EXHIBIT 1.02
Execution Original
REGISTRATION RIGHTS AGREEMENT
Among
Salem Communications Corporation, a California corporation
ATEP Radio, Inc.,
Beltway Media Partners,
Bison Media, Inc.,
Caron Broadcasting, Inc.,
Common Ground Broadcasting, Inc.,
Golden Gate Broadcasting Company, Inc.,
Inland Radio, Inc.,
Inspiration Media, Inc.,
Inspiration Media of Texas, Inc.,
New England Continental Media, Inc.,
New Inspiration Broadcasting Company, Inc.,
Oasis Radio, Inc.,
Pennsylvania Media Associates, Inc.,
Radio 1210, Inc.,
Salem Communications Corporation, a Delaware corporation
Salem Media Corporation,
Salem Media of California, Inc.,
Salem Media of Colorado, Inc.,
Salem Media of Louisiana, Inc.,
Salem Media of Ohio, Inc.,
Salem Media of Oregon, Inc.,
Salem Media of Pennsylvania, Inc.,
Salem Media of Texas, Inc.,
Salem Music Network, Inc.,
Salem Radio Network Incorporated,
Salem Radio Representatives, Inc.,
South Texas Broadcasting, Inc.,
SRN News Network, Inc.,
Vista Broadcasting, Inc.,
and
Furman Selz LLC,
Smith Barney Inc.,
BancBoston Securities Inc.,
and
BNY Capital Markets, Inc.
Dated as of September 25, 1997
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of
September 25, 1997, by and among Salem Communications Corporation, a California
corporation ("SALEM" or the "COMPANY"), the Guarantors (as defined below), and
Furman Selz LLC, Smith Barney Inc., BancBoston Securities Inc., and BNY Capital
Markets, Inc., as the initial purchasers (the "INITIAL PURCHASERS") of the
Company's 9 1/2% Senior Subordinated Notes due 2007 (the "NOTES"), which are
guaranteed (the "GUARANTEES") by the following subsidiaries of the Company:
ATEP Radio, Inc., a California corporation, Beltway Media Partners, a Virginia
partnership, Bison Media, Inc., a California corporation, Caron Broadcasting,
Inc., an Ohio corporation, Common Ground Broadcasting, Inc., an Oregon
corporation, Golden Gate Broadcasting Company, Inc., a California corporation,
Inland Radio, Inc., a California corporation, Inspiration Media of Texas, Inc.,
a Texas corporation, Inspiration Media, Inc., a Washington corporation, New
England Continental Media, Inc., a Massachusetts corporation, New Inspiration
Broadcasting Company, Inc., a California corporation, Oasis Radio, Inc., a
California corporation, Pennsylvania Media Associates, Inc., a Pennsylvania
corporation, Radio 1210, Inc., a California corporation, Salem Communications
Corporation (DE) Salem Media Corporation, a New York corporation, Salem Media of
California, Inc., a California corporation, Salem Media of Colorado, Inc., a
Colorado corporation, Salem Media of Louisiana, Inc., a Louisiana corporation,
Salem Media of Ohio, Inc., an Ohio corporation, Salem Media of Oregon, Inc., an
Oregon corporation, Salem Media of Pennsylvania, Inc., a Pennsylvania
corporation, Salem Media of Texas, Inc., a Texas corporation, Salem Music
Network, Inc., a Texas corporation, South Texas Broadcasting, Inc., a Texas
corporation, Salem Radio Network Incorporated, a Delaware corporation, Salem
Radio Representatives, Inc., a Texas corporation, SRN News Network, Inc., a
Texas corporation, and Vista Broadcasting, Inc., a California corporation, (each
a "GUARANTOR" and collectively the "GUARANTORS").
This Agreement is made pursuant to the Placement Agreement, dated
September 17, 1997, among the Company, the Guarantors and the Initial Purchasers
(the "PLACEMENT AGREEMENT"), which provides for the sale by the Company to the
Initial Purchasers of $150,000,000 aggregate principal amount of the Company's 9
1/2% Senior Subordinated Notes due 2007 (the "NOTES"), which Notes are
guaranteed (the "GUARANTEES") to the extent set forth in the Indenture (as
defined below), the Notes and the Guarantees.
In order to induce the Initial Purchasers to enter into the Placement
Agreement, the Company and the Guarantors have agreed to provide to the Initial
Purchasers and their direct and indirect transferees the registration rights
with respect to the Notes and the Guarantees as set forth in this Agreement.
The execution of this Agreement is a condition to the closing under the
Placement Agreement.
1. Definitions.
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As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
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"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
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Friday which is not a day on which banking institutions in The City of New York,
the State of California or the city in which the Corporate Trust Office (as
defined in the Indenture) is located are authorized or obligated by law or
executive order to close.
"CLOSING DATE" shall mean the date on which the Notes are initially
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issued by the Company and the Guarantees are initially issued by the Guarantors,
in each case, to the Initial Purchasers.
"COMMISSION" means the Securities and Exchange Commission, as from
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time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMPANY" shall have the meaning set forth in the preamble.
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"EFFECTIVE TIME," in the case of (i) an Exchange Offer, shall mean the
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time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean
the time and date as of which the Commission declares the Shelf Registration
effective or as of which the Shelf Registration otherwise becomes effective.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
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successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"EXCHANGE DATE" shall have the meaning set forth in Section 2(a)(ii).
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"EXCHANGE GUARANTEES" shall have the meaning assigned thereto in
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Section 2(a) hereof.
