AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 2003
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
AMERICAN MEDIA OPERATIONS, INC.
(Exact Name of Registrant as Specified In Its Charter)
<Table>
DELAWARE 2721 59-2094424
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</Table>
1000 AMERICAN MEDIA WAY
BOCA RATON, FLORIDA 33464
(561) 997-7733
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
MICHAEL B. KAHANE
1000 AMERICAN MEDIA WAY
BOCA RATON, FLORIDA 33464
(561) 997-7733
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------------
WITH A COPY TO:
JOHN B. TEHAN, ESQ.
SIMPSON THACHER & BARTLETT LLP
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
---------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration number of the earlier effective
Registration Statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
8 7/8% Senior Subordinated Notes
due 2011........................ $150,000,000 100% $150,000,000 $12,135
- ---------------------------------------------------------------------------------------------------------------------------
Guarantee of 8 7/8% Senior
Subordinated Notes due
2011(2)......................... $150,000,000 100% $150,000,000 (3)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) See inside facing page for additional registrant guarantors.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee for the Guarantee is payable.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF ADDITIONAL REGISTRANT GUARANTORS
<Table>
<Caption>
EXACT NAME OF REGISTRANT STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER
GUARANTOR AS SPECIFIED IN ITS CHARTER INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER
- ------------------------------------- ------------------------------ ---------------------
AM Auto World Weekly, Inc. Delaware 65-0963857
American Media Consumer Entertainment Delaware 65-0963852
Inc.
American Media Consumer Magazine Delaware 65-0963863
Group, Inc.
American Media Distribution & Delaware 65-0963860
Marketing Group, Inc.
American Media Property Group, Inc. Delaware 01-0704153
American Media Mini Mags, Inc. Delaware 65-0963854
American Media Newspaper Group, Inc. Delaware 65-0963864
Country Music Media Group, Inc. Delaware 65-0462019
Distribution Services, Inc. Delaware 59-1641185
Globe Communications Corp. Delaware 36-2702593
Globe Editorial, Inc. Delaware 65-0963859
Mira! Editorial, Inc. Delaware 65-0963841
National Enquirer, Inc. Florida 59-2764097
National Examiner, Inc. Delaware 65-0963855
NDSI, Inc. Delaware 59-2632066
Star Editorial, Inc. Delaware 59-2719233
<Caption>
ADDRESS INCLUDING
ZIP CODE, AND TELEPHONE NUMBER
EXACT NAME OF REGISTRANT INCLUDING AREA CODE, OF REGISTRANT
GUARANTOR AS SPECIFIED IN ITS CHARTER GUARANTOR'S PRINCIPAL EXECUTIVE OFFICES
- ------------------------------------- ---------------------------------------
AM Auto World Weekly, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
American Media Consumer Entertainment 1000 American Media Way
Inc. Boca Raton, FL 33464
(561) 997-7733
American Media Consumer Magazine 1000 American Media Way
Group, Inc. Boca Raton, FL 33464
(561) 997-7733
American Media Distribution & 1000 American Media Way
Marketing Group, Inc. Boca Raton, FL 33464
(561) 997-7733
American Media Property Group, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
American Media Mini Mags, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
American Media Newspaper Group, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Country Music Media Group, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Distribution Services, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Globe Communications Corp. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Globe Editorial, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Mira! Editorial, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
National Enquirer, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
National Examiner, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
NDSI, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Star Editorial, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
</Table>
<Table>
<Caption>
EXACT NAME OF REGISTRANT STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER
GUARANTOR AS SPECIFIED IN ITS CHARTER INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER
- ------------------------------------- ------------------------------ ---------------------
AMI Books, Inc. Delaware 52-2377122
AMI Films, Inc. Delaware 52-2377127
Weider Publications, LLC Delaware 75-3091848
SYL Communications California 95-4262903
<Caption>
ADDRESS INCLUDING
ZIP CODE, AND TELEPHONE NUMBER
EXACT NAME OF REGISTRANT INCLUDING AREA CODE, OF REGISTRANT
GUARANTOR AS SPECIFIED IN ITS CHARTER GUARANTOR'S PRINCIPAL EXECUTIVE OFFICES
- ------------------------------------- ---------------------------------------
AMI Books, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
AMI Films, Inc. 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
Weider Publications, LLC 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
SYL Communications 1000 American Media Way
Boca Raton, FL 33464
(561) 997-7733
</Table>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 6, 2003
PROSPECTUS
$150,000,000
American Media Operations, Inc.
OFFER TO EXCHANGE OF $150,000,000 8 7/8% SENIOR
SUBORDINATED NOTES DUE 2011, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL 8 7/8%
SENIOR SUBORDINATED NOTES DUE 2011
Material Terms of the Exchange Offer
- The exchange offer expires at 5:00 p.m., New York City time, on
, 2003, unless extended.
- The exchange notes to be issued shall be exchanged for up to all of our
outstanding 8 7/8% Senior Subordinated Notes due 2011.
- The exchange offer is not conditioned upon any minimum aggregate
principal amount of outstanding notes being tendered for exchange.
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
- Tenders of outstanding notes may be withdrawn any time prior to the
expiration of the exchange offer.
- The exchange of outstanding notes should not be a taxable exchange for
U.S. federal income tax purposes.
- We will not receive any proceeds from the exchange offer.
- The terms of the exchange notes to be issued are substantially identical
to the outstanding notes, except for certain transfer restrictions and
registration rights relating to the outstanding notes.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 15 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THIS EXCHANGE OFFER.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this prospectus is , 2003.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by us. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which it relates or any offer to sell or the
solicitation of an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in our affairs since the date hereof
or that the information contained herein is correct as of any time subsequent to
its date.
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes where
such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the consummation of the exchange offer, it
will make this prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ABOUT THIS PROSPECTUS....................................... ii
FORWARD-LOOKING STATEMENTS.................................. ii
WHERE YOU CAN FIND ADDITIONAL INFORMATION................... iii
INCORPORATION BY REFERENCE.................................. iii
INDUSTRY DATA AND CIRCULATION INFORMATION................... iii
SUMMARY..................................................... 1
RISK FACTORS................................................ 15
USE OF PROCEEDS............................................. 26
CAPITALIZATION.............................................. 26
UNAUDITED PRO FORMA FINANCIAL INFORMATION................... 27
THE EXCHANGE OFFER.......................................... 30
DESCRIPTION OF OTHER INDEBTEDNESS........................... 41
DESCRIPTION OF THE EXCHANGE NOTES........................... 44
CERTAIN U.S. FEDERAL TAX CONSEQUENCES....................... 82
PLAN OF DISTRIBUTION........................................ 86
LEGAL MATTERS............................................... 87
EXPERTS..................................................... 87
CHANGE IN ACCOUNTANTS....................................... 87
</Table>
i
ABOUT THIS PROSPECTUS
American Media Operations, Inc. is a Delaware corporation. Our principal
executive offices are located at 1000 American Media Way, Boca Raton, Florida
33464 and our telephone number is (561) 997-7733.
Unless the context otherwise requires, in this prospectus:
- "we," "us," "our" and the "Company" refer to American Media Operations,
Inc. and its subsidiaries,
- "Holdings" refers to American Media, Inc., our parent company,
- "Weider" refers to Weider Publications, LLC and its subsidiaries, and
- "Acquisition" refers to the acquisition of Weider.
FORWARD-LOOKING STATEMENTS
Some of the information presented or incorporated by reference in this
prospectus constitutes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including, in particular, the statements about our plans, strategies and
prospects under the heading "Summary" included in this prospectus and under the
headings "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" incorporated by reference in this
prospectus. We have used the words "may," "will," "expect," "anticipate,"
"believe," "estimate," "plan," "intend," and similar expressions to identify
forward-looking statements. We have based these forward-looking statements on
our current assumptions, expectations and projections about future events. We
caution you that a variety of factors could cause business conditions and
results to differ materially from what is contained in the forward-looking
statements. These forward-looking statements are subject to risks, uncertainties
and assumptions about us, including, among other things:
- our high degree of leverage and significant debt service obligations,
- our ability to increase circulation and advertising revenues,
- market conditions for our publications,
- our ability to develop new publications and services,
- outcomes of pending and future litigation,
- the effects of terrorism, including bioterrorism, on our business,
- increasing competition by domestic and foreign media companies,
- increased costs and business disruption resulting from diminished service
levels from our wholesalers,
- the introduction and increased popularity over the long term of
alternative technologies for the provision of news and information,
- declines in spending levels by advertisers and consumers,
- the ability in a challenging environment to continue to develop new
sources of circulation,
- lower than expected valuations associated with cash flows and revenues
may result in the inability to realize the value of recorded intangibles
and goodwill.
- changes in the cost of paper used by us,
- any future changes in our management, and
- general risks associated with the publishing industry.
ii
You should not put undue reliance on any forward-looking statements. You
should understand that many important factors, including those discussed under
the heading "Risk Factors" included in this prospectus and the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference in this prospectus, could cause our
results to differ materially from those expressed or suggested in any
forward-looking statements. These forward-looking statements speak only as of
the date of this prospectus, and we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the information requirements of the Exchange Act and, in
accordance therewith, file reports and other information with the Securities and
Exchange Commission. Such reports and other information can be inspected and
copied at the Public Reference Section of the SEC located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at regional
public reference facilities maintained by the SEC located at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the SEC at
prescribed rates. Such materials may also be accessed electronically by means of
the SEC's home page on the Internet (http://www.sec.gov).
We, together with the subsidiary guarantors, have filed a registration
statement on Form S-4 to register with the SEC the exchange notes to be issued
in exchange for the outstanding notes. This prospectus is part of that
registration statement. As allowed by the SEC's rules, this prospectus does not
contain all of the information you can find in the registration statement or the
exhibits to the registration statement.
INCORPORATION BY REFERENCE
Rather than include certain information in this prospectus that we have
already included in reports filed with the SEC, we are incorporating this
information by reference, which means that we can disclose important information
to you by referring to those publicly filed documents containing the
information. This information incorporated by reference is considered to be part
of this prospectus, and future information that we file with the SEC after the
date of this prospectus and prior to the termination of the exchange offer will
automatically update and supersede the information in this prospectus. We
incorporate by reference our Annual Report on Form 10-K for the fiscal year
ended March 31, 2003 and our Current Report on Form 8-K filed on June 6, 2003
and any future filings we make with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act until all the notes offered under this prospectus are
sold.
---------------------
INDUSTRY DATA AND CIRCULATION INFORMATION
Information contained in this prospectus concerning publishing industry
data, circulation information, rankings, readership information (e.g., multiple
readers per copy) and other industry and market information, including our
general expectations concerning the publishing industry, are based on estimates
prepared by us based on certain assumptions and our knowledge of the publishing
industry as well as data from various third party sources. These sources
include, but are not limited to, the report of the Audit Bureau of Circulations
("ABC"), BPA Circulation Statements, Statement of Ownership figures filed with
the U.S. Postal Service, Mediamark Research Inc. ("MRI") syndicated research
data and Veronis Suhler Stevenson research data. While we are not aware of any
misstatements regarding any industry data presented in this prospectus we have
not independently verified any of the data from any of these sources and, as a
result, this data may be imprecise. Our estimates, in particular as they relate
to our general expectations concerning the publishing industry, involve risks
and uncertainties and are subject to change based on various factors.
