<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-26530
TRIATHLON BROADCASTING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 33-0668235
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Symphony Towers
750 B Street, Suite 1920
San Diego, CA 92101
(Address of principal executive offices)
(619) 239-4242
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the registrant's Class A Common Stock, $.01
par value, Class B Common Stock, $.01 par value, Class C Common Stock, $.01 par
value, Class D Common Stock, $.01 par value, and Depositary Shares, each
representing a one-tenth interest in a share of 9% Mandatory Convertible
Preferred Stock, $.01 par value, outstanding as of August 10, 1998, was
3,175,645, 886,811, 31,000, 802,445, and 5,834,000, respectively.
<PAGE>
TRIATHLON BROADCASTING COMPANY
FORM 10-Q
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed consolidated balance sheets - June 30, 1998 (unaudited)
and December 31, 1997 3
Condensed consolidated statements of operations - Three and six months
ended June 30, 1998 and 1997 (unaudited) 4
Condensed consolidated statements of cash flows - Six months
ended June 30, 1998 and 1997 (unaudited) 5
Condensed consolidated statement of stockholders' equity - Six months
ended June 30, 1998 (unaudited) 6
Notes to condensed consolidated financial statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 20
Item 6 - Exhibits and Reports on Form 8-K 20
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997(1)
---- -------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 576 $ 1,771
Accounts receivable, net of allowance
for doubtful accounts 6,579 7,510
Notes receivable from officer 175 75
Other current assets 487 875
--------- ---------
Total current assets 7,817 10,231
Property and equipment - less accumulated
depreciation and amortization 9,688 10,280
Intangible assets, net of accumulated amortization 109,978 111,674
Notes receivable from officer 250 250
Long term note receivable 232 266
Other assets 40 40
--------- ---------
$ 128,005 $ 132,741
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 5,182 $ 6,056
Due to affiliates 220 40
Amended Credit Agreement 59,500 58,500
Current portion of other long term debt 943 890
Non-compete payable - current portion 150 150
--------- ---------
Total current liabilities 65,995 65,636
Other long term debt, less current portion -- 943
Non-compete payable, less current portion 406 481
Deferred compensation 157 155
Deferred taxes 7,630 7,630
Stockholders' equity
Preferred stock 12 12
Common stock 49 49
Paid-in-capital 58,482 61,236
Deferred compensation (295) (363)
Accumulated deficit (4,431) (3,038)
--------- ---------
Total stockholders' equity 53,817 57,896
--------- ---------
$ 128,005 $ 132,741
========= =========
</TABLE>
(1) The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
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TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 9,570 $ 7,953 $ 18,465 $ 13,614
Operating expenses
Station operating expenses 6,713 5,805 13,123 10,211
Depreciation and amortization 1,194 807 2,375 1,559
Corporate expenses 513 524 1,030 1,014
Deferred compensation 37 97 70 197
-------- -------- -------- --------
Total operating expenses 8,457 7,233 16,598 12,981
-------- -------- -------- --------
Operating income 1,113 720 1,867 633
Other expense (202) -- (202) --
Interest expense - net (1,452) (941) (3,058) (1,511)
-------- -------- -------- --------
Loss before extraordinary item (541) (221) (1,393) (878)
Extraordinary item - loss on early
extinguishment of debt -- (958) -- (958)
-------- -------- -------- --------
Net loss (541) (1,179) (1,393) (1,836)
Preferred stock dividend requirement (1,377) (1,377) (2,754) (2,754)
-------- -------- -------- --------
Net loss applicable to common stock $ (1,918) $ (2,556) $ (4,147) $ (4,590)
======== ======== ======== ========
Loss per basic common share:
Loss before extraordinary item $ (0.39) $ (0.32) $ (0.85) $ (0.74)
Extraordinary item $ -- $ (0.20) $ -- $ (0.20)
-------- -------- -------- --------
Net loss per basic common share $ (0.39) $ (0.52) $ (0.85) $ (0.94)
======== ======== ======== ========
Weighted average basic common
shares outstanding 4,893 4,881 4,893 4,871
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities $ 1,623 $ 1,102
Cash flow from investing activities
Acquisition of net assets of radio stations -- (63,708)
Sale of property and equipment 140 --
Capital expenditures (314) (277)
Due to affiliate -- 12
--------- ---------
Net cash used in investing activities (174) (63,973)
Cash flow from financing activities
Borrowings 1,000 108,279
Debt repayments (890) (40,050)
Financing costs -- (1,492)
Payment of preferred stock dividends (2,754) (2,754)
--------- ---------
Net cash (used in) provided by financing activities (2,644) 63,983
Net (decrease) increase in cash and cash equivalents (1,195) 1,112
Cash and cash equivalents at beginning of period 1,771 3,083
--------- ---------
Cash and cash equivalents at end of period $ 576 $ 4,195
========= =========
Supplemental cash flow information:
Interest paid $ 3,147 $ 1,495
Issuance of Class A Common Stock in connection
with acquisitions $ -- $ 487
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Series B Mandatory Total
Convertible Convertible Class A Class B Class C Class D Accumu- Stock-
Preferred Preferred Common Common Common Common Paid-In Deferred lated holders
Stock Stock Stock Stock Stock Stock Capital Compensation Deficit Equity
----- ----- ----- ----- ----- ----- ------- ------------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
January 1, 1998 $ 6 $ 6 $ 32 $ 2 $ 1 $ 14 $61,236 $(363) $(3,038) $57,896
Deferred compensation -- -- -- -- -- -- -- 68 -- 68
Dividends on Mandatory
Convertible Preferred
Stock ($0.472 per share) -- -- -- -- -- -- (2,754) -- -- (2,754)
Net loss -- -- -- -- -- -- -- -- (1,393) (1,393)
---- ---- ---- ---- ---- ---- ------- ------ ------- -------
Balances at June 30, 1998 $ 6 $ 6 $ 32 $ 2 $ 1 $ 14 $58,482 $ (295) $(4,431) $53,817
==== ==== ==== ==== ==== ==== ======= ====== ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1998
(unaudited)
NOTE 1 - MERGER WITH CAPSTAR; STOCK CONVERSION
On July 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Capstar Radio Broadcasting Partners, Inc.
("Capstar") and TBC Radio Acquisition Corp., a wholly-owned subsidiary of
Capstar ("Sub"), pursuant to which Sub would merge with and into the Company
and the Company would become a wholly-owned subsidiary of Capstar (the
"Merger"). Pursuant to the Merger Agreement, upon the consummation of the
Merger, each outstanding share of each class of Common Stock of the Company
shall be converted into the right to receive $13.00, subject to adjustment, and
each outstanding depositary share of the Company, representing one-tenth
interest in a share of 9% Mandatory Convertible Preferred Stock, par value $.01
per share, of the Company ("Depositary Shares"), shall be converted into the
right to receive $10.83, subject to adjustment.
As a condition precedent to the execution of the Merger Agreement,
Capstar, Sub, the Company and certain stockholders of the Company have entered
into stockholder agreements (the "Stockholder Agreements"), whereby each of
such stockholders have agreed to vote all shares of the capital stock of the
Company beneficially owned by each in favor of the Merger and against any
competing transaction. In order to facilitate the Merger and pursuant to the
Stockholder Agreements, on August 5, 1998, such stockholders converted an
aggregate of 641,921 shares of Class D Common Stock into Class B Common Stock
based on the existence of certain covenant defaults under the Amended Credit
Agreement at the time of the conversion. After giving effect to the conversion
of the Class D Common Stock into Class B Common Stock, such stockholders
collectively beneficially own the majority of the outstanding voting capital
stock of the Company.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including, but not
limited to, the approval by the stockholders of the Company of the transactions
contemplated thereby, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of all applicable consents to the Merger from the
Federal Communications Commission. The Merger is currently expected to be
consummated in the second quarter of 1999.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for an interim period
are not necessarily
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
June 30, 1998
(unaudited)
indicative of the results that may be expected for a full year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 filed with the Securities and Exchange Commission on March
31, 1998.
The accompanying unaudited condensed consolidated financial statements
include the accounts and transactions of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The Company's revenues vary throughout the year. As is typical in the
radio broadcasting industry, the Company's first quarter generally produces the
lowest revenues for the year and the fourth quarter generally produces the
highest revenues for the year. The Company's operating results in any period
may be affected by the incurrence of advertising and promotion expenses that do
not necessarily produce commensurate revenues until the impact of the
advertising and promotion is realized in future periods.
NOTE 3 - INDEBTEDNESS
On May 30, 1997, the Company entered into an Amended Credit Agreement
with AT&T Commercial Finance Corporation and Union Bank of California, N.A.
(collectively the "Lenders"), in an aggregate amount of $80 million. The
purpose of the Amended Credit Agreement was to refinance existing debt, finance
acquisitions and support working capital needs.
On May 28, 1998, the Company issued a secured promissory note to
Havelock Bank ("Havelock") in the amount of $1.725 million as security for an
irrevocable letter of credit, in the face amount of $1.725 million, issued by
Havelock to the University of Nebraska pursuant to the Broadcast Rights
Agreement between the University of Nebraska and the Company. As of June 30,
1998, there are no amounts outstanding to Havelock.
On June 30, 1998, the Company entered into the First Amendment to
Amended and Restated Loan Agreement ("First Amendment") with the Lenders. The
purpose of the First Amendment was to enable the Lenders to fund an acquisition
loan of $1.0 million which was used by the Company to refinance a portion of
the indebtedness related to the acquisition of Pinnacle Sports Productions, LLC
in 1997.
