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As filed with the Securities and Exchange Commission on February __, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TRIATHLON BROADCASTING COMPANY
(Exact Name of Registrant as Specified in Its Charter)
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SYMPHONY TOWERS
750 B STREET
SUITE 1920
SAN DIEGO, CALIFORNIA 92101
DELAWARE (619) 239-4242 33-0668235
(State or Other Jurisdiction of (Address, Including Zip Code, and Telephone Number, (I.R.S. Employer
Incorporation or Organization) Including Area Code, of Registrant's Principal Executive Offices) Identification No.)
</TABLE>
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NORMAN FEUER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYMPHONY TOWERS
750 B STREET
SUITE 1920
SAN DIEGO, CALIFORNIA 92101
(619) 239-4242
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copy to:
HOWARD M. BERKOWER, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10122
(212) 751-5700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(2) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01 per share.. 389,808 shares(1) $8.062 $3,142,632 $953
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(1) Includes 50,000 shares of Class A Common Stock issuable upon the conversion
of the Class C Common Stock. Each share of the Class C Common Stock
automatically converts into one share of Class A Common Stock upon
transfer.
(2) Pursuant to Rule 457(c), the offering price and amount of registration fee
have been calculated based upon the average of the bid and asked price of
the Registrant's Class A Common Stock as reported on the Nasdaq SmallCap
Market on February 5, 1997.
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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.
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<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 FEBRUARY __, 1997
PROSPECTUS
389,808 Shares
[TRIATHON LOGO]
CLASS A COMMON STOCK
The 389,808 shares of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), offered hereby are being offered for the account of
certain stockholders of Triathlon Broadcasting Company, a Delaware corporation
(the "Company"), named under the heading "Selling Stockholders." The shares
offered hereby include 50,000 shares of Class A Common Stock which will be
issued upon the automatic conversion of an equal number of shares of Class C
Common Stock, par value $.01 per share (the "Class C Common Stock"). The Class
C Common Stock automatically converts into Class A Common Stock upon transfer.
The Company will not receive any proceeds from the sale of the Class A Common
Stock offered hereby, but has agreed to bear certain costs relating to the
registration of the Class A Common Stock under the federal and state securities
laws (currently estimated to be $50,000), and of any offering and sale
hereunder, not including certain expenses such as commissions and discounts of
underwriters, dealers and agents. See "Selling Stockholders," "Use of Proceeds"
and "Plan of Distribution."
The shares of Class A Common Stock may be offered and sold from time to
time by the Selling Stockholders directly or through broker-dealers or
underwriters who may act solely as agents, or who may acquire shares as
principals. The distribution of the shares of Class A Common Stock may be
effected in one or more transactions that may take place through the Nasdaq
SmallCap Market or any national securities exchange on which the Class A Common
Stock is approved for listing in the future, including block trades or ordinary
broker's transactions, or through privately negotiated transactions, or through
an underwritten public offering, or through a combination of any such methods
of sale, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Usual and customary or
specially negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with such sales. See "Plan of Distribution."
To the extent required, the specific shares of the Class A Common Stock
to be sold, the names of the Selling Stockholders, purchase price, public
offering price, the names of any such agent, dealer or underwriter, and any
applicable commission or discount with respect to a particular offering will be
set forth in an accompanying Prospectus Supplement. The aggregate proceeds to
the Selling Stockholders will be the purchase price thereof less commissions
and discounts, if any, and other expenses of distribution not borne by the
Company.
The Company's outstanding voting securities are comprised of Class A
Common Stock, which entitles its holders to one vote per share and, voting
together as a class with the holders of the Depositary Shares (as defined
herein), to elect two members of the Company's Board of Directors, Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"), which
entitles its holders generally to ten votes per share, Class C Common Stock
which is non-voting, Class D Common Stock, par value $.01 per share (the "Class
D Common Stock"), which is non-voting and convertible on certain terms and
conditions into shares of Class B Common Stock, and Depositary Shares, each
representing a one-tenth interest in the Company's 9% Mandatory Convertible
Preferred Stock (the "Preferred Stock"), which entitles its holders to 4/5 of
one vote (the "Depositary Shares"). Norman Feuer, the President, Chief
Executive Officer and a Director of the Company, holds all of the outstanding
shares of Class B Common Stock and, as a result thereof holds approximately
23.85% of the combined voting power assuming the conversion of the remaining
50,000 shares of Class C Common Stock into an equal number of shares of Class A
Common Stock. The non-voting Class D Common Stock is held by affiliates of
Robert F.X. Sillerman, one of the founders of the Company. If all of such
shares of Class D Common Stock were converted into shares of Class B Common
Stock, affiliates of Mr. Sillerman would own approximately 58.4% of the
combined voting power of the Company. See "Description of Capital Stock."
The Class A Common Stock and the Depositary Shares are traded on the
Nasdaq SmallCap Market under the symbols "TBCOA" and "TBCOL," respectively. On
February 5, 1997, the closing sales price of the Class A Common Stock was $8
per share.
------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURI-
TIES 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 , 1997.
<PAGE>
AVAILABLE INFORMATION
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, information statements
and other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: Seven World Trade Center, 13th Floor, New York, New York
10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington
D.C. 20549 at prescribed rates. The Company is an electronic filer under the
EDGAR (Electronic Data Gathering, Analysis and Retrieval) system maintained by
the Commission. The Commission maintains a Web site (http://www.sec.gov) on the
Internet that contains reports, proxy statements, information statements and
other information regarding companies that file electronically with the
Commission. In addition, material filed by the Company can be inspected at the
offices of The Nasdaq Stock Market, Inc., Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with any amendments or supplements thereto, the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the Class A Common Stock. This Prospectus does not contain all the
information set forth in the Registration Statement. Such additional
information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
documents filed as an exhibit to the Registration Statement, each such
statement being qualified by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K, as amended, for the
year ended March 31, 1996;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended June 30, 1996 and September 30, 1996;
(iii) the Company's Current Reports on Form 8-K dated June 20, 1996
(as amended by Form 8-K/A Amendment No. 1 dated August 27,
1996), December 9, 1996 (as amended by Form 8-K/A Amendment No.
1 dated February 4, 1997) and January 24, 1997 (as amended by
Form 8-K/A Amendment No. 1 dated February 4, 1997); and
(iv) the description of the Company's Class A Common Stock contained
in the Company's Registration Statement on Form 8-A (File No.
0-026530) filed with the Commission on July 27, 1995.
All documents and reports filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Class A Common Stock 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 which is, or is 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 the previous
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any document incorporated by reference in this Prospectus, other than exhibits
to any such document unless such exhibits are specifically incorporated by
reference herein. Requests for such documents should be directed to Triathlon
Broadcasting Company, 150 East 58th Street, 19th Floor, New York, New York
10155, Attention: Timothy J. Klahs, Director of Investor Relations, telephone
number (212) 407-9191.
TABLE OF CONTENTS
PAGE
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2
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Available Information........................................................2
Incorporation of Certain Documents by Reference..............................2
Risk Factors.................................................................4
The Company.................................................................10
Use of Proceeds.............................................................10
Description of Capital Stock................................................10
Plan of Distribution........................................................16
Selling Stockholders........................................................17
Legal Matters...............................................................17
Experts.....................................................................18
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER
WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
3
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RISK FACTORS
In addition to the other information contained or incorporated by
reference in this Prospectus, the following factors should be considered
carefully by prospective investors in evaluating the Company before purchasing
any of the securities offered hereby. The information contained or incorporated
by reference in this Prospectus includes forward-looking statements that
involve risks and uncertainties, a number of which are identified in this "Risk
Factors" section. These risks and uncertainties include limitations on the
consummation of acquisitions, integration of acquired stations, leverage,
regulation of radio broadcasting and other factors. The Company's actual
results may differ materially from the results discussed in the forward-looking
statements due to such risks and uncertainties.