Unless otherwise indicated, all average weekly circulation information for
our tabloid publications is an average of actual weekly single copy circulation
for the fiscal year ended March 31, 2003. Unless otherwise indicated, all
average circulation information for Weider's publications is an average of
actual per issue circulation for the twelve months ended March 31, 2003. All
references to "circulation" are to single copy and subscription circulation,
unless otherwise specified.
iii
SUMMARY
This summary highlights information contained elsewhere in, or incorporated
by reference in, this prospectus. You should read all the information contained
or incorporated by reference in this prospectus carefully, including the
information under the heading "Risk Factors" and the financial information
included elsewhere in, or incorporated by reference in, this prospectus. All
references to a particular fiscal year are to the four fiscal quarters ended the
last Monday in March of the fiscal year specified.
AMERICAN MEDIA OPERATIONS, INC.
OVERVIEW
We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Globe, National Examiner, Weekly World News,
Sun, Country Weekly, Country Music Magazine, MIRA!, Auto World Magazine and
other smaller monthly publications with a current aggregate weekly circulation
of approximately 5.2 million copies. National Enquirer, Star, and Globe, our
premier titles, have the third, fourth and sixth highest weekly single copy
circulation, respectively, of any weekly periodical in the United States. We are
the leader in total weekly single copy circulation of magazines in the United
States and Canada with approximately 35% of total U.S. and Canadian circulation
for audited weekly publications. We derive approximately 79% of our revenues
from circulation, predominantly single copy sales in retail outlets, and the
remainder from advertising and other sources. National Enquirer, Star, Globe and
National Examiner are distributed in approximately 150,000 retail outlets in the
United States and Canada, representing, in the opinion of management,
substantially complete coverage of periodical outlets in these countries.
Distribution Services, Inc. ("DSI"), our subsidiary, arranges for the placement
and merchandising of our publications and third-party publications at retail
outlets throughout the United States and Canada. In addition, DSI provides
marketing, merchandising and information-gathering services for third parties.
Our tabloid publications are among the most well-known and widely
distributed titles in the publishing industry. While our tabloid publications
have a current aggregate weekly newsstand circulation of approximately 4.3
million copies, they enjoy a weekly readership of over 27 million people due to
multiple readers per copy sold. Our other titles (including the Mini Mags, Micro
Mags and Digests) contribute an additional readership of over 21 million, giving
our titles a total readership in excess of 48 million. As a result, we believe
our publications enjoy strong consumer brand awareness with a large and loyal
readership base.
On January 23, 2003, we acquired Weider Publications, LLC, a privately held
company controlled by Weider Health and Fitness. Weider is the leading worldwide
publisher of health and fitness magazines, with a total estimated readership of
25 million in the United States, more than any other publisher in the health and
fitness category. The health and fitness category is the fastest growing
advertising segment of special interest magazines. Weider currently publishes
seven magazines, including Muscle & Fitness, Shape, Men's Fitness, Muscle &
Fitness Hers, Flex, Fit Pregnancy and Natural Health, with an aggregate average
circulation of approximately 4 million copies.
Our publications include the following titles:
- National Enquirer is a weekly celebrity focused publication with an
editorial content devoted to investigative reporting, celebrities and
features, human interest stories and articles covering lifestyle topics
such as health, food and household affairs. National Enquirer is the
third highest selling weekly periodical based on U.S., Canadian and U.K.
single copy circulation. We sell on average 1.4 million single copies of
National Enquirer per week in the United States, Canada and the United
Kingdom. National Enquirer has a total average weekly circulation of
approximately 1.7 million copies, including subscriptions, with a total
estimated readership in the United States, Canada and the United Kingdom
of 13.9 million.
- Star is a weekly celebrity news-based periodical dedicated to covering
the stars of movies, television and music, as well as the lives of the
rich and famous from politics, business, royalty and other areas. Star's
editorial content also incorporates fashion, health, fitness and diet
features, all with a celebrity spin. Star is the fourth highest selling
weekly periodical in the United States and Canada based on single copy
circulation, selling on average 1.1 million copies per week. Star has a
total average weekly
1
circulation of approximately 1.3 million copies, including subscriptions,
with a total estimated readership in the United States and Canada of 6.6
million.
- Globe is a weekly tabloid with celebrity features that are edgier than
National Enquirer and Star, with a greater emphasis on investigative
crime stories. Globe is the sixth highest selling weekly periodical in
the United States and Canada based on single copy circulation, selling on
average 559,000 copies per week. Globe has a total average weekly
circulation of approximately 603,000 copies, including subscriptions,
with an estimated readership of 3.9 million.
- National Examiner's editorial content consists of celebrity and
human-interest stories, differentiating itself from the other titles
through its upbeat positioning as the "gossip, games and good news"
tabloid. National Examiner has an average weekly single copy circulation
of 263,000 copies with a total average weekly circulation of
approximately 280,000 copies, including subscriptions. Total readership
is estimated at 1.1 million.
- Weekly World News is a tabloid devoted to the publication of bizarre and
strange but true stories. There is much humorous original content and the
paper has created several characters that have become staples of pop
culture. Weekly World News has an average weekly single copy circulation
of 178,000 copies, with a total average weekly circulation of
approximately 197,000 copies, including subscriptions. Total readership
is estimated at 800,000.
- Sun's editorial content is skewed to an older target audience and focuses
on religion, health, holistic remedies, predictions and prophecies. Sun
also includes entertaining and unusual articles from around the world.
Sun has an average weekly single copy circulation of approximately
145,000 copies, with a total readership estimated at 600,000.
- Country Weekly is an entertainment magazine presenting various aspects of
country music and related lifestyles, events and personalities, and has
the highest bi-weekly circulation of any such magazine in its category.
Country Weekly is a bi-weekly publication and has an average single copy
circulation of 215,000 copies, with a total average bi-weekly circulation
of approximately 400,000 copies, including subscriptions. Total
readership is estimated at 3.3 million.
- Country Music is a bi-monthly publication that is also an entertainment
magazine presenting various aspects of country music and related
lifestyles, events and personalities. We acquired Country Music on August
1, 2000. Country Music has an average single copy circulation of
approximately 22,000 copies, with a total average circulation of
approximately 300,000 copies, including subscriptions. Total readership
is estimated at 4.8 million.
- Mini-Mags, Micro-Mags and Digest are pocket-sized books covering such
topics as diets, health, horoscopes, astrology and pets. We believe we
are the largest such publisher in the field, producing approximately 100
million copies annually. With the acquisition of Weider we plan on
leveraging certain Weider brands to enhance the editorial content of
several of our Mini-Mags, Micro-Mags and Digest titles.
- Mira! is a Spanish language magazine that features exclusive news, gossip
and goings-on about the hottest stars in the Latino community, along with
interviews and in-depth stories spotlighting them at work and at play. It
is distributed at checkout counters in supermarkets, bodegas and mass
merchandisers in the top 43 Hispanic markets in the United States. The
magazine was launched in June 2000 and has a total bi-weekly circulation
of approximately 107,000 copies and an estimated total readership of
856,000.
- Auto World targets the in-market buyer and we believe is the only
automotive magazine sold at checkout counters in supermarkets and mass
merchandisers. The readership is 35% female, which we believe gives Auto
World the highest number of women readers of any automotive title.
Articles focus on buying new and pre-owned cars, road tests, comparison
tests, news, pricing, recalls and rebates.
- New Media. We have web sites for the National Enquirer
(nationalenquirer.com), Star (starmagazine.com), Country Weekly
(countryweekly.com), Country Music (countrymusicmagazine.com), Weekly
World News (weeklyworldnews.com), Auto World (amiautoworld.com) and Nopi
Street Perform-
2
ance Compact (streetperformancecompact.com). The Weekly World News site
was voted one of the 100 Best Internet Sites by PC Magazine and we have
content syndication agreements in place with Lycos, Yahoo, iWon, Excite
and Keen.
Weider's publications include the following titles:
- Muscle & Fitness is a premier monthly fitness-related lifestyle magazine,
appealing to exercise enthusiasts and athletes of all ages, especially
those focused on resistance training, body fat control and sports
nutrition. Muscle & Fitness has more than 60 years of brand equity and
has served as a successful brand extension foundation for new titles.
Muscle & Fitness has a total average monthly circulation of approximately
428,000 copies, with monthly subscriptions of 218,000, and an estimated
total readership of 7.9 million.
- Shape is the leader in circulation and advertising revenues in the
attractive and growing women's active lifestyle category. Shape's mission
is to help women lead a healthier lifestyle by providing useful
information on exercise techniques, nutrition, psychology, beauty and
other inspirational topics. Shape has a total average monthly circulation
of approximately 1.7 million copies, with monthly subscriptions of 1.3
million, and an estimated total readership of 5.7 million.
- Men's Fitness is a leading monthly magazine for men with active
lifestyles. The magazine promotes a multi-training approach towards
exercise and offers information and advice in the areas of fitness,
career, and relationships. Men's Fitness has a total average monthly
circulation of approximately 664,000 copies, with monthly subscriptions
of 565,000, and an estimated total readership of 6.4 million.
- Muscle & Fitness Hers was launched in 2000 as a female focused magazine
from Muscle & Fitness. The magazine targets the underserved market of
female fitness enthusiasts and athletes. The editorial style and content
emphasizes resistance training and sports nutrition designed to improve
physical appearance, strength, health and sports performance. The
magazine was published seven times in calendar 2002, and will be expanded
to ten issues in fiscal 2004. Muscle & Fitness Hers has a total average
circulation per issue of approximately 256,000 copies, with subscriptions
per issue of 82,000, and an estimated total readership of 1.2 million.
- Flex, which was spun off from Muscle & Fitness in 1983, is a monthly
magazine devoted to professional bodybuilding. The magazine delivers
nutrition and performance science information for bodybuilding
enthusiasts. As Flex is a premier title in the bodybuilding segment it
receives a significant share of advertising devoted to this special
interest category. Flex has a total average monthly circulation of
approximately 153,000 copies, with monthly subscriptions of 51,000, and
an estimated total readership of 918,000.
- Fit Pregnancy was spun off from Shape in 1995. Fit Pregnancy's editorial
focus makes it a premier lifestyle magazine for women during pregnancy
and the first couple of years after childbirth. The bi-monthly magazine
delivers authoritative information on health, fashion, food and fitness.
Fit Pregnancy recently increased its editorial emphasis on the two-year
postpartum period and as a result has expanded its postnatal products
advertising. Fit Pregnancy has a total average circulation per issue of
approximately 508,000 copies, with subscriptions per issue of 411,000,
and an estimated total readership of 2.0 million.