The Amended Credit Agreement contains covenants relating to financial
leverage and coverage ratios and restrictions on capital expenditures and other
payments. As of June 30, 1998, the Company did not meet certain financial
covenants under the Amended Credit Agreement. Management believes that it is
probable that it will not comply with certain covenants in its quarterly tests
during the remainder of 1998 and the Lenders have indicated that they are only
willing to grant waivers on a quarter by quarter basis. Accordingly, the entire
debt outstanding
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
June 30, 1998
(unaudited)
under the Amended Credit Agreement has been reclassified as a current liability
on its condensed consolidated balance sheet as of June 30, 1998. Based on
discussions with the Lenders, management believes that it will be able to
obtain the appropriate waivers in the future. However, in the event that such
waivers are not granted, management, after consultation with its regular
financing sources, believes that the Company would be able to refinance the
Amended Credit Agreement on acceptable terms. However, there can be no
assurance that the Company will be successful in obtaining the appropriate
waivers by the Lenders or that the Company will be able to refinance the
Amended Credit Agreement. The failure by the Company to obtain such waivers or
refinance the Amended Credit Agreement would have a material adverse affect on
the Company's financial condition and results of operations. See "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
NOTE 4 - DOJ INFORMATION REQUEST
Following the passage of the Telecommunications Act of 1996, the
Department of Justice, Antitrust Division ("DOJ") indicated its intention to
investigate certain existing industry practices that had not been previously
subject to anti-trust review. The Company has received information requests
regarding the joint selling agreement ("JSA") the Company had from September 1
to December 31, 1996 in the Wichita, Kansas market and the JSA the Company has
in the Colorado Springs, Colorado and Spokane, Washington markets (the "Citadel
JSA"). These information requests also cover another JSA which the Company has
in Spokane, Washington. The Citadel JSA provided approximately 15% of the
Company's net revenues during the six months ended June 30, 1998. In the event
the DOJ requires the termination or modification of the Citadel JSA, the
Company believes that it will not have a long-term material adverse effect on
the Company because the Company believes that it can provide more efficiently
the services currently performed by Citadel given the fee structure of the
Citadel JSA. However, the Company may suffer a short term disruption in sales
efforts caused by the transition. The Company has begun preparations for an
orderly transition in the event that the DOJ requires the termination of the
Citadel JSA.
NOTE 5 - LOSS PER BASIC COMMON SHARE
Loss per basic common share is based upon the net loss applicable to
basic common shares, which is net of preferred stock dividends and upon the
weighted average number of common shares outstanding during the period. The
conversion of securities convertible into common stock and the exercise of
stock options were not assumed in the calculation of loss per basic common
share because the effect would be antidilutive.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
June 30, 1998
(unaudited)
NOTE 6 - LEGAL PROCEEDING
On July 24, 1998, a lawsuit was commenced against the Company and its
directors in the Court of Chancery of the State of Delaware (New Castle
County). The plaintiff in the lawsuit is Herbert Behrens, who purports to have
filed the action on behalf of a class consisting of all holders of Depositary
Shares. The complaint alleges that the consideration to be paid as a result of
the Merger to the holders of the Depositary Shares is unfair and that the
individual defendants have breached their fiduciary duties. The complaint seeks
to have the action certified as a class action and seeks to enjoin the Merger,
or, in the alternative, seeks monetary damages. The Company intends to defend
the lawsuit vigorously.
NOTE 7 - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information" ("FAS 131"), which is
effective for years beginning after December 15, 1997. FAS 131 establishes
standards for the way that public business enterprises report selected
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosure about products and services, geographic areas and major
customers. FAS 131 is effective for financial statements for fiscal years
beginning after December 15, 1997 and therefore, the Company will adopt the new
requirements in 1998. Management has not yet completed its review of FAS 131.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the condensed
consolidated financial statements and related notes thereto. The following
discussion contains certain forward looking statements that involve risks and
uncertainties that could cause the Company's actual results to differ
materially from those discussed in such forward looking statements. Generally,
forward-looking statements include words or phrases such as "management
anticipates," "management believes," "the Company anticipates," "the Company
believes," "the Company expects" and words and phrases of similar impact, and
include but are not limited to statements regarding future operations and
business environment. The forward-looking statements are made pursuant to safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Factors that could cause or contribute to such differences include, but are not
limited to, risks and uncertainties relating to leverage, the ability to obtain
financing, the level and volatility of interest rates, integration of the
acquisitions completed during the year ended December 31, 1997, the ability of
the Company to achieve certain cost savings, the management of growth, the
introduction of new technology, changes in the regulatory environment, the
popularity of radio as a broadcasting and advertising medium, changing consumer
tastes, the effect of economic and market conditions, the impact of current or
pending legislation and regulation and other factors, including those discussed
in this document and in prior SEC filings, press releases and other public
filings of the Company. The Company undertakes no obligation to publicly
release the results of any revisions to these forward looking statements that
may be made to reflect any future events or circumstances.
RECENT DEVELOPMENT; MERGER
On July 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement"), with Capstar Radio Broadcasting Partners, Inc.
("Capstar") and TBC Radio Acquisition Corp., a wholly-owned subsidiary of
Capstar ("Sub"), pursuant to which Sub would merge with and into the Company
and the Company would become a wholly-owned subsidiary of Capstar (the
"Merger"). Pursuant to the Merger Agreement, upon the consummation of the
Merger, each outstanding share of each class of Common Stock of the Company
shall be converted into the right to receive $13.00, subject to adjustment, and
each outstanding depositary share of the Company, representing one-tenth
interest in a share of 9% Mandatory Convertible Preferred Stock, par value $.01
per share, of the Company ("Depositary Shares"), shall be converted into the
right to receive $10.83, subject to adjustment.
As a condition precedent to the execution of the Merger Agreement,
Capstar, Sub, the Company and certain stockholders of the Company have entered
into stockholder agreements (the "Stockholder Agreements"), whereby each of
such stockholders have agreed to vote all shares of the capital stock of the
Company beneficially owned by each in favor of the Merger and against any
competing transaction. In order to facilitate the Merger and pursuant to the
Stockholder Agreements, on August 5, 1998, such stockholders converted an
aggregate of 641,921 shares of Class D Common Stock into Class B Common Stock
based on the existence of certain covenant defaults under the Amended Credit
Agreement at the time of the conversion. After giving effect
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<PAGE>
to the conversion of the Class D Common Stock into Class B Common Stock, such
stockholders collectively beneficially own the majority of the outstanding
voting capital stock of the Company.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including, but not
limited to, the approval by the stockholders of the Company of the transactions
contemplated thereby, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of all applicable consents to the Merger from the
Federal Communications Commission. The Merger is currently expected to be
consummated in the second quarter of 1999. For additional information, see
"Item 5--Other Events," of the Company's Report on Form 8-K filed with the
Securities and Exchange Commission on July 31, 1998.
GENERAL
The Company owns and operates radio stations primarily in medium and
small markets in the Midwestern and Western United States. The Company
currently owns and operates, sells advertising on behalf of or provides
programming to 10 AM and 22 FM radio stations in six markets and owns Pinnacle
Sports Productions, LLC, a regional sports radio network (the "Sports Network")
as set forth in the following chart:
<TABLE>
<CAPTION>
AM FM
-- --
<S> <C> <C>
Omaha, Nebraska(1) 1 3
Spokane, Washington(2) 3 5
Wichita, Kansas 2 4
Colorado Springs, Colorado(3) 2 2
Lincoln, Nebraska(1) 0 4
Tri-Cities, Washington(4) 2 4
-- --
Total 10 22
</TABLE>
- --------------
(1) The Company owns the Sports Network operating in Nebraska in addition to
the stations in Omaha and Lincoln, Nebraska.
(2) Includes four stations for which Citadel Broadcasting Company sells
advertising pursuant to a JSA and one station that is not owned by the
Company but on which the Company sells advertising pursuant to a JSA.
(3) Consists of four stations owned by the Company for which Citadel
Broadcasting Company sells advertising pursuant to a JSA.
(4) Includes two stations not owned by the Company on which the Company
provides programming services and sells advertising pursuant to local
marketing agreements. The Tri-Cities, Washington market consists of the
cities of Richland, Kennewick and Pasco in the State of Washington.
The performance of a radio station group, such as the Company, is
customarily measured by its ability to generate Broadcast Cash Flow ("BCF")
which is net revenues less station operating expenses. Although BCF is not a
measure of performance calculated in accordance with generally accepted
accounting principles ("GAAP"), the Company believes that BCF is accepted by
the broadcasting industry as a generally recognized measure of performance and
is
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<PAGE>
used by analysts who report publicly on the performance of broadcasting
companies. Nevertheless, this measure should not be considered in isolation or
as a substitute for operating income, net income, net cash provided by
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with GAAP.
The primary source of the Company's revenues is the sale of
advertising time on its radio stations. The Company's most significant station
operating expenses are employee salaries and commissions, programming expenses
and advertising and promotional expenditures. The Company seeks to reduce
expenses at the stations by implementing cost controls, operating the stations
as groups in their respective markets and lowering overhead by combining and
centralizing administrative and financing functions of its stations.
The Company's revenues are primarily affected by the advertising rates
that its radio stations charge. The Company's advertising rates are in large
part based on a station's ability to attract audiences in the demographic
groups targeted by its advertisers, as measured principally by The Arbitron
Company (an independent rating service) on a quarterly basis. Because audience
ratings in local markets are crucial to a station's financial success, the
Company endeavors to develop strong listener loyalty. The Company seeks to
diversify the formats on its stations as a means to insulate it from the
effects of changes in the musical tastes of the public in any particular
format. The number of advertisements that can be broadcast without jeopardizing
audience levels (and the resulting ratings) is limited in part by the format of
a particular station.