RISKS RELATED TO PENDING ACQUISITIONS
Consummation of the Company's pending acquisitions of radio stations
is subject to a number of factors, certain of which are beyond the Company's
control. In particular, consummation of the acquisitions is subject to the
prior approval by the Federal Communications Commission (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 such that
there is no material adverse change in such stations that would prevent
consummation of any such transactions. As a result of the elimination of the
national ownership limits and the liberalization of the local ownership limits
effected by the Telecommunications Act of 1996 (the "Recent Legislation"),
acquisitions and dispositions of radio stations will be subject to antitrust
review by the Federal Trade Commission and the Department of Justice, Antitrust
Division (the "Antitrust Agencies"). The Antitrust Agencies have indicated
their intention to review matters related to the concentration of ownership
within markets even when the ownership in question is in compliance with the
provisions of the Recent Legislation. See "--Extensive Regulation of Radio
Broadcasting."
In order to consummate its pending acquisitions, the Company must also
seek additional financing. The amounts available under the $40.0 million credit
facility of the Company (the "Credit Agreement") and cash on hand and from
operations is not sufficient to fund the purchase price of all of the pending
acquisitions. The ability of the Company to issue certain securities or borrow
under the Credit Agreement will be subject to meeting certain financial tests.
In addition, consummation of certain acquisitions is subject to the prior
approval of AT&T Commercial Finance Corporation ("AT&T"), the lender under the
Credit Agreement. There can be no assurance that the Company's existing
stations, and the stations which the Company will acquire, will achieve the
cash flow levels required to issue certain securities or borrow under the
Credit Agreement. Without additional financing it is unlikely that the Company
will be able to implement its acquisition strategy and will lose all or part of
the deposits made in connection with the pending acquisitions.
HISTORICAL LOSSES AND FUTURE CHARGES TO OPERATIONS
Although the Company had net income of $213,000 for the six months
ended September 30, 1996, since inception the Company has accumulated net
losses and many of the stations it has acquired have accumulated net losses,
primarily due to depreciation and amortization, interest expense and corporate
overhead. There can be no assurance that the Company will be able to continue
to achieve net income.
The Company has recorded and will continue to record substantial
non-cash compensation expense in connection with the issuance prior to the date
hereof of securities and stock options to certain officers, directors and
advisors. In connection with the issuance of Class B Common Stock to Mr. Feuer
prior to the date hereof, the Company will record compensation expense of
$136,000 per year through 2001. The Company will also record a charge of
$220,000 in 1997 with respect to the stock options to purchase 80,000 shares of
Class A Common Stock issued to Sillerman Communications Management Corporation
("SCMC") and its affiliates prior to the date hereof. In addition, the Company
may incur additional substantial charges in connection with certain cash-only
stock appreciation rights and the issuance of Series B Convertible Preferred
Stock to officers, directors and advisors of the Company in the event that such
shares become convertible into shares of Class A Common Stock in the event
certain Class A Common Stock price targets are met. The recording of
substantial non-cash compensation expense could adversely affect the price of
the Class A Common Stock and the Depositary Shares.
4
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SUBSTANTIAL LEVERAGE; INABILITY TO SERVICE OBLIGATIONS
In connection with acquisitions, the Company has incurred and will
incur significant amounts of indebtedness. Subject to certain restrictions
contained in the Credit Agreement and the Preferred Stock, the Company may
incur additional indebtedness from time to time to finance acquisitions, for
capital expenditures or for other purposes. See "--Limitations on Expansion
Strategy; Need for Additional Funds."
The degree to which the Company is and may become 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 Preferred Stock and will not be available for other purposes,
(iii) the agreements governing the Company's debt contain or are expected to
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 and (iv) the
Company's level of indebtedness could make it more vulnerable to economic
downturns, limit its ability to withstand competitive pressures and limit its
flexibility in reacting to changes in its industry and general economic
conditions. Certain of the Company's competitors operate on a less leveraged
basis, and have significantly greater operating and financial flexibility, than
the Company.
Dividend payments on the Preferred Stock have been and will be made
out of the remaining proceeds of the Preferred Stock offering and/or the Credit
Agreement. In order to fund future dividend payments from operating income, the
Company will have to improve the operating results of its current radio
stations and those to be acquired in the pending acquisitions. The Company's
ability to make these improvements will be subject, to a certain extent, to
general economic, financial, competitive, legislative, regulatory and other
factors, many of which are beyond the Company's control.
The Company's borrowings under the Credit Agreement are, and other
future borrowings may be, at variable rates of interest, which will result in
higher interest expense in the event of increases in interest rates. There can
be no assurance that the Company's business will generate sufficient cash flow
from operations or that future working capital borrowings will be available in
an amount which enables the Company to service its debt and to make dividend
payments and to make necessary capital or other expenditures. The Company may
be required to refinance a portion of the principal amount of its debt or the
aggregate liquidation preference of the outstanding preferred stock prior to
their 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.
EXTENSIVE REGULATION OF RADIO BROADCASTING
Adoption of the Recent Legislation in February 1996 eliminated the
national limits and liberalized the local limits on radio station ownership by
a single company. However, the Antitrust Agencies are increasingly scrutinizing
acquisitions of radio stations and the entering into of joint sales agreements
("JSAs") and local market agreements ("LMAs"). There can be no assurance that
policy and rule-making activities of the Antitrust Agencies will not impact the
Company's operations (including existing stations or markets), expansion
strategy or its ability to realize the benefits which management had
anticipated obtaining following the adoption of the Recent Legislation.
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
FCC consents 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 eight years. There can be no assurance that
the Company's licenses will be renewed, or that the FCC will approve future
acquisitions or dispositions. Failure to obtain the renewal of any of the
Company's broadcast licenses or to obtain FCC approval for an assignment of a
license in connection with a station acquisition could have a material adverse
effect on the Company's business and operations.
5
<PAGE>
In addition, the number and locations of radio stations that the
Company may acquire is limited by FCC rules and will vary depending upon, among
other things, whether the interests in other radio stations or certain other
media properties of certain individuals affiliated with the Company (including
but not limited to any stockholders of the Company who hold or will hold five
percent or more of the total voting power in the Company) are attributable to
those individuals. Moreover, under certain circumstances, the FCC's
cross-interest policy 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. The number and location of stations the
Company may acquire may, in particular, be affected by whether the stations
owned by the Company are attributable to Robert F.X. Sillerman and Howard J.
Tytel. The Company believes that such stations are not currently attributable
to Messrs. Sillerman and Tytel. The FCC is currently examining through
outstanding rule making and adjudicatory proceedings whether to change the
criteria for considering an interest to be attributable. In particular, the FCC
recently released a notice of proposed rulemaking 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, (ii)
increasing the amount of stock an investment company can own without
attribution, (iii) attributing, under certain circumstances, certain interests
such as non-voting stock or debt, and (iv) attributing, under certain
circumstances, JSAs. Some commenters in the rule making proceedings have urged
that the test for attribution should not be voting power but rather influence
over the licensee. Fisher Wayland Cooper Leader & Zaragoza LLP, FCC counsel to
the Company, has advised the Company that to the extent that the FCC adopts
this standard, the contractual arrangements between SCMC and the Company may
cause Messrs. Sillerman's and Tytel's interests in the Company to be
attributable to them which may require a change in the relationship between
such individuals and the Company. Any limitations upon the ability of Messrs.
Sillerman or Tytel to provide services to the Company could have a material
adverse effect on 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. In addition, any
actions, such as transfers or conversions of stock in the Company, that would
cause an individual or entity to acquire 50% or more of the total voting power
in the Company or to acquire actual working control over the Company would
require prior FCC consent, and there can be no assurance that such consent
would be obtained.
There can be no assurance that there will not be changes in the
current regulatory scheme, the imposition of additional regulations or the
creation of new regulatory agencies, which would restrict or curtail the
ability of the Company to acquire, operate and dispose of its stations or, in
general, to compete profitably with other operators of radio and other media
properties. Further, 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 and the
Company's stations are located in highly competitive markets. 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 its
respective market. 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. The
Company's audience ratings and market share are subject to change, and any
adverse change in audience ratings or market share in any particular market
could have an adverse material effect on the Company's net revenues. Although
the Company competes with other radio stations with comparable programming
formats in most of its markets, if another station in the market were to
convert its programming format to a format similar to one of the Company's
radio stations, if a new radio station were to adopt a competitive format, or
if an existing competitor were to strengthen its operations, the Company's
stations could suffer a reduction in ratings or advertising revenue and could
require the Company to incur increased promotional and other expenses. In
addition, certain of the Company's stations compete, and in the future other
stations may compete, with groups of stations in a market operated by a single
operator. As a result of the Recent Legislation, the radio broadcasting
industry has become increasingly consolidated, resulting in the existence of
radio broadcasting companies which are significantly larger, with greater
financial resources, than the Company. Furthermore, the Recent Legislation will
permit other radio broadcasting companies to enter the markets in which the
Company operates or may operate in the future. 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 its current audience ratings and advertising revenue market share.