- Natural Health is a leading wellness magazine published ten times a year,
offering readers practical information to benefit from the latest
scientific knowledge and advancements in the field of natural health,
including advice to improve well-being and combat illness. Published for
more than 30 years, Natural Health is one of the longest continuously
published and most widely read paid publications in its field. Natural
Health has a total average circulation per issue of approximately 327,000
copies, with subscriptions per issue of 272,000, and an estimated total
readership of 785,000.
- New Media. We have web sites for Muscle & Fitness
(muscleandfitness.com), Flex (flexonline.com), Mens Fitness
(mensfitness.com), Muscle & Fitness Hers (muscleandfitnesshers.com),
Shape (shape.com), Natural Health (naturalhealthmagazine.com) and Fit
Pregnancy (fitpregnancy.com). We maintain an online fitness portal
(fitnessonline.com) and also sell a paid subscription based interactive
online weight loss & exercise program, (iShape.com).
3
THE ACQUISITION
On January 23, 2003, we acquired the magazine business of Weider for $357.3
million, which includes a post-closing working capital adjustment of $7.3
million, and Weider Publications, LLC became a wholly owned subsidiary of
American Media Operations, Inc. In connection with the Acquisition, Weider
Publications, LLC entered into certain other agreements with Weider Health and
Fitness and its subsidiaries, the terms of which are described under the heading
"Certain Relationships and Related Transactions" in our Annual Report on Form
10-K for the fiscal year ended March 31, 2003, which is incorporated herein by
reference.
The Acquisition, and the related financings, including the borrowings under
our amended and restated credit facilities (the "Amended and Restated Credit
Facilities"), are collectively referred to in this prospectus as the
Transactions.
THE RECAPITALIZATION
On May 7, 1999, EMP Group L.L.C., (the "LLC"), a company formed by Evercore
Partners, referred to as Evercore in this prospectus, acquired Holdings, our
parent company (the "1999 Acquisition"). On April 17, 2003, we completed a
series of transactions whereby principals and affiliates of Evercore and Thomas
H. Lee Partners, referred to as T.H. Lee in this prospectus, David J. Pecker,
our Chief Executive Officer, other members of management and certain other
investors contributed approximately $434,570,000 in cash and existing ownership
interests of the LLC, our ultimate parent, valued at approximately $73,270,000,
to a merger vehicle which was merged with and into the LLC in exchange for newly
issued ownership interests of the LLC. These transactions are referred to
collectively as the "Recapitalization" in this prospectus. Please see "Security
Ownership of Certain Beneficial Owners and Management" in our Annual Report on
Form 10-K for the fiscal year ended March 31, 2003, which is incorporated herein
by reference for a summary of our ownership structure and Note 14 to the
consolidated financial statements incorporated herein by reference.
Evercore, based in New York and Los Angeles, makes private equity and
venture capital investments and provides strategic, financial and restructuring
advisory services.
T.H. Lee makes private equity investments and manages four private equity
funds, with aggregate capital commitments of approximately $12 billion.
4
THE EXCHANGE OFFER
THE EXCHANGE OFFER............ We are offering to exchange up to $150,000,000
aggregate principal amount of our 8 7/8% Senior
Subordinated Notes due 2011, which have been
registered under the Securities Act, which we
refer to in this prospectus as the exchange
notes, for up to $150,000,000 aggregate
principal amount of our 8 7/8% Senior
Subordinated Notes due 2011, which we refer to
in this prospectus as the outstanding notes.
Outstanding notes may be exchanged only in
integral multiples of $1,000.
EXCHANGE NOTES................ The forms and terms of the exchange notes are
identical in all material respects to the terms
of the outstanding notes, except for certain
transfer restrictions, registration rights and
liquidated damages provisions relating to the
outstanding notes.
EXPIRATION DATE; WITHDRAWAL OF
TENDER........................ Unless we extend the exchange offer, it will
expire at 5:00 p.m., New York City time, on
, 2003. You may withdraw any
outstanding notes you tender pursuant to the
exchange offer at any time prior to the
expiration of the exchange offer. We will
return, as promptly as practicable after the
expiration or termination of the exchange
offer, any outstanding notes not accepted for
exchange for any reason without expense to you.
CERTAIN CONDITIONS TO THE
EXCHANGE OFFER................ The exchange offer is subject to the following
conditions, which we may waive, which permit us
to refuse acceptance of the outstanding notes
or to terminate the exchange offer if:
- a lawsuit is instituted or threatened in
a court or before a government agency
which may impair our ability to proceed
with the exchange offer;
- a law, statute, rule or regulation is
proposed or enacted or interpreted by
the SEC which may impair our ability to
proceed with the exchange offer; or
- any governmental approval is not
received which we think is necessary to
consummate the exchange offer.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES............. If you wish to accept the exchange offer, you
must complete, sign and date the letter of
transmittal in accordance with the
instructions, and deliver the letter of
transmittal, along with the outstanding notes
and any other required documentation, to the
exchange agent.
By executing the letter of transmittal, you
will represent to us that, among other things:
- any exchange notes you receive will be
acquired in the ordinary course of your
business;
- you have no arrangement or understanding
with any person to participate in the
distribution of the exchange notes; and
- you are not an affiliate of the Company
or, if you are an affiliate, you will
comply with the registration and
prospectus delivery requirements of the
Securities Act to the extent applicable.
5
If you hold your outstanding notes through The
Depository Trust Company and wish to
participate in the exchange offer, you may do
so through The Depository Trust Company's
Automated Tender Offer Program ("ATOP"). By
tendering outstanding notes through ATOP, you
will agree to be bound by the letter of
transmittal as though you had executed it.
INTEREST ON THE EXCHANGE
NOTES......................... Interest on the exchange notes will accrue from
the date of their issuance at the rate of
8 7/8% per annum. Interest on the outstanding
notes exchanged for exchange notes will cease
to accrue upon issuance of the exchange notes.
PAYMENT OF INTEREST ON THE
EXCHANGE NOTES................ Interest is payable every six months on January
15 and July 15, beginning July 15, 2003. The
interest payment made to holders of the
exchange notes on July 15, 2003 will include
the interest on the outstanding notes exchanged
for such exchange notes accrued and unpaid as
of the date of issuance of the exchange notes.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. If you are a beneficial owner whose outstanding
notes are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee and wish to tender such notes in the
exchange offer, please contact the registered
holder as soon as possible and instruct them to
tender on your behalf and comply with our
instructions set forth elsewhere in this
prospectus.
GUARANTEED DELIVERY
PROCEDURE..................... If you wish to tender your outstanding notes,
you may, in certain instances, do so according
to the guaranteed delivery procedures set forth
elsewhere in this prospectus under "The
Exchange Offer -- Guaranteed Delivery
Procedures."
EXCHANGE AND REGISTRATION
RIGHTS AGREEMENT.............. On January 23, 2003, we sold the outstanding
notes and the related guarantees to the initial
purchasers in a transaction exempt from the
registration requirements of the Securities
Act. At that time, we entered into an exchange
and registration rights agreement with the
initial purchasers that grants the holders of
the outstanding notes certain exchange and
registration rights. The exchange offer
satisfies those rights, which terminate upon
consummation of the exchange offer. You will
not be entitled to any exchange or registration
rights with respect to the exchange notes.
However, outstanding notes that are not
tendered in the exchange offer may experience a
significantly more limited trading market,
which might adversely affect the liquidity of
any remaining outstanding notes. See "Risk
Factors -- Risks Related to the Exchange
Offer -- The market value of your current notes
may be lower if you do not exchange your
outstanding notes or fail to properly tender
your outstanding notes for exchange."
CERTAIN FEDERAL TAX
CONSIDERATIONS................ With respect to the exchange of the outstanding
notes for the exchange notes:
- the exchange will not constitute a
taxable exchange for U.S. federal income
tax purposes;
- you will not recognize gain or loss upon
receipt of the exchange notes;
6
- you must include interest in gross
income to the same extent as the
outstanding notes; and
- you will be able to tack the holding
period of the exchange notes to the
holding period of the outstanding notes.
USE OF PROCEEDS............... We will not receive any proceeds from the
exchange of outstanding notes pursuant to the
exchange offer.
EXCHANGE AGENT................ We have appointed J.P. Morgan Trust Company,
National Association as the exchange agent for
the exchange offer. The address of the Exchange
Agent is 3800 Colonnade Parkway, Suite 490,
Birmingham, Alabama 35243 and its telephone
number at that address is (205) 968-0506.
7
THE EXCHANGE NOTES
Pursuant to the exchange offer, we are offering to exchange up to
$150,000,000 aggregate principal amount of the exchange notes for up to an equal
aggregate principal amount of the outstanding notes. The form and terms of the
exchange notes are the same as the form and terms of the outstanding notes,
except that the exchange notes will have been registered under the Securities
Act and will not bear legends restricting their transfer. The holders of
exchange notes will not be entitled to certain rights of holders of the
outstanding notes under the exchange and registration rights agreement, which
rights will terminate upon the consummation of the exchange offer.
The exchange notes will evidence the same debt of the outstanding notes and
will be issued under, and be entitled to the benefits of, the indenture, dated
as of January 23, 2003, between us, our subsidiary guarantors and J.P. Morgan
Trust Company, National Association.
ISSUER........................ American Media Operations, Inc.
NOTES OFFERED................. $150,000,000 in aggregate principal amount of
8 7/8% Senior Subordinated Notes due 2011,
which have been registered under the Securities
Act.
MATURITY DATE................. January 15, 2011.
INTEREST...................... Annual rate: 8 7/8%
Payment frequency: every six months on January
15 and July 15, beginning July 15, 2003.
OPTIONAL REDEMPTION........... On or after January 15, 2007, we may redeem
some or all of the exchange notes at the
redemption prices listed in the section
entitled "Description of the Exchange
Notes -- Optional Redemption." Prior to such
date, we may not redeem the exchange notes,
except as described in the following sentence.
At any time prior to January 15, 2006, we may,
on one or more occasions, redeem up to 35% of
the original aggregate principal amount of the
exchange notes with the net cash proceeds of
certain offerings of equity at a redemption
price equal to 108.875% of the principal amount
thereof, plus accrued and unpaid interest and
liquidated damages thereon, if any, so long as
- at least 65% of the original aggregate
principal amount of the exchange notes remain
outstanding after each such redemption and
- any such redemption by us is made within 60
days of such equity offering.
CHANGE OF CONTROL............. Upon the occurrence of a change of control, you
will have the right to require us to repurchase
all or a portion of your exchange notes at a
purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and
unpaid interest and liquidated damages thereon,
if any, to the date of repurchase; provided,
however, that notwithstanding a change of
control, we will not be obligated to repurchase
the exchange notes pursuant to a change of
control offer in the event that we have
exercised our right to redeem all the exchange
notes, as described under "Optional Redemption"
above. See "Description of the Exchange
Notes -- Change of Control."