The Company's stations strive to maximize revenue by constantly
managing the number of commercials available for sale and adjusting prices
based upon local market conditions. In the broadcasting industry, radio
stations often utilize trade (or barter) agreements which exchange advertising
time for goods or services (such as travel or lodging), instead of for cash.
The Company generates most of its revenue from local advertising, which is sold
primarily by a station's sales staff. During Fiscal Year 1997, approximately
81% of the Company's revenues (exclusive of Citadel JSA fees received) were
from local advertising. To generate national advertising sales, the Company
engages independent advertising sales representatives that specialize in
national sales for each of its stations.
The Company's revenues vary throughout the year. As is typical in the
radio broadcasting industry, the Company's first calendar quarter generally
produces the lowest revenues for the year, and the fourth calendar quarter
generally produces the highest revenues for the year. The Company's operating
results in any period may be affected by the incurrence of advertising and
promotion expenses that do not necessarily produce commensurate revenues until
the impact of the advertising and promotion is realized in future periods.
The radio broadcasting industry is highly competitive. The financial
results of each of the Company's stations are dependent to a significant degree
upon its audience ratings and its share of the overall advertising revenue
within the station's geographic market.
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<PAGE>
Following the passage of the Telecommunications Act of 1996, the
Department of Justice, Antitrust Division ("DOJ") indicated its intention to
investigate certain existing industry practices that had not been previously
subject to anti-trust review. The DOJ is investigating the Citadel JSA in
connection with the concentration of radio station ownership in the Colorado
Springs, Colorado and Spokane, Washington markets. In a recent case unrelated
to the Company, the DOJ has, for the first time, requested the termination of a
radio station JSA that, in the opinion of the DOJ, would have given a radio
station owner, together with its proposed acquisition of other radio stations
in the area, control over more than 60% of radio advertising revenue in the
area. The Citadel JSA provided approximately 15% of the Company's net revenues
during the six months ended June 30, 1998. In the event the DOJ requires the
termination or modification of the Citadel JSA, the Company believes that it
will not have a long-term material adverse effect on the Company because the
Company believes that it can provide more efficiently the services currently
performed by Citadel given the fee structure of the Citadel JSA. The Company,
however, may suffer a short term disruption in sales efforts caused by the
transition. The Company has begun preparations for an orderly transition in the
event that the DOJ requires the termination of the Citadel JSA.
RESULTS OF OPERATIONS
The Company's condensed consolidated financial statements are not
directly comparable from period to period due to acquisition and disposition
activity. For more information regarding dispositions and acquisitions, see
"Item 1 -- Business" of the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 filed with the Securities and Exchange Commission on
March 31, 1998.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Net revenues increased approximately $1.6 million or 20% to
approximately $9.6 million for the three months ended June 30, 1998 (the "1998
Quarter") from approximately $8.0 million for the three months ended June 30,
1997 (the "1997 Quarter") as a result of acquisitions consummated during the
1997 Quarter as well as growth at continuously owned and operated stations. On
a same station basis for the radio stations owned and operated as of June 30,
1998, net revenues increased by 7% to approximately $9.6 million for the 1998
Quarter from approximately $9.0 million for the 1997 Quarter. Despite the
growth in net revenues, the Company has been negatively impacted by changes in
direct competitive forces in certain markets resulting in increased
competition.
Station operating expenses increased by approximately $908,000 or 16%
to approximately $6.7 million for the 1998 Quarter from approximately $5.8
million for the 1997 Quarter, primarily due to the inclusion of expenses
related to the stations acquired during the 1997 Quarter. On a same station
basis for the radio stations owned and operated by the Company as of June 30,
1998, operating expenses for the 1998 Quarter increased by 1% to approximately
$6.7 million from approximately $6.6 million for the 1997 Quarter. The increase
in operating expenses related principally to a larger volume of business during
the 1998 Quarter reduced by the improved cost structure of stations acquired
during the 1997 Quarter.
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BCF increased by approximately $709,000 or 33% to approximately $2.9
million for the 1998 Quarter from approximately $2.1 million for the 1997
Quarter. BCF as a percentage of net revenues increased to 30% for the 1998
Quarter versus 27% for the 1997 Quarter principally due to increases in net
revenues exceeding increases in operating expenses. On a same station basis for
radio stations owned and operated by the Company as of June 30, 1998, BCF of
approximately $2.9 million for the 1998 Quarter represented an increase of
approximately 21% as compared to the BCF of approximately $2.4 million for the
1997 Quarter principally as a result of increased net revenues and improved
cost structure of the newly acquired stations.
Depreciation and amortization expense increased by 48% to
approximately $1.2 million for the 1998 Quarter versus approximately $807,000
for the 1997 Quarter. The increase was principally attributable to the
amortization of intangible assets resulting from acquisitions consummated
during the 1997 Quarter.
Corporate expenses consisting primarily of officer's salary, financial
consulting and professional fees and expenses, and corporate office expenses
were approximately $513,000 for the 1998 Quarter as compared to approximately
$524,000 for the 1997 Quarter. Included in corporate expenses are fees of
approximately $133,000 and approximately $142,000 for the 1998 Quarter and the
1997 Quarter, respectively, payable to SFX Entertainment, Inc. ("SFX
Entertainment"), an affiliate, for financial, legal and advisory services
rendered by The Sillerman Companies, an affiliate, under the Amended and
Restated Financial Consulting Agreement between the Company and SFX
Entertainment. The interests of SFX Broadcasting, Inc. ("SFX Broadcasting")
under that agreement were assigned to SFX Entertainment in connection with the
spin-off of SFX Entertainment from SFX Broadcasting in April 1998.
The Company recorded deferred compensation expense of approximately
$37,000 for the 1998 Quarter and approximately $97,000 for the 1997 Quarter.
This recurring expense, not currently, and in some cases never affecting cash
flow, is related to stock, stock options and stock appreciation rights granted
to officers, directors and advisors in prior periods.
Operating income (net revenues less total operating expenses) for the
1998 Quarter was approximately $1.1 million and approximately $720,000 for the
1997 Quarter. This increase results principally from the inclusion of
operations for stations acquired during the 1997 Quarter and larger increases
in net revenues than in operating expenses.
Other expenses for the 1998 Quarter include approximately $91,000 of
loss on the sale of property and equipment and approximately $111,000 of costs
related to the Merger.
Net interest expense for the 1998 Quarter was approximately $1.5
million as compared to approximately $941,000 for the 1997 Quarter. The net
increase in interest expense was principally attributable to the increased
borrowings to complete the acquisitions of radio stations during the 1997
Quarter.
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Loss before extraordinary item for the 1998 Quarter was approximately
$541,000 as compared to a loss of approximately $221,000 for the 1997 Quarter.
During the 1997 Quarter, the Company incurred an extraordinary loss in
connection with the write off of deferred financing costs of $958,000
associated with the early extinguishment of debt.
Net loss for the 1998 Quarter was approximately $541,000 as compared
to approximately $1.2 million for the 1997 Quarter. Net loss applicable to
common stock for the 1998 Quarter was approximately $1.9 million as compared to
approximately $2.6 million for the 1997 Quarter. The decreased net loss and net
loss applicable to common stock resulted from the factors described above.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net revenues increased approximately $4.9 million or 36% to
approximately $18.5 million for the six months ended June 30, 1998 (the "1998
Period") from approximately $13.6 million for the six months ended June 30,
1997 (the "1997 Period") as a result of acquisitions consummated during the
1997 Period as well as growth at continuously owned and operated stations. On a
same station basis for the radio stations owned and operated as of June 30,
1998, net revenues increased by 8% to approximately $18.5 million for the 1998
Period from approximately $17.1 million for the 1997 Period. Despite the growth
in net revenues, the Company has continued to be impacted by disruptions in
sales efforts as a result of restructuring of sales management and turnover of
sales staff of acquisitions consummated during the prior fiscal year as well as
changes in direct competitive forces in selected markets resulting in increased
competition.
Station operating expenses increased by approximately $2.9 million or
29% to approximately $13.1 million for the 1998 Period from approximately $10.2
million for the 1997 Period primarily due to the inclusion of expenses related
to the stations acquired during the 1997 Period. On a same station basis for
the radio stations owned and operated by the Company as of June 30, 1998,
operating expenses for the 1998 Period increased by 2% to approximately $13.1
million from approximately $12.8 million for the 1997 Period. The increase in
operating expenses related principally to a larger volume of business during
the 1998 Period reduced by the improved cost structure of stations acquired
during the 1997 Period and continuing implementation of the Company's cost
reduction programs and efficiencies of combined operations.
BCF increased by approximately $1.9 million or 57% to approximately
$5.3 million for the 1998 Period from approximately $3.4 million for the 1997
Period. BCF as a percentage of net revenues increased to 29% for the 1998
Period versus 25% for the 1997 Period principally due to increases in net
revenues exceeding increases in operating expenses. On a same station basis for
radio stations owned and operated by the Company as of June 30, 1998, BCF of
approximately $5.3 million for the 1998 Period represented an increase of
approximately 23% as compared to the BCF of approximately $4.3 million for the
1997 Period principally as a result of increased net revenues, improved cost
structure of the newly acquired stations and the effects of the Company's cost
reduction programs.
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Depreciation and amortization expense increased by 52% to
approximately $2.4 million for the 1998 Period versus approximately $1.6
million for the 1997 Period. The increase was principally attributable to the
amortization of intangible assets resulting from acquisitions consummated
during the 1997 Period.
Corporate expenses consisting primarily of officer's salary, financial
consulting and professional fees and expenses, and corporate office expenses
were approximately $1.0 million for both the 1998 Period and the 1997 Period.