The Company's stations also compete with other
6
<PAGE>
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. The
Company cannot predict the effect, if any, that any of these new technologies
may have on the radio broadcasting industry.
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 affect advertisers. In particular, because a significant
percentage 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. These 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; (ii)
regulatory restrictions on types of programming or 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.
LIMITATIONS ON EXPANSION STRATEGY; NEED FOR ADDITIONAL FUNDS
The Company's financial performance will be substantially dependent
upon its ability (i) to grow continuing its acquisition strategy and (ii) to
integrate the operations of the radio stations the Company acquires in order to
increase revenues and reduce operating expenses. There can be no assurance that
the Company will be able to enter into and consummate any acquisitions or
integrate the operations of those acquired stations, if any. In certain of the
markets in which the Company is focusing its operations, the competition for
radio station acquisitions is substantial and the Recent Legislation may result
in an increase in competition for such acquisitions. Accordingly, there can be
no assurance that the Company will be able to identify additional acquisition
opportunities or, if identified, be able to successfully consummate such
acquisitions. Each acquisition will be subject to the prior approval of the FCC
and AT&T. 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 such acquisitions and financings, could be restricted
by the terms of the Credit Agreement and Preferred Stock. 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
"--Extensive Regulation of Radio Broadcasting."
KEY PERSONNEL
The Company's success is dependent to a significant extent upon the
performance of certain key individuals, including in particular, Norman Feuer.
In 1995, the Company entered into a five-year employment agreement with Mr.
Feuer to serve as the Company's President and Chief Executive Officer; however,
there can be no assurance that Mr. Feuer will continue to provide services to
the Company for the term of his employment agreement. In the event that Mr.
Feuer is no longer employed by the Company, an event of default will occur
under the Credit Agreement unless a successor with comparable experience is
appointed within 90 days. The Company has obtained key man life insurance on
Mr. Feuer in the amount of $2.0 million. In addition, Robert F.X. Sillerman and
Howard J. Tytel, by virtue of their positions with SCMC, which provides
financial consulting and advisory services to the Company, are expected to
contribute materially to the development and implementation of the Company's
business strategies. Mr. Sillerman, however, is employed by SFX Broadcasting,
Inc. ("SFX") and pursuant to his employment agreement with SFX is required to
devote substantially all of his business time to matters related to SFX.
Therefore, Mr. Sillerman is restricted in the amount of time he may devote to
matters affecting the Company. Mr. Tytel is also an officer and director of SFX,
which will limit the amount of time Mr. Tytel will devote to the Company. The
loss of the services to the Company of Messrs. Feuer, Sillerman or Tytel could
have a material adverse effect on the Company.
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SECURITY HOLDINGS OF MANAGEMENT; PRINCIPAL STOCKHOLDERS
Mr. Feuer holds approximately 23.85% of the Company's combined voting
power by virtue of his ownership of 100% of the outstanding shares of Class B
Common Stock assuming the conversion of the remaining 50,000 shares of Class C
Common Stock into an equal number of shares of Class A Common Stock. Mr.
Feuer's shares of Class B Common Stock are subject to surrender to the Company
in varying percentages in the event he terminates his employment with the
Company. Mr. Feuer has granted Radio Investors, Inc., a New York corporation
which is controlled by Mr. Sillerman ("Radio Investors"), a right of first
refusal to purchase all of Mr. Feuer's shares of Class B Common Stock. Radio
Investors and Radio Analysis Associates ("Radio Analysis"), both of which are
affiliates of Mr. Sillerman, hold 1,199,476 and 244,890 shares, respectively,
of non-voting Class D Common Stock. Upon the occurrence of certain events, and
subject to FCC approval, Radio Investors and Radio Analysis will have the right
to convert their shares of Class D Common Stock into shares of Class B Common
Stock. In the event of such conversion, Radio Investors, Radio Analysis and Mr.
Feuer will hold approximately 48.5%, 9.9% and 9.9%, respectively, of the
Company's combined voting power. Accordingly, Mr. Feuer, or upon conversion of
the Class D Common Stock into Class B Common Stock upon approval of the FCC,
Radio Investors, will have the ability to significantly influence and possibly
control the outcome of substantially all matters submitted to a vote of the
stockholders. In addition, an aggregate of 565,000 shares of Series B
Convertible Preferred Stock have been issued by the Board of Directors of the
Company to Radio Investors, Radio Analysis, Mr. Feuer, John D. Miller and
Dennis R. Ciapura. The Series B Convertible Preferred Stock is non-voting and
vests over a five year period beginning one year from the date of issuance.
One-half of the shares of Series B Preferred Convertible Preferred Stock are
convertible into an equal number of shares of Class A Common Stock if and when
the market price of the Class A Common Stock is greater than or equal to $14.00
per share for 20 consecutive trading days. The remaining shares of Series B
Convertible Preferred Stock are convertible into an equal number of shares of
Class A Common Stock if and when the market price of the Class A Common Stock
is greater than or equal to $15.00 per share for 20 consecutive trading days.
Upon the conversion of such Series B Convertible Preferred Stock into Class A
Common Stock, which may require FCC consent, Mr. Feuer will hold 25.3% of the
Company's combined voting power. See "Description of Capital Stock."
The holdings of Company securities of Mr. Feuer and Radio Investors
and the requirement of obtaining FCC consent prior to any change of control of
the Company may have the effect of discouraging certain types of change of
control transactions, including transactions in which the holders of the shares
of Class A Common Stock or the Depository Shares might otherwise receive a
premium for their shares over the then current market price.
POTENTIAL CONFLICTS OF INTEREST
Each of Messrs. Sillerman and Tytel provides services to the Company
through his position as an officer and director of SCMC, a corporation
controlled by Mr. Sillerman. SCMC is obligated to offer the Company any radio
broadcasting opportunities that come to its attention in medium and small
markets located west of the Mississippi River. Messrs. Sillerman and Tytel have
investments in other entities that own and operate radio stations. Mr.
Sillerman is the Executive Chairman of the Board of Directors and controlling
stockholder, and Mr. Tytel is a Director, Executive Vice President and
Secretary, of SFX. These investments (and any similar investments made in the
future) and management responsibilities may give rise to certain conflicts of
interest as well as potential attribution under FCC rules. Specifically, these
investments and management responsibilities may affect the ability of Messrs.
Sillerman and Tytel to provide services to the Company, which could have a
material adverse effect on the Company.
SFX owns certain radio stations in the Wichita, Kansas market, a
market in which the Company has significant radio station ownership interests.
SFX has indicated that it does not intend to pursue acquisitions in the medium
and small markets on which the Company primarily focuses, except for its
stations in Wichita, Kansas. SFX and SCMC entered into an agreement, pursuant
to which SCMC assigned to SFX its rights to receive fees for consulting and
marketing services payable by the Company, except for fees relating to certain
transactions pending at the date of such agreement.
RESTRICTIONS ON FOREIGN OWNERSHIP
The Amended and Restated Certificate of Incorporation of the Company
restricts the ownership, voting and transfer of the Company's capital stock in
accordance with the Communications Act of 1934, as amended (the "Communications
Act"), and the rules of the FCC, to prohibit ownership of more than 25% of the
Company's outstanding capital stock, or more
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than 25% of the voting rights it represents, by or for the account of non U.S.
citizens or their representatives or a foreign government or a representative
thereof or a corporation organized under the laws of a foreign country
("Aliens") or corporations otherwise subject to domination or control by
Aliens. In addition, the Amended and Restated Certificate of Incorporation
provides that shares of capital stock of the Company determined by the Board of
Directors to be owned beneficially by an Alien or an entity directly or
indirectly owned by Aliens in whole or in part shall always be subject to
redemption by the Company by action of the Board of Directors to the extent
necessary, in the judgment of the Board of Directors, to comply with the Alien
ownership restrictions of the Communications Act and the FCC rules and
regulations.