NOTE GUARANTEES............... The exchange notes will be fully and
unconditionally guaranteed (each such
guarantee, a "Note Guarantee"), on an unsecured
senior subordinated basis by each of our
domestic subsidiaries existing on the issue
date of the exchange notes and by each of our
8
future domestic restricted subsidiaries
(collectively, the "Note Guarantors"). The Note
Guarantees will be subordinated to the
guarantees of our senior indebtedness issued by
the Note Guarantors under our Amended and
Restated Credit Facilities. The exchange notes
will not be guaranteed by our current or future
foreign subsidiaries. As of and for the fiscal
year ended March 31, 2003, after eliminating
inter-company activity, these non-guarantor
foreign subsidiaries (i) had approximately $2.0
million of total liabilities (including trade
payables), (ii) had approximately 0.3% of our
assets and (iii) generated approximately 0.1%
of our operating revenues. See "Description of
the Exchange Notes -- Overview of the Exchange
Notes and the Note Guarantees -- The Note
Guarantees."
RANKING....................... The exchange notes will be unsecured and
subordinated in right of payment to all of our
existing and future senior indebtedness,
including all of our borrowings under our
Amended and Restated Credit Facilities. The
exchange notes will rank equal in right of
payment with all of our existing and future
senior subordinated indebtedness (including any
outstanding notes not exchanged for exchange
notes and our existing $400 million aggregate
principle amount of 10 1/4% Series B Senior
Subordinated Notes due 2009 (the "existing
notes")) and senior to all of our future
subordinated obligations. We are a holding
company and as such we derive all of our
operating income and cash flow from our
subsidiaries. The Note Guarantees will be
unsecured and subordinated in right of payment
to all existing and future senior indebtedness
of the Note Guarantors, including all
guarantees of the Note Guarantors under our
Amended and Restated Credit Facilities. The
Note Guarantees will rank equal in right of
payment with all of the existing and future
senior subordinated indebtedness of the Note
Guarantors (including the guarantees of any
outstanding notes not exchanged for exchange
notes and the guarantees of the existing notes)
and be senior to all of the existing and future
subordinated obligations of the Note
Guarantors. The exchange notes and the Note
Guarantees will be effectively subordinated to
the liabilities, including trade payables, and
preferred stock of any subsidiary of the
Company that is not a Note Guarantor. See
"Description of the Notes -- Ranking."
As of March 31, 2003, there was outstanding:
(a) $468.8 million of senior indebtedness of
the Company, consisting of our borrowings
under our amended and restated credit
facilities (excluding unused commitments
under our Amended and Restated Credit
Facilities), all of which would have been
secured indebtedness;
(b) $550.7 million of senior subordinated
indebtedness of the Company (including
the outstanding notes and the existing
notes) and no indebtedness of the Company
that is subordinate or junior in right of
repayment to the exchange notes;
9
(c) no senior indebtedness of the Note
Guarantors (excluding their guarantees of
our indebtedness under our Amended and
Restated Credit Facilities); and
(d) no senior subordinated indebtedness of
the Note Guarantors (excluding the
guarantees of the outstanding notes and
the existing notes and the Note
Guarantees) and no indebtedness of the
Note Guarantors that is subordinate or
junior in right of payment to the
guarantees of the outstanding notes.
The indenture relating to the exchange notes
permits us and our subsidiaries to incur a
significant amount of additional indebtedness.
CERTAIN COVENANTS............. The indenture under which the exchange notes
will be issued and under which the outstanding
notes were issued, limits, among other things,
our ability and the ability of our subsidiaries
to:
- borrow money;
- guarantee other indebtedness;
- use assets as security in other
transactions;
- pay dividends on stock, redeem stock or
redeem subordinated debt;
- make investments;
- enter into agreements that restrict
dividends from subsidiaries;
- sell assets;
- enter into affiliate transactions;
- sell capital stock of subsidiaries;
- enter into new lines of business; and
- merge or consolidate.
For more details, see "Description of the
Exchange Notes -- Certain Covenants."
ABSENCE OF A PUBLIC MARKET FOR
THE EXCHANGE NOTES............ In general, you may freely transfer the
exchange notes. However, there are exceptions
to this general statement. Holders of exchange
notes may not freely transfer the exchange
notes if:
- they acquire the exchange notes outside
of their ordinary course of business;
- they have an arrangement with any person
to participate in the distribution of
the exchange notes; or
- they are an affiliate of ours.
Further, the exchange notes will be new
securities for which there will not initially
be a market. As a result, the development or
liquidity of any market for the exchange notes
may not occur. The initial purchasers of the
outstanding notes have advised us that they
currently intend to make a market in the
exchange notes. However,
10
you should be aware that the initial purchasers
are not obligated to do so. In the event such a
market may develop, the initial purchasers may
discontinue it any time without notice. We do
not intend to apply for listing of the exchange
notes on any securities exchange or on any
automated dealer quotation system.
USE OF PROCEEDS............... We will not receive proceeds from the exchange
offer.
RISK FACTORS
You should carefully consider the information under the caption "Risk
Factors" and all other information contained or incorporated by reference in
this prospectus before tendering your outstanding notes.
11
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table sets forth certain of our summary historical and pro
forma financial information and the notes related thereto. The summary
historical financial information for the fiscal periods ended May 6, 1999 and
March 27, 2000 and as of March 27, 2000 and March 26, 2001 has been derived
from, and should be read in conjunction with, our audited historical financial
statements and the notes related thereto, which are not incorporated by
reference in this prospectus. The summary historical financial information for
the fiscal period ended March 26, 2001 and as of and for the fiscal periods
ended March 25, 2002 and March 31, 2003 has been derived from, and should be
read in conjunction with, our audited historical financial statements and the
notes related thereto, which are incorporated by reference in this prospectus.
The unaudited pro forma financial information for the fiscal year ended March
31, 2003 has been derived from the unaudited pro forma financial information and
the notes thereto included elsewhere in this prospectus. Such pro forma
financial information gives effect to the Transactions as if they had been
consummated as of the beginning of the fiscal year presented, is for
informational purposes only and does not purport to be indicative of the results
of operations that would have actually been obtained had the Transactions in
fact occurred for the fiscal year presented, nor are they indicative of, or
projections of, our results of operations for any future period or date. The
Acquisition was accounted for using the purchase method of accounting.
Allocations of purchase price have been determined based upon information
presently available and are subject to change as additional information becomes
available.
The parent of American Media Operations, Inc. was purchased on May 7, 1999
resulting in a change in our historical cost basis of various assets and
liabilities. Accordingly, our historical financial information provided and
incorporated by reference in this prospectus for periods prior to May 7, 1999 is
not comparable to our post-acquisition financial information. For purposes of
this presentation, all historical financial information for periods prior to May
7, 1999 is referred to as the "Predecessor Company" and all periods subsequent
to May 7, 1999 are referred to as the "Company." [A solid black vertical line
has been inserted in the table where financial information may not be comparable
across periods.] The following summary historical and pro forma financial
information should be read in conjunction with "Summary -- The Acquisition,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Financial Information" and our financial
statements and the notes related thereto included elsewhere or incorporated by
reference in this prospectus.
12
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
<Table>
<Caption>
PREDECESSOR
COMPANY THE COMPANY PRO FORMA
------------- ------------------------------------------------------------------ --------------
SIX WEEKS FORTY-SIX WEEKS
FROM FROM MAY 7,
MARCH 30, 1999 FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
THROUGH THROUGH ENDED ENDED ENDED ENDED
MAY 6, 1999 MARCH 27, 2000 MARCH 26, 2001 MARCH 25, 2002 MARCH 31, 2003 MARCH 31, 2003
------------- --------------- -------------- -------------- -------------- --------------
(DOLLARS IN THOUSANDS)
STATEMENT OF INCOME (LOSS)
DATA:
Operating Revenues:
Circulation............... $24,587 $ 233,135 $ 314,497 $ 308,809 $ 314,089 $352,968
Advertising............... 2,640 22,521 37,141 39,915 61,303 153,848
Other..................... 2,308 20,187 20,563 19,407 24,341 28,419
------- ---------- ---------- ---------- ---------- --------
29,535 275,843 372,201 368,131 399,733 535,235
------- ---------- ---------- ---------- ---------- --------
Operating Expenses:
Editorial................. 3,040 29,567 39,286 37,027 39,967 53,843
Production................ 7,784 71,465 103,132 104,275 107,687 144,172
Distribution, circulation
and other cost of
sales................... 4,996 39,965 49,430 49,914 56,857 78,465
Selling, general and
administrative
expenses................ 3,248 37,865 41,050 41,912 54,515 98,111
Performance unit and
equity plan
compensation............ -- -- -- -- -- 21,138
Transaction costs......... -- -- -- -- -- 1,334
Gain on insurance
settlement.............. -- -- -- -- (7,613) (7,613)
Depreciation and
amortization............ 3,703 57,209 76,733 88,170 31,664 40,392
------- ---------- ---------- ---------- ---------- --------
22,771 236,071 309,631 321,298 283,077 429,842
Operating income............ 6,764 39,772 62,570 46,833 116,656 105,393
Interest expense............ (4,837) (57,466) (71,742) (65,167) (60,065) (77,171)
Other income (expense),
net....................... 25 125 751 (139) 288 288
------- ---------- ---------- ---------- ---------- --------
Income (loss) before
provision for income taxes
and extraordinary
charge.................... 1,952 (17,569) (8,421) (18,473) 56,879 28,510
Provision for income
taxes..................... 1,365 1,361 6,875 3,009 21,463 11,112
------- ---------- ---------- ---------- ---------- --------
Income (loss) before
extraordinary charge...... 587 (18,930) (15,296) (21,482) 35,416 17,398
Extraordinary charge, net of
income taxes(1)........... -- (2,581) -- -- -- --
------- ---------- ---------- ---------- ---------- --------
Net income (loss)........... $ 587 $ (21,511) $ (15,296) $ (21,482) $ 35,416 $ 17,398
------- ---------- ---------- ---------- ---------- --------
OTHER DATA:
EBITDA(2)................... $10,467 $ 96,981 $ 139,303 $ 135,003 $ 148,320 --
BALANCE SHEET DATA (AT END
OF PERIOD):
Total assets................ N/M $1,169,307 $1,134,990 $1,083,492 $1,500,260 N/M
Total debt.................. N/M 680,874 680,874 748,459 1,019,550 N/M
Total stockholder's
equity.................... N/M 201,698 186,493 89,368 174,920 N/M
</Table>
- ---------------
(1) In connection with the 1999 Acquisition, a fee related to an unused bridge
loan commitment totaling approximately $4.1 million ($2.6 million net of
income taxes) was charged as an extraordinary loss for the period from May
7, 1999 to March 27, 2000.
(2) EBITDA is defined as operating income before depreciation and amortization.
EBITDA is not a measure of performance defined by generally accepted
accounting principles ("GAAP") in the United States. EBITDA should not be
considered in isolation or as a substitute for net income or cash flows from
operating activities, which have been prepared in accordance with GAAP or as
a measure of our operating performance, profitability or liquidity. We
believe EBITDA provides useful information regarding our ability to service
our debt, and we understand that such information is considered by certain
investors to be an additional basis for evaluating a company's ability to
pay interest and repay debt.