"EXCHANGE NOTES" shall have the meaning assigned thereto in Section
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2(a) hereof.
"EXCHANGE OFFER" shall have the meaning assigned thereto in Section
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2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
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Securities Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
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registration statement of the Company and the Guarantors on Form S-4 (or, if
applicable, on another appropriate form) which covers all of the Exchange
Securities, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"EXCHANGE SECURITIES" shall have the meaning assigned thereto in
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Section 2(a) hereof.
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"GUARANTEES" shall have the meaning set forth in the preamble.
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"GUARANTORS" shall have the meaning set forth in the preamble.
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"HOLDER" shall mean any Initial Purchaser for so long as it owns any
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Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities;
provided, that for purposes of Sections 3, 4 and 5 of this Agreement, the term
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"HOLDER" shall include Participating Broker-Dealers (as defined in Section
4(a)).
"HOLDERS' INFORMATION" shall have the meaning assigned thereto in
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Section 5(a) hereof.
"INDENTURE" shall mean the Indenture, dated as of September 25, 1997,
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among the Company, the Guarantors and The Bank of New York, as trustee, as the
same shall be amended from time to time.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble.
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"MAJORITY HOLDERS" shall mean the Holders of a majority of the
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aggregate principal amount of outstanding Registrable Securities; provided that,
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for purposes of this definition, whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company, its subsidiaries or any of their
respective affiliates (as such term is defined in Rule 405 under the Securities
Act) (other than the Initial Purchasers or subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"NASD" shall mean the National Association of Securities Dealers, Inc.
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"NOTES" shall have the meaning set forth in the preamble.
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"OFFER TERMINATION DATE" shall have the meaning set forth in Section
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2(a)(iii).
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
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Section 4(a) hereof.
"PENALTY AMOUNTS" shall have the meaning assigned thereto in Section
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2(d) hereof.
"PERSON" shall mean an individual, partnership, limited liability
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company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"PRESCRIBED TIME PERIOD" shall have the meaning set forth in Section
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2(d)(i).
"PROSPECTUS" shall mean the prospectus included in a Registration
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Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus
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supplement, including a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by reference or
deemed to be incorporated by reference therein.
"PROSPECTUS DELIVERY REQUIREMENT SITUATION" shall have the meaning set
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forth in Section 2(e).
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
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preamble.
"REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
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that any such Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Registrable Securities shall have
been declared effective under the Securities Act and such Securities shall have
been disposed of or exchanged pursuant to such Registration Statement, (ii) upon
the expiration of the Exchange Offer period with respect to any Exchange Offer
Registration Statement if all Registrable Securities validly tendered in
connection with such Exchange Offer shall have been exchanged for Exchange
Securities, (iii) when such Securities have been sold to the public pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the Securities Act or (iv) when such Securities shall have ceased to be
outstanding; provided, however, that if an opinion of counsel to the effect
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described in Section 2(d)(i)(B) is delivered to the Company and the Guarantors,
then such Securities held by the Initial Purchasers shall not cease to be
Registrable Securities solely by reason of clause (ii) above.
"REGISTRATION DEFAULT" shall have the meaning assigned thereto in
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Section 2(d) hereof.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
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performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all Commission, stock exchange or
NASD registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws, (iii) all
expenses of any Person in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, underwriting agreements, securities sales
agreements, indentures and any other documents necessary in order to comply with
this Agreement, (iv) all fees and disbursements relating to the qualification of
the Indenture and the Guarantors under applicable securities laws, (v) the fees
and disbursements of the Trustee and its counsel and of any escrow agent as
custodian, (vi) the fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the Holders in connection
with an Exchange Offer Registration Statement and a Shelf Registration
Statement, (vii) the fees and disbursements of the independent public
accountants of the Company and the Guarantors, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts, if any, and
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder and (viii) fees, disbursements and expenses
of any "qualified independent underwriter" engaged, if any, (ix) rating agency
fees, (x) Securities Act liability insurance, if the Company desires such
insurance, (xi) fees and expenses of all other Persons retained by the Company,
(xii) internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company performing legal
or accounting duties), (xiii) the expense of any annual
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audit and (xiv) the fees and expenses incurred in connection with the listing of
the securities to be registered on any securities exchange.
"REGISTRATION STATEMENT" shall mean any registration statement of the
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Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"RESALE PERIOD" shall have the meaning assigned thereto in Section
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2(a) hereof.
"RESTRICTED HOLDER" shall mean (i) a holder that is an affiliate of
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the Company or any of the Guarantors within the meaning of Rule 405, (ii) a
Holder who acquires Exchange Securities outside the ordinary course of such
Holder's business or (iii) a Holder who has arrangements or understandings with
any Person to participate in the Exchange Offer for the purpose of distributing
Exchange Securities.
"RULE 144," "RULE 144A," "RULE 174," "RULE 405," "RULE 415," and "RULE
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424" shall mean, in each case, such rule promulgated under the Securities Act or
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any similar rule that may be adopted by the Commission.
"SECURITIES" shall mean collectively, the Notes and the Guarantees.
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"SECURITIES ACT" shall mean the Securities Act of 1933, or any
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successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"SHELF REGISTRATION" shall mean a registration under the Securities
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Act effected pursuant to Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "SHELF" registration
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statement of the Company and the Guarantors prepared pursuant to the provisions
of Section 2(b) of this Agreement which covers all of the Registrable Securities
on an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the Commission, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference or deemed incorporated by reference therein.
