files, documents
and correspondence transferred to it hereunder relating to the pre-closing
period. SFX shall at no time dispose of or destroy any such records, files,
documents and correspondence without giving thirty (30) days prior notice to
Chancellor to permit Chancellor, at its expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All information, records, files, documents and correspondence made available or
disclosed under this Section 13.8 shall be kept confidential.
13.9 SFX will use commercially reasonable efforts to obtain all
necessary consents, authorizations, or approvals, in each case, required for
the consummation of the transactions contemplated by this Agreement.
SECTION 14. JOINT COVENANTS
Chancellor and SFX covenant and agree that they shall act in accordance
with the following:
14.1 Confidentiality. Each of Chancellor and SFX shall each keep
confidential all information obtained by it with respect to the other parties
hereto in connection with this Agreement and the negotiations preceding this
Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to
the other party hereto, without retaining a copy thereof, any schedules,
documents or other written information obtained
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from such other party in connection with this Agreement and the transactions
contemplated hereby except to the extent required or useful in connection with
any claim made with respect to the transactions contemplated by this Agreement
or the negotiation thereof. Notwithstanding the foregoing, no party shall be
required to keep confidential or return any information which (i) is known or
available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party, or (ii) is or becomes publicly known
through no fault of the receiving party or its agents, or (iii) is required to
be disclosed pursuant to an order or request of a judicial or government
authority (provided the non-disclosing party is given reasonable prior notice
such that it may seek, at its expense, confidential treatment of the
information to be disclosed), (iv) is developed by the receiving party
independently of the disclosure by the disclosing party, (v) is required to be
disclosed under applicable law or rule, as determined by counsel for the
receiving party or (vi) is required to be disclosed in connection with any
sale, in whole or in party of the assets, stock or business of Chancellor or
Chancellor Broadcasting Company, provided the recipient of said information
has executed a confidentiality agreement for such a transaction.
14.2 Cooperation. Chancellor and SFX shall cooperate fully with one
another in taking any actions, including actions to obtain the required
consent of any governmental instrumentality or any third party necessary or
helpful to accomplish the transactions contemplated by this Agreement;
provided, however, that no party shall be required to take any action which
would have a material adverse effect upon it.
14.3 Control of Stations. Prior to Closing, Chancellor shall not,
directly or indirectly, control or direct the operations of the Long Island
Stations, and SFX shall not, directly or indirectly, control or direct the
operations of the Jacksonville Stations. Such operations, including complete
control over the Jacksonville Stations' or the Long Island Stations'
programming, employees and policies, shall be the sole responsibility of
current licensees.
14.4 Bulk Sales Laws. Chancellor hereby waives compliance by SFX and
SFX hereby waives compliance by Chancellor with the provisions of the "bulk
sales" or similar laws of any state. SFX agrees to indemnify Chancellor and
Chancellor agrees to indemnify SFX and each party agrees to hold the other
harmless from any and all loss, cost, damage and expense (including but not
limited to, reasonable attorney's fees) sustained by one party as a result of
any failure of the other party to comply with any "bulk sales" or similar
laws.
14.5 Public Announcements. Neither Chancellor nor SFX shall issue
any press release or make any disclosure with respect to the transaction
contemplated by this Agreement without the prior written approval of the other
party, except as may be required by applicable law or by obligations pursuant
to any listing agreement with any securities exchange or any stock exchange
regulations.
14.6 Hart-Scott-Rodino. SFX and Chancellor shall submit to the
United States Department of Justice and the United States Federal Trade
Commission not later than 15 business days after the date of this Agreement
all of the forms and information applicable to this transaction
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required under the Hart-Scott-Rodino Act (the "HSR Act") and will use
commercially reasonable efforts to respond promptly to any request by them for
additional information.
14.7 Employee Matters. Each party hereby consents to the other
making such offers of employment relating to the Jacksonville Stations and the
Long Island Stations subject to the effectiveness of the LMAs between the
parties. As of the commencement date of either the Jacksonville Stations LMA
or the Long Island Stations LMA, the current employees of those respective
stations (other than a general manager and one staff employee of each station)
will become employees of the party programming the stations. SFX shall be
responsible for all obligations or liabilities to those employees not offered
employment by Chancellor (herein referred to as "Retained Long Island
Employees"), and Chancellor shall have no obligations with respect to the
retained Long Island Employees except as specifically set forth below.
Chancellor shall be responsible for all obligations or liabilities to those
employees not offered employment by SFX (hereinafter referred to as the
"Retained Jacksonville Employees"), and SFX shall have no obligations with
respect to the Retained Jacksonville Employees except as specifically set
forth below. Chancellor agrees that SFX may terminate employees of the
Jacksonville Stations without cause thirty (30) days from this Agreement; and
SFX agrees that Chancellor may terminate employees of the Long Island Stations
without cause thirty (30) days from this Agreement, but if the number of
employees exceeds ten (10) or in the aggregate, the severance liability amount
at either the Jacksonville Stations or the Long Island Stations exceeds One
Hundred Thousand Dollars ($100,000), then Chancellor with respect to the Long
Island Stations and SFX with respect to the Jacksonville Stations shall be
responsible to pay for any severance amounts exceeding the first One Hundred
Thousand Dollars ($100,000). SFX with respect to the Long Island Stations and
Chancellor with respect to the Jacksonville Stations shall be responsible to
pay for any severance amounts associated with only the first ten (10)
terminated employees, as designated by the party programming the station, but
in no event will SFX with respect to the Long Island Stations and Chancellor
with respect to the Jacksonville Stations be liable for any severance amounts
exceeding One Hundred Thousand Dollars ($100,000). The above thirty (30) day
time period is subject to the rights of the parties pursuant to Section 22.11.
SECTION 15. CONDITIONS OF CLOSING BY CHANCELLOR
The obligations of Chancellor hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
15.1 Representations, Warranties and Covenants. All representations
and warranties of SFX made in this Agreement or in any Exhibit, Schedule or
document delivered pursuant hereto, shall be true and complete in all material
respects as of the date hereof and on and as of the Closing Date as if made on
and as of that date, except for changes expressly permitted or contemplated by
the terms of this Agreement and except those given as of a specified date.