13
EBITDA is a widely used performance measure for publishing companies and is
provided here as a supplemental measure of operating performance to
operating income calculated in accordance with GAAP. A reconciliation from
operating income to EBITDA is as follows:
<Table>
<Caption>
PREDECESSOR
COMPANY THE COMPANY
-------------- -------------------------------------------------------------------
SIX WEEKS FORTY-SIX WEEKS
FROM MARCH 30, FROM MAY 7, 1999 FISCAL YEAR FISCAL YEAR FISCAL YEAR
THROUGH THROUGH ENDED ENDED ENDED
MAY 6, 1999 MARCH 27, 2000 MARCH 26, 2001 MARCH 25, 2002 MARCH 31, 2003
-------------- ---------------- -------------- -------------- --------------
(IN THOUSANDS)
Operating income........................... $ 6,764 $39,772 $ 62,570 $ 46,833 $116,656
Add (deduct):
Depreciation and amortization.............. 3,703 57,209 76,733 88,170 31,664
------- ------- -------- -------- --------
EBITDA..................................... $10,467 $96,981 $139,303 $135,003 $148,320
======= ======= ======== ======== ========
</Table>
- ---------------
14
RISK FACTORS
Before you tender your outstanding notes in the exchange offer, you should
be aware that there are various risks, including those described below. You
should carefully consider these risk factors, together with the other
information contained in and incorporated by reference in this prospectus before
tendering your outstanding notes.
RISKS RELATED TO THE EXCHANGE OFFER
THE MARKET VALUE OF YOUR OUTSTANDING NOTES MAY BE LOWER IF YOU DO NOT EXCHANGE
YOUR OUTSTANDING NOTES OR FAIL TO PROPERLY TENDER YOUR OUTSTANDING NOTES FOR
EXCHANGE NOTES.
Consequences of Failure to Exchange. To the extent that the outstanding
notes are tendered and accepted for exchange pursuant to the exchange offer, the
trading market for outstanding notes that remain outstanding may be
significantly more limited, which might adversely affect the liquidity of the
outstanding notes not tendered for exchange notes. The extent of the market and
the availability of price quotations for outstanding notes would depend upon a
number of factors, including the number of holders of outstanding notes
remaining at such time and the interest in maintaining a market in such
outstanding notes on the part of securities firms. An issue of securities with a
smaller outstanding market value available for trading, or float, may command a
lower price than would a comparable issue of securities with a greater float.
Therefore, the market price for outstanding notes that are not exchanged in the
exchange offer for exchange notes may be affected adversely to the extent that
the amount that outstanding notes exchanged pursuant to the exchange offer
reduces the float. The reduced float also may tend to make the trading price of
the outstanding notes that are not exchanged more volatile. Any outstanding
notes that remain outstanding following consummation of the exchange offer will
continue to be subject to the same transfer restrictions currently applicable to
the outstanding notes.
Consequences of Failure to Properly Tender. Issuance of the exchange notes
in exchange for the outstanding notes pursuant to the exchange offer will be
made following the prior satisfaction, or waiver, of the conditions set forth in
"The Exchange Offer -- Certain Conditions to the Exchange Offer" and only after
timely receipt by the exchange agent of such outstanding notes, a properly
completed and duly executed letter of transmittal and all other required
documents. Therefore, holders of outstanding notes desiring to tender such
outstanding notes in exchange for exchange notes should allow sufficient time to
ensure timely delivery of all required documentation. Neither we, the exchange
agent nor any other person is under any duty to give notification of defects or
irregularities with respect to the tenders of outstanding notes for exchange
notes. Any outstanding notes that are not properly tendered in the exchange
offer pursuant to the requirements explained in "The Exchange
Offer -- Procedures For Tendering," following consummation of the exchange
offer, will remain outstanding.
IF YOU FAIL TO TENDER YOUR OUTSTANDING NOTES FOR EXCHANGE, YOUR ABILITY TO
TRANSFER SUCH NOTES WILL BE LIMITED.
We issued the outstanding notes in a private offering. As a result, the
outstanding notes have not been registered under the Securities Act, and may not
be resold by purchasers thereof unless the outstanding notes are subsequently
registered or an exemption from the registration requirements of the Securities
Act is available. The outstanding notes that are not tendered in the exchange
offer will continue to be subject to the existing restrictions upon their
transfer. We will have no obligation to provide for the registration under the
Securities Act of unexchanged outstanding notes.
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES AND WE CANNOT ASSURE YOU
WHETHER AN ACTIVE TRADING MARKET FOR THE EXCHANGE NOTES WILL DEVELOP.
The exchange notes will be new securities for which there currently is no
market. Accordingly, we cannot assure you as to the development or liquidity of
any market for the exchange notes, and we will have no obligation to create such
a market. At the time of the private placement of the outstanding notes, the
initial purchasers of the outstanding notes advised us that they intended to
make a market in the outstanding notes
15
and, if issued, the exchange notes. However, the initial purchasers are not
obligated to make a market in, the exchange notes, and they may discontinue such
activities at any time in their sole discretion.
The liquidity of any market for the exchange notes will depend upon the
number of holders of the exchange notes, the overall market for high yield
securities, our financial performance and prospects, the prospects for companies
in our industry generally, the interest of securities dealers in making a market
in the exchange notes and other factors.
RISKS RELATING TO THE EXCHANGE NOTES
OUR SIGNIFICANT INDEBTEDNESS COULD IMPAIR OUR ABILITY TO OPERATE AND EXPOSE US
TO CERTAIN RISKS.
We are highly leveraged. In addition, we incurred substantial debt to
finance the Acquisition. Our future performance could be affected by our
substantial amount of debt. As of March 31, 2003, we had total debt (excluding
unused commitments under our Amended and Restated Credit Facilities) of $1,019.6
million and total stockholder's equity of $174.9 million, giving us a total debt
to equity ratio of 5.8 to 1.0. In addition, subject to restrictions in our
Amended and Restated Credit Facilities and in the indentures for the exchange
notes and the existing notes, we may borrow more money for working capital,
capital expenditures, acquisitions or for other purposes.
Our high level of debt could have important consequences for you, including
the following:
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of the money earned by our
subsidiaries to pay principal and interest on the Amended and Restated
Credit Facilities, the exchange notes, the existing notes and other debt,
which will reduce the amount of money available to us to finance our
operations and other business activities;
- some of our debt has a variable rate of interest, which exposes us to the
risk of increased interest rates;
- debt under our Amended and Restated Credit Facilities will be secured and
will mature prior to the exchange notes;
- we may have a much higher level of debt than certain of our competitors,
which may put us at a competitive disadvantage;
- our debt level makes us more vulnerable to economic downturns and adverse
developments in our business;
- our debt level reduces our flexibility in responding to changing business
and economic conditions, including increased competition in the
publishing industry; and
- our debt level limits our ability to pursue other business opportunities,
borrow more money for operations or capital in the future and implement
our business strategy.
On a proforma basis, our interest expense for the fiscal year ended March
31, 2003 was $77.2 million. On the same basis, for the fiscal year ended March
31, 2003 our ratio of earnings to fixed charges was 1.4x.
We expect to obtain the money to pay our expenses and to pay the principal
and interest on the exchange notes, the existing notes, our Amended and Restated
Credit Facilities and other debt from the operations of our subsidiaries,
including Weider. Therefore, our ability to meet our expenses and debt service
obligations depends on the future performance of our subsidiaries, which will be
affected by financial, business, economic and other factors. We will not be able
to control many of these factors, such as economic conditions and pressure from
competitors. We cannot be certain that the money earned by our subsidiaries will
be sufficient to allow us to pay principal and interest on our debt (including
the exchange notes) and meet our other obligations. If we do not have enough
money, we may be required to refinance all or part of our existing debt,
including the exchange notes, sell assets, borrow more money or raise equity. We
cannot guarantee that we will be able to refinance our debt, sell assets, borrow
more money or raise equity on terms acceptable to us or at all. In addition, the
terms of existing or future debt agreements, including our Amended and Restated
Credit Facilities and our indentures, may restrict us from adopting any of these
alternatives.
16
Under our Amended and Restated Credit Facilities, we also must comply with
certain specified financial ratios and tests. If we do not comply with these or
other covenants and restrictions contained in our Amended and Restated Credit
Facilities, we could default under our Amended and Restated Credit Facilities.
Such debt, together with accrued interest, could then be declared immediately
due and payable. Our ability to comply with such provisions may be affected by
events beyond our control. See "Description of Other Indebtedness."
THE EXCHANGE NOTES AND THE NOTE GUARANTEES ARE CONTRACTUALLY SUBORDINATED TO OUR
SENIOR INDEBTEDNESS.
The exchange notes will be contractually subordinated in right of payment
to all of our senior indebtedness and the Note Guarantees will be contractually
subordinated in right of payment to all senior indebtedness of the Note
Guarantors. In addition, the exchange notes and the Note Guarantees will be
effectively subordinated to any secured indebtedness of the Company and the Note
Guarantors to the extent of the value of the assets securing such indebtedness.
As of March 31, 2003, we had approximately $468.8 million of senior indebtedness
(excluding unused commitments under our Amended and Restated Credit Facilities),
all of which is secured indebtedness, and the Note Guarantors had no senior
indebtedness (excluding their guarantees of our indebtedness under our Amended
and Restated Credit Facilities). The indentures permit us and the Note
Guarantors to borrow certain additional debt, which may be senior indebtedness.
We may not pay principal, premium (if any), interest or other amounts on
account of the exchange notes or the Note Guarantees in the event of a payment
default or certain other defaults in respect of certain senior indebtedness
(including indebtedness under our Amended and Restated Credit Facilities) unless
such indebtedness has been paid in full or the default has been cured or waived.
In addition, in the event of certain other defaults with respect to such senior
indebtedness, we may not be permitted to pay any amount on account of the
exchange notes or the Note Guarantees for a designated period of time. If we or
the Note Guarantors are declared bankrupt or insolvent, or if there is a payment
default under, or an acceleration of, any senior indebtedness, we are required
to pay the lenders under our Amended and Restated Credit Facilities and any
other creditors who are holders of senior indebtedness in full before we apply
any of our assets to pay you. Accordingly, we may not have enough assets
remaining after payments to holders of such senior indebtedness to pay you.
Further, our Amended and Restated Credit Facilities will, and our future
senior indebtedness may, prohibit us from repurchasing any exchange notes prior
to maturity, even though the indenture requires us to offer to repurchase
exchange notes in certain circumstances. If we or the Note Guarantors make
certain asset sales or if a change of control occurs when we are prohibited from
repurchasing exchange notes, we could ask our lenders under our Amended and
Restated Credit Facilities (or such future senior indebtedness) for permission
to repurchase the exchange notes or we could attempt to refinance the borrowings
that contain such prohibitions. If we do not obtain such a consent to repay such
borrowings or are unable to refinance such borrowings, we would be unable to
repurchase the exchange notes. Our failure to repurchase tendered exchange notes
at a time when such repurchase is required by the indenture would constitute an
event of default under the indenture, which, in turn, would constitute a default
under the Amended and Restated Credit Facilities and may constitute an event of
default under such future senior indebtedness. In such circumstances, the
subordination provisions in the indenture would restrict payments to you. See
"Description of Other Indebtedness," "Description of the Exchange
Notes -- Ranking," "Description of the Exchange Notes -- Change of Control" and
"Description of the Exchange Notes -- Certain Covenants."