Included in corporate expenses are fees of approximately $265,000 and
approximately $283,000 for the 1998 Period and the 1997 Period, respectively,
paid and or payable to SFX Entertainment.
The Company recorded deferred compensation expense of approximately
$70,000 for the 1998 Period and approximately $197,000 for the 1997 Period.
This recurring expense, not currently, and in some cases never affecting cash
flow, is related to stock, stock options and stock appreciation rights granted
to officers, directors and advisors in prior periods.
Operating income (net revenues less total operating expenses) for the
1998 Period was approximately $1.9 million as compared to approximately
$633,000 for the 1997 Period. This increase results principally from the
inclusion of six full months of operations in the 1998 Period for stations
acquired during the 1997 Period.
Other expenses for the 1998 Period include approximately $91,000 of
loss on the sale of property and equipment and approximately $111,000 of costs
related to the Merger.
Net interest expense for the 1998 Period was approximately $3.1
million as compared to approximately $1.5 million for the 1997 Period. The net
increase in interest expense was principally attributable to the increased
borrowings to complete the acquisitions of radio stations acquired during the
1997 Period.
Loss before extraordinary item for the 1998 Period was approximately
$1.4 million as compared to a loss of approximately $878,000 for the 1997
Period. During the 1997 Period, the Company incurred an extraordinary loss in
connection with the write off of deferred financing costs of $958,000
associated with the early extinguishment of debt.
Net loss for the 1998 Period was approximately $1.4 million as
compared to approximately $1.8 million for the 1997 Period. Net loss applicable
to common stock for the 1998 Period was approximately $4.1 million as compared
to approximately $4.6 million for the 1997 Period. The decreased net loss and
net loss applicable to common stock resulted from the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's principal sources of funds have been
the proceeds from the Company's initial public offering on September 5, 1995
(the "Initial Public Offering") of approximately $12.9 million, net proceeds of
approximately $56.4 million from the sale of
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preferred stock (the "Preferred Stock Offering") and borrowings of $78.5
million under the Amended Credit Agreement, which borrowings were used to
refinance the Company's borrowings of $40 million under the Company's loan
agreement with AT&T Commercial Finance Corporation, finance acquisitions and
support working capital needs. The cost of the acquisitions completed through
June 30, 1998 of approximately $130.9 million were financed with the proceeds
from the Initial Public Offering, the Preferred Stock Offering and the
borrowings mentioned above. In October, 1997, the Company reduced its
outstanding indebtedness to the Lenders by $20.0 million with the proceeds of
the disposition of radio stations KOLL FM, KSSN FM and KMVK FM, each operating
in the Little Rock, Arkansas market. In June 1998 the Company refinanced a
portion of the indebtedness relating to the 1997 acquisition of Pinnacle Sports
Productions, LLC.
Cash flow provided from operating activities for the 1998 Period was
approximately $1.6 million as compared to approximately $1.1 million for the
1997 Period. The increase in cash flow from operating activities was
principally due to growth in net revenues as compared to the 1997 Period. Cash
used in investing activities was approximately $174,000 during the 1998 Period
and approximately $64.0 million for the 1997 Period. The decrease related to
the absence of radio station acquisition activity during the 1998 Period. Cash
flow used for financing activities of approximately $2.6 million during the
1998 Period related primarily to the payment of dividends to the preferred
stockholders while the cash flow provided from financing activities during the
1997 Period of approximately $64.0 million principally related to additional
borrowings.
On June 30, 1998, the Company entered into the First Amendment to
Amended and Restated Loan Agreement ("First Amendment") with the Lenders. The
purpose of the First Amendment was to, among other things, enable the Lenders
to fund an acquisition loan of $1.0 million (the "Acquisition Loan") under the
$20.0 million acquisition loan facility of the Amended Credit Agreement. The
Acquisition Loan was used by the Company to refinance a portion of the
indebtedness related to the acquisition of Pinnacle Sports Productions, LLC in
1997. The Acquisition Loan is a term loan bearing interest at LIBOR + 3.50% (or
the alternative base rate + 2.50%). The principal balance of the Acquisition
Loan must be reduced by $6,250 per year (paid on a quarterly basis) until the
final maturity of July 1, 2004.
The Amended Credit Agreement contains covenants relating to financial
leverage and coverage ratios, and restrictions on capital expenditures and
other payments. Additionally, the Merger Agreement places certain restrictions
on the conduct of business by the Company, including a restriction on the
incurrence of indebtedness and the making of capital expenditures. As of June
30, 1998, the Company did not meet certain financial covenants under the
Amended Credit Agreement. Management believes that it is probable that it will
not comply with certain covenants in its quarterly tests during the remainder
of 1998 and the Lenders have indicated that they are only willing to grant
waivers on a quarter by quarter basis. Accordingly, the entire debt outstanding
under the Amended Credit Agreement has been reclassified as a current liability
on its condensed consolidated balance sheet as of June 30, 1998. Based on
discussions with the Lenders, management believes that it will be able to
obtain the appropriate waivers in the future. However, in the event that such
waivers are not granted, management, after consultation with its regular
financing sources, believes that the Company would be able to refinance the
Amended
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Credit Agreement on acceptable terms. However, there can be no assurance that
the Company will be successful in obtaining the appropriate waivers by the
Lenders or that the Company will be able to refinance the Amended Credit
Agreement. The failure by the Company to obtain such waivers or refinance the
Amended Credit Agreement would have a material adverse affect on the Company's
financial condition and results of operations.
For the remainder of 1998, the Company expects its capital needs,
including interest expense, dividends, corporate expenses, capital expenditures
and other commitments, to be approximately $8.0 million. It is anticipated the
Company will be able to meet these obligations for the remainder of 1998 from
cash on hand, cash provided from operations which assumes a substantial
improvement in the operating results of the Company's radio stations and
borrowing which may be available under the Amended Credit Agreement or other
sources. The Company anticipates that future debt service, dividends, and other
commitments payable after 1998 will be met from cash on hand and cash provided
from operations, which assumes a substantial improvement in the operating
results of the Company's radio stations. There can be no assurance that the
Company will be able to make these improvements which are subject to prevailing
economic conditions and to legal, financial, business, regulatory, industry and
other factors, many of which are beyond the Company's control.
YEAR 2000
It is possible that the Company's currently installed computer
systems, software products or other business systems will not always accept
input of, store, manipulate or output dates in the year 2000 or thereafter
without error or interruption (the "Year 2000 Issue"). The Company is
conducting a review of its computer systems to attempt to identify ways in
which its systems could be affected by problems in correctly processing date
information. At this time, the Company does not expect the Year 2000 Issue to
have a material adverse affect on its operations. However, there can be no
assurance that the Company will identify all date-handling problems in its
computer systems in advance of their occurrence or that the Company will be
able to successfully remedy problems that are discovered. The expenses of the
Company's efforts to identify and address such problems, or the expenses or
liabilities to which the Company may become subject as a result of such
problems, though unlikely, could have a material adverse effect on the
Company's business, results or operations and financial condition.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 24, 1998, a lawsuit was commenced against the Company and its
directors in the Court of Chancery of the State of Delaware (New Castle
County). The plaintiff in the lawsuit is Herbert Behrens, who purports to have
filed the action on behalf of a class consisting of all holders of Depositary
Shares. The complaint alleges that the consideration to be paid as a result of
the Merger to the holders of the Depositary Shares is unfair and that the
individual defendants have breached their fiduciary duties. The complaint seeks
to have the action certified as a class action and seeks to enjoin the Merger,
or, in the alternative, seeks monetary damages. The Company intends to defend
the lawsuit vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
2.1+ Agreement and Plan of Merger, dated as of July 23, 1998, among
Capstar Radio Broadcasting Partners, Inc., TBC Radio Acquisition
Corp. and Triathlon Broadcasting Company.
10.68+ Stockholder Agreement, dated as of July 23, 1998, among Robert
F.X. Sillerman, Capstar Radio Broadcasting Partners, Inc., TBC
Radio Acquisition Corp. and Triathlon Broadcasting Company.
10.69+ Stockholder Agreement, dated as of July 23, 1998, among Tomorrow
Foundation, Capstar Radio Broadcasting Partners, Inc., TBC Radio
Acquisition Corp. and Triathlon Broadcasting Company.
10.70+ Stockholder Agreement, dated as of July 23, 1998, among Norman
Feuer, Capstar Radio Broadcasting Partners, Inc., TBC Radio
Acquisition Corp. and Triathlon Broadcasting Company.
10.71+ Stockholder Agreement, dated as of July 23, 1998, among Howard
Tytel, Capstar Radio Broadcasting Partners, Inc., TBC Radio
Acquisition Corp. and Triathlon Broadcasting Company.
10.72 First Amendment to the Amended and Restated Loan Agreement dated
June 30, 1998 among AT&T Commercial Finance Corporation, Union
Bank of California, N.A., City National Bank and The CIT
Group/Equipment Financing, Inc. and Triathlon Broadcasting of
Wichita, Inc., Triathlon Broadcasting of Lincoln, Inc., Triathlon
Broadcasting of Omaha, Inc., Triathlon Broadcasting of Spokane,
Inc., Triathlon Broadcasting of Tri-Cities, Inc., Triathlon
Broadcasting of Colorado Springs, Inc., and Triathlon
Broadcasting of Little Rock, Inc.
10.73 First Amendment to Stockholder Agreement, dated as of August 5,
1998, among Robert F.X. Sillerman, Capstar Radio Broadcasting
Partners, Inc., TBC Radio Acquisition Corp. and Triathlon
Broadcasting Company.
10.74 First Amendment to Stockholder Agreement, dated as of August 5,
1998, among Norman Feuer, Capstar Radio Broadcasting Partners,
Inc., TBC Radio Acquisition Corp. and Triathlon Broadcasting
Company.