15.2 Compliance with Agreement. All of the terms, covenants and
conditions to
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be complied with and performed by SFX on or prior to the Closing Date shall
have been complied with or performed in all material respects.
15.3 Third Party Consents and Approvals; Estoppel Certificates. SFX
has obtained all third-party consents and approvals, if any, required for the
transfer or continuance, as the case may be, of the Contracts on Schedule
2.4.4 (and contracts that would have been on Schedule 2.4.4 had they been in
existence on the date of this Agreement) and, if requested by Chancellor prior
to 45 days of the date of the Closing, such third parties have provided
estoppel certificates, non-disturbance agreements, and/or written
clarifications of the rights of Chancellor thereunder, all in form and
substance reasonably satisfactory to Chancellor.
15.4 Closing Certificates. Chancellor shall have received a
certificate, dated as of the Closing Date, from SFX, executed by an
appropriate officer of SFX to the effect of Sections 15.1 and 15.2.
15.5 Governmental Consents.
(a) The FCC Consents shall have been issued by the FCC without
any conditions that would otherwise permit Buyers to terminate this Agreement
pursuant to Section 20.1(e), below, and each such FCC consent shall have
become a Final Order (as defined in Section 6.1), unless finality has been
waived by mutual agreement of the parties.
(b) All applicable notification and waiting period
requirements under the HSR Act shall have been satisfied.
(c) All other material authorizations, consents, approvals,
and clearances of federal, state, or local Governmental Entities required to
permit the consummation of the transactions contemplated by this Agreement
shall have been obtained.
15.6 Adverse Proceedings. No injunction, order, decree or judgment
of any court, agency or other Governmental Entities shall have been rendered
against Chancellor or SFX which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
15.7 Closing Documents. SFX shall have delivered or caused to be
delivered to Chancellor, on the Closing Date, all deeds, bills of sale,
endorsements, assignments and other instruments of conveyance and transfer
consistent with the terms hereof and otherwise reasonably satisfactory in form
and substance to Chancellor, effecting the sale, transfer, assignment and
conveyance of the Long Island Stations' Assets to Chancellor.
15.8 Environmental Condition. Chancellor shall have been satisfied
in its sole discretion that any environmental conditions identified in the
Phase I environmental audit report with respect to the Long Island Real Estate
and operations of the Long Island Stations and the
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environmental and industrial hygiene and safety condition of the Long Island
Real Estate and operations of the Long Island Stations shall have been or is
scheduled to be satisfactorily remediated.
SECTION 16. CONDITIONS OF CLOSING BY SFX
The obligations of SFX hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
16.1 Representations, Warranties and Covenants. All representations
and warranties of Chancellor made in this Agreement or in any Exhibit,
Schedule or document delivered pursuant hereto, shall be true and complete in
all material respects as of the date hereof and on and as of the Closing Date
as if made on and as of that date, except for changes expressly permitted or
contemplated by the terms of this Agreement and except those given as of a
specified date.
16.2 Compliance with Agreement. All the terms, covenants, and
conditions to be complied with and performed by Chancellor on or prior to the
Closing Date shall have been complied with or performed in all material
respects.
16.3 Third Party Consents and Approvals; Estoppel Certificates.
Chancellor has obtained all third-party consents and approvals, if any,
required for the transfer or continuance, as the case may be, of the Contracts
on Schedule 2.2.4 (and contracts that would have been on Schedule 2.2.4 had
they been in existence on the date of this Agreement) and, if requested by SFX
prior to 45 days of the date of the Closing, such third parties have provided
estoppel certificates, non-disturbance agreements, and/or written
clarifications of the rights of SFX thereunder, all in form and substance
reasonably satisfactory to SFX.
16.4 Closing Certificates. SFX shall have received a certificate,
dated as of the Closing Date, from Chancellor, executed by an appropriate
officer of Chancellor to the effect of Sections 16.1 and 16.2.
16.5 Governmental Approval.
(a) The FCC Consents shall have been issued by the FCC and
each shall have become a Final Order (as defined in Section 6.1), unless
finality has been waived by mutual agreement of the parties.
(b) All applicable notification and waiting period
requirements under the HSR Act shall have been satisfied.
(c) All other material authorizations, consents, approvals,
and clearances of federal, state or local Governmental Entities required to
permit the consummation of the transactions contemplated by this Agreement
shall have been obtained.
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16.6 Adverse ProceedNo injunction, decree or judgment of any court,
agency or other governmental entities shall have been rendered against
Chancellor or SFX which would render it unlawful, as of the Closing date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
16.7 Closing DocumenChancellor shall have delivered or caused to be
delivered to SFX, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer consistent with
the terms hereof and otherwise reasonably satisfactory in form and substance
to SFX, effecting the sale, transfer, assignment and conveyance of the Florida
Station's Assets to SFX.
16.8 Environmental Condition. SFX shall have been satisfied in its
sole discretion that any environmental conditions identified in the Phase I
environmental audit report with respect to the Jacksonville Real Estate and
operations of the Jacksonville Stations and the environmental and industrial
hygiene and safety condition of the Jacksonville Real Estate and operations of
the Jacksonville Stations shall have been or is scheduled to be satisfactorily
remediated.
SECTION 17. CLOSING
17.1 Time and Place. A closing on the exchange and sale of the Long
Island Assets and the Jacksonville Assets shall take place at 12655 North
Central Expressway, Suite 405, Dallas, Texas on the date agreed on by the
parties, said date to be within ten days after the latter of (x) all necessary
FCC action(s) approving the transactions contemplated herein become Final
Orders and (y) the expiration or termination of the waiting period under the
HSR Act (the "Closing Date"). The parties acknowledge that the Florida
Agreement shall not close until after January 1, 1997, and therefore, SFX and
Chancellor agree to use their reasonable best efforts to close this Exchange
Agreement on or about the same date and time as the Florida Agreement.
17.2 Deliveries By Chancellor. At closing, Chancellor shall deliver
to SFX by wire transfer of available funds the cash payments specified in
Section 3.1. In addition, Chancellor shall deliver documents conveying title
to the Jacksonville Assets to SFX in substantially the same manner as
Chancellor received title to the Jacksonville Assets from Omni, it being the
intention of the parties to vest in SFX all of Chancellor's rights, title and
interest in the Jacksonville Assets received from Omni such that the
Jacksonville Assets conveyed to SFX are substantially the same Jacksonville
Assets (in terms of identity, quantity, quality, utility, value, nature of
title conveyed, etc.) as the Jacksonville Assets that were conveyed to
Chancellor by Omni pursuant to the Florida Agreement. The deliveries from
Chancellor to SFX shall include:
(a) An Assignment of Government Authorizations conveying the
Jacksonville Licenses and all other governmental permits, licences and
authorizations used in the operation of the Jacksonville Stations.