"TRUSTEE" means The Bank of New York, as trustee under the Indenture.
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"TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, or
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any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"SECTION" or "CLAUSE" refers to a Section or clause, as the case may be, of this
Agreement, and the words "HEREIN," "HEREOF"
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and "HEREUNDER" and other words of similar import refer to this Agreement as a
whole and not to any particular Section or other subdivision. Unless the
context otherwise requires, any reference to a statute, rule or regulation shall
be deemed to be a statute, rule or regulation (including any successor statute,
rule or regulation thereto) as it may be amended from time to time.
2. Registration under the Securities Act.
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(a) Except as set forth in Section 2(b) below, the Company and the
Guarantors agree to use their best efforts to file under the Securities Act as
soon as practicable after the Closing Date, but in no event later than 75 days
after such date, an Exchange Offer Registration Statement relating to an offer
by the Company and the Guarantors to exchange (the "EXCHANGE OFFER") (i) any and
all of the Notes for a like aggregate amount of notes issued by the Company,
which notes are identical in all material respects to the Notes (the "EXCHANGE
NOTES"), except that the Exchange Notes have been registered pursuant to an
effective registration statement under the Securities Act on the appropriate
form, do not contain restrictions on transfers (except as they may be held by
Restricted Holders) and provide for the additional amounts contemplated in
Section 2(d) below for any periods before such exchange and (ii) any and all of
the Guarantees for like guarantees by the Guarantors, which guarantees are
identical to the Guarantees (the "EXCHANGE GUARANTEES," and together with the
Exchange Notes, the "EXCHANGE SECURITIES") except that they have been registered
pursuant to an effective registration statement under the Securities Act on the
appropriate form and do not contain restrictions on transfers. The Company and
the Guarantors agree to use their best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act as soon as
prac ticable after the filing of the Exchange Offer Registration Statement but
in no event later than 150 days after the Closing Date. The Exchange Offer
shall be registered under the Securities Act on the appropriate form and shall
comply with all applicable tender offer and other rules and regulations under
the Exchange Act. The Company and the Guarantors further agree to use their
best efforts to commence and consummate the Exchange Offer promptly after the
Exchange Offer Registration Statement has become effective, hold the Exchange
Offer open for not less than 20 Business Days (or longer, if required by
applicable law) after the date notice of the Exchange Offer has been mailed to
Holders and exchange Securities for all Securities that have been properly
tendered and not withdrawn on or prior to the expiration of the Exchange Offer
and to consummate such Exchange Offer within 180 days after the Closing Date.
The Exchange Offer will be deemed to have been completed, as the case may be,
only if the Exchange Securities received by Holders other than Restricted
Holders in the Exchange Offer are, upon receipt, transferable by each such
Holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the blue sky or securities laws of the
States of the United States of America. The Exchange Offer shall be deemed to
have been completed upon the Company and the Guarantors having exchanged,
pursuant to the Exchange Offer, the Exchange Securities for all outstanding
Securities, pursuant to the Exchange Offer, properly tendered and not withdrawn
before the expiration of the Exchange Offer, which shall be on a date that is
not less than 20 Business Days (or longer, if required by applicable law)
following the commencement of the Exchange Offer. The Company and the
Guarantors shall commence the Exchange Offer by mailing the related Prospectus
and accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Securities validly tendered will be accepted for
exchange;
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(ii) the dates of acceptance for exchange (which shall be a period of
at least 20 Business Days from the date such notice is mailed) (each such
date being an "EXCHANGE DATE");
(iii) that a Holder electing to have Registrable Securities exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Securities, together with the enclosed letters of transmittal,
to the institution and at the address specified in the notice prior to the
close of business on the last Exchange Date (the "OFFER TERMINATION DATE");
and
(iv) that a Holder will be entitled to withdraw such Holder's
election, not later than the close of business on the Offer Termination
Date, by sending to the institution and at the address specified in the
notice a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing its
election to have such Registrable Securities exchanged.
As soon as practicable after the Offer Termination Date, the Company and
the Guarantors shall:
(A) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(B) deliver, or cause to be delivered, to the Trustee for cancellation
all Registrable Securities or portions thereof so accepted for exchange by the
Company and the Guar antors and issue, and cause the Trustee to promptly
authenticate and mail to each Holder who has properly tendered and not withdrawn
Registrable Securities pursuant to the Exchange Offer, an Exchange Security in
aggregate principal amount equal to the aggregate principal amount of the
Registrable Securities surrendered by such Holder. The Company shall use its
best efforts to complete the Exchange Offer as provided above and shall comply
with the applicable requirements of the Securities Act, the Exchange Act and
other applicable laws and regulations in connection with the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the Commission. The Company shall inform the Initial Purchasers
of the names and addresses of the Holders to whom the Exchange Offer is made,
and the Initial Purchasers shall have the right, subject to applicable law, to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Each Holder of Securities participating in the Exchange Offer shall be
required to represent to the Company and the Guarantors that at the time of the
consummation of the Exchange Offer (i) such Holder is not an "affiliate" of the
Company or any Guarantor within the meaning of Rule 405 under the Securities
Act, (ii) the Exchange Securities being acquired by it pursuant to the Exchange
Offer are being acquired in the ordinary course of the business of the Person
receiving such Exchange Securities and (iii) such Holder has no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Securities. If such Holder is a Participating Broker-Dealer that will receive
Exchange Securities for its own account in exchange for the Registrable
Securities that were acquired as a result of market-making activities or other
trading activities, it will
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be required to acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Securities.