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<PAGE>
10.75 First Amendment to Stockholder Agreement, dated as of August 5,
1998, among Howard Tytel, Capstar Radio Broadcasting Partners,
Inc., TBC Radio Acquisition Corp. and Triathlon Broadcasting
Company.
27 Financial Data Schedule
+ Incorporated by reference to the Registrant's Report on Form 8-K filed
with the Securities and Exchange Commission on July 31, 1998.
(b) Reports on Form 8-K
Form 8-K filed with Securities and Exchange Commission on July 31,
1998 reporting under Item 5 the Merger Agreement entered into by the
Company and a lawsuit which was commenced against the Company and its
directors alleging that the consideration to be paid as a result of the
Merger is unfair to the holders of the Depositary Shares and that the
individual defendants have breached their fiduciary duties.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TRIATHLON BROADCASTING COMPANY
By: /s/ Norman Feuer
---------------------------
Chief Executive Officer
By: /s/ William G. Thompson
---------------------------
Chief Financial Officer
Dated: August 14, 1998
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FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT is made as of the 30th day of June, 1998, by
and among
TRIATHLON BROADCASTING OF WICHITA, INC., a Delaware corporation
("TBW"), TRIATHLON BROADCASTING OF LINCOLN, INC., a Delaware corporation
("TBL"), TRIATHLON BROADCASTING OF OMAHA, INC., a Delaware corporation ("TBO"),
TRIATHLON BROADCASTING OF SPOKANE, INC., a Delaware corporation ("TBS"),
TRIATHLON BROADCASTING OF TRI-CITIES, INC., a Delaware corporation ("TBTC"),
TRIATHLON BROADCASTING OF COLORADO SPRINGS, INC., a Delaware corporation
("TBCS"), and TRIATHLON BROADCASTING OF LITTLE ROCK, INC., a Delaware
corporation ("TBLR") (TBW, TBL, TBO, TBS, TBTC, TBCS and TBLR are sometimes
hereinafter referred to individually as a "BORROWER" and collectively as the
"BORROWERS");
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, UNION
BANK OF CALIFORNIA, N.A., a national banking association, CITY NATIONAL BANK, a
national banking association, and THE CIT GROUP/EQUIPMENT FINANCING, INC., a
New York corporation (collectively, the "LENDERS" and each individually, a
"LENDER");
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as
agent for the Lenders (in such capacity, the "AGENT") and in its capacity as
Administrative Agent, Documentation Agent and Managing Agent; and
UNION BANK OF CALIFORNIA, N.A., a national banking association, as
co-agent for the Lenders (in such capacity, the "CO-AGENT") and in its capacity
as Syndication Agent, Managing Agent, and Designated Reviewing Bank.
W I T N E S S E T H T H A T:
WHEREAS, the Borrowers and the Lenders, Agent and Co-Agent are
parties to a certain Amended and Restated Loan Agreement dated as of May 30,
1997 (the "LOAN AGREEMENT"); and
WHEREAS, the Borrowers have applied to the Lenders for certain
consents, amendments and waivers in respect to the Loan Agreement; and
WHEREAS, the Lenders are willing to enter into such amendments and
give such consents and waivers conditional upon the Borrowers' execution and
delivery of this Amendment and satisfaction of the other conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE>
1. DEFINITIONS.
(A) Unless otherwise defined herein, all capitalized terms used in
this Amendment shall have the same meanings given to such terms in the Loan
Agreement.
(B) The definitions of "Companies" appearing in Article I of the
Loan Agreement is hereby amended to read in its entirety as follows:
"COMPANIES: (a) the Borrowers, (b) the License
Subsidiaries, and (c) (i) during the period May 30, 1997, through
March 31, 1998, and (ii) from and after the date that (A) Pinnacle
Sports has paid in full all of its Indebtedness to Havelock Bank
and (B) the Agent has received UCC lien searches and other evidence
satisfactory to the Agent that all security interests granted by
Pinnacle Sports, TSPN and TSPI to Havelock Bank have been
terminated, Pinnacle Sports, TSPN and TSPI."
2. ARTICLE V AMENDMENTS.
(A) Sections 5.03, 5.04 and 5.05 of the Loan Agreement are hereby
amended to read in their entirety as follows:
"SECTION 5.03. FIXED CHARGE COVERAGE RATIO; WORKING
CAPITAL RATIO.
(a) Maintain on a combined basis at all times a ratio
of (i) the Companies' combined Broadcast Cash Flow plus available
cash on hand (in an amount not to exceed $2,000,000.00, exclusive
of any Cash Collateral Deposits) for the preceding twelve (12)
months to (iii) the Companies' Fixed Charges during such period of
not less than 1.05:1.00.
(b) Maintain on a combined basis at all times a ratio
of the Borrowers' combined Current Assets to their combined Current
Liabilities of not less than 1.50:1.00.
"SECTION 5.04. CAPITAL EXPENDITURES.
Not make or incur Capital Expenditures without the
prior approval of the Majority Lenders in excess of (a) One Million
Dollars ($1,000,000.00) in the aggregate on a combined basis as to
all Borrowers during each of Fiscal Years ending December 31, 1997
and December 31, 1998, or (b) Seven Hundred Fifty Thousand Dollars
($750,000) in the aggregate on a combined basis as to all
Borrowers, in each Fiscal Year commencing with Fiscal Year ending
December 31, 1999; provided, however, that Capital Expenditures
made by TBO during the period January 1, 1998, through December 31,
1999, in an aggregate amount not to exceed Six Hundred Fifty
Thousand Dollars ($650,000.00) solely for the purpose of completing
an upgrade of KTNP-FM's broadcast signal from a Class A to a Class
C 3 (including, without limitation, any sums paid during such
period to "buy down" the signal from Saga Communications in
adjacent areas), shall be excluded from the foregoing limitation.
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<PAGE>
"SECTION 5.05. CORPORATE OVERHEAD.
(a) Be permitted to make and may make payments in
respect of Corporate Overhead (exclusive of dividend payments) only
so long as
(i) (y) at the time of each such payment, after
giving effect thereto, neither an Event of Default nor an Unmatured
Event of Default exists or will occur as a result of such payment,
by reason of a default in the performance of the Borrowers'
obligations under SECTION 5.01, 5.02 or 5.03 hereof or otherwise,
and
(z) the aggregate amount of all such Corporate
Overhead payments (exclusive of dividends to the Parent to the
extent permitted by SECTION 5.06, but including, without
limitation, the payments described in SECTION 5.05(b)) shall not
exceed (A) Two Million Dollars ($2,000,000.00) during Fiscal Year
ending December 31, 1997, (B) One Million Four Hundred Thousand
Dollars ($1,400,000) during Fiscal Year ending December 31, 1998
(although Borrowers may accrue, but not pay, during such Fiscal
Year, additional Corporate Overhead in an amount not to exceed the
difference between Two Million Dollars ($2,000,000) and the amount
of Corporate Overhead actually paid during such Fiscal Year, which
accrued additional Corporate Overhead may be paid on or after the
date the Agent receives the Borrowers' audited financial statements
for Fiscal Year 1998 (confirming the absence of any Event of
Default or Unmatured Event of Default as of December 31, 1998) so
long as at the time of each such payment, after giving effect
thereto and to all other Corporate Overhead payments made
contemporaneously therewith, neither an Event of Default nor an
Unmatured Event of Default exists or will occur as a result of such
payment), (C) Two Million One Hundred Thousand Dollars ($2,100,000)
during Fiscal Year ending December 31, 1999, or (D) in each
subsequent Fiscal Year, one hundred five percent (105%) of the
maximum amount permitted to be paid under this CLAUSE (Z) during
the immediately preceding Fiscal Year; or
(ii) if at the time of such payment, after giving
effect thereto, the conditions set forth in the preceding paragraph
(i) are not satisfied, the aggregate amount of all Corporate
Overhead payments exclusive of dividends to the Parent to the
extent permitted by SECTION 5.06 but including, without limitation,
the payments described in SECTION 5.05(b)) shall not exceed Seven
Hundred Fifty Thousand Dollars ($750,000.00) during Fiscal Year
ending December 31, 1997, or in each subsequent Fiscal Year, one
hundred five percent (105%) of the maximum amount permitted to be
paid under this paragraph (ii) during the preceding Fiscal Year.
Corporate Overhead payments in respect of dividends shall be
subject to SECTION 5.06(b)).
(b) Subject in all respects to the SCMC Subordination
Agreements, not pay consulting fees or other sums to SCMC or SFX
Broadcasting or any other Person in any Fiscal Year in excess of
(i) $500,000 in the aggregate as to the Borrowers and the Parent,
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<PAGE>
plus (ii) any reasonable investment banking services fees earned by
SCMC or SFX Broadcasting pursuant to Section 5 of the Amended and
Restated Financial Consulting Agreement dated February 1, 1996, as
amended by letter dated February 21, 1996, the Termination and
Assignment Agreement dated April 15, 1996; provided that no such
payment pursuant to this SECTION 5.05(b)) shall be made to the
extent any of the respective applicable dollar limitations set
forth in SECTION 5.05(a)) would be exceeded."
(B) Article V of the Loan Agreement is hereby further amended by
adding thereto a new Section 5.08 which shall read in its entirety as follows:
"SECTION 5.08. HAVELOCK BANK DEBT.
(a) Not permit the aggregate principal amount of all
Indebtedness of Pinnacle Sports to Havelock Bank to exceed
$1,725,000; (b) not incur Indebtedness to Havelock Bank other than
Pinnacle Sports' reimbursement obligations arising from the letter
of credit issued or to be issued by Havelock Bank to the University
of Nebraska for the account of Pinnacle Sports; and (c) not grant
any collateral to Havelock Bank as security therefor except as
permitted pursuant to the terms of an Intercreditor Agreement
executed by Havelock Bank and acceptable to the Majority Lenders."