The Company has established certain procedures and controls designed
to implement such prohibitions. Specifically, at the time shares of Common
Stock or other capital stock of the Company are presented for transfer, the
Company's transfer agent will inquire as to whether the transfer would result
in Aliens directly or indirectly owning or having the right to vote more than
20% of the Company's outstanding capital stock. If so, the proposed transfer
will not be permitted. This restriction on transfers to Aliens may adversely
affect the market for the Company's securities.
SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock by existing stockholders pursuant to Rule
144 promulgated under the Securities Act or otherwise could have an adverse
effect on the market price of the shares of Class A Common Stock and could
impair the Company's ability to raise additional capital through the sale of
equity securities. In addition, the currently outstanding 244,890 shares of
Class B Common Stock, 1,444,366 shares of Class D Common Stock and 565,000
shares of Series B Convertible Preferred Stock are "restricted securities" as
that term is defined in Rule 144 promulgated under the Securities Act. Such
shares of Class B Common Stock, Class D Common Stock and Series B Convertible
Preferred Stock may, under certain circumstances, be converted into shares of
Class A Common Stock and sold without registration pursuant to Rule 144
commencing in July 1997. The holders of all of the issued and outstanding
shares of Class B Common Stock and Class D Common Stock have agreed not to
sell, assign or transfer any of their shares of Common Stock until March 7,
1997 without the IPO Underwriters' prior written consent. Furthermore, the
Company has issued 120,000 of the 400,000 and none of the 200,000 stock options
under its 1995 Stock Option Plan and 1996 Stock Option Plan, respectively. The
Company has agreed to file a registration statement covering the resale of the
shares of Class A Common Stock issuable to the IPO Underwriters upon the
exercise of the IPO Warrants. No prediction can be made as to the effect, if
any, that future sales, or the availability of shares for future sale, will
have on the market price of the Class A Common Stock prevailing from time to
time. Sales of substantial amounts of Class A Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Class A Common Stock and could impair the
Company's ability to raise capital through an offering of its equity
securities.
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THE COMPANY
The Company owns and operates radio stations primarily in medium and
small-sized markets in the Midwest and Western United States. The Company
currently owns and operates, sells advertising on behalf of or provides
programming to 24 FM and 12 AM radio stations in seven markets: Wichita,
Kansas; Lincoln, Nebraska; Omaha, Nebraska; Little Rock, Arkansas; Colorado
Springs, Colorado; Tri-Cities, Washington; and Spokane, Washington. The
principal executive offices of the Company are located at Symphony Towers, 750
B Street, Suite 1920, San Diego, California 92101 and its telephone number is
(619) 239-4242.
USE OF PROCEEDS
The Company will not receive any proceeds from the Class A Common
Stock offered hereby. All of the proceeds of this offering will be received by
the Selling Stockholders. The Company has agreed to bear certain costs relating
to the registration of the Class A Common Stock under the federal and state
securities laws (currently estimated to be $50,000), and of any offering and
sale hereunder, not including certain expenses such as commissions and
discounts of underwriters, dealers and agents.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is incorporated under the laws of the State of Delaware.
Pursuant to the Company's Amended and Restated Certificate of Incorporation,
the Company's authorized capital stock consists of 30,000,000 shares of Class A
Common Stock, 1,689,256 shares of Class B Common Stock, 367,344 shares of Class
C Common Stock, 1,444,366 shares of Class D Common Stock and 4,000,000 shares
of preferred stock. The Company has outstanding 3,124,808 shares of Class A
Common Stock, including the 317,344 shares of the 367,344 shares of Class A
Common Stock offered hereby, 244,890 shares of Class B Common Stock, 50,000
shares of Class C Common Stock convertible into Class A Common Stock offered
hereby, 1,444,366 shares of Class D Common Stock, 583,400 shares of 9%
Mandatory Convertible Preferred Stock (represented by 5,834,000 Depositary
Shares) and 565,000 shares of Series B Convertible Preferred Stock. In
addition, the Company has (i) 9,489,256 shares of Class A Common Stock reserved
for issuance upon the conversion of the shares of Class B Common Stock, Class D
Common Stock and the Preferred Stock, (ii) 400,000 shares of Class A Common
Stock reserved for issuance upon the exercise of options pursuant to the 1995
Stock Option Plan, (iii) 200,000 shares of Class A Common Stock reserved for
issuance upon the exercise of options pursuant to the 1996 Stock Option Plan,
(iv) 600,000 shares of Class A Common Stock reserved for issuance upon the
conversion of the Series B Convertible Preferred Stock, (v) 240,000 shares
reserved for issuance upon exercise of IPO Warrants, (vi) 1,444,366 shares of
Class B Common Stock reserved for issuance upon the conversion of the shares of
Class D Common Stock and (vii) 23,725 shares of Class A Common Stock reserved
for issuance to Southern Skies Corporation upon the consummation of the
purchase of radio stations KMVK-FM and KSSN-FM, each operating in the Little
Rock, Arkansas market from an affiliate of Southern Skies Corporation (the
"Second Southern Skies Acquisition").
The following description of the capital stock of the Company is a
summary and is qualified in its entirety by the Company's Amended and Restated
Certificate of Incorporation and Bylaws, copies of which are filed as exhibits
to the Registration Statement of which this Prospectus forms a part.
COMMON STOCK
Voting Rights. Holders of shares of Class A Common Stock, Class B
Common Stock and Depositary Shares vote as a single class on all matters
submitted to a vote of the stockholders, with each share of Class A Common
Stock entitled to one vote, each share of Class B Common Stock generally
entitled to ten votes and each Depositary Share entitled to 4/5ths of one vote,
except as described below or as otherwise provided by law.
The holders of Class A Common Stock, voting together as a class with
the holders of the Depositary Shares, are entitled to elect or remove two of
the Company's directors. In the event of the death, removal or resignation of
such a
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Director prior to the expiration of his or her term, such vacancy may be
filled by a majority of the directors then in office, although less than a
quorum. The holders of Class A Common Stock, Depositary Shares and Class B
Common Stock, voting as a single class are entitled to elect or remove the
remaining directors. The holders of Common Stock and Depositary Shares are not
entitled to cumulative votes in the election of directors.
If one or more of Messrs. Feuer, Sillerman or Tytel or Radio Investors
(each a "Principal Stockholder") or any of their affiliates engage in or agree
to participate in a "going private" transaction, any share of Class B Common
Stock held by such person or entity engaging in or agreeing to participate in
such transaction shall be entitled to only one vote per share. For purposes of
this provision, Mr. Feuer is not deemed to be an "affiliate" of Messrs.
Sillerman or Tytel or Radio Investors. Such provision is designed to decrease
the voting power of any Principal Stockholder of the Company engaging in or
participating in a going private transaction.
Except as required by law, the holders of the Class C Common Stock and
the Class D Common Stock have no voting rights.
Under Delaware law, the affirmative vote of the holders of a majority
of the outstanding shares of any class of Common Stock is required to approve,
among other things, a change in the designations, preferences or limitations of
the shares of such class of Common Stock.
Conversion. Each share of Class B Common Stock, Class C Common Stock
and Class D Common Stock automatically converts into one share of Class A
Common Stock upon its sale or other transfer of such holder's entire interest
in such shares to any party other than a Principal Stockholder or any of their
affiliates, subject (as are all conversions of the Company's capital stock) to
compliance with FCC rules and regulations. Each share of Class B Common Stock,
Class C Common Stock and Class D Common Stock may be conveyed by sale or gift
or other transfer of such holder's entire interest in such stock to (i) a
Principal Stockholder or (ii) to an affiliate of the Principal Stockholder
holding such shares, in which case upon the death of the transferor each of
such shares shall automatically convert into one share of Class A Common Stock
(subject to compliance with FCC rules and regulations). Each share of Class D
Common Stock may be converted at any time, subject to compliance with FCC rules
and regulations, at the option of its holder, into one share of Class A Common
Stock. In addition, each share of Class D Common Stock may be converted,
subject to compliance with FCC rules and regulations, at the option of its
holder, into one share of Class B Common Stock in the event that (i) the
Company generates less than $2,000,000 of Broadcast Cash Flow in any fiscal
year ending after December 31, 1996 or (ii) the Company is in default for
borrowed money from an institutional lender and such default has not been cured
or waived by such lender. As used herein, Broadcast Cash Flow is defined as net
revenues less station operating expenses, excluding depreciation, amortization,
interest, taxes and corporate expenses. The shares of Class C Common Stock
which has been converted into the Class A Common Stock offered hereby are, and
the shares of Class B Common Stock, Class C Common Stock and Class D Common
Stock that may be converted into shares of Class A Common Stock or Class B
Common Stock will be, retired and cannot be reissued.