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(b) A Bill of Sale for all items of personal property included
in the Jacksonville Assets.
(c) Deeds conveying title to all Jacksonville Real Estate
owned in fee simple by Chancellor and used in the operation of the
Jacksonville Stations.
(d) Assignments of leases conveying all of Chancellor's right,
title and interest in all Jacksonville Real Estate leased by Chancellor.
(e) All other conveyances, assignments and documents
reasonably necessary to vest in SFX title to the Jacksonville Assets as
contemplated in this Agreement.
17.3 Delivery By SFX. At Closing, SFX shall deliver to Chancellor
documents conveying title to the Long Island Assets. The deliveries from SFX
to Chancellor shall include:
(a) An Assignment of Government Authorizations conveying the
Long Island Licenses and all other governmental permits, licences and
authorizations used in the operation of the Long Island Stations.
(b) A Bill of Sale for all items of personal property included
in the Long Island Assets.
(c) Deeds conveying title to all Long Island Real Estate owned
in fee simple by SFX and used in the operation of the Long Island Stations.
(d) Assignments of leases conveying all of SFX's right, title
and interest in all Long Island Real Estate leased by SFX.
(e) All other conveyances, assignments and documents
reasonably necessary to vest in Chancellor's title to the Long Island Assets
as contemplated in this Agreement.
SECTION 18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
18.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement, and in any
schedule, instrument or certificate delivered pursuant hereto, shall survive
the Closing until the earlier of March 31, 1998, or one year after the closing
of the Florida Agreement.
SECTION 19. INDEMNIFICATION
19.1 Indemnification by Chancellor.
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(a) Chancellor shall indemnify and hold SFX and its
stockholders, employees, officers, directors, affiliates and agents harmless
from all damages, losses, costs, suits, actions, causes of action and
liabilities of any nature whatsoever, including costs of suit and attorneys
fees, arising out of (i) Chancellor's ownership or operation of the Long
Island Stations, (ii) the Jacksonville Retained Liabilities after the Closing
Date (which shall not be subject to Section 19.3); (iii) any inaccuracy in any
representation or warranty of Chancellor contained in this Agreement or in any
schedule, instrument or certificate delivered pursuant thereto; and (iv) any
breach of any covenant or agreement of Chancellor contained in this Agreement
and required to be performed by Chancellor with the exception of matters
specifically referred to in Section 5 hereof.
(b) Chancellor shall enforce, in its own name and for the
benefit of SFX, all indemnification provisions of the Florida Agreement
specifically pertaining to the Jacksonville Stations or Assets.
19.2 Indemnification by SFX.
(a) SFX shall indemnify and hold Chancellor and its
stockholders, employees, officers, directors, affiliates and agents harmless
from all damages, losses, costs, suits, actions, causes of action and
liabilities of any nature whatsoever, including costs of suit and attorneys
fees, arising out of (i) SFX's ownership or operation of the Jacksonville
Stations, (ii) the Long Island Retained Liabilities after the Closing Date
(which shall not be subject to Section 19.3); (iii) any inaccuracy in any
representation or warranty of SFX contained in this Agreement or in any
schedule, instrument or certificate delivered pursuant thereto; and (iv) any
breach of any covenant or agreement of SFX contained in this Agreement and
required to be performed by SFX with the exceptions of matters specifically
referred to in Section 5 hereof.
(b) SFX shall enforce, in its own name and for the benefit of
Chancellor, all indemnification provisions of the Long Island Stations and any
agreement in which the Long Island Stations have entered into prior to the
Closing Date.
19.3 Limitation on Reimbursement.
(a) Except as provided in Section 5, neither Chancellor nor
SFX shall be entitled to reimbursement for damages incurred or suffered with
respect to its respective claims until and only to the extent that the
aggregate damages with respect to its respective claims to which it is
otherwise entitled to reimbursement exceeds Three Hundred Thousand Dollars
($300,000) (the "Indemnification Basket"). The individual parties shall not be
entitled to reimbursement for damages in excess of Five Million Dollars
($5,000,000)in the aggregate.
(b) For all purposes of this Agreement, the amount of damages,
and the amount reimbursable with respect thereto, shall be reduced to the
extent of any insurance proceeds or other third party recovery received with
respect to such damages.
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19.4 Procedure for Indemnification.
(a) If any claim or proceeding covered by Section 19 to
indemnify and hold harmless shall arise, the Party who seeks indemnification
(the "Indemnified Party") shall give written notice thereof to the other Party
(the "Indemnitor") promptly but in no event more than ten (10) days after the
Indemnified Party learns of the existence of such claim or proceeding. Any
claim for indemnification hereunder shall be accompanied by evidence
demonstrating the Indemnified Party's right or possible right to
indemnification, including a copy of all supporting documents relevant
thereto. After the Indemnitor acknowledges its obligation to defend against or
settle any such claim or proceeding, the Indemnitor shall not be liable to the
Indemnified Party under this Section 19 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof; provided, however, that the Indemnified Party shall have the right to
employ counsel to represent it (at the Indemnified Party's expense), unless
the Indemnified Party is advised by counsel that representation of the
Indemnitor and the Indemnified Party by one firm of counsel would constitute a
conflict of interest under applicable codes of professional conduct in which
event the reasonable fees and expenses of such separate counsel shall be paid
by the Indemnitor. The Parties shall fully cooperate in the defense of each
claim or proceeding and shall make available to each other all books or
records necessary or appropriate for such defense.
(b) The Indemnitor shall have the right to employ counsel
reasonably acceptable to the Indemnified Party to defend against the claim or
proceeding or to compromise, settle or otherwise dispose of the same;
provided, however, that no settlement or compromise shall be effected without
the express prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed; and, provided further, that if
the Indemnified Party does not consent to a bona fide offer of settlement made
by a third party and the settlement involves only the payment of money, then
the Indemnitor may, in lieu of payment of that amount to such third party, pay
that amount to the Indemnified Party. After such payment to the Indemnified
Party, the Indemnitor shall have no further liability with respect to that
claim or proceeding and the Indemnified Party shall assume full responsibility
for the defense, payment or settlement of such claim or proceeding.