3. WAIVERS OF DEFAULTS.
(A) The Lenders hereby waive as of December 31, 1997, all Events of
Default under the Loan Agreement arising by reason of the Borrowers' failure to
satisfy the covenants set forth in Section 5.03(a) and Section 5.05(a) of the
Loan Agreement for the Fiscal Quarter and Fiscal Year ending December 31, 1997.
(B) The Lenders hereby waive as of March 31, 1998, all Events of
Default under the Loan Agreement arising by reason of the Borrowers' failure to
satisfy the covenants set forth in Section 5.03(a) and Section 5.03(b) of the
Loan Agreement for the Fiscal Quarter ending March 31, 1998.
(C) The waivers set forth in this Section 3 are expressly limited
to the covenant defaults and time periods set forth in this Section 3, and no
waiver of any other or further Events of Default under the Loan Agreement is
granted hereby.
4. ARTICLE VIII AMENDMENT.
Paragraph (v) of Article VIII of the Loan Agreement is hereby
amended to read in its entirety as follows:
"(v) failure by Pinnacle Sports (i) to cause the
cancellation on or before October 31, 1998, of the Havelock Bank
letter of credit issued to the University of Nebraska, or (ii) to
pay in full on or before October 31, 1998, all of its Indebtedness
to
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<PAGE>
Havelock Bank and to obtain releases of all liens in favor of
Havelock Bank securing such Indebtedness; or. . ."
5. ARTICLE XIII AMENDMENTS.
The Notice provisions applicable to the Agent and to AT&T-CFC set
forth in the Loan Agreement and in all Security Documents are hereby amended to
read as follows:
AT&T COMMERCIAL FINANCE CORPORATION
c/o Newcourt Capital Corporation
44 Whippany Road
Morristown, New Jersey 07962
Attention: Michael V. Monahan, Vice President
with a copy (which shall not constitute notice) to:
AT&T COMMERCIAL FINANCE CORPORATION
c/o Newcourt Capital Corporation
44 Whippany Road
Morristown, New Jersey 07962
Attention: Corporate Counsel
and with a copy (which shall not constitute notice) to:
Andrew J. Chlebus, Esq.
Edwards & Angell, LLP
One BankBoston Plaza
Providence, Rhode Island 02903.
6. ACQUISITION LOANS.
The Borrowers previously applied to the Lenders for an Acquisition
Loan to TBL and TBO in the principal amount of up to $1,000,000 to enable TBL
and TBO to fund a loan in an identical amount to Triathlon Sports Programming,
Inc., a Delaware corporation ("SPORTS") and TSPN, Inc., a Delaware corporation
("TSPN"), to enable Sports and TSPN to make payments to Paul R. Aaron ("AARON")
and Dale M. Jensen ("JENSEN") in the aggregate amount of $1,000,000 under the
Promissory Note and Guaranty agreements dated May 15, 1997. AT&T-CFC is
willing, subject to the satisfaction of conditions set forth in Article III of
the Loan Agreement and the execution of documentation by the Borrowers, the
Parent, Sports and TSPN satisfactory to AT&T-CFC in form and substance
(including, without limitation, the execution by Sports and TSPN of an
intercompany note to TBO and TBL which shall be pledged to the Lenders and the
Agent), to make such Acquisition Loan. On or about May 15, 1998, and prior to
the date of execution and delivery of this First Amendment by the parties
hereto, TBO and TBL funded an intercompany loan to Sports and TSPN in the
aggregate amount of $1,000,000 to enable Sports and TSPN to make their
scheduled payments to Aaron and Jensen when due on or about May 15,
-5-
<PAGE>
1998, in such aggregate amount. The Lenders (i) hereby consent to the funding
of an Acquisition Loan by AT&T-CFC to TBO and TBL in the amount of $1,000,000,
and the intercompany loan by TBO and TBL to Sports and TSPN for the
above-described purposes, (ii) hereby waive, solely for the purposes of
permitting the transactions described in this Section 6, the provisions of
Section 5.07 of the Loan Agreement which would otherwise prohibit payments to
Aaron and Jensen other than from Excess Cash Flow as provided in said Section
5.07, and (iii) hereby waive as of the date hereof any Event of Default under
the Loan Agreement which arose on or about May 15, 1998, by reason of the
intercompany loan of $1,000,000 made on or about that date by TBO and TBL to
Sports and TSPN and the payment of $1,000,000 made on or about that date by
Sports, TSPN, TBO and TBL to Aaron and Jensen from a source other than Excess
Cash Flow as required by said Section 5.07. Such Acquisition Loan shall be
entitled to the benefits of all Security Documents, including, without
limitation, the Amended and Restated Guaranty and Security Agreements of all
Borrowers and the Guarantees of the Guarantors, in each case to the same extent
as if such Acquisition Loan had been made to consummate a Permitted
Acquisition.
7. DISPOSITION OF ASSETS; COMPLETION OF ENVIRONMENTAL MATTERS.
(A) The Lenders hereby consent to (i) the sale by TBS of its KEYF
AM/FM real estate described on Exhibit A attached hereto in accordance with
Section 2.05(c)(iii) of the Loan Agreement, which shall constitute a permitted
disposition pursuant to Section 7.03 of the Loan Agreement, (ii) consolidation
of the studios of KEYF with the studios utilized by KKZX/KUDY, and (iii) the
transmission of the KEYF-AM signal from the KUDY tower site.
(B) The Lenders and the Agent hereby extend to July 31, 1998, the
deadline for completion of any remaining environmental actions required to be
undertaken by the Borrowers pursuant to Section 6.15 of, and Schedule 6.15 to,
the Loan Agreement.
8. AMENDED SCHEDULES.
Schedules 4.02, 4.13, 4.14, 4.15, 4.21 and 7.01 to the Loan
Agreement are hereby amended to read in their entirety in the forms of Exhibits
B, C, D, E, F and G, respectively, attached hereto and made a part hereof.
9. NO FURTHER AMENDMENTS.
Except for the amendments set forth above, the text of the Loan
Agreement and all other Transaction Documents shall remain unchanged and in
full force and effect. No waiver by the Lenders under the Loan Agreement or any
other Transaction Document is granted or intended except as expressly set forth
herein, and the Lenders expressly reserve the right to require strict
compliance with the terms of the Loan Agreement and the other Transaction
Documents in all respects. The amendments agreed to herein, the default waivers
set forth in Section 3 hereof and the waivers set forth in Section 6 hereof
shall not constitute either a modification of the Loan Agreement or a course of
dealing with the Lenders at variance with the Loan Agreement such as to require
further notice by the Lenders or the Agent to require strict compliance with
the terms of the Loan Agreement and the other Transaction Documents in the
future.
-6-
<PAGE>
10. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
Each Borrower hereby represents and warrants to the Lenders and the
Agent that:
(a) Each representation and warranty set forth in Article IV of the
Loan Agreement and in each Security Document is hereby restated and affirmed as
true and correct as of the date hereof, and that on and as of the date hereof
(except as hereinafter set forth), there exists neither an Event of Default nor
an Unmatured Event of Default under the Loan Agreement;
(b) The Borrowers have the requisite power and authority to enter
into this Amendment, and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by them;
(c) This Amendment has been duly authorized (by all necessary
corporate action and otherwise), and validly executed and delivered by one or
more officers of the Borrowers, and this Amendment constitutes the legal, valid
and binding obligation of the Borrowers enforceable against them in accordance
with its terms; and
(d) The execution and delivery of this Amendment and the Borrowers'
performance hereunder do not and will not require the consent or approval of
any governmental authority, nor be in contravention of or in conflict with the
Borrowers' Articles of Incorporation or By-Laws, or the indenture, instrument,
agreement, or undertaking, to which any Borrower or any Borrower's assets or
properties are or may become bound.
(e) The only Events of Default which occurred during Fiscal Year
1997 consisted of:
(i) a default under Section 5.03(a) of the Loan
Agreement by reason of the Companies' maintaining for such Fiscal Year a Fixed
Charge Coverage Ratio of 1.00:1.00; and
(ii) a default under Section 5.05(a) of the Loan
Agreement by reason of the Companies' payment of aggregate Corporate Overhead
in the amount of $2,068,085.
(f) The only Events of Default which occurred during the Fiscal
Quarter ending March 31, 1998, consisted of:
(i) a default under Section 5.03(a) of the Loan
Agreement by reason of the Companies' maintaining for the twelve (12) months
ending March 31, 1998, a Fixed Charge Coverage Ratio of 0.96:1.00; and
(ii) a default under Section 5.03(b) of the Loan
Agreement (by reason of the Accountants reclassifying the long-term portion of
the Borrowers' Senior Debt as current debt due to the Events of Default
described in paragraph (e) of this Section 10) and the Borrowers therefore
being deemed to have a Working Capital Ratio of 0.12:1.00 for the twelve (12)
months ending March 31, 1998. If the Accountants had not reclassified such
long-term Senior Debt as
-7-
<PAGE>
current, the Borrowers' ratio for the purposes of Section 5.03(b) would have
been 1.56:1.00 as of March 31, 1998.