(b) In the event that (i) due to a change in applicable law or current
interpretations by the Commission, the Company and the Guarantors are not
permitted to effect the Exchange Offer for all of the Securities, (ii) the
Exchange Offer for all of the Securities is not for any other reason consummated
within 180 days after the Closing Date, (iii) any Holder shall, within 30 days
after commencement of the Exchange Offer, notify the Company that such Holder
(x) is prohibited by applicable law or Commission policy from participating in
the Exchange Offer, (y) may not resell Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a broker-
dealer and holds Securities acquired directly from the Company and Guarantors or
an "AFFILIATE" of the Company or any Guarantor, then in addition to or in lieu
of conducting the Exchange Offer contemplated by Section 2(a), or (iv) at the
request of any of the Initial Purchasers, the Company and the Guarantors will be
required to file a "SHELF" registration statement (a "SHELF REGISTRATION
STATEMENT") covering resales (a) by the Holders of Registrable Securities in the
event the Company and the Guarantors are not permitted to effect the Exchange
Offer pursuant to the foregoing clause (i) or the Exchange Offer is not
consummated within 180 days after the Closing Date pursuant to the foregoing
clauses (i) or (ii) or (b) by the Holders of Registrable Securities with respect
to which the Company and the Guarantors receive notice pursuant to the foregoing
clauses (iii) or (iv). The Trustee will promptly deliver to the Holders written
notice that the Company and the Guarantors will be complying with the provisions
of this Section 2(b). The Company and the Guarantors agree to use their best
efforts to cause the Shelf Registration Statement to become or be declared
effective and to keep such Shelf Registration Statement continuously effective
for a period of time ending on the second anniversary of the Effective Time (the
"EFFECTIVE PERIOD") or such shorter period that will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement. The Company and the
Guarantors shall, if they file a Shelf Registration Statement, provide to each
Holder of the Registrable Securities copies of the Prospectus contained therein
and notify each such Holder when the Shelf Registration Statement has become
effective. The Company and the Guarantors further agree to supplement or make
amendments to the Shelf Registration Statement, as and when required by the
rules, regulations or instructions applicable to the registration form used by
the Company and the Guarantors for such Shelf Registration Statement or by the
Securities Act or rules and regulations thereunder for shelf registrations, and
the Company and the Guarantors agree to furnish to the Holders of the
Registrable Securities copies of any such supplement or amendment prior to its
being used or promptly following its filing with the Commission.
(c) The Company and the Guarantors shall, jointly and severally, pay
all Registration Expenses in connection with any registration pursuant to
Section 2(a) or Section 2(b). Each Holder shall pay all underwriting discounts,
if any, and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Exchange
Offer Registration Statement or a Shelf Registration Statement, as the case may
be.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effec tive unless it has been declared effective by
the Commission; provided, however, that, if, after it has
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been declared effective, the offering of Registrable Securities pursuant to an
Exchange Offer Registration Statement or a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, such Registration
Statement will be deemed not to have been effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. If the Company and the Guarantors
shall fail to comply with this Agreement or if the Exchange Offer Registration
Statement or the Shelf Registration Statement fails to become effective (any
such event, a "REGISTRATION DEFAULT"), then, as liquidated damages, registration
default amounts (the "PENALTY AMOUNTS"), shall become payable in respect of the
Notes as follows:
(i) (A) if an Exchange Offer Registration Statement (or, in the event
of a change in applicable law or due to current interpretations by the
Commission, the Company and the Guarantors are not permitted to effect the
Exchange Offer, a Shelf Registration Statement), is not filed within 75
days following the Closing Date, (B) in the event that within the 30 days
after commencement of the Exchange Offer, any Holder of the Registrable
Securities shall notify the Company that such Holder (x) is prohibited by
applicable law or Commission policy from participating in the Exchange
Offer, (y) may not resell Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a
broker-dealer and holds Securities acquired directly from the Company or
any Guarantor or an "affiliate" of the Company or any Guarantor and a Shelf
Registration Statement is not filed within 75 days after such notice or (C)
upon the request of an Initial Purchaser, a Shelf Registration Statement is
not filed within 75 days after such request, then commencing on either the
76th day after the Closing Date or the expiration of either of the 75-day
time periods set forth in clauses (B) and (C) above (either, a "PRESCRIBED
TIME PERIOD"), as the case may be, Penalty Amounts shall be accrued on the
Notes over and above the stated payment rates thereon at a rate of 0.25%
per annum for the first 90 days immediately following either the 76th day
after the Closing Date or the expiration of the Prescribed Time Period, as
the case may be, such Penalty Amounts rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) above and is not
declared effective within either 150 days following the Closing Date or 75
days following the expiration of the applicable Prescribed Time Period, as
the case may be, then commencing on the 151st day after the Closing Date or
the 76th day following the expiration of the Prescribed Time Period, as the
case may be, Penalty Amounts shall be accrued on the Notes over and above
the accrued stated payment rates thereon at a rate of 0.25% per annum for
the first 90 days immediately following the 151st day after the Closing
Date or the 76th day after the expiration of the Prescribed Time Period, as
the case may be, such Penalty Amounts rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period; and
(iii) if either (A) the Company and the Guarantors have not exchanged
Exchange Securities for all Securities validly tendered in accordance with
the terms of the Exchange Offer on or prior to 180 days after the Closing
Date, or (B) if applicable, a Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be
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effective prior to the end of the Effective Period, or such shorter period
that will terminate when all of the Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, then, subject to certain exceptions, Penalty Amounts shall be
accrued on the Notes over and above the stated payment rates at a rate of
0.25% per annum for the first 90 days immediately following (x) the 181st
day after the Closing Date in the case of (A) above or (y) the day such
Shelf Registration Statement ceases to be effective in the case of (B)
above, such Penalty Amounts rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
provided, however, that the Penalty Amounts rate on any of the applicable Notes
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may not exceed 1.0% per annum; and provided further, that (1) upon the filing of
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the Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of clause
(ii) above), or (3) upon the exchange of Exchange Securities for all Securities
tendered in the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to the end of
the Effective Period (in the case of clause (iii) above), Penalty Amounts as a
result of such clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above will be
payable in cash on the various payment dates related to the Notes. The Penalty
Amounts will be determined by multiplying the applicable Penalty Amounts rate by
the principal amount of the Notes multiplied by a fraction, the numerator of
which is the number of days such Penalty Amounts rate was applicable during such
period, and the denominator of which is 360.