OUR HOLDING COMPANY STRUCTURE MAY SUBORDINATE THE EXCHANGE NOTES TO THE
OBLIGATIONS OF OUR SUBSIDIARIES.
We are a holding company and as such we conduct substantially all our
operations through our subsidiaries. As a holding company, we are dependent upon
dividends or other intercompany transfers of funds from our subsidiaries to meet
our debt service and other obligations. Generally, creditors of a subsidiary
will have a superior claim to the assets and earnings of such subsidiary than
the claims of creditors of its parent company, except to the extent the claims
of the parent's creditors are guaranteed by the subsidiary.
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Our foreign subsidiaries will not guarantee the payment of interest on and
principal of the exchange notes. Any right that we have to receive any assets of
our subsidiaries that are not Note Guarantors upon the liquidation or
reorganization of those subsidiaries, and the consequent right of holders of
exchange notes to realize proceeds from the sale of the assets of those
subsidiaries, will be structurally subordinated to the claims of those
subsidiaries' creditors, including trade creditors and holders of debt issued by
those subsidiaries.
As of and for the fiscal year ended March 31, 2003, after eliminating
inter-company activity, our foreign subsidiaries (i) had approximately $2.0
million of total liabilities (including trade payables), (ii) had approximately
0.3% of our assets and (iii) generated approximately 0.1% of our operating
revenues.
Although the Note Guarantees provide the holders of the exchange notes with
a direct claim against the assets of the Note Guarantors, enforcement of the
Note Guarantees against any Note Guarantor may be subject to legal challenge in
a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
such Note Guarantor, and would be subject to certain defenses available to
guarantors generally. See "-- Under fraudulent conveyance laws, courts could
void obligations under the exchange notes or the Note Guarantees." To the extent
that the Note Guarantees are not enforceable, the exchange notes would be
effectively subordinated to all liabilities of the Note Guarantors, including
trade payables of the Note Guarantors. Accordingly, in the event of our
dissolution, bankruptcy, liquidation or reorganization, the holders of the
exchange notes may not receive any amounts with respect to the exchange notes
until after the payment in full of the claims of creditors of our subsidiaries.
In addition, the Note Guarantees will be general unsecured obligations of the
Note Guarantors that will be subordinated to all senior indebtedness of the Note
Guarantors.
Although the indenture limits the ability of the Note Guarantors to incur
indebtedness and issue preferred stock, there are certain significant
qualifications and exceptions. The indenture does not limit such subsidiaries
from incurring liabilities that are excluded from the definitions of
indebtedness, disqualified stock or preferred stock under the indenture. See
"Description of the Exchange Notes -- Certain Covenants -- Limitations on
Indebtedness."
In addition, the ability of the Company's and the Note Guarantors'
subsidiaries to pay dividends and make other payments to us may be restricted
by, among other things, applicable corporate and other laws and regulations and
agreements of the subsidiaries. Although the indenture limits the ability of
such subsidiaries to enter into consensual restrictions on their ability to pay
dividends and make other payments, such limitations are subject to a number of
significant qualifications and exceptions. See "Description of the Exchange
Notes -- Certain Covenants -- Limitations on Restrictions on Distributions from
Restricted Subsidiaries."
COVENANTS IN OUR DEBT AGREEMENTS RESTRICT OUR BUSINESS IN MANY WAYS.
Our indentures contain covenants with respect to us that restrict, among
other things,
- the incurrence of additional indebtedness and the issuance of
disqualified stock and preferred stock;
- the payment of dividends on and redemptions of capital stock and the
redemption of indebtedness that is subordinated in right of payment to
the Notes;
- certain other restricted payments including, without limitation,
investments;
- certain sales of assets;
- certain transactions with affiliates; and
- consolidations, mergers and transfers of all or substantially all of our
assets.
In addition, our Amended and Restated Credit Facilities contain other and
more restrictive covenants and prohibit us from prepaying our other indebtedness
(including the exchange notes and the existing notes) while indebtedness under
our Amended and Restated Credit Facilities is outstanding. Our Amended and
Restated Credit Facilities also require us to maintain specified financial
ratios and satisfy financial condition tests. Our ability to meet those
financial ratios and tests can be affected by events beyond our control and
there can be no assurance that we will meet those ratios and tests. A breach of
any of these covenants, ratios, tests or
18
restrictions could result in an event of default under our Amended and Restated
Credit Facilities and/or our indentures. Upon the occurrence of an event of
default under our Amended and Restated Credit Facilities, the lenders could
elect to declare all amounts outstanding under our credit facility, together
with accrued interest, to be immediately due and payable. If we were unable to
repay those amounts, the lenders could proceed against the collateral granted to
them to secure such indebtedness. If the lenders under our credit facility
accelerate the payment of the indebtedness, we cannot assure you that our assets
would be sufficient to repay in full such indebtedness and our other
indebtedness, including the exchange notes. See "Description of Other
Indebtedness" and "Description of the Exchange Notes -- Certain Covenants."
ALL OF OUR ASSETS SECURE OUR OBLIGATIONS UNDER THE AMENDED AND RESTATED CREDIT
FACILITIES.
In addition to being contractually subordinated to all existing and future
senior indebtedness, our obligations under the exchange notes will be unsecured
while our obligations under our Amended and Restated Credit Facilities are
secured by first priority or equivalent security interests in substantially all
tangible and intangible assets of Holdings, the Company and each of our existing
and subsequently acquired or organized domestic subsidiaries, including all the
capital stock of, or other equity interests in, the Company, each of our direct
or indirect domestic and first-tier foreign subsidiaries and each of our
subsequently acquired or organized direct or indirect domestic and first-tier
foreign subsidiaries (which, in the case of a foreign subsidiary, shall in each
case be limited to 65% of such capital stock or equity interests, as the case
may be). If we or one of our restricted subsidiaries are declared bankrupt or
insolvent or if we default under our Amended and Restated Credit Facilities, the
lenders could declare all of the funds borrowed thereunder, together with
accrued interest, immediately due and payable. If we were unable to repay such
indebtedness, the lenders could foreclose on the pledged stock of our
subsidiaries and on the assets in which they have been granted a security
interest, in each case to your exclusion, even if an event of default exists
under the Indenture at such time. Furthermore, under the Note Guarantees, if all
shares of any Note Guarantor are sold to persons pursuant to an enforcement of
the pledge of shares in such Note Guarantor for the benefit of the senior
lenders, then the applicable Note Guarantor will be released from its Note
Guarantee automatically and immediately upon such sale. See "Description of
Other Indebtedness."
WE MAY NOT BE PERMITTED OR HAVE THE ABILITY TO PURCHASE THE EXCHANGE NOTES UPON
A CHANGE OF CONTROL AS REQUIRED BY OUR INDENTURES.
Upon a change of control under our indentures, we will be required to offer
to purchase all of the exchange notes and the existing notes then outstanding at
101% of their principal amount, plus accrued but unpaid interest and liquidated
damages, if any, to the date of repurchase. If a change of control were to
occur, we cannot assure you that we would have sufficient funds to pay the
purchase price for the exchange notes and the existing notes, and we expect that
we would require third-party financing to finance such repurchase; however, we
cannot assure you that we would be able to obtain such financing on favorable
terms, if at all. In addition, our Amended and Restated Credit Facilities
restrict our ability to repurchase the exchange notes and the existing notes,
including pursuant to an offer in connection with a change of control. A change
of control under the indentures may result in an event of default under our
Amended and Restated Credit Facilities and may cause the acceleration of other
senior indebtedness, if any, in which case the subordination provisions of the
exchange notes and the existing notes would require payment in full of our
Amended and Restated Credit Facilities and any other senior indebtedness before
we could repurchase the exchange notes and the existing notes. Our future
indebtedness may also contain restrictions on repayment requirements with
respect to certain events or transactions that could constitute a change of
control under the indentures. See "Description of Other Indebtedness" and
"Description of the Exchange Notes -- Change of Control." The inability to repay
senior indebtedness, if accelerated, and to purchase all of the tendered
exchange notes, would each constitute an event of default under the indentures.
19
UNDER FRAUDULENT CONVEYANCE LAWS, A COURT COULD VOID OBLIGATIONS UNDER THE
EXCHANGE NOTES OR NOTE GUARANTEES.
The incurrence of indebtedness by us or the Note Guarantors, such as the
exchange notes or the Note Guarantees, may be subject to review under federal
bankruptcy law or relevant state fraudulent conveyance laws if a bankruptcy case
or lawsuit is commenced by or on behalf of unpaid creditors. Under these laws,
if in such case or lawsuit a court were to find that, at the time we or any Note
Guarantor incurred indebtedness (including indebtedness under the exchange notes
or the Note Guarantees),
(a) we or any Note Guarantor, as applicable, incurred such
indebtedness with the intent of hindering, delaying or defrauding current
or future creditors; or
(b) (i) we or any Note Guarantor, as applicable, received less than
reasonably equivalent value or fair consideration for incurring such
indebtedness; and
(ii) we or any Note Guarantor, as applicable,
(1) were insolvent or were rendered insolvent by reason of any of
the transactions;
(2) were engaged, or about to engage, in a business or transaction
for which the assets remaining with us or such Note Guarantor
constituted unreasonably small capital to carry on our or its business;
(3) intended to incur, or believed that we or such Note Guarantor
would incur, debts beyond our or its ability to pay as such debts
matured (as all of the foregoing terms are defined in or interpreted
under the relevant fraudulent transfer or conveyance statutes); or
(4) were a defendant in an action for money damages, or had a
judgment for money damages docketed against us or such Note Guarantor
(in either case, if, after final judgment, the judgment is unsatisfied),
then such court could avoid or subordinate the amounts owing under the exchange
notes or the Note Guarantees to our or such Note Guarantor's presently existing
and future indebtedness and take other actions detrimental to you.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, however, a debtor would be considered insolvent if,
at the time such debtor incurred the indebtedness, either (a) the sum of its
debts (including contingent liabilities) is greater than its assets, at fair
valuation, or (b) the present fair saleable value of its assets is less than the
amount required to pay the probable liability on its total existing debts and
liabilities (including contingent liabilities) as they become absolute and
matured. There can be no assurance as to what standards a court would use to
determine whether we or any Note Guarantor were solvent at the relevant time, or
whether, whatever standard was used, the exchange notes would not be avoided or
further subordinated on another of the grounds set forth above.
We and the Note Guarantors believe that at the time we initially incur
indebtedness constituting the exchange notes and the Note Guarantees, we and
each Note Guarantor will:
(a) (i) neither be insolvent nor rendered insolvent thereby;
(ii) be in possession of sufficient capital to run our respective
businesses effectively; and
(iii) be incurring debts within our respective abilities to pay as the
same mature or become due; and
(b) have sufficient assets to satisfy any probable money judgment
against any of us in any pending action.
In reaching the foregoing conclusions, we have relied upon our analyses of
internal cash flow projections and estimated values of assets and liabilities.