11. BORROWERS' FURTHER AGREEMENTS. The Borrowers hereby acknowledge
and confirm that they do not have any grounds and hereby agree not to challenge
(or to allege or to pursue any matter, cause or claim arising under or with
respect to, the Notes, the Loan Agreement, the Security Documents or any of the
other Transaction Documents, any document, instrument or agreement relating to
any of the foregoing, any of the Indebtedness, covenants, promises, agreements,
obligations, duties or liabilities thereunder, or the status of any thereof as
legal, valid and binding obligations enforceable in accordance with their
respective terms; and they do not possess (and hereby forever waive, remise,
release, discharge and hold harmless the Agent, the Co-Agent, the Lenders and
their respective parents, subsidiaries, Affiliates, stockholders, directors,
officers, employees, attorneys, agents and representatives and each of their
respective heirs, executors, administrators, successors and assigns
[collectively, the "NOTEHOLDER PARTIES"] from and against, and agree not to
allege or pursue) any action, cause of action, suit, debt, claim, counterclaim,
cross-claim, demand, defense, offset, opposition, demand and other right of
action whatsoever, whether in law, equity or otherwise (which they, all those
claiming by, through or under them, or their successors or assigns, have or may
have) against the Noteholder Parties, or any of them, prior to or as of the
date of this Amendment for, upon, or by reason of, any matter, cause or thing
whatsoever, arising out of, or relating to, the Notes, the Loan Agreement, the
Security Documents, the Transaction Documents or other any document, instrument
or agreement relating to any of the foregoing (including, without limitation,
any payment, performance, validity or enforceability of any or all of the
Indebtedness, covenants, promises, agreements, provisions, rights, remedies,
obligations, duties and liabilities thereunder) or any transaction relating to
any of the foregoing, or any or all actions, courses of conduct or other
matters in any manner whatsoever relating to or otherwise connected with any of
the foregoing.
12. REFERENCES IN SECURITY DOCUMENTS.
All references to the "Loan Agreement" in all Security Documents,
and in any other documents or agreements by and between the parties hereto,
shall from and after the effective date hereof refer to the Loan Agreement, as
amended hereby, and the Loan Agreement, as amended hereby, shall be secured by
and be entitled to the benefits of said Security Documents and such other
documents and agreements. All Security Documents heretofore executed by the
Borrowers shall remain in full force and effect to secure the Notes and, as
amended hereby, are hereby ratified and affirmed.
13. COUNTERPARTS.
This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same agreement and any of the parties hereto may execute
this Amendment by signing any such counterpart. This Amendment may be executed
and delivered by facsimile transmission, which shall be equally as effective as
delivery of an original executed counterpart. Any party delivering an
-8-
<PAGE>
executed counterpart hereof by facsimile transmission shall also deliver
original executed counterparts hereof, but any failure to deliver an original
executed counterpart shall not affect the validity, enforceability or binding
effect of this Amendment.
14. APPLICABLE LAW.
THIS AMENDMENT SHALL BE DEEMED TO BE MADE PURSUANT TO THE LAWS OF
THE STATE OF NEW YORK WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED
WHOLLY IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED, INTERPRETED, PERFORMED
AND ENFORCED IN ACCORDANCE THEREWITH.
15. CAPTIONS.
The captions in this Amendment are for convenience of reference
only and shall not define or limit the provisions hereof.
16. TRANSACTION AND WAIVER FEE; LEGAL FEES.
(A) In consideration of the Lenders agreeing to the amendments and
waivers contained herein, the Borrowers have paid to the Agent a Transaction
and Waiver Fee in the amount of $200,000, which was in turn paid by the Agent
to the Lenders on a pro rata basis based on the Lenders' respective
Commitments.
(B) The Borrowers shall pay all reasonable expenses incurred by the
Agent, the Co-Agent and the Lenders in the drafting, negotiation and closing of
the documents and transactions contemplated hereby, including the reasonable
fees and disbursements of the Agent's and Co-Agent's counsel.
17. REAFFIRMATION.
Except as amended hereby, the Loan Agreement shall remain in full
force and effect and is in all respects hereby ratified and affirmed.
(The next page is the first signature page)
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this
Amendment or have caused this Amendment to be executed by their respective duly
authorized officers as of the date first above written.
BORROWERS:
TRIATHLON BROADCASTING OF WICHITA, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF LINCOLN, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF OMAHA, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF SPOKANE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF TRI-CITIES, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
-10-
<PAGE>
[Continuation of First Amendment to Amended and Restated Loan Agreement]
TRIATHLON BROADCASTING OF COLORADO
SPRINGS, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF LITTLE ROCK, INC.
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
AGENT:
AT&T COMMERCIAL FINANCE CORPORATION, AS
AGENT
By: /s/ Michael Monahan
-----------------------------------------
Title: Vice President
CO-AGENT:
UNION BANK OF CALIFORNIA, N.A., AS CO-AGENT
By: /s/ Bryan G. Petermann
-----------------------------------------
Title: Vice President
LENDERS:
AT&T COMMERCIAL FINANCE CORPORATION
By: /s/ Michael Monahan
-----------------------------------------
Title: Vice President
-11-
<PAGE>
[Continuation of First Amendment to Amended and Restated Loan Agreement]
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Bryan G. Petermann
-----------------------------------------
Title: Vice President
CITY NATIONAL BANK
By: /s/ Rod Bollins
-----------------------------------------
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By:
-----------------------------------------
Title:
-12-
<PAGE>
[Continuation of First Amendment to Amended and Restated Loan Agreement]
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of
which are hereby acknowledged, the undersigned, Guarantors of the indebtedness
of the Borrowers under those certain Guarantees dated as of May 30, 1997, and
June 17, 1997, hereby consent to the Borrowers' execution, delivery and
performance of this Amendment, and hereby severally ratify and affirm said
Guarantees, and all agreements securing the payment and performance thereof,
each of which shall remain in full force and effect.
TRIATHLON BROADCASTING COMPANY
By: /s/ Norman Feuer
-----------------------------------------
Title: President and Chief Executive Officer
TRIATHLON BROADCASTING OF WICHITA
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TRIATHLON BROADCASTING OF LINCOLN
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TRIATHLON BROADCASTING OF OMAHA
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
-13-
<PAGE>
[Continuation of First Amendment to Amended and Restated Loan Agreement]
TRIATHLON BROADCASTING OF SPOKANE
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TRIATHLON BROADCASTING OF COLORADO SPRINGS
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TRIATHLON BROADCASTING OF TRI-CITIES
LICENSEE, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TSPN, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
TRIATHLON SPORTS PROGRAMMING, INC.
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
-14-
<PAGE>
[Continuation of First Amendment to Amended and Restated Loan Agreement]
PINNACLE SPORTS PRODUCTIONS, L.L.C.
By Triathlon Sports Programming, Inc.,
a Member
By: /s/ Norman Feuer
-----------------------------------------
Norman Feuer, President
<PAGE>
FIRST AMENDMENT TO STOCKHOLDER AGREEMENT
This FIRST AMENDMENT TO STOCKHOLDER AGREEMENT, dated as of August 5,
1998 (this "Amendment"), is made and entered into by and among Capstar Radio
Broadcasting Partners, Inc., a Delaware corporation ("Parent"), TBC Radio
Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary
of Parent ("Sub"), Robert F.X. Sillerman (the "Stockholder"), and Triathlon
Broadcasting Company, a Delaware corporation (the "Company"), and amends that
certain Stockholder Agreement dated as of July 23, 1998 among the Stockholder,
Parent, Sub and the Company (the "Agreement").
WHEREAS, the parties wish to amend the Agreement in accordance with
Section 9(b) thereof (a) to replace Schedule A to the Agreement in its entirety
with Schedule A attached hereto, and (b) to consent to the execution and
delivery of a voting trust with respect to certain of the Stockholder's Shares
of Class B Common Stock.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Schedule A attached hereto shall and hereby does replace in its
entirety Schedule A to the Agreement.
2. Parent hereby consents to the execution and delivery by the
Stockholder of that certain Voting Trust Agreement dated the date hereof by and
among Stockholder, Howard J. Tytel and Norman Feuer, as trustee, and the
deposit thereunder of 136,852.06 Shares of the Stockholder's Class B Common
Stock, as converted on the date hereof from such same number of Shares of the
Stockholder's Class D Common Stock.
3. The parties hereto agree that this Amendment complies with the
terms of Section 9(b) of the Agreement.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first written above.
/s/ Robert F.X. Sillerman
------------------------------------
Robert F. X. Sillerman
CAPSTAR RADIO BROADCASTING PARTNERS,
INC.
By: /s/ Paul D. Stone
---------------------------------
Paul D. Stone
Vice President
TBC RADIO ACQUISITION CORP.
By: /s/ Paul D. Stone
---------------------------------
Paul D. Stone
Vice President
TRIATHLON BROADCASTING COMPANY
By: /s/ Norman Feuer
---------------------------------
Name: Norman Feuer
-------------------------------
Title: President/CEO
------------------------------
<PAGE>
SCHEDULE A SILLERMAN
PART I. SHARES
<TABLE>
<CAPTION>
A B
RECORD AND
BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
------------------ ---------------------
<S> <C> <C>
Class A Common Stock - 0 - - 0 -
Class B Common Stock - 0 - 542,852.06(2)(3)(4)
Class C Common Stock - 0 - - 0 -
Class D Common Stock - 0 - 680,000(2)
Series B Convertible
Preferred Stock 404,200 - 0 -
9% Mandatory Convertible
Preferred Stock - 0 - - 0 -
</TABLE>
PART II. DERIVATIVES
<TABLE>
<CAPTION>
NO. OF CLASS OF EXERCISE/
SHARES SHARES BASE PRICE
------ ------ ----------
<S> <C> <C> <C>
Warrants - 0 - - 0 - - 0 -
Options 60,200 Class A Common $5.50
SARs - 0 - - 0 - - 0 -
</TABLE>
PART III. INTEREST REQUIRING CONSENT (SS. 4(A)(II))(2)(3)(4)
- -------------------
(1) Excluding the rights in shares described in Part II and shares of
capital stock of the Company into which the shares described in Part I
may be converted in accordance with the terms thereof.