If the Company and the Guarantors effect the Exchange Offer, the Company
and the Guarantors will be entitled to close the Exchange Offer provided that
they have accepted all Registrable Securities theretofore validly tendered in
accordance with the terms of the Exchange Offer. Registrable Securities not
tendered in the Exchange Offer shall bear interest at the same rate as in effect
at the time of issuance of the Registrable Securities.
(e) Without limiting the remedies available to the Initial Purchasers
and the Holders, the Company and the Guarantors acknowledge that any failure by
the Company and the Guarantors to comply with their obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damage for such injuries precisely and that, in the event of
any such failure, the Initial Purchasers or any Holder may seek to obtain such
relief as may be required to specifically enforce the Company's and the
Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company and the
Guarantors with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company and the Guarantors shall as promptly as
practicable:
(a) prepare and file with the Commission a Registration Statement on
the appropriate form under the Securities Act, which form shall (x) be selected
by the Company and the
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Guarantors, (y) in the case of a Shelf Registration, be available for the sale
of the Registrable Securities by the selling Holders thereof and (z) comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith or incorporated by reference therein, as the case may be, and use
their best efforts to cause such Registration Statement to become effective and
remain effective as promptly as practicable in accordance with Section 2 hereof;
(b) prepare and file with the Commission such amendments and post-
effective amendments to each Registration Statement as may be necessary to keep
such Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act or, in
the case of a Shelf Registration, file, or cause to be filed, promptly all
reports required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act required to be incorporated by reference therein; and keep each
Prospectus current during the period described under Section 4(3) and Rule 174
under the Securities Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange Securities; the
Company shall be deemed not to have used its best efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes any
action that would result in selling Holders of the Registrable Securities
covered thereby seeking to sell Exchange Securities not being able to sell such
Registrable Securities or such Exchange Securities during that period unless
such action is required by applicable law;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities to which such Shelf Registration Statement relates, to
counsel for the Initial Purchasers and to counsel for the Holders, without
charge, one conformed copy of the Shelf Registration Statement (and any post-
effective amendment thereto) and exhibits thereto and as many copies of each
Prospectus, including each preliminary Prospectus and any amendment or
supplement thereto, reasonably requested to facilitate the public sale or other
disposition of the Registrable Securities; and the Company's and the Guarantors'
consent to the use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders of Registrable
Securities and underwriters or agents, if any, and dealers, if any, in each case
in connection with the offering and sale of the Registrable Securities covered
by and in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use their best efforts (i) to register or qualify the Registrable
Securities under all applicable state securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the Commission; provided that
--------
where Exchange Notes held or Registrable Notes are offered other than through an
underwritten offering, the Company agrees to cause its counsel to perform blue
sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 3(d), (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions during
the period the Shelf Registration Statement is required to remain effective
under Section 2(b) above and for so long as may be necessary to enable any such
Holder, agent or underwriter to complete its distribution of the Securities
pursuant to such Registration Statement but in no event longer than two years
and (iii) to cooperate with such Holders and each underwriter, if any, in
connection with any filings required to be made with the NASD and do any and
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all other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however, that the
-------- -------
Company and the Guarantors shall not be required to (A) qualify to do business
as foreign corporations or as dealers in securities in any jurisdiction where
they would not otherwise be required to qualify but for this Section 3(d), (B)
file any general consent to service of process or (C) subject themselves to
taxation in excess of a nominal dollar amount in any such jurisdiction if they
are not so subject;
(e) in the case of a Shelf Registration and in case a Participating
Broker-Dealer is required to deliver a Prospectus contained in an Exchange
Registration Statement under the Securities Act ("PROSPECTUS DELIVERY
REQUIREMENT SITUATION"), notify each Holder of Registrable Securities, counsel
for the Holders and for the Initial Purchasers (or, if applicable, separate
counsel for the Holders) and, if requested by such Persons, confirm such advice
in writing, (i) when the Registration Statement has become effective and when
any post-effective amendment thereto has been filed and becomes effective, (ii)
of any request by the Commission or any state securities authority for
amendments and supplements to the Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) if the Company or any
Guarantor receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any event
during the period a Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus untrue
in any material respect or which requires the making of any changes in such
Registration Statement or any document incorporated by reference therein in
order to make the statements therein not misleading or which requires the making
of any changes in the Prospectus or documents incorporated by reference therein
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (vi) of any determination by the
Company and the Guarantors that a post-effective amendment to the Registration
Statement would be appropriate;
(f) use their best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide prompt notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities and managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
(unless required by applicable securities laws) and enable such Registrable
Securities to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders or managing
underwriters, if any, may reasonably request;
(h) in the case of a Shelf Registration or a Prospectus Delivery
Requirement Situation, upon the occurrence of any event contemplated by Section
3(e)(v) or (vi) hereof, use their best efforts to prepare a supplement or post-
effective amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities,
-13-
such Prospectus will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
--------
Company and the Guarantors agree to notify the Holders to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an event;
(i) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document incorporated by
reference therein, provide copies of such document to the Initial Purchasers and