Dividends. Holders of shares of Common Stock are entitled to receive
such dividends as may be declared by the Board of Directors out of funds
legally available for such purpose. In general, in the case of any stock
dividend, holders of Class A Common Stock are entitled to receive the same
percentage dividend (payable in shares of Class A Common Stock) as the holders
of Class B Common Stock (payable in shares of Class B Common Stock), the
holders of Class C Common Stock (payable in shares of Class C Common Stock) and
the holders of Class D Common Stock (payable in shares of Class D Common
Stock). The payment of dividends is limited by the terms of the Preferred Stock
and the Credit Agreement.
Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets available for distribution after payment in full of creditors and
holders of preferred stock, including the Preferred Stock, as required by the
terms of such preferred stock.
Other Provisions. The holders of Common Stock are not entitled to
preemptive or subscription rights. The shares of Common Stock presently
outstanding are validly issued, fully-paid and nonassessable. In any merger,
consolidation or business combination, the consideration to be received per
share by holders of Class A Common Stock, Class B Common Stock, Class C Common
Stock and Class D Common Stock must be identical for each class of stock,
except that in any such transaction in which shares of Common Stock are
distributed, such shares may differ as to voting rights to the extent that
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voting rights differ among the classes of Common Stock. No class of Common
Stock may be subdivided, consolidated, reclassified or otherwise changed unless
concurrently the other classes of Common Stock are subdivided, consolidated,
reclassified or otherwise changed in the same proportion and in the same
manner.
PREFERRED STOCK
The Company's Amended and Restated Certificate of Incorporation
authorizes the Board of Directors to issue 4,000,000 shares of preferred stock
from time to time in one or more series. The Board of Directors is authorized
to determine, prior to issuing such series of preferred stock and without any
vote or action by the stockholders, the rights, and preferences, privileges and
restrictions of the shares of such series, including dividend rights, voting
terms, terms of redemption, the provisions of any purchase, retirement or
sinking fund to be provided for the shares of any series, conversion and
exchange rights, the preferences upon any distribution of the assets of the
Company, including in the event of voluntary or involuntary liquidation,
dissolution or winding-up of the Company and the preferences and relative
rights among each series of preferred stock.
9% Mandatory Convertible Preferred Stock and Depositary Shares each
representing a 1/10th interest in a share of 9% Mandatory Convertible Preferred
Stock. The holders of the Preferred Stock (and thereby the Depositary Shares)
are entitled to receive, when, as and if dividends are declared by the Board of
Directors, out of funds legally available therefor, cumulative preferential
dividends accruing at the rate per Depositary Share of $.945 per annum, payable
in arrears at the end of each calendar quarter. Dividends are payable in cash,
except that upon conversion or redemption of the Depositary Shares the accrued
dividends may be paid, at the Company's option, in shares of Class A Common
Stock. Conversions or redemptions of the Depositary Shares or the Preferred
Stock are subject to compliance with FCC rules and regulations. Accumulated
unpaid dividends bear interest at a rate of 10.5% per annum. On June 30, 2000
(the "Mandatory Conversion Date"), the Preferred Stock then outstanding (and
thereby the Depositary Shares) will convert automatically into shares of Class
A Common Stock. Upon mandatory conversion of the Depositary Shares, accrued but
unpaid dividends with respect thereto shall be payable in cash or, at the
Company's option, in shares of Class A Common Stock valued at the then Current
Market Price (as defined in the Certificate of Designations).
On the Mandatory Conversion Date, each of the Depositary Shares will
convert into that number of shares of Class A Common Stock that when multiplied
by the Current Market Price of the Class A Common Stock on the Mandatory
Conversion Date produces a value equal to the initial public offering price per
Depositary Share (the "Mandatory Conversion Rate"), except that the Mandatory
Conversion Rate shall not be greater than 1.15 or less than .833, subject to
adjustment in certain circumstances. The Preferred Stock (and thereby the
Depositary Shares) will be convertible at the option of the holders, at any
time prior to redemption or the Mandatory Conversion Date, into Class A Common
Stock, at a conversion rate of 8.33 shares of Class A Common Stock per share of
Preferred Stock (.833 shares per Depositary Share (the "Conversion Rate")),
which is equivalent to a conversion price of $12.60 per share of Class A Common
Stock, subject to adjustment in certain circumstances. Upon conversion of the
Depositary Shares, accrued but unpaid dividends with respect thereto shall be
payable in cash or, at the Company's option, in shares of Class A Common Stock
valued at the then Current Market Price.
In the event a Change of Control (as defined in the Certificate of
Designations) or a Fundamental Change (as defined in the Certificate of
Designations) occurs when the Current Market Price of the Class A Common Stock
is less than the Conversion Price (as defined in the Certificate of
Designations) then in effect, the Conversion Rate will be increased for a
period of 45 days such that the effective Conversion Price will equal the
Current Market Price of the Class A Common Stock immediately prior to such
occurrence, but in no event will the Conversion Rate be adjusted above 1.5,
subject to adjustment in certain circumstances. The Company may pay cash in
lieu of the Class A Common Stock to be issued resulting from such conversion.
The Preferred Stock (and thereby the Depositary Shares) is not
redeemable by the Company prior to June 30, 1999. At any time or from time to
time on or after June 30, 1999 until the close of business on the last business
day preceding the Mandatory Conversion Date, the Company may redeem, in whole
or in part, the outstanding Preferred Stock (and thereby the Depositary
Shares). Upon any such redemption, the Company shall deliver, with respect to
each share of the Preferred Stock redeemed, that number of shares of Class A
Common Stock equal to the Call Price (as defined in the Certificate of
Designations) in effect on the date of redemption divided by the Current Market
Price of the Class A Common Stock, subject
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to adjustment in certain circumstances, together with all accrued and unpaid
dividends. Any such accrued but unpaid dividends shall be payable in cash or,
at the Company's option, in shares of Class A Common Stock valued at the then
Current Market Price.
The holders of the Preferred Stock (and thereby the Depositary Shares)
vote together with the holders of Class A Common Stock, with each share of the
Preferred Stock entitled to eight votes (the equivalent of 4/5 of a vote per
Depositary Share). Whenever dividends on the Preferred Stock shall be in
arrears and unpaid in the aggregate amount of dividends payable thereon for six
quarterly dividend periods, the holders of the Preferred Stock (voting
separately as a class) will be entitled to vote for the election of two
additional directors of the Company, subject to certain limitations.
The Certificate of Designations of the Preferred Stock contains
covenants for the benefit of the holders of the Preferred Stock that, among
other things, restrict the ability of the Company and the subsidiaries to (i)
create encumbrances on the ability of the Company to pay dividends or make
other distributions on the Preferred Stock, (ii) pay two-thirds of the annual
advisory fees to SCMC at any time that the Company's dividend payments on the
Preferred Stock are in arrears, (iii) incur debt or issue capital stock, (iv)
repurchase capital stock or pay dividends on capital stock (other than the
Preferred Stock), (v) engage in transactions with related parties and (vi)
issue capital stock to related parties.
Holders of Depositary Shares may exchange the Depositary Shares for
that number of whole shares of the Preferred Stock represented by such
Depositary Shares. The Preferred Stock is not qualified for inclusion on the
Nasdaq SmallCap Market or any other organized trading market.
Series B Convertible Preferred Stock. The Board of Directors
designated 600,000 shares of preferred stock as Series B Convertible Preferred
Stock, par value $.01 per share. In the event of the liquidation of the
Company, the holders of the Series B Convertible Preferred Stock would share
ratably in the assets of the Company, to the extent of the par value of each
share of the Series B Convertible Preferred Stock, before the holders of the
Common Stock. The Preferred Stock ranks senior to the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock in right of
payment with respect to dividends and upon liquidation, dissolution or
winding-up of the Company. The Series B Convertible Preferred Stock contains no
voting or dividend rights and there is no sinking fund for the benefit of the
holders of the Series B Convertible Preferred Stock.