(c) If the Indemnitor fails to acknowledge in writing its
obligation to defend against or settle any claim or proceeding within twenty
(20) days after receiving notice of the claim or proceeding from the
Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), the Indemnified Party shall be free
to dispose of the matter, at the expense of the Indemnitor, in any way that
the Indemnified Party deems in its best interest, subject to the Indemnitor's
right subsequently to contest through appropriate proceedings its obligation
to provide indemnification.
(d) The Indemnitor shall be subrogated to all rights of the
Indemnified Party against any third party with respect to any claim for which
indemnification is paid by the Indemnitor to the extent of such payment.
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SECTION 20. TERMINATION
20.1 Right to Terminate. This Agreement may be terminated at any
time prior to closing as follows:
(a) by the mutual consent of the parties;
(b) by written notice of (i) Chancellor to SFX, if SFX
breaches in any material respect any of its representations or warranties or
defaults in any material respect in the observance or in the due and timely
performance of any of its covenants or agreements herein contained or in
either the Jacksonville Stations LMA or the Long Island Stations LMA
(together, the "LMA Agreements") and such breach or default shall not be cured
within thirty (30) days of the date of notice of breach or default served by
Chancellor (or such lesser period provided for under the LMA Agreements), or
(ii) SFX to Chancellor if Chancellor breaches in any material respect any of
its representations or warranties or default in any material respect in the
observance or in the due and timely performance of any of its covenants or
agreements herein contained or in either of the LMA Agreements and such breach
or default shall not be cured within thirty (30) days of the notice of breach
or default served by SFX (or such lesser period provided for under the LMA
Agreements), but such notice and cure period shall not apply in the case of
Chancellor's or SFX's failure to consummate the transactions in accordance
with the terms and times specified in Section 17 of this Agreement.
(c) by Chancellor or SFX by written notice to the other, if a
court of competent jurisdiction or other Governmental Entity shall have issued
an order, decree or ruling or taken any other action (which order, decree or
ruling the parties hereto shall use their best efforts to lift), in each case
permanently restraining, permanently enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) by the party whose qualifications are not at issue, if,
for any reason, the FCC denies or dismisses any of the FCC Applications and
the time for reconsideration or court review under the Communications Act with
respect to such denial or dismissal has expired and there is not pending with
respect thereto a timely filed petition for reconsideration or request for
review;
(e) by written notice of Chancellor to SFX or by SFX to
Chancellor unless extended pursuant to Section 5, if the Closing shall not
have been consummated on or before July 1, 1997 as provided in Section 17.1;
(f) pursuant to Section 22.11 of this Agreement;
(g) by Chancellor in the event it does not receive its Board
of Directors approval of the Agreement within two (2) days of the execution of
this Agreement. Said termination shall be without liability to Chancellor.
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Notwithstanding the foregoing, no party hereto may effect a termination hereof
if such party is in material default or breach of this Agreement.
SECTION 21. EXPENSES, TRANSFER TAXES, AND FEES
21.1 Expenses. Except as set forth in Sections 21.2 and, 21.3
below, each party hereto shall be solely responsible for all costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
21.2 Transfer Taxes and Similar Charges. All costs of transferring
the Jacksonville Assets in accordance with this Agreement, including
recordation, transfer and documentary taxes and fees, the Long Island Assets,
and any excise, sales or use taxes, shall be borne equally by SFX and
Chancellor. All costs of transferring the Long Island Stations in accordance
with this Agreement, including recordation, transfer and documentary taxes and
fees, and any excise, sales or use taxes, shall be borne by Chancellor.
Chancellor and SFX shall, in good faith, attempt to calculate all such taxes
and fees prior to Closing and to settle their respective obligations therefore
on or before the Closing Date.
21.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required for the
consummation of the transactions contemplated hereby, including but not
limited to, the FCC, the FTC, and the Department of Justice shall be borne
equally by Chancellor and SFX.
SECTION 22. MISCELLANEOUS
22.1 Risk of Loss. Prior to Closing, risk of loss to the
Jacksonville Stations shall be borne by Chancellor and risk of loss to the
Long Island Stations shall be borne by SFX.
22.2 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that
without releasing the Parties from any of their obligations or liabilities
hereunder (a) nothing in this Agreement shall limit any Party's ability to
sell or transfer any or all of its respective assets (whether by sale of stock
or assets, or by merger, consolidation or otherwise) without the consent of
the other party, (b) nothing in this Agreement shall limit Chancellor's
ability to assign the Long Island Licenses (including the right to acquire the
Long Island Licenses at the Closing) to Chancellor Broadcasting Licensee
Company or any other subsidiary of Chancellor without the consent of Sellers,
(c) nothing in this Agreement shall limit SFX's ability to assign the
Jacksonville Station Licenses (including the right to acquire Jacksonville
Licenses at the Closing) to SFX Broadcasting, Inc. or any other wholly owned
subsidiary of SFX without the
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consent of Sellers, and (d) nothing in this Agreement shall limit a party's
ability to make a collateral assignment of its rights under this Agreement to
any institutional lender that provides funds to that party without the consent
of the other. Each party shall execute an acknowledgment of such assignment(s)
and collateral assignments in such forms as the other party or its
institutional lenders may from time to time reasonably request; provided,
however, that unless written notice is given to a party that any such
collateral assignment has been foreclosed upon, that party shall be entitled
to deal exclusively with the other party as to any matters arising under this
Agreement or any of the other agreements delivered pursuant hereto. In the
event of such an assignment, the provisions of this Agreement shall inure to
the benefit of and be binding on all parties' successors and assigns.
22.3 Amendments. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
22.4 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
22.5 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the State of Florida without giving
effect to the choice of law provisions thereof.
22.6 Notices. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing and
shall be deemed to have been duly delivered and received on the date of
personal delivery or on the third day after deposit in the U.S. mail if mailed
by registered or certified mail, postage prepaid and return receipt requested;
or on the day after delivery to a nationally recognized overnight courier
service if sent by an overnight delivery service for next morning delivery,
and shall be addressed to the following addresses:
(a) In the case of SFX to:
Robert F. X. Sillerman
SFX Broadcasting, Inc.