their counsel (and, in the case of a Shelf Registration Statement, counsel for
the Holders) and make such of the representatives of the Company and the
Guarantors as shall be reasonably requested by the Initial Purchasers or their
counsel (and, in the case of a Shelf Registration Statement, counsel for the
Holders) available for discussion of such document, and shall not at any time
file or make any amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus, of which
the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, counsel for the Holders) shall not have previously been
advised and furnished a copy or to which the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, counsel for the Holders)
shall reasonably object;
(j) obtain a CUSIP number for all Exchange Securities or Registrable
Securities (if applicable), as the case may be, and provide the Trustee with
printed certificates for the Registrable Notes in a form eligible for deposit
with the Depository Trust Company, in each case not later than the Effective
Time;
(k) cause the Indenture to be qualified under the Trust Indenture Act
in connection with the registration of the applicable Exchange Securities or
applicable Registrable Securities, as the case may be, cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act and execute, and use their best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the Commission to enable
the Indenture to be so qualified in a timely manner;
(l) in the case of a Shelf Registration or Prospectus Delivery
Requirement Situation, make reasonably available for inspection by one
representative of the Holders of the Registrable Securities, counsel for the
Holders and accountants designated by the Holders and reasonably acceptable to
the Company and the Guarantors, at reasonable times and in a reasonable manner
and subject to the execution of customary confidentiality agreements, all
financial and other records, pertinent documents and properties of the Company
and the Guarantors, and cause the respective officers, directors and employees
of the Company and the Guarantors to supply all information reasonably
requested, and as is customary for similar due diligence examinations, by any
such representative, attorney or accountant in connection with a Shelf
Registration Statement;
(m) if requested by any Holder of Registrable Securities covered by a
Registration Statement, (i) promptly include in a Prospectus supplement or post-
effective amendment or document incorporated by reference in such Prospectus
such information with respect to such Holder as such Holder requests to be
included therein, (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as the Company and the Guarantors have
received notification
-14-
of the matters to be included in such filing and (iii) supplement or make
amendments to such Registration Statement; and
(n) in the case of a Shelf Registration or an Exchange Offer
Registration, if the Initial Purchasers on behalf of the Holders shall so
request, enter into such customary agreements and take all such other reasonable
actions in connection therewith (including, those reasonably requested by
counsel for the Holders) in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, (i) to the extent possible,
make such representations and warranties to the Holders of such Registrable
Securities and underwriters, if any, with respect to the business of the
Company, the Guarantors and their respective subsidiaries, the Registration
Statement, the Prospectus and documents deemed incorporated by reference, if
any, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested, (ii) obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to counsel to the Holders) and updates, in each case,
addressed to each selling Holder of Registrable Securities, or underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings, and such other matters as may reasonably be requested,
(iii) obtain "cold comfort" letters from the independent certified public
accountants of the Company and the Guarantors (and, if necessary, any other
certified public accountant of any subsidiary of the Company, any Guarantor or
any business acquired by the Company or Guarantor for which financial statements
and financial data are or are required to be included or incorporated by
reference in the Registration Statement) and updates, in each case, addressed to
each selling Holder of Registrable Securities, or underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings,
(iv) deliver such documents and certificates as may be reasonably requested by
counsel for the Holders or underwriters, if any, to evidence the continued
validity of the representations and warranties of the Company and the Guarantors
made pursuant to clause (i) above and to evidence compliance with any customary
conditions in an underwriting agreement and (v) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 5 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriters or agent) with respect to all parties to
be indemnified pursuant to Section 5 hereof and the underwriters.
(o) comply, as to all matters within the Company's and the Guarantors'
control, with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such Registration
Statement in accordance with the intended methods of disposition by the Holders
thereof provided for in such Registration Statement;
(p) use their best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may be
required to be obtained by the Company and the Guarantors to effect the Shelf
Registration or the offering or sale of Securities in connection therewith or to
enable the selling Holder or Holders to offer, or to consummate the disposition
of, their Registrable Securities;
-15-
(q) notify in writing each Holder of Registrable Securities of any
proposal by the Company and the Guarantors to amend or waive any provision of
this Agreement pursuant to Section 7(b) hereof and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;
(r) in the event that any broker-dealer registered under the Exchange
Act shall underwrite any Registrable Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules and the By-Laws of the NASD or any successor
thereto, as amended from time to time) thereof, whether as a Holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Rules and By-Laws, including by (A) if
such Conduct Rules or By-Laws shall so require, permitting a "qualified
independent underwriter" (as defined in such Conduct Rules or By-Laws (or any
successor thereto)) to participate in the preparation of the Registration
Statement relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the yield of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof and (C) providing such information to such broker-dealer as may
be required in order for such broker-dealer to comply with the requirements of
the Conduct Rules or By-Laws of the NASD;
(s) make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the effective
date of such Registration Statement, an earnings statement of the Company and
its subsidiaries complying with Section 11(a) of the Securities Act (including
Rule 158 thereunder);
(t) Upon consummation of an Exchange Offer, obtain an opinion of
counsel to the Company addressed to the Trustee for the benefit of all Holders
of Registrable Securities participating in the Exchange Offer and which includes
an opinion that (i) the Company and the Guarantors have duly authorized,
executed and delivered the Exchange Securities and the related indenture, and
(ii) each of the Exchange Securities and related indenture constitutes a legal,
valid and binding obligation of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its respective terms
(with customary exceptions).