On February 8, 1996, the Company issued an aggregate of 565,000 shares
of Series B Convertible Preferred Stock pursuant to a compensation plan to
Radio Investors, Radio Analysis and Messrs. Feuer, Miller and Ciapura. Subject
to required FCC consents, if the market price of Class A Common Stock is
greater than or equal to $14.00 per share for 20 consecutive trading days prior
to December 31, 1998, one-half of the Series B Convertible Preferred Stock held
by each holder thereof will be convertible into an equal number of shares of
Class A Common Stock. If the market price is not greater than or equal to
$14.00 per share for such 20 consecutive trading days, such shares will become
redeemable by the Company for $.01 per share. If the market price of the Class
A Common Stock is greater than or equal to $15.00 per share for 20 consecutive
trading days prior to December 31, 1999, any remaining shares of Series B
Convertible Preferred Stock not yet subject to redemption will be convertible
into an equal number of shares of Class A Common Stock. If the market price is
not greater than or equal to $15.00 per share for such 20 consecutive trading
days, such shares will become redeemable by the Company for $.01 per share. The
Series B Convertible Preferred Stock vests over a five year period beginning
one year from the date of issuance.
The ability of the Board of Directors of the Company to issue
preferred stock, while providing flexibility in connection with acquisitions
and other corporate purposes, could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,
a majority of the outstanding voting stock of the Company. The Company has no
current plans to issue any additional preferred stock.
TRANSFER AGENT
The Transfer Agent and Registrar for the Class A Common Stock is
Chemical Mellon Shareholder Services L.L.C.
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CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND STATUTE
Directors' Liability. Under the General Corporation Law of the State
of Delaware (the "Delaware Law"), directors of a Delaware corporation can
generally be held liable for certain acts and omissions in connection with the
performance of their duties to the corporation and its stockholders. As
permitted by Delaware Law, however, the Amended and Restated Certificate of
Incorporation contains provisions eliminating or limiting the personal
liability of directors for monetary damages for breaches of duties to the
Company and its stockholders. Such provisions do not, however, eliminate
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. In addition, the Amended and Restated Certificate of
Incorporation provides that if the Delaware Law is amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of the directors shall be eliminated or limited to the fullest extent
permitted by the Delaware Law, as so amended. The effect of this provision is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
This provision, which may not be amended or modified to increase the liability
of a director, or repealed except upon the affirmative vote of 75% or more of
the outstanding shares of Common Stock, does not limit or eliminate the rights
of the Company or any stockholder to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
Directors' Indemnification. The Amended and Restated Certificate of
Incorporation provides that the Company shall indemnify its directors, officers
and employees to the fullest extent permitted by Delaware Law and advance
expenses to such directors, officers and employees to defend any action for
which rights of indemnification are provided. The Company believes that this
provision will assist the Company in attracting and retaining qualified
individuals to serve as directors, officers and employees.
Section 203 of Delaware Law. The Company is subject to the "business
combination" statute of the Delaware Law. In general, Section 203 of the
Delaware Law prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
"interested stockholder," unless (i) prior to such date the board of directors
of the corporation approved either the "business combination" or the
transaction which resulted in the stockholder becoming an "interested
stockholder," (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the "interested stockholder"
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned (a) by persons who are
directors and also officers and (b) employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer, or
(iii) at or subsequent to such time the "business combination" is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3 % of the outstanding
voting stock which is not owned by the "interested stockholder." A "business
combination" includes mergers, stock or asset sales and other transactions
resulting in a financial benefit to the "interested stockholder." An
"interested stockholder" is a person (other than the corporation and any direct
or indirect majority-owned subsidiary of that corporation) who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.
FOREIGN OWNERSHIP
The Amended and Restated Certificate of Incorporation restricts the
ownership, voting and transfer of the Company's capital stock, in accordance
with the Communications Act and the rules of the FCC, which prohibit the
ownership of more than 25% of the Company's outstanding capital stock, or more
than 25% of the voting power of its outstanding capital stock which is entitled
to vote (such percentage, however, is 20% in the case of those subsidiaries
that are direct holders of FCC licenses), by or for the account of Aliens or
corporations otherwise subject to domination or control by Aliens. In addition,
the Amended and Restated Certificate of Incorporation provides that shares of
capital stock of the Company determined by the Board of Directors to be owned
beneficially by an Alien or entity directly or indirectly owned by Aliens in
whole or in part shall always be subject to redemption by the Company by action
of the Board of Directors to
14
<PAGE>
the extent necessary, in the judgment of the Board of Directors, to comply with
the alien ownership restrictions of the Communications Act and the FCC rules
and regulations. The Amended and Restated Certificate of Incorporation
authorizes the Board of Directors of the Company to adopt such provisions as it
deems necessary to enforce these prohibitions. The Company has established
certain procedures and controls designed to implement the aforesaid
prohibitions. Specifically, at the time shares of Common Stock, Depositary
Shares or any other equity securities of the Company are presented for
transfer, the Company's transfer agent will inquire as to whether the transfer
would result in Aliens directly or indirectly owning or having the right to
vote more than 20% of the Company's outstanding capital stock. If so, the
proposed transfer will not be permitted.
IPO UNDERWRITERS' WARRANTS
The Company sold to the IPO Underwriters, for nominal consideration,
the IPO Warrants to purchase up to an aggregate of 240,000 shares of Class A
Common Stock. The IPO Warrants are exercisable during the three-year period
commencing on September 7, 1997 at an exercise price equal to $7.425, subject
to adjustment in certain events, and are not transferable except to officers of
the IPO Underwriters or to members of the selling group. The IPO Warrants also
contain a cashless exercise provision. The Company has agreed to register the
Class A Common Stock issuable upon exercise of the IPO Warrants, under the
Securities Act on one occasion during the four-year period commencing September
7, 1997 upon request of the holders of a majority of the IPO Warrants, such
registration to be at the Company's expense. The Company has also granted
certain "piggyback" registration rights to the holders of the IPO Warrants.
If the IPO Warrants are exercised, the value of the Class A Common
Stock held by public investors will be diluted if the value of such stock
immediately prior to the exercise of such IPO Warrants exceeds the exercise
price thereof, with the extent of such dilution depending upon such excess. The
IPO Warrants afford the holders thereof the opportunity, at nominal cost, to
profit from a rise in the market price of the Class A Common Stock, which may
adversely affect the terms upon which the Company could issue additional Class
A Common Stock during the term thereof.
15
<PAGE>
PLAN OF DISTRIBUTION
Each of the Selling Stockholders may offer and sell from time to time
shares of Class A Common Stock directly or through broker-dealers or
underwriters who may act solely as agents, or who may acquire shares as
principals. The distribution of the shares may be effected in one or more
transactions that may take place through the Nasdaq Small Cap Market or any
national securities exchange on which the Class A Common Stock is approved for
listing in the future, including block trades or ordinary broker's
transactions, or through privately negotiated transactions, or through an
underwritten public offering, or in accordance with Rule 144 under the
Securities Act, through a combination of any such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with such sales. Although the Company ultimately
expects that all shares may be sold, the actual number of shares that will be
sold cannot be determined.
Each Selling Stockholder and any other person participating in the
sale of shares of Class A Common Stock will be subject to applicable provisions
of the Exchange Act and the rules and regulation thereunder, including, without
limitation, Rules 10b-2, 10b-6 and 10b-7, which provisions may limit the timing
of purchases and sales by each Selling Stockholder and any other such person.
Furthermore, under 10b-6 under the Exchange Act, any person engaged in a
distribution of the Class A Common Stock may not simultaneously engage in
market making activities with respect to such securities for a period of two
business days prior to the commencement of such distribution. All of the
foregoing may affect the marketability of the securities offered hereby.
The aggregate proceeds to the Selling Stockholders from the sale of
the Class A Common Stock will be the purchase price of the Class A Common Stock
sold less the aggregate agents' commissions and underwriters' discounts, if
any, and other expenses of issuance and distribution not borne by the Company.