150 E. 58th Street
New York, NY 10155
Telecopier number: (212) 753-3188
With a copy to:
Richard A. Liese, Esq.
SFX Broadcasting, Inc.
150 E. 58th Street
New York, NY 10155
Telecopier number: (212) 753-3188
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(b) In the case of Chancellor, to:
Steven Dinetz
President and Chief Executive Officer
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, TX 75243
With a copy to:
Matthew L. Leibowitz, Esq.
Leibowitz & Associates, P.A.
One S.E. Third Avenue, Suite 1450
Miami, Florida 33131
and
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Attention: Lawrence D. Stuart, Jr.
and
Weil, Gotshal & Manges, LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attention: Jeremy W. Dickens
22.7 Schedules. The schedules and exhibits attached to this
Agreement are hereby made a part of this Agreement as if set forth in full
herein.
22.8 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto with respect to its subject matter and supersedes all
negotiations, prior discussions, agreements, letters of intent, and
understandings, written or oral, relating to the subject matter of this
Agreement.
22.9 Severability. If any provision of this Agreement is held to be
unenforceable, invalid, or void to any extent for any reason, that provision
shall remain in force and effect to the maximum extent allowable, and the
enforceability and validity of the remaining provisions of this
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Agreement shall not be affected thereby.
22.10 CounterparThis Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
22.11 Binding AgreemeThe parties shall each have fifteen (15) days
from the execution of this Agreement to deliver all Schedules associated
herewith. The parties shall each have thirty (30) days from the execution of
this Agreement to conduct an investigation that includes, but is not limited
to, reviewing the Schedules to this Exchange Agreement, reviewing the
Stations' financial performance, real estate, contracts, environmental
compliance, equipment, studio, transmitter, engineering, litigation, licenses
and all other aspects of the Stations' assets and their ownership, performance
and operations reasonably examinable in such an investigation. If either
party's investigation reveals a material misrepresentation or a material
omission made by the Selling party, then the purchasing party shall give
notice of the defects to the selling party, who will then have fifteen (15)
days to cure the defects. If the selling party does not cure such a defect
within the allowed period, the affected purchasing party may terminate this
Agreement by giving notice to the other party within fifteen (15) days after
the allowed cure period without recourse to the selling party.
22.12 Governing Law. The obligations of Chancellor and SFX are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to the Communications Act and the rules and
regulations of the Federal Communications Commission. The construction and
performance of this Agreement will be governed by the laws of the State of
Delaware.
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IN WITNESS WHEREOF, the parties have caused this Exchange Agreement
to be executed effective as of the date first written above.
CHANCELLOR RADIO BROADCASTING COMPANY
By: /s/ Steven Dinetz
---------------------
Steven Dinetz
President
SFX BROADCASTING, INC.
By: /s/ Robert F. X. Sillerman
---------------------------
Robert F. X. Sillerman
Executive Chairman & CEO
WBLI, INC.
WBLI-FM, INC.
By: /s/ Robert F. X. Sillerman
----------------------------
Robert F. X. Sillerman
Executive Chairman & CEO
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WHFM, INC.
By: /s/ Robert F. X. Sillerman
----------------------------
Robert F. X. Sillerman
Executive Chairman & CEO
WBAB, INC.
By: /s/ Robert F. X. Sillerman
----------------------------
Robert F. X. Sillerman
Executive Chairman & CEO
WGBB, INC.
By: /s/ Robert F. X. Sillerman
----------------------------
Robert F. X. Sillerman
Executive Chairman & CEO
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FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the "FIRST
AMENDMENT") is made and entered as of the 28th day of June, 1996 by and
between HMW COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and SFX
Broadcasting, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Parent and Buyer are parties to an Asset Purchase
Agreement, dated as of January 18, 1996 (the "Asset Purchase Agreement");
WHEREAS, Parent and Multi-Market Radio Acquisition Corp., a
Delaware corporation ("Multi-Market"), are parties to an Asset Purchase
Agreement, dated as of January 18, 1996, as amended by that certain First
Amendment to Asset Purchase Agreement and Agreement as to Schedules, dated as
of March 6, 1996 (such Asset Purchase Agreement, as so amended, being referred
to herein as the "MM Agreement");
WHEREAS, Buyer and Multi-Market are related parties and Liberty
Acquisition Subsidiary Corporation, a Delaware corporation and a subsidiary of
Buyer, will acquire the assets to be sold to Multi-Market under the MM
Agreement;
WHEREAS, although the MM Agreement sets forth the basis for
calculating a portion of the purchase price payable thereunder, Parent,
Multi-Market and Buyer have disagreed as to the amount of the required
calculation;
WHEREAS, contemporaneously with the execution and delivery of this
First Amendment, Parent and Multi-Market are executing and delivering a Second
Amendment to Asset
<PAGE>
Purchase Agreement (the "Second Amendment") which amends the MM Agreement in
certain respects and includes an agreement as to the portion of the purchase
price as to which Parent, Multi-Market and Buyer have disagreed;
WHEREAS, in connection with the execution and delivery of the
Second Amendment, among other things, (i) Buyer has agreed to immediately
exercise the rights granted to Buyer under Section 2.1 of the Asset Purchase
Agreement, (ii) Parent and Buyer have agreed to increase the cash purchase
price payable under the Asset Purchase Agreement and to eliminate Parent's
option to receive shares of Buyer Common Stock in lieu of the payment of a
cash purchase price under the Asset Purchase Agreement, and (iii) Buyer has
agreed to deposit into escrow an amount of cash equal to the difference
between the purchase price under the Asset Purchase Agreement, as amended
hereby, and the Earnest Money Escrow Deposit;
NOW, THEREFORE, in consideration of the foregoing premises
(including, without limitation, the execution and delivery by Parent of the
Second Amendment) and the mutual covenants and agreements hereinafter set
forth, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Defined Terms. Terms used herein with their initial letters
capitalized and not otherwise defined herein (including those terms so used
and not defined in the recitals above) shall have the respective meanings
given such terms in the Asset Purchase Agreement.