(u) If an Exchange Offer is to be consummated, upon delivery of the
Registrable Securities by Holders to the Company (or to such other Person as
directed by the issuers) in exchange for the Exchange Securities the Company
shall mark, or cause to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange Notes;
in no event shall such Registrable Securities be marked as paid or otherwise
satisfied.
4. Participation of Broker-Dealers in Exchange Offer.
-------------------------------------------------
(a) Each of the Company and the Guarantors understands that the staff
of the Commission has taken the position that any broker-dealer that receives
Exchange Securities for its own account in the Exchange Offer in exchange for
Securities that were acquired by such broker-dealer as
-16-
a result of market-making or other trading activities (a "PARTICIPATING BROKER-
DEALER"), may be deemed to be an "UNDERWRITER" within the meaning of the
Securities Act in connection with any resale of such Exchange Securities and,
therefore, must deliver a prospectus meeting the requirements of the Securities
Act in connection with any resales of the Exchange Securities received by it in
the Exchange Offer.
Each of the Company and the Guarantors understands that it is the staffs
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligations under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise
meets the requirements of the Securities Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company and the Guarantors agree: to cause the Exchange
Offer Registration Statement to remain effective for a period 180 days after the
Offer Termination Date (or such earlier date as each Participating Broker-Dealer
shall have notified the Company and the Guarantors in writing that such
Participating Broker-Dealer has resold all such Exchange Securities received in
the Exchange Offer) and shall amend or supplement the Prospectus or document
incorporated by reference therein, as the case may be, contained in the Exchange
Offer Registration Statement, as would otherwise be contemplated by Section 3(h)
for such a period, and Participating Broker-Dealers shall not be authorized by
the Company and the Guarantors to deliver and shall not deliver such Prospectus
after such period in connection with the resales contemplated by this Section 4.
(c) The Initial Purchasers shall have no liability to the Company, the
Guarantors or any Holder for costs and expenses of the Exchange Offer
Registration with respect to any request that they make pursuant to Section 4(b)
above.
5. Indemnification and Contribution.
--------------------------------
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each Holder and each Person,
if any who controls the Initial Purchasers or any Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, liabilities and expenses
(including the reasonable fees and expenses of counsel and other expenses in
connection with investigating, defending or settling such action or claim)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement (or any amendment or
supplement thereto) pursuant to which Exchange Securities or Registrable
Securities were registered under the Securities Act (including all documents
incorporated therein by reference) or arising out of or based upon any omissions
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented if the
Company and the Guarantors shall have furnished any amendments or supplements
thereto), or arising out of or based upon any omission or alleged
-17-
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, EXCEPT insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information furnished in
writing to the Company and the Guarantors by or on behalf of any Holder
expressly for use in connection therewith ("HOLDERS' INFORMATION"); provided,
--------
however that the indemnification contained in this paragraph (a) with respect to
- -------
any preliminary Prospectus shall not inure to the benefit of the Holders (or to
the benefit of any Person controlling any Holder) on account of any such loss,
claim, damage, liability or expense arising from the sale of such Registrable
Securities or Exchange Securities by the Holders to any Person if a copy of the
final Prospectus shall not have been delivered or sent to such Person at or
prior to written confirmation of such sale, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
the preliminary Prospectus was corrected in the final Prospectus, provided that
--------
the Company and the Guarantors have delivered the final Prospectus to the
Holders in requisite quantity on a timely basis to permit delivering and
sending. The foregoing indemnity agreement shall be in addition to any
liability which the Company and the Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Holders or any Person controlling the Holders in respect of which indemnity may
be sought against the Company and the Guarantors, such Holders or such
controlling Person shall promptly notify the parties against whom
indemnification is being sought (the "INDEMNIFYING PARTIES"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Holders or any such
controlling Person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Holders or
such controlling Person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Holders or such controlling Person and the indemnifying parties and such Holders
or such controlling Person shall have been advised by its counsel that
representation of such indemnified party and any indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Holders or such controlling
Person). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for such Holders and
controlling Persons not having actual or potential differing interests with such
Holder or among themselves, which firm shall be designated in writing by Furman
Selz, and that all such fees and expenses shall be reimbursed as they are
incurred. The indemnifying parties shall not be liable for any settlement of any
such action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties agree
to indemnify and hold harmless any Holders, to the extent provided in the
preceding paragraph, and any
-18-
such controlling Person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless each of the Company, the Guarantors, each of their respective
directors and officers, and any Person who controls the Company or any of the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company and the Guarantors to each Holder, but only with respect to the Holders'
Information. If any action, suit or proceeding shall be brought against the
Company, any of the Guarantors, any of their respective directors or officers,
or any such controlling Persons based on any Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto),
and in respect of which indemnity may be sought against any Holder pursuant to
this paragraph (c), such Holder shall have the rights and duties given to the
Company and the Guarantors by paragraph (b) above (except that if the Company
and the Guarantors shall have assumed the defense thereof such Holder shall not
be required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Holder's expense), and the Company, the Guarantors, their respective directors
and officers, and any such controlling Persons shall have the rights and duties
given to the Holders by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which any Holders may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits of the Company and
the Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Guarantors from the offering of the Securities included in
any Registration Statement shall in each case be deemed to include the proceeds
received by the Company in connection with the offering of the Securities
pursuant to the Placement Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the Placement Agreement shall not be deemed to be a
benefit received by the Initial Purchasers in connection with the offering of
the Securities included in any Registration Statement. The relative fault of the
Company and the Guarantors on the one hand, the Holders on another hand, and the
Initial Purchasers on another hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors on the one hand, by the
Holders on another hand, and the Initial Purchasers on another hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
-19-
(e) The Company, the Guarantors and each Holder agree that it would
not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Not
withstanding the provisions of this Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Securities were sold by such Holder exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 5 are several in proportion
to the aggregate principal amount of Securities purchased by such Holder and not
joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement (i) includes an unconditional release
of such indemnified party from all liability or claims that are the subject
matter of such action, suit or proceeding and (ii) does not include a statement
as to, or an admission of, fault, culpability or a failure to act by or on
behalf of any indemnified party.