The Selling Stockholders and any dealers or agents that participate in the
distributions of the Class A Common Stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any profit on the sale of the
Class A Common Stock by them and any commissions received by any such dealers
or agents might be deemed to be underwriting discounts and commissions under
the Securities Act.
The Selling Stockholders may effect transactions by selling the Class
A Common Stock directly or through broker-dealers acting either as principal or
as agent, and such broker-dealers may receive compensation in the form of usual
and customary or specifically negotiated underwriting discounts, concessions or
commissions from the Selling Stockholders.
To comply with the securities laws of certain jurisdictions, the
securities offered hereby will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
To the extent required, the specific shares of the Class A Common
Stock to be sold, the names of the Selling Stockholders, purchase price, public
offering price, the names of any such agent, dealer or underwriter and any
applicable commission or discount with respect to a particular offering will be
set forth in an accompanying Prospectus Supplement.
Pursuant to the Subscription Agreements (as defined below), the
Company will pay all of the expenses, estimated to be $50,000 in connection
with this offering, other than underwriting discounts and commissions, legal
fees and expenses of the Selling Stockholders which shall be borne by them.
In addition, the Subscription Agreements and the Purchase Agreement
(as defined below) provide that the Company has agreed to indemnify each of the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act, and the Subscription Agreements further provide that the
Company will reimburse the Selling Stockholder for payments made by such
Selling Stockholder in respect thereof.
16
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders
and the number of shares of Class A Common Stock or Class C Common Stock of the
Company beneficially owned on December 31, 1996 (or January 9, 1997 in the case
of Southern Skies Corporation), by such Selling Stockholders. All shares are
beneficially owned and the sole voting power and investment power is held by
the person or entity named.
Except for Southern Skies Corporation, all of the Selling Stockholders
obtained shares of Class C Common Stock pursuant to Subscription Agreements
effective as of May 1, 1995 (collectively, the "Subscription Agreements") which
provide that the Company shall prepare and file with the Commission a
registration statement covering the resale of the Class A Common Stock issued
upon conversion of the Class C Common Stock and shall use its best efforts to
cause such registration statement to become effective as soon as practically
possible. Southern Skies Corporation obtained shares of Class A Common Stock on
January 9, 1997 as a portion of the purchase price paid to it upon the
consummation of the Purchase Agreement entered into by the Company and Southern
Skies Corporation on February 8, 1996, as amended (the "Purchase Agreement").
The Purchase Agreement provides that the Company shall prepare and file with
the Commission a registration statement covering the resale of the Class A
Common Stock issued to Southern Skies Corporation no later than January 29,
1997 and shall use its best efforts to have such registration statement
declared effective as soon as reasonably practicable after such filing and
shall use commercially reasonable efforts to keep such registration statement
continuously effective for the period of two years thereafter.
Number of Shares
of Class A
Common Stock
Beneficially
Owned on
Name December 31, 1996
- ---- -----------------
Henilia Financial Limited.................................... 267,344
First Rock Trustees Limited as Trustee for the Mair Trust.... 50,000
Ellis French................................................. 18,750*
Jeffrey Zimmerman............................................ 18,750*
Henry A. Leonard & Co. Inc.
Employees Pension Trust................................. 6,250*
Richard Tauber............................................... 6,250*
Southern Skies Corporation .................................. 22,464**
- -------------------
* Represents shares of Class C Common Stock which will automatically convert
into Class A Common Stock upon transfer.
** Represents shares of Class A Common Stock obtained on January 9, 1997.
The Selling Stockholders may sell up to all of the shares of Class A
Common Stock shown above pursuant to this Prospectus in one or more
transactions from time to time as described under the section "Plan of
Distribution". Since the Selling Stockholders may sell all, some or none of
their shares, no estimate can be made of the aggregate number of shares of
Class A Common Stock that are to be offered hereby or that will be owned by
each Selling Stockholder upon completion of the offering to which this
Prospectus relates. If, however, each of the Selling Stockholders were to sell
all of the shares of Class A Common Stock set forth above, each Selling
Stockholder would beneficially own less than one percent of the Class A Common
Stock.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Baker & McKenzie, New York, New York, counsel to the Company.
Howard J. Tytel, who is Executive Vice President, General Counsel and a
Director of and holds an equity interest in SCMC, and is an executive officer
of, and holds an equity interest in, Radio Investors which holds certain
securities of the Company, including the Class D Common Stock that upon certain
circumstances are convertible into a controlling interest in the Company, is of
counsel to Baker & McKenzie.
EXPERTS
17
<PAGE>
The consolidated financial statements of Triathlon Broadcasting
Company as of March 31, 1996 and for the year then ended; the financial
statements of Marathon Broadcasting Corporation as of June 30, 1995 and for the
six months ended June 30, 1995; the financial statements of 93.3, Inc. as of
December 31, 1995 and for the two years in the period ended December 31, 1995;
the financial statements of Rock Steady, Inc. as of September 30, 1995 and for
the two years in the period ended September 30, 1995; the financial statements
of Valley Broadcasting, Inc. as of December 31, 1995 and for the two years in
the period ended December 31, 1995; the financial statements of KOLL-FM (a
division of Southern Starr of Arkansas, Inc.) as of December 31, 1995 and for
the period from March 27, 1995 to December 31, 1995; the statements of
operations of KOLL-FM (a division of Southern Starr Broadcasting Group, Inc.)
for the year ended December 31, 1994 and the period from January 1, 1995 to
March 26, 1995; and the combined financial statements of KAQQ-AM, KISC-FM and
KNFR-FM (divisions of Silverado Broadcasting Company, Inc.) as of December 31,
1995 and for the two years in the period ended December 31, 1995, incorporated
by reference herein, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports with respect thereto, and are
incorporated by reference herein in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of KFH/KXLK (a division of Pourtales Radio
Partnership) as of December 31, 1994 and for the periods from July 1, 1994
through December 31, 1994 and January 1, 1995 through September 12, 1995; the
combined financial statements of KZKX-FM, Inc., KTGL Corporation, and KZKX and
KTGL (divisions of Pourtales Radio Partnership) as of December 31, 1995 and
1994 and for the years then ended; and the combined financial statements of
Springs Radio, Inc., KVUU/KSSS, Inc., KOTY-FM, Inc., KEYF Corporation, Fourth
Street Broadcasting, Inc., and KTCR/KEGX, KEYF, KUDY/KKZX and KEYN (divisions
of Pourtales Radio Partnership) as of December 31, 1995 and 1994 and for the
years then ended incorporated by reference herein have been audited by Deloitte
& Touche LLP, independent auditors, as set forth in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
The combined financial statements of Southern Skies Corporation and
Arkansas Skies Corporation as of December 31, 1995 and for each of the years
ended December 31, 1994, and 1995 incorporated by reference herein have been
audited by KPMG Peat Marwick LLP, independent auditors, as set forth in their
report with respect thereto, and are incorporated by reference herein in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.
The financial statements of KFAB-AM, KGOR-FM and Business Music Service
(divisions of Henry Broadcasting Company) for the years ended December 31, 1994
and 1995 incorporated by reference herein have been audited by Miller, Kaplan,
Arase & Co., independent auditors, as set forth in their report with respect
thereto, and are incorporated by reference herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses in connection
with the issuance and distribution of the securities being registered
hereunder. Except for the SEC registration fee and the Nasdaq listing fee, all
amounts are estimates.
II-1
<PAGE>
SEC Registration Fee................................................. $ 953
Nasdaq Listing Fee................................................... 1,000
Printing and Engraving Expenses...................................... 5,000
Legal Fees and Expenses.............................................. 15,000
Accounting Fees and Expenses......................................... 15,000
Blue Sky Fees and Expenses........................................... 3,000
Miscellaneous Expenses............................................... 10,047
-------
Total........................................................... $50,000
ITEM 15. 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 other 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.
The Company's Amended and Restated Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company 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 the Company 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.
The Company's Amended and Restated Certificate of Incorporation
provides that the Company 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 by reason of the fact that he is or was a director or officer of
the Company, or while a director or officer of the Company is or was serving at
the request of the Company as a director or officer of another company,
partnership, joint venture, sole proprietorship, trust, employee benefit plan
or other enterprise, to the fullest extent permitted under the General
Corporation Law of the State of Delaware, as amended.