However, we cannot assure you that a court passing on such questions would reach
the same conclusions.
20
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against us
or any Note Guarantor within 90 days after any payment by us with respect to the
exchange notes or by such Note Guarantor under the applicable Note Guarantee or
if we or such Note Guarantor anticipated becoming insolvent at the time of such
payment, all or a portion of such payment could be avoided as a preferential
transfer and the recipient of such payment could be required to return such
payment.
RISKS RELATING TO OUR BUSINESS
OUR PUBLICATIONS HAVE EXPERIENCED DECLINES IN SINGLE COPY CIRCULATION.
Single copy circulation of each of National Enquirer and Star has
experienced declines. For example, in fiscal 2000, National Enquirer and Star
had average weekly single copy circulation of approximately 1.7 million and 1.4
million copies, respectively, which declined in fiscal 2003 to approximately 1.4
million and 1.1 million copies, respectively. Our other publications also have
experienced declines in single copy circulation.
We believe that the principal factors contributing to these declines in
circulation include (a) a general industry-wide decline in single copy
circulation of individual publications due to an increasing number of
publications in the industry; (b) diminished service levels from wholesalers who
distribute our magazines to retailers and fill the pockets at checkout counters
as a result of consolidation among wholesalers and their related efforts to cut
expense; (c) the October 2001 anthrax incident at our Boca Raton headquarters;
and (d) increased competition from other publications and forms of media, such
as certain newspapers, television and Internet sites concentrating on celebrity
news. See "--Terrorist attacks, such as the September 11, 2001 terrorist attacks
and the October anthrax incident at our Boca Raton headquarters, and other acts
of violence or war may affect the financial markets and our business, results of
operation and financial condition."
In January 2002, we successfully negotiated multi-year contracts with all
of our major U.S. wholesalers for the complete distribution of our product line
and improved service levels. However, we cannot assure you that service levels
will improve or that if service levels do improve, circulation of our
publications will increase.
In addition, we have experienced declines in the aggregate single copy
circulation for our six tabloids and Country Weekly of 6.9% for fiscal year 2003
compared to fiscal 2002 primarily as a result of the factors described above.
Historically, we have offset declines in single copy circulation, in part,
through increases in cover prices. In April 2002, we expanded National Enquirer
and Star to 60 pages from 48 pages and raised cover prices from $1.89 to $2.09.
In April 2003, we increased the U.S. cover price of both National Enquirer and
Star from $2.09 to $2.19. In April 2003, we expanded Globe to 60 pages from 48
pages and raised cover prices from $1.99 to $2.19. We cannot assure you that we
will be able to increase cover prices without decreasing circulation, or be able
to take other measures, such as increasing advertising and promotion of our
titles to offset such circulation declines, or that the single copy circulation
declines described above will be reversed. Continued declines in circulation, or
declines in circulation of Weider's publications, could have a material adverse
effect on our business or financial performance. See "--If we fail to implement
our business strategy, our business will be adversely affected" below.
THE FEDERAL TRADE COMMISSION AND FOOD AND DRUG ADMINISTRATION MAY TAKE ACTIONS
AGAINST ADVERTISERS THAT COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
A portion of our revenues comes from advertising of dietary supplements and
other nutritional products, a category which has received and continues to
receive scrutiny from the Food and Drug Administration ("FDA") and the Federal
Trade Commission ("FTC"). These agencies have selectively taken actions against
individual advertisers that have made false or misleading claims about their
products, and these actions
21
have had material adverse effects on such advertisers and their advertising
budgets. To date, neither we nor other media that print or broadcast dietary
supplement advertisements or nutritional products have been made party to these
actions; however, the FTC has publicly expressed an interest in including the
media in such actions, suggesting that the media should bear some level of
responsibility for the content of advertisements carried by them. We believe
there are substantial legal barriers to instituting such actions against the
media, and that any such actions would only occur after a normal fact finding
and implementation period. We would rigorously defend against any such actions
and would seek to implement new advertisement procurement procedures in response
to any such actions. However, we cannot assure you that our results of
operations would not suffer if the FTC or FDA were to bring any such actions
against us. In addition, we cannot assure you that our results of operations
will not suffer if the FTC or FDA continues to successfully bring such actions
against our dietary supplement and nutritional supplement advertisers.
GENERAL ECONOMIC TRENDS MAY REDUCE OUR ADVERTISING REVENUES.
For the twelve months ended December 31, 2002, Weider generated 68% of its
revenues from advertisements, and, on a pro forma basis for the twelve months
ended March 31, 2003, we generated 29% of our revenues from advertisements.
Advertising revenues are subject to the risks arising from adverse changes in
domestic and global economic conditions. A decline in the level of business
activity of our advertisers could have an adverse effect on our revenues and
profit margins. Because of the recent economic slowdown in the United States,
many advertisers are reducing advertising expenditures. The impact of this
slowdown on us is difficult to predict, but it may result in reductions in
purchases of advertising. If the current economic slowdown continues or worsens,
our results of operations may be adversely affected.
IF WE FAIL TO IMPLEMENT OUR BUSINESS STRATEGY, OUR BUSINESS WILL BE ADVERSELY
AFFECTED.
Our future financial performance and success are dependent in large part
upon our ability to successfully implement our business strategy. We cannot
assure you that we will be able to successfully implement our business strategy
or be able to improve our operating results. In particular, we cannot assure you
that we will be able to increase circulation of our publications, obtain new
sources of advertising revenues, generate additional revenues by building on the
brand names of our publications, attract new clients for DSI or raise the cover
prices of our publications without causing a decline in circulation.
Furthermore, any growth through acquisitions and investments will be dependent
upon identifying suitable acquisition or investment candidates and successfully
consummating such transactions and integrating the acquired operations at
reasonable costs. We may not successfully integrate any acquired businesses and
may not achieve anticipated revenue and cost benefits. In addition, lower than
expected valuations associated with cash flows and revenues may result in the
inability to realize the value of recorded intangibles and goodwill.
Such acquisitions and investments may require additional funding which may
be provided in the form of additional debt, equity financing or a combination
thereof. We cannot assure you that any such additional financing will be
available to us on acceptable terms or at all or that we will be permitted under
the terms of our Amended and Restated Credit Facilities (or any replacement
thereof) or under the terms of our indentures to obtain such financing for such
purpose. See "Description of Other Indebtedness" and "Description of the
Exchange Notes--Certain Covenants."
Implementation of our business strategy could be affected by a number of
factors beyond our control, such as increased competition, legal developments,
general economic conditions or increased operating costs or expenses. In
particular, there has been a recent trend of increased consolidation among both
retailers and wholesalers of magazines. This consolidation has caused an
increase in margin pressure on publishers. Because National Enquirer, Star and
Globe have been consistently among the highest revenue-producing magazines to
both retailers and wholesalers, we do not believe the increased consolidation
among retailers and wholesalers will have a material adverse effect on us and,
as such, we do not believe this trend will have a material adverse effect on the
Weider publications. Nevertheless, we cannot assure you that such consolidation
will not have a material adverse effect on us in the future.
22
Any failure to successfully implement our business strategy may adversely
affect our ability to service our indebtedness, including our ability to make
principal and interest payments on the Notes. We may, in addition, decide to
alter or discontinue certain aspects of our business strategy at any time.
TERRORIST ATTACKS, SUCH AS THE SEPTEMBER 11, 2001 TERRORIST ATTACKS AND THE
OCTOBER ANTHRAX INCIDENT AT OUR BOCA RATON HEADQUARTERS, AND OTHER ACTS OF
VIOLENCE OR WAR MAY AFFECT THE FINANCIAL MARKETS AND OUR BUSINESS, RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
As a result of the September 11, 2001 terrorist attacks and subsequent
events, there has been considerable uncertainty in world financial markets. The
full effect of these events, as well as concerns about future terrorist attacks,
on the financial markets is not yet known, but could include, among other
things, increased volatility in the prices of securities, including the exchange
notes. These uncertainties could also adversely affect our ability to obtain
financing on terms acceptable to us or at all to finance our acquisitions,
capital expenditures or our working capital.
Terrorist attacks may negatively affect our operations and financial
condition. There can be no assurance that there will not be further terrorist
attacks against the United States or U.S. businesses. These attacks or armed
conflicts may directly impact our physical facilities or those of our retailers
and customers. These events could cause consumer confidence and spending to
decrease or result in the increased volatility in the U.S. and world financial
markets and economy. They could result in an economic recession in the United
States or abroad. Any of these occurrences could have a material adverse impact
on our operating results, revenues and costs.
Our Boca Raton headquarters, which housed substantially all of our
editorial operations (including our photo, clipping and research libraries),
executive offices and certain administrative functions, was closed on October 7,
2001 by the Palm Beach County Health Department when traces of anthrax were
found on a computer keyboard following the death of one of our photo editors
from inhalation anthrax. In response to the closure of our Boca Raton facility,
we immediately implemented our hurricane disaster plan to produce all of our
weekly publications as originally scheduled. While this inhibited the production
of our publications, we printed all of our tabloids that week and we believe
that our operations have substantially returned to normal. In February 2002, the
Palm Beach County Health Department quarantined the Boca Raton facility for an
additional 18 months. We have entered into a two year lease for a 53,000 square
foot facility two blocks from our Boca Raton headquarters which expires in
February 2004. In April 2003, we sold our Boca Raton headquarters.
In addition, our circulation has declined since the September 11, 2001
terrorist attacks and the October anthrax incident. We believe that as a result
of the anthrax incident, we have experienced a decline in circulation. When the
incident first occurred, there were specific concerns and consumer discomfort
and lack of knowledge with respect to the safety of our magazines. We quickly
responded to these safety concerns with an extensive public relations effort to
educate consumers that there was no health risk in buying our magazines. Since
the first issues following the anthrax incident, our unit sales have steadily
improved, although they remain below pre-September 11, 2001 levels. We cannot
predict what effect, if any, future acts of terrorism may have on our
circulation. However, the consequences of these events could have a material
adverse effect on our business, results of operations and financial condition.
See "--Our publications have experienced declines in single copy circulation."
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF THE PRICE OF PAPER INCREASES.
Our operating income may be significantly affected by changes in the price
of paper used in our publications. For the fiscal year ended March 31, 2003,
these costs represented approximately 12% of our revenues. We have currently
committed a significant portion of our volume and pricing requirements with our
major suppliers through December 2005. If paper prices increase in the future
and we cannot pass these costs on to our customers, such increases may have a
material adverse effect on us. We do not currently hedge against increases in
paper prices but are reviewing various hedging strategies against future
increases in paper prices.
23
WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT.
National Enquirer, Globe, Star, National Examiner, Weekly World News, Sun,
Mira!, Country Music and Country Weekly compete in varying degrees with other
publications sold at retailers' checkout counters, as well as forms of media
concentrating on celebrity news, such as certain newspapers, magazines and
television and radio programs. We believe that historical declines in single
copy circulation of National Enquirer, Globe, Star and National Examiner have
resulted in part from increased competition from these publications and forms of
media. Competition for circulation is largely based upon the content of the
publication, its placement in retail outlets and, to a lesser extent, its price.