2. Amendment of Section 5.1 of the Asset Purchase Agreement.
Section 5.1 of the Asset Purchase Agreement is hereby amended to read in its
entirety as follows:
2
<PAGE>
5.1 Delivery of Consideration.At the Closing, in consideration for
the sale of the Station Assets of WWWB Operating and WWWB License,
in addition to the assumption of certain obligations of WWWB
Operating and WWWB License pursuant to Section 4.1 above, Buyer
shall deliver or cause to be delivered (i) to Parent as agent for
WWWB Operating and WWWB License, by wire transfer of immediately
available funds, an amount equal to $6,000,000 minus the
Indemnification Escrow Deposit and (ii) to the Indemnification
Escrow Agent, by wire transfer of immediately available funds, an
amount equal to the Indemnification Escrow Deposit, such amount to
be held by the Indemnification Escrow Agent pursuant to the terms
of the Indemnification Escrow Agreement.
3. Amendment of Section 6.1 of the Asset Purchase Agreement.
Section 6.1 of the Asset Purchase Agreement is hereby amended to read in its
entirety as follows:
6.1 Closing. The closing of the transactions contemplated herein
(the "Closing") shall occur at 10:00 a.m., local time, on the
"Closing Date". Except as otherwise mutually agreed upon by Buyer
and Parent, the "Closing Date" shall be determined in accordance
with the following: (i) in the event no petition to deny the grant
of the FCC Consent shall have been timely filed with the FCC, the
Closing Date shall be the fifth (5th) business day after the date
of the release on public notice of the FCC Consent; and (ii) in the
event a petition to deny the grant of the FCC Consent shall have
been timely filed with the FCC, the Closing Date shall be the fifth
(5th) business day after the date on which the FCC Consent shall
become a Final Order. The Closing shall be held
3
<PAGE>
in the offices of Weil, Gotshal & Manges LLP, 100 Crescent Court,
Suite 1300, Dallas, Texas 75201, or at such place as the parties
hereto may agree.
4. Exercise of Rights. Buyer hereby exercises the rights granted
under Section 2.1 of the Asset Purchase Agreement. Buyer and Parent
acknowledge and agree that the execution and delivery of this First Amendment
shall constitute the delivery of the Buyer's Election Notice under the Asset
Purchase Agreement.
5. Execution and Delivery of Certain Other Agreements.
Contemporaneously with the execution and delivery of this First Amendment, (i)
Buyer and Parent, pursuant to Section 5.3 of the Asset Purchase Agreement,
shall execute and deliver the Earnest Money Escrow Agreement and Buyer shall
make the deposit required thereunder, (ii) Buyer shall execute and deliver,
and Parent shall cause WWWB Operating to execute and deliver, the WHSL Station
LMA, which shall become effective as of July 1, 1996, and (iii) Buyer and
Parent shall execute and deliver the Purchase Price Escrow Agreement in the
form of Exhibit A hereto and Buyer shall make the deposit required thereunder.
6. Amendment of Section 19.9 of the Asset Purchase Agreement. The
reference to "R. Steven Hicks, President and Chief Executive Officer" set
forth opposite the word "Attention" under the portion of Section 19.9
regarding the delivery of notices to Buyer is hereby deleted and is replaced
with the following: "D. Geoffrey Armstrong, Executive Vice President".
7. Amendment to Form of Indemnification Escrow Agreement. The form
of the Indemnification Escrow Agreement attached as Exhibit C to the Asset
Purchase Agreement is hereby replaced by the form of Indemnification Escrow
Agreement labeled "Exhibit C" attached hereto.
4
<PAGE>
8. Amendments to Form of Earnest Money Escrow Agreement.
a. Section 4.1 of the form of the Earnest Money Escrow Agreement
attached as Exhibit E to the Asset Purchase Agreement is hereby amended
to read in its entirety as follows:
4.1 INVESTMENT. The Escrow Agent shall invest the Escrow
Deposit in such (a) obligations of the United States Government or
any agency thereof, (b) commercial paper of companies incorporated
or organized under the laws of the United States or one of the
States thereof and in each case having a rating assigned to such
commercial paper by Standard & Poor's Corporation or Moody's
Investor Services, Inc. equal to the highest rating assigned by
such organization, (c) U.S. dollar-denominated certificates of
deposit issued by any bank, trust company or national banking
association incorporated in the United States and having a combined
capital and surplus and retained earnings of at least $100,000,000,
(d) interest bearing accounts of any bank, trust company or
national banking association incorporated in the United States and
having a combined capital and surplus and retained earnings of at
least $100,000,000, or (e) money market mutual funds, as shall be
specified in written instructions signed by Parent. The Escrow
Deposit does not form a part of the capital or assets of the Escrow
Agent, and will not be subject to the claims of its creditors or
depositors. Escrow Agent hereby agrees that during the term of this
Agreement, the Escrow Deposit shall be physically segregated from
the other assets of the Escrow Agent, and held for the exclusive
benefit of Parent and Buyer.
5
<PAGE>
b. Section 6.7 of the form of the Earnest Money Escrow Agreement
attached as Exhibit E to the Asset Purchase Agreement is hereby amended
to read in its entirety as follows:
6.7 INSOLVENCY. The bankruptcy or insolvency of Parent or
Buyer shall not affect or prevent performance by the Escrow Agent
of its obligations and instructions hereunder.
c. The reference to "R. Steven Hicks, President
and Chief Executive Officer" set forth opposite the
word "Attention" under the portion of Section 6.1
regarding the delivery of notices to Buyer is hereby
deleted and is replaced with the following: "D.
Geoffrey Armstrong, Executive Vice President".
9. Effectiveness. Parent and Buyer agree that the Asset Purchase
Agreement, as modified by this First Amendment, is in full force and effect
and that, except as provided herein, there have been no modifications of, or
waivers granted under, the Asset Purchase Agreement.
10. Counterparts. This First Amendment may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date and year first above written.
PARENT:
HMW COMMUNICATIONS, INC.
By: /s/ Eric C. Hellman
---------------------
Name: Eric C. Hellman
Title: President
BUYER:
SFX BROADCASTING, INC.