(2) Mr. Sillerman transferred 1,000,000 shares of the Company's Class D
Common Stock which he previously held of record to the Tomorrow
Foundation, of which 320,000 shares have been converted by the
Tomorrow Foundation into such same number of shares of the Company's
Class B Common Stock. As such, Mr. Sillerman may be deemed to
beneficially own such 320,000 shares of Class B Common Stock and the
remaining 680,000 shares of the Company's Class D Common Stock held of
record by the Tomorrow Foundation.
(3) 86,000 of the 542,852.06 shares of the Company's Class B Common Stock
are subject to a voting trust agreement among Mr. Sillerman, Howard J.
Tytel and Norman Feuer. Pursuant to such agreement, Mr. Feuer retains
the right to vote such shares.
(4) 136,852.06 of the 542,852.06 shares of the Company's Class B Common
Stock are subject to a voting trust agreement among Mr. Sillerman, Mr.
Tytel and Mr. Feuer. Pursuant to such agreement, Mr. Feuer retains the
right to vote such shares.
<PAGE>
FIRST AMENDMENT TO STOCKHOLDER AGREEMENT
This FIRST AMENDMENT TO STOCKHOLDER AGREEMENT, dated as of August 5,
1998 (this "Amendment"), is made and entered into by and among Capstar Radio
Broadcasting Partners, Inc., a Delaware corporation ("Parent"), TBC Radio
Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary
of Parent ("Sub"), Norman Feuer (the "Stockholder"), and Triathlon Broadcasting
Company, a Delaware corporation (the "Company"), and amends that certain
Stockholder Agreement dated as of July 23, 1998 among the Stockholder, Parent,
Sub and the Company (the "Agreement").
WHEREAS, the parties wish to amend the Agreement in accordance with
Section 9(b) thereof to replace Schedule A to the Agreement in its entirety
with Schedule A attached hereto.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree that Schedule A attached hereto shall and hereby does replace in
its entirety Schedule A to the Agreement. The parties hereto agree that this
Amendment complies with the terms of Section 9(b) of the Agreement.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first written above.
/s/ Norman Feuer
--------------------------------------
Norman Feuer
/s/ Mary Ziegler
--------------------------------------
[Spouse]
CAPSTAR RADIO BROADCASTING PARTNERS,
INC.
By: /s/ Paul D. Stone
-----------------------------------
Paul D. Stone
Vice President
TBC RADIO ACQUISITION CORP.
By: /s/ Paul D. Stone
-----------------------------------
Paul D. Stone
Vice President
TRIATHLON BROADCASTING COMPANY
By: /s/ William G. Thompson
-----------------------------------
Name: William G. Thompson
---------------------------------
Title: CFO
--------------------------------
<PAGE>
SCHEDULE A FEUER
PART I. SHARES
<TABLE>
<CAPTION>
A B
RECORD AND
BENEFICIALLY OWNED BENEFICIALLY OWNED(3)
------------------ ---------------------
<S> <C> <C>
Class A Common Stock - 0 - - 0 -
Class B Common Stock 144,890(1)(2) 421,921(4)(5)
Class C Common Stock - 0 - - 0 -
Class D Common Stock - 0 - - 0 -
Series B Convertible
Preferred Stock 60,000 - 0 -
9% Mandatory Convertible
Preferred Stock - 0 - - 0 -
</TABLE>
PART II. DERIVATIVES
<TABLE>
<CAPTION>
NO. OF CLASS OF EXERCISE/
SHARES SHARES BASE PRICE
------ ------ ----------
<S> <C> <C> <C>
Warrants - 0 - - 0 - - 0 -
Options 15,000 Class A Common $11.50(6)
SARs - 0 - - 0 - - 0 -
</TABLE>
PART III. INTEREST REQUIRING CONSENT (SS. 4(A)(II))(1)
- -------------------
(1) 144,890 shares of Class B Common Stock owned by Mr. Feuer beneficially
and of record are subject to a right of first refusal of Radio
Investors pursuant to that certain Agreement dated as of August 7,
1995, between Mr.
Feuer and Radio Investors.
(2) 35,294 shares of Class B Common Stock owned by Mr. Feuer beneficially
and of record are pledged to the Company to secure indebtedness.
(3) Excluding the rights in shares described in Part II and shares of
capital stock of the Company into which the shares described in Part I
may be converted in accordance with the terms thereof.
(4) Includes 86,000 shares of Class B Common Stock owned by Robert F.X.
Sillerman and 14,000 shares of Class B Common Stock owned by Howard J.
Tytel which Mr. Feuer may be deemed to beneficially own because he has
the right to vote such shares pursuant to a voting trust agreement.
(5) Includes 136,852.06 shares of Class B Common Stock owned by Mr.
Sillerman and 185,068.94 shares of Class B Common Stock owned by Mr.
Tytel which Mr. Feuer may be deemed to beneficially own because he has
the right to vote such shares pursuant to a voting trust agreement.
(6) Also granted a cash bonus, payable upon exercise of the options equal
to 15,000 x (Closing Price of the Company's Class A Common Stock on
October 30, 1995 [$11.50] - $5.50).
<PAGE>
FIRST AMENDMENT TO STOCKHOLDER AGREEMENT
This FIRST AMENDMENT TO STOCKHOLDER AGREEMENT, dated as of August 5,
1998 (this "Amendment"), is made and entered into by and among Capstar Radio
Broadcasting Partners, Inc., a Delaware corporation ("Parent"), TBC Radio
Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary
of Parent ("Sub"), Howard J. Tytel (the "Stockholder"), and Triathlon
Broadcasting Company, a Delaware corporation (the "Company"), and amends that
certain Stockholder Agreement dated as of July 23, 1998 among the Stockholder,
Parent, Sub and the Company (the "Agreement").
WHEREAS, the parties wish to amend the Agreement in accordance with
Section 9(b) thereof (a) to replace Schedule A to the Agreement in its entirety
with Schedule A attached hereto, and (b) to consent to the execution and
delivery of a voting trust with respect to certain of the Stockholder's Shares
of Class B Common Stock.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Schedule A attached hereto shall and hereby does replace in its
entirety Schedule A to the Agreement.
2. Parent hereby consents to the execution and delivery by the
Stockholder of that certain Voting Trust Agreement dated the date hereof by and
among Stockholder, Robert F.X. Sillerman and Norman Feuer, as trustee, and the
deposit thereunder of 185,068.94 Shares of the Stockholder's Class B Common
Stock, as converted on the date hereof from such same number of Shares of the
Stockholder's Class D Common Stock.
3. The parties hereto agree that this Amendment complies with the
terms of Section 9(b) of the Agreement.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed on date first written above.
/s/ Howard J. Tytel
----------------------------------------
Howard J. Tytel
CAPSTAR RADIO BROADCASTING PARTNERS,
INC.
By: /s/ Paul D. Stone
-------------------------------------
Paul D. Stone
Vice President
TBC RADIO ACQUISITION CORP.
By: /s/ Paul D. Stone
-------------------------------------
Paul D. Stone
Vice President
TRIATHLON BROADCASTING COMPANY
By: /s/ Norman Feuer
-------------------------------------
Name: Norman Feuer
-----------------------------------
Title: President/Chief Executive Officer
----------------------------------
<PAGE>
SCHEDULE A TYTEL
PART I. SHARES
<TABLE>
<CAPTION>
A B
RECORD AND
BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
------------------ ---------------------
<S> <C> <C>
Class A Common Stock - 0 - - 0 -
Class B Common Stock - 0 - 199,068.94(2)(3)
Class C Common Stock - 0 - - 0 -
Class D Common Stock - 0 - - 0 -
Series B Convertible
Preferred Stock 65,800 - 0 -
9% Mandatory Convertible
Preferred Stock - 0 - - 0 -
</TABLE>
PART II. DERIVATIVES
<TABLE>
<CAPTION>
NO. OF CLASS OF EXERCISE/
SHARES SHARES BASE PRICE
------ ------ ----------
<S> <C> <C> <C>
Warrants - 0 - - 0 - - 0 -
Options 9,800 Class A Common $5.50
SARs - 0 - - 0 - - 0 -
</TABLE>
PART III. INTEREST REQUIRING CONSENT (SS. 4(A)(II))(2)(3)
- -------------------
(1) Excluding the rights in shares described in Part II and shares of
capital stock of the Company into which the shares described in Part I
may be converted in accordance with the terms thereof.
(2) 14,000 of the 199,068.94 shares of the Company's Class B Common Stock
are subject to a voting trust agreement between Mr. Tytel, Robert F.X.
Sillerman and Norman Feuer. Pursuant to such agreement, Mr.
Feuer retains the right to vote such shares.
(3) 185,068.94 of the 199,068.94 shares of the Company's Class B Common
Stock are subject to a voting trust agreement between Mr. Tytel, Mr.
Sillerman and Mr. Feuer. Pursuant to such agreement, Mr. Feuer retains
the right to vote such shares.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 576,000
<SECURITIES> 0
<RECEIVABLES> 7,225,000
<ALLOWANCES> 646,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,817,000
<PP&E> 12,087,000
<DEPRECIATION> 2,399,000
<TOTAL-ASSETS> 128,005,000
<CURRENT-LIABILITIES> 65,995,000
<BONDS> 0
6,000
6,000
<COMMON> 49,000
<OTHER-SE> 53,756,000
<TOTAL-LIABILITY-AND-EQUITY> 128,005,000
<SALES> 20,556,000
<TOTAL-REVENUES> 18,465,000
<CGS> 0
<TOTAL-COSTS> 16,598,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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