(g) Any losses, claims, damages, liabilities or expenses (including
counsel fees pursuant to paragraph (b) above) for which an indemnified party is
entitled to indemnification or contribution under this Section 5 shall be paid
by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 5 shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Holder or any Person controlling any Holder, the Company's or any Guarantor's
directors or officers or any Person controlling the Company or any Guarantor,
(ii) acceptance of any Exchange Securities and (iii) any sale of Registrable
Securities pursuant to a Shelf Registration Statement.
6. Underwritten Offerings, Rule 144.
--------------------------------
(a) Selection of Underwriters. If any of the Registrable Securities
-------------------------
covered by the Shelf Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by the Holders of at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each Holder of Registrable Securities
------------------------
hereby agrees with each other such Holder that no such Holder may participate in
any underwritten offering hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve
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such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(c) Rule 144. For so long as the Company is subject to the reporting
--------
requirements of Section 13 or 15 of the Exchange Act, the Company covenants to
the Holders of Registrable Securities that the Company shall timely file the
reports required to be filed by it under the Exchange Act or the Securities Act
(including the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder, that if it ceases to be so required to file such reports, it will
upon the request of any Holder of Registrable Securities (i) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the Securities Act, (ii) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144 under the
Securities Act and it will take such further action as any Holder of Registrable
Securities may reasonably request, and shall take such further action as any
Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitations of the
exemption provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder of
Registrable Securities in connection with that Holder's sale pursuant to Rule
144, the Company shall deliver to such Holder a written statement as to whether
it has complied with such requirements.
7. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company and the Guarantors have
--------------------------
not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Entire Agreement, Amendments and Waivers. This Agreement and the
----------------------------------------
other writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company and the Guarantors
have obtained the written consent of the Majority Holders; provided, however,
-------- -------
that no departure from the provisions of Section 5 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing by
such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company and the Guarantors by means of a notice given in accordance with the
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provisions of this Section 7(c), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Placement Agreement; and (ii)
if to the Company or the Guarantors at the Company's address set forth in the
Placement Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly given
at the time delivered, if personally delivered; five Business Days after being
deposited in the mail, postage pre-paid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next Business
Day if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferees of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities, shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers shall have no liability or obligation to the Company or the
Guarantors with respect to any failure by a Holder (other than the Initial
Purchasers) to comply with, or any breach by any Holder of, the obligations of
such Holder under this Agreement.
(e) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company, the
Guarantors and the Initial Purchasers and shall have the right to enforce such
agreements directly to the extent they deem such enforcement necessary or
advisable to protect their rights hereunder.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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(i) Severability. In the event that one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Salem Communications Corporation, a California
corporation
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
ATEP Radio, Inc.,
Bison Media, Inc.,
Caron Broadcasting, Inc.,
Common Ground Broadcasting, Inc.,
Golden Gate Broadcasting Company, Inc.,
Inland Radio, Inc.,
Inspiration Media, Inc.,
Inspiration Media of Texas, Inc.,
New England Continental Media, Inc.,
New Inspiration Broadcasting Company, Inc.,
Oasis Radio, Inc.,
Pennsylvania Media Associates, Inc.,
Radio 1210, Inc.,
Salem Communications Corporation, a Delaware
corporation
Salem Media Corporation,
Salem Media of California, Inc.,
Salem Media of Colorado, Inc.,
Salem Media of Louisiana, Inc.,
Salem Media of Ohio, Inc.,
Salem Media of Oregon, Inc.,
Salem Media of Pennsylvania, Inc.,
Salem Media of Texas, Inc.,
Salem Music Network, Inc.,
Salem Radio Network Incorporated.,
Salem Radio Representatives, Inc.,
South Texas Broadcasting, Inc.,
SRN News Network, Inc.,
and
Vista Broadcasting, Inc.,
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
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Beltway Media Partners
By: Salem Communications Corporation, a
California corporation, its general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
By: Golden Gate Broadcasting Company, Inc., its
general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
By: New Inspiration Broadcasting Company, Inc.,
its general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
Confirmed as of the date first
above mentioned.
FURMAN SELZ LLC
SMITH BARNEY INC.
BANCBOSTON SECURITIES INC.
BNY CAPITAL MARKETS, INC.
By: Furman Selz LLC
By: /s/ Harlan J. Wakoff
---------------------
Harlan Wakoff
Vice President
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