By: /s/ Richard A. Liese
----------------------
Name: Richard A. Liese
Title: Vice President
7
SECOND AMENDMENT
TO
ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (the "SECOND
AMENDMENT") is made and entered as of the 28th day of June, 1996 by and
between HMW COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and
MULTI-MARKET RADIO ACQUISITION CORP., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Parent and Buyer are parties to an Asset Purchase
Agreement, dated as of January 18, 1996, as amended by that certain First
Amendment to Asset Purchase Agreement and Agreement as to Schedules, dated as
of March 6, 1996 (such Asset Purchase Agreement, as so amended, being referred
to herein as the "Asset Purchase Agreement");
WHEREAS, Parent and SFX Broadcasting, Inc., a Delaware corporation
("SFX"), are parties to an Asset Purchase Agreement, dated as of January 18,
1996 (the "SFX Agreement");
WHEREAS, Buyer and SFX are related parties and Liberty Acquisition
Subsidiary Corporation, a Delaware corporation and a subsidiary of SFX, will
acquire the assets to be sold to Buyer under the Asset Purchase Agreement;
WHEREAS, Section 4.1(a) of the Asset Purchase Agreement provides
for the payment of an amount equal to the WTRG Purchase Price in consideration
for the sale of the Station Assets of WTRG Operating and WTRG License and
Section 4.1(b) of the Asset Purchase Agreement provides for the payment of an
amount equal to the WRDU Purchase Price in consideration for the sale of the
Station Assets of WRDU Operating and WRDU License;
<PAGE>
WHEREAS, the Asset Purchase Agreement provides that the WTRG
Purchase Price is to be calculated based on the WTRG Closing Broadcast Cash
Flow and that the WRDU Purchase Price is to be calculated based on the WRDU
Closing Broadcast Cash Flow and sets forth the basis for calculating the WTRG
Closing Broadcast Cash Flow and the WRDU Closing Broadcast Cash Flow;
WHEREAS, although the Asset Purchase Agreement sets forth the basis
for calculating the WTRG Closing Broadcast Cash Flow and the WRDU Closing
Broadcast Cash Flow, Parent, Buyer and SFX have disagreed as to the amount of
the WTRG Closing Broadcast Cash Flow and the WRDU Closing Broadcast Cash Flow
and, accordingly, the amount of the WTRG Purchase Price and the WRDU Purchase
Price;
WHEREAS, contemporaneously with the execution and delivery of this
Second Amendment, Parent and SFX are executing and delivering a First
Amendment to Asset Purchase Agreement (the "First Amendment") pursuant to
which, among other things, (i) SFX has agreed to immediately exercise the
rights granted to SFX under Section 2.1 of the SFX Agreement, (ii) Parent and
SFX have agreed to increase the cash purchase price payable under the SFX
Agreement and to eliminate Parent's option to receive shares of SFX common
stock in lieu of the payment of a cash purchase price under the SFX Agreement,
and (iii) SFX has agreed to deposit into escrow a portion of the purchase
price under the SFX Agreement;
WHEREAS, in connection with the execution and delivery of the First
Amendment, Parent and Buyer wish to agree as to the amount that will be paid
at Closing for the Station Assets of WTRG Operating and WTRG License and the
Station Assets of WRDU Operating and WRDU License;
WHEREAS, Parent and Buyer wish to provide that the Closing shall
occur contemporaneously with the execution and
2
<PAGE>
delivery hereof and shall be effective as of 12:01 a.m.,
eastern time, on June 1, 1996;
WHEREAS, Parent and Buyer wish to amend the form of Indemnification
Escrow Agreement to be delivered at Closing pursuant to the Asset Purchase
Agreement; and
WHEREAS, Parent and Buyer wish to amend the provisions regarding
the allocation of the purchase price under the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
(including, without limitation, the execution and delivery by SFX of the First
Amendment) and the mutual covenants and agreements hereinafter set forth, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. Terms used herein with their initial letters
capitalized and not otherwise defined herein (including those terms so used
and not defined in the recitals above) shall have the respective meanings
given such terms in the Asset Purchase Agreement.
2. Amendment of Section 4.1 of the Asset Purchase Agreement.
Section 4.1 of the Asset Purchase Agreement is hereby amended to read in its
entirety as follows:
4.1 Delivery of Consideration.At the Closing:
(a) In consideration for the sale of the Station Assets of
WTRG Operating and WTRG License and the Station Assets of WRDU
Operating and WRDU License, in addition to the assumption of
certain obligations of WTRG Operating, WTRG License, WRDU Operating
and WRDU License pursuant to Section 3.1 above, Buyer shall
deliver, by wire transfer of
3
<PAGE>
immediately available funds, (i) to Parent as agent for WTRG
Operating, WTRG License, WRDU Operating and WRDU License an amount
equal to $30,381,500 and (ii) to the Indemnification Escrow Agent,
an amount equal to $418,500, such amount to be held by the
Indemnification Escrow Agent pursuant to the terms of the
Indemnification Escrow Agreement.
(b) [Intentionally left blank.]
(c) In consideration for the sale of the Station Assets of
WWWB Operating, WWWB License, WMFR/WMAG Operating, and WMFR/WMAG
License, in addition to the assumption of certain obligations of
such Sellers pursuant to Section 3.1 above, Buyer shall deliver, by
wire transfer of immediately available funds, (i) to Parent as
agent for WWWB Operating, WWWB License, WMFR/WMAG Operating, and
WMFR/WMAG License, an amount equal to $5,918,500 and (ii) to the
Indemnification Escrow Agent, an amount equal to $81,500, such
amount to be held by the Indemnification Escrow Agent pursuant to
the terms of the Indemnification Escrow Agreement.
3. Amendment of Section 4.2 of the Asset Purchase Agreement.
Section 4.2 of the Asset Purchase Agreement is hereby amended to read in its
entirety as follows: "4.2 [Intentionally left blank.]".
4. Closing. The Closing shall occur contemporaneously with the
execution and delivery of this Second Amendment and shall be effective as of
12:01 a.m., eastern time, on June 1, 1996.