The Underwriting Agreement filed as Exhibit 1 hereto provides for
indemnification of the Company's officers and directors by the Underwriters
named therein against certain liabilities, including liabilities under the
Securities Act, that arise out of, among other things, an untrue statement or
alleged untrue statement contained in this Prospectus or the omission or
alleged omission of a material fact required to be stated in this Prospectus,
but only to the extent that such misstatement or omission was made in reliance
upon and in conformity with written information furnished in writing to the
Company by the Underwriters for use in the Prospectus.
ITEM 16. EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
NUMBER
+ 4.1 IPO Underwriters' Warrant
+ 4.2 Specimen Stock Certificate for Class A Common Stock
++ 4.3 Certificate of Designations of the Series B Convertible
Preferred Stock
II-2
<PAGE>
++ 4.4 Form of Certificate of Designations of the 9% Mandatory
Convertible Preferred Stock
++ 4.5 Form of Deposit Agreement relating to the 9% Mandatory
Convertible Preferred Stock
++ 4.6 Form of Stock Certificate for 9% Mandatory Convertible Preferred
Stock
++ 4.7 Form of Depositary Receipt Evidencing Depositary Shares
5 Opinion of Baker & McKenzie with respect to the legality of the
securities being registered
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of Miller, Kaplan Arase & Company
23.5 Consent of Baker & McKenzie (included in Exhibit 5)
23.6 Consent of Fisher Wayland Cooper Leader & Zaragoza LLP
24 Power of Attorney (included on the signature page hereto)
- --------------
+ Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 (File No. 33-94316) as amended, originally filed with the
Securities and Exchange Commission on July 6, 1995.
++ Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 (File No. 33-1186) as amended, originally filed with the
Securities and Exchange Commission on February 9, 1996.
ITEM 17. UNDERTAKINGS
(a) 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 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.
(b) The undersigned 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;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding
the
II-3
<PAGE>
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the charges in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective 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
provided, however, that paragraphs (1) (i) and (1)
(ii) do not apply if the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
the Registrant pursuant to section 13 or section 15(d)
of the Exchange Act that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
authorized in the City of New York, State of New York, on February 5, 1997.
TRIATHLON BROADCASTING COMPANY
By:
-----------------------------------
Norman Feuer
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates stated. Each person whose signature to this
Registration Statement appears below hereby appoints Norman Feuer or Jan E.
Chason as his attorney-in-fact to sign on his behalf, individually and in the
capacities stated below, and to file any and all amendments and post-effective
amendments to this Registration Statement, which amendment or amendments may
make such changes and additions as such attorney-in-fact may deem necessary or
appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board of Directors
- -----------------------------
John D. Miller
President, Chief Executive Officer and
- ----------------------------- Director (principal executive officer)
Norman Feuer
Treasurer and Chief Financial Officer
- ----------------------------- (Principal financial and accounting officer)
Jan E. Chason
Director
- -----------------------------
Frank E. Barnes, III
Director
- -----------------------------
Dennis R. Ciapura
Director
- -----------------------------
Jeffrey Leiderman
</TABLE>
II-5
<PAGE>
Baker & McKenzie
805 Third Avenue
New York, New York 10022
February 5, 1997
Triathlon Broadcasting Company
Symphony Towers
750 B Street, Suite 1920
San Diego, California 92101
Gentlemen:
We have acted as counsel to Triathlon Broadcasting Company, a Delaware
corporation (the "Company"), in connection with its filing of a registration
statement on Form S-3 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), covering up to 389,808 shares of
Class A Common Stock, par value $.01 per share ("Class A Common Stock"),
including 50,000 shares of Class A Common Stock issuable upon conversion of
shares of Class C Common Stock, par value $.01 per share ("Class C Common
Stock").
We have examined the originals, or photostatic or certified copies, of
such records of the Company, certificates of officers of the Company and of
public officials, and such other documents as we have deemed relevant and
necessary as the basis of the opinion set forth below. In such examination we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as photostatic or certified copies and the
authenticity of the originals of such copies.
Based upon our examination, we are of the opinion that:
(i) the shares of Class A Common Stock (other than shares issuable
upon conversion of shares of Class C Common Stock) have been legally issued and
are fully paid and non-assessable; and
(ii) the shares of Class A Common Stock issuable upon conversion of
shares of Class C Common Stock, when issued as contemplated by the Registration
Statement, will be legally issued, fully paid and non-assessable.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement. This consent is not to be construed as and admission that we are a
person whose consent is required to be filed with the Registration Statement
under the provisions of the Securities Act.
Very truly yours,
/s/ Baker & McKenzie
<PAGE>
Triathlon Broadcasting Company
February 5, 1997
Page 2
HMB/WD/ND
<PAGE>
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Triathalon
Broadcasting Company (the "Company") for the registration of 389,808 of its
Class A Common Stock, par value $.01 per share, and to the incorporation by
reference therein of our report dated June 6, 1996 with respect to the
consolidated financial statements of the Company included in its Annual Report
on Form 10-KSB, as amended, for the year ended March 31, 1996, and our reports
dated (i) August 31, 1995 with respect to the financial statements of Marathon
Broadcasting Corporation, (ii) January 12, 1996 with respect to the financial
statements of 93.3, Inc. and Valley Broadcasting, Inc., (iii) November 17,
1995 with respect to the financial statements of Rock Steady, Inc., (iv)
December 29, 1995 with respect to the financial statements of KOLL-FM (a
division of Southern Starr Broadcasting Group, Inc.) and (v) February 20, 1996
with respect to the financial statements of KOLL-FM (a division of Southern
Starr of Arkansas, Inc.) and the combined financial statements of KAQQ-AM,
KISC-FM and KNFR-FM (divisions of Silverado Broadcasting Company, Inc.), all
included in the Company's Registration Statement on Form SB-2 dated March 4,
1996, filed with the Securities and Exchange Commission and incorporated
herein by reference.
/s/ Ernst & Young LLP
New York, New York
February 6, 1997
<PAGE>
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Triathlon Broadcasting Company, relating to the registration of 389,808 shares
of Class A Common Stock on Form S-3, of our reports dated February 21, 1996,
incorporated by reference in the Current Report of Triathlon Broadcasting
Company on Form 8-K dated December 9, 1996, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of the Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
February 6, 1997
<PAGE>
INDEPENDENT AUDITORS' CONSENT
------------------------------
The Boards of Directors
Southern Skies Corporation
Arkansas Skies Corporation
We consent to the use of our report incorporated by reference herein dated
January 25, 1996, except as to note 8, which is as of February 8, 1996,
with respect to the combined balance sheet of Southern Skies Corporation and
Arkansas Skies Corporation as of December 31, 1995 and the related combined
statements of operations and accumulated deficit and cash flows for the years
ended December 31, 1994 and 1995 and to reference to our Firm under the heading
"Experts" in the registration statement and prospectus.
/s/ KGMG Peat Marwick LLP
KPMG Peat Marwick LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3) of Triathlon Broadcasting Company
and related Prospectus, to be filed on or about February 6, 1997, and to the
incorporation by reference therein of our report dated April 16, 1996 (except
for Note 12 as to which the date is July 3, 1996), with respect to the
financial statements of KFAB-AM, KGOR-FM and Business Music Service
(Divisions of Henry Broadcasting Company) for the years ended December 31,
1995 and 1994.
/s/ Miller, Kaplan, Arase & Co.
- -------------------------------
MILLER, KAPLAN, ARASE & CO.
North Hollywood, California
February 6, 1997
<PAGE>
CONSENT
-------
We hereby consent to the use of our firm name in Triathlon Broadcasting
Company's Registration Statement on Form S-3 and in the Prospectus forming a
part of such Registration Statement to be filed with the Securities and Exchange
Commission on February 6, 1997. In giving this consent, we do not concede that
we come within the category of persons whose consent is required by Section 7 of
the Securities Act of 1933, as amended.
/s/ Fisher Wayland Cooper Leader & Zaragoza L.L.P.
----------------------------------------------
FISHER WAYLAND COOPER LEADER & ZARAGOZA L.L.P.
Dated: February 6, 1997