5. Amendment to Form of Indemnification Escrow Agreement. Section
5.1 of the form of the Indemnification
4
<PAGE>
Escrow Agreement attached as Exhibit D to the Asset Purchase Agreement is
hereby amended to read in its entirety as follows:
5.1 INVESTMENT. The Escrow Agent shall invest the Escrow
Sum in such (a) obligations of the United States Government or any
agency thereof, (b) commercial paper of companies incorporated or
organized under the laws of the United States or one of the States
thereof and in each case having a rating assigned to such
commercial paper by Standard & Poor's Corporation or Moody's
Investor Services, Inc. equal to the highest rating assigned by
such organization, (c) U.S. dollar-denominated certificates of
deposit issued by any bank, trust company or national banking
association incorporated in the United States and having a combined
capital and surplus and retained earnings of at least $100,000,000,
(d) interest bearing accounts of any bank, trust company or
national banking association incorporated in the United States and
having a combined capital and surplus and retained earnings of at
least $100,000,000, or (e) money market mutual funds, as shall be
specified in written instructions signed by Parent. The Escrow Sum
does not form a part of the capital or assets of the Escrow Agent,
and will not be subject to the claims of its creditors or
depositors. Escrow Agent hereby agrees that during the term of this
Agreement, the Escrow Sum shall be physically segregated from the
other assets of the Escrow Agent, and held for the exclusive
benefit of Parent and Buyer.
6. Amendment of Section 4.4 of the Asset Purchase Agreement. The
first sentence of Section 4.4 of
5
<PAGE>
the Asset Purchase Agreement is hereby amended to read in its entirety as
follows:
Parent and Buyer shall mutually agree upon the allocation of the
Total Purchase Price among the Station Assets of the respective
Sellers (the "Allocation") by the fifth (5th) day following the
Closing Date (the "Allocation Determination
Date").
7. Amendment of Definition. The definition of "Total Purchase
Price" set forth in Article 1 of the Asset Purchase Agreement is hereby
amended to read in its entirety as follows:
"TOTAL PURCHASE PRICE" shall mean $36,800,000.
8. Effectiveness. Parent and Buyer agree that the Asset Purchase
Agreement, as modified by this Second Amendment, is in full force and effect
and that, except as provided herein, there have been no modifications of, or
waivers granted under, the Asset Purchase Agreement.
9. Counterparts. This Second Amendment may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the date and year first above written.
PARENT:
HMW COMMUNICATIONS, INC.
By: /s/ Eric C. Hellman
----------------------------
Name: Eric C. Hellman
Title: President
BUYER:
MULTI-MARKET RADIO ACQUISITION
CORP.
By: /s/ Kraig Fox
-----------------------------
Name: Kraig Fox
Title: Secretary
7
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-4 No. 333-06553) and related
Prospectus of SFX Broadcasting, Inc. for the registration of $450,000,000
10 3/4% Senior Subordinated Notes due 2006, Series B and to the incorporation by
reference therein of our reports dated February 20, 1996, except for Note 14 as
to which the date is May 1, 1996 with respect to the consolidated financial
statements of SFX Broadcasting, Inc., February 14, 1996, excep
t for Note 10 as to which the date is May 1, 1996 with respect to the
consolidated financial statements of Multi-Market Radio, Inc. and May 20, 1996
with respect to the financial statements of KKRW-FM (a division of CBS, Inc.)
all included in the Current Report on Form 8-K dated May 30, 1996 of SFX
Broadcasting, Inc., filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Yound LLP
New York, New York
July 12, 1996
CONSENT OF INDEPENDENT ACCOUNTANT
We consent to the incorporation by reference in the Registration Statement of
SFX Broadcasting, Inc. (No. 333-06553) on Form S-4 for our report dated March 9,
1996, on our audits of the combined financial statements of HMW Communications,
Inc. - Selected Operations as of December 31, 1995 and 1994,
and for the year ended December 31, 1995, and various periods from January 6,
1994 to December 31, 1994, all of which have been included in SFX Broadcasting,
Inc.'s current report on Form 8-K dated May 9, 1996. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P
Coopers & Lybrand L.L.P
Raleigh, North Carolina
July 10, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
SFX Broadcasting, Inc. on Form S-4 (file no. 333-06553) of our report dated
March 13, 1996, except as to Note 14 for which the date is March 26, 1996, on
our audits of the consolidated financial statements of Liberty Bro
adcasting, Inc., as of December 31, 1995 and 1994, and for the years ended
December 31, 1995, 1994 and for the nine months ended December 31, 1993, which
report is included in SFX Broadcasting, Inc.'s current report on Form 8-K dated
May 9, 1996. We also consent to the reference to our firm under t
he caption "Experts."
/s/ Coopers & Lybrand L.L.P
Coopers & Lybrand L.L.P
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 12, 1996
[LETTERHEAD FOR PEAT MARWICK LLP]
Independent Accountant's Consent
We consent to incorporation by reference in the registration statement filed on
Form S-4 of SFX Broadcasting, Inc. of our report dated March 29, 1996 relating
to the balance sheets of Prism Radio Partners L.P. as of December 31, 1995 and
1994, and the related statements of operations, partners' cap
ital and cash flows for each of the years in the three year period ended
December 31, 1995, which report appears in SFX Broadcasting, Inc.'s Form 8-K
dated May 9, 1996, and to the reference to our firm appearing under the heading
"Experts" in the registration statement.
/s/ KPMG Peat Marwick LLP
Phoenix, Arizona
July 12, 1996
INDEPENDENT ACCOUNTANTS' CONSENT
We consent incorporation by reference in the registration statement (no. 333-
06553), amendment #1, filed on Form S-4 of SFX Broadcasting, Inc. of our report
dated February 1, 1996 relating to the balance sheet of ABS Greenville Partners,
L.P. as of December 31, 1995, and the related statements of o
perations, partners' deficit and cash flows for the year then ended, which
report appears in SFX Broadcasting, Inc.'s Form 8-K dated May 9, 1996, and to
the reference to our firm appearing under the heading "Experts" in the
registration statement.
/s/ Cheely Burcham Edding Rokenbrod & Carroll
Richmond, Virginia
July 12, 1996
CONSENT
We hereby consent to the use of our firm name in SFX Broadcasting,
Inc.'s Registration Statement on Form S-4 and in the Prospectus forming a part
of such Registration Statement. In giving this consent, we do not concede that
we come within the category of persons whose consent is required by Secti
on 7 of the Securities Act of 1933, as amended.
FISHER WAYLAND COOPER LEADER
& ZARAGOZA L.L.P.
Dated: July 11, 1996