Competition for advertising revenues is largely based upon circulation levels,
readership, demographics, price and advertising results. Many of our competitors
have substantially larger operating staffs, greater capital resources and
greater revenues from their publications. In this respect, we may be at a
competitive disadvantage with such entities. We believe that our most
significant direct competitors in the print media are AOL Time Warner Inc.
(which publishes People, In Style and Entertainment Weekly), Wenner Media, Inc.,
(which publishes US Weekly), Gemstar TV Guide, Inc. (which publishes TV Guide)
and Bauer (which publishes In-Touch). We also face competition from the use of
the Internet and new on-line ventures focusing on celebrity news.
In addition we compete with many other companies providing marketing and
distribution services, such as full-service national distributors, wholesalers
and publishers with their own marketing organizations. Certain of our
competitors have substantially larger operating staffs and greater capital
resources. In this respect, we may be at a competitive disadvantage with such
entities.
Each of Weider's specialty consumer magazines faces competition in its
subject area from a variety of publishers and competes for readers on the basis
of the high quality of its targeted editorial content. Competition for
advertising revenues is largely based upon circulation levels, readership,
demographics, price and advertising results. We believe that Weider's most
significant direct competitors include Conde Nast Publications, Inc. (which
publishes Self), Gruner + Jahr Publishing (which publishes Fitness, Parents and
Child), Rodale Inc. (which publishes Men's Health and Organic Style), Wenner
Media, Inc. (which publishes Men's Journal), Advanced Research Press (which
publishes Muscular Development) and Muscle Media Publishing (which publishes
Muscle Media).
Increased competition may result in less demand for our products and
services which may have a material adverse effect on our business, results of
operation and financial condition.
OUR PERFORMANCE COULD BE ADVERSELY AFFECTED IF WE LOSE OUR KEY PERSONNEL.
We believe that our success is largely dependent on the abilities and
experience of Mr. Pecker, our chairman and chief executive officer, and our
senior management team. The loss of the services of Mr. Pecker or one or more of
these senior executives could adversely affect our ability to effectively manage
our overall operations or successfully execute current or future business
strategies. We have entered into a five-year employment contract with Mr.
Pecker, which expires on April 17, 2008 and is automatically extended for one-
year periods unless sixty days prior written notice is given to the contrary. In
addition, we believe that our success will depend upon our ongoing ability to
attract and retain qualified management and other employees.
WE ARE CONTROLLED BY EVERCORE AND T.H. LEE, WHOSE INTERESTS IN OUR BUSINESS MAY
BE DIFFERENT THAN YOURS.
Evercore and T.H. Lee have effective control of us by virtue of its rights
to appoint a majority of the Board of Managers and a majority of the Board of
Directors of our parent entities. As a result, Evercore and T.H. Lee control our
policies and operations and have the power to appoint new management and approve
any action requiring stockholder approval (including adopting amendments to our
certificate of incorporation and approving mergers or sales of substantially all
of our assets). We cannot assure you that the interests of Evercore and T.H. Lee
will not conflict with your interests.
24
PENDING AND FUTURE LITIGATION COULD MATERIALLY AFFECT OUR OPERATIONS.
We are involved in a number of litigation matters which have arisen in the
ordinary course of our business. Because the focus of our publications often
involves controversial celebrities or subjects, the risk of defamation or
invasion of privacy litigation arises in the ordinary course of our business.
Our experience suggests that the claims for damages made in such lawsuits are
heavily inflated and, in any event, any reasonably foreseeable material
liability or settlement would be covered by insurance. We have not experienced
any difficulty obtaining such insurance and do not expect to experience any
material difficulty in the future. In addition, as of March 31, 2003, we
established a $1.9 million reserve for pending legal cases. There are currently
no claims pending that we believe would have a material adverse effect on our
operations. We cannot assure you that we will continue to be able to obtain
insurance on terms acceptable to us or at all or that any pending or future
litigation, if adversely determined, would not have a material adverse effect on
our business and financial condition.
OUR FORMER USE OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITOR MAY POSE RISKS
TO US AND WILL LIMIT YOUR ABILITY TO SEEK POTENTIAL RECOVERIES FROM THEM RELATED
TO THEIR WORK.
On June 15, 2002, Arthur Andersen LLP, or Andersen, our former independent
auditor, was convicted on a federal obstruction of justice charge. On July 9,
2002 we dismissed Andersen and appointed Deloitte & Touche LLP to succeed
Andersen as our independent auditors. Our audited consolidated financial
statements for fiscal 2002 that are incorporated by reference in this prospectus
were audited by Andersen. While Andersen has previously consented to the
inclusion of its audit report for such periods in our reports filed with the
SEC, Andersen is no longer able to reissue a consent to including or
incorporating by reference its audit reports relating to such financial
statements in our SEC filings as may be required under SEC rules. The SEC has
provided certain regulatory relief designed to allow companies that file reports
with the SEC to dispense with the requirement of filing a consent of Andersen in
certain circumstances. Notwithstanding the SEC's regulatory relief, an
investor's ability to seek potential recoveries from Andersen related to any
claims that an investor may assert as a result of the work performed by Andersen
may be limited significantly by the lack of such consent and the diminished
amount of assets of Andersen that are or may be available to satisfy any such
claims.
25
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2003. The
table should be read in conjunction with "Summary -- Summary Historical and Pro
Forma Financial Information," "Unaudited Pro Forma Financial Information," "Use
of Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and the notes
related thereto included elsewhere in or incorporated by reference in this
prospectus.
<Table>
<Caption>
MARCH 31, 2003
----------------------
(DOLLARS IN THOUSANDS)
Debt (including current maturities):
Amended and Restated Credit Facilities(1)
Revolving credit facility.............................. $ --
Tranche A Term Loan.................................... 7,756
Tranche C Term Loan.................................... 321,054
Tranche C-1 Term Loan.................................. 140,000
----------
Total Amended and Restated Credit Facilities......... 468,810
Existing notes............................................ 400,000
Outstanding notes......................................... 150,000
Other debt(2)............................................. 740
----------
Total debt........................................... 1,019,550
----------
Total stockholder's equity.................................. 174,920
----------
Total capitalization........................................ $1,194,470
==========
</Table>
- ---------------
(1) Our existing credit facilities consist of (i) a Tranche A Term Loan which
matures in April 2006, (ii) a Tranche C Term Loan which matures in April
2007, (iii) a Tranche C-1 Term Loan which matures in April 2007 and (iv) a
$60.0 million revolving credit facility which matures in April 2006. All
borrowings under our Amended and Restated Credit Facilities are senior
secured indebtedness. As of March 31, 2003 there were no amounts outstanding
under the revolving credit facility. See "Description of Other
Indebtedness -- Our Amended and Restated Credit Facilities."
(2) Other debt is comprised of our 11.63% Senior Subordinated Notes due 2004.
26
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is based on our and
Weider's historical financial statements incorporated by reference in this
prospectus, adjusted to give effect to the Transactions. Certain of Weider's
historical financial information has been reclassified to conform with our
financial statement presentation. All references to our 2003 fiscal year are to
the fifty-three weeks ended March 31, 2003. Weider's historical results for the
period from April 1, 2002 to January 23, 2002 are derived by subtracting the
quarter ended March 31, 2002 from Weider's audited financial statements for the
year ended December 31, 2002 and adding Weider's results of operations for the
period from January 1, 2003 to January 23, 2003. We acquired Weider on January
23, 2003, and consequently, Weider's operating results subsequent to such date
are included in our consolidated operating results. See "Summary -- The
Acquisition."
The unaudited pro forma consolidated statement of operations for the
fifty-three weeks ended March 31, 2003, gives pro forma effect to the
Transactions as if they had occurred on March 26, 2002, the beginning of our
2003 fiscal year.
The unaudited pro forma financial information is presented for
informational purposes only and does not purport to represent what our results
of operations would actually have been had the Transactions occurred at such
time or to project our results of operations for any future period or date.
The pro forma adjustments are based on available information and various
assumptions that we believe are reasonable. The pro forma adjustments and
certain assumptions are described in the accompanying notes. The Acquisition was
accounted for using the purchase method of accounting. Allocations of the
purchase price have been determined based upon information presently available
and are subject to change as additional information becomes available.
The unaudited pro forma financial information should be read in conjunction
with "Summary -- Summary Historical and Pro Forma Financial Information,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our historical financial statements and the related notes to
such financial statements included elsewhere or incorporated by reference in
this prospectus.
27
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FIFTY-THREE WEEKS ENDED MARCH 31, 2003
<Table>
<Caption>
FISCAL YEAR APRIL 1, 2002
ENDED THRU
MARCH 31, 2003 JANUARY 23, 2003 PRO FORMA
AMERICAN MEDIA WEIDER ADJUSTMENTS PRO FORMA
-------------- ---------------- ----------- ---------
Operating Revenues:
Circulation........................... $314,089 $ 38,879 $ -- $352,968
Advertising........................... 61,303 92,545 -- 153,848
Other................................. 24,341 4,078 -- 28,419
-------- -------- -------- --------
399,733 135,502 -- 535,235
-------- -------- -------- --------
Operating Expenses:
Editorial............................. 39,967 13,876 -- 53,843
Production............................ 107,687 36,485 -- 144,172
Distribution, circulation and other
cost of sales...................... 56,857 21,608 -- 78,465
Selling, general and administrative
expenses........................... 54,515 42,929 667(1) 98,111
Performance unit and equity plan
compensation....................... -- 21,138 -- 21,138
Transaction costs..................... -- 1,334 -- 1,334
Gain on insurance settlement.......... (7,613) -- -- (7,613)
Depreciation and amortization......... 31,664 3,572 5,156(2) 40,392
-------- -------- -------- --------
283,077 140,942 5,823 429,842
Operating income (loss)................. 116,656 (5,440) (5,823) 105,393
Interest expense........................ (60,065) (3,942) (13,164)(3) (77,171)
Other income (expense), net............. 288 -- -- 288
-------- -------- -------- --------
Income (loss) before provision for
income taxes.......................... 56,879 (9,382) (18,987) 28,510
Provision for income taxes.............. 21,463 (3,326) (7,025)(4) 11,112
-------- -------- -------- --------
Net income (loss)....................... $ 35,416 $ (6,056) $(11,962) $ 17,398
======== ======== ======== ========
</Table>
See the accompanying notes to the Unaudited Pro Forma Consolidated Statement of
Operations
28
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
The following unaudited pro forma adjustments relate to the Acquisition and
are derived as if the Transactions had occurred on March 26, 2002:
(1) Represents adjustments necessary to reflect a full year of expenses
related to the Company's athlete endorsement and trademark licensing
agreements with Weider Health and Fitness.
(2) Represents the amortization, on a straight-line basis, of the following
items arising from the Acquisition: (a) covenants not to compete for
certain founders of Weider over five to seven years, (b) Weider's
subscription lists over three years, (c) advertising relationships over
three years, and (d) customer relationships over eight years. The pro
forma adjustment is net of the elimination of Weider historical
amortization of other intangible assets.
<Table>
<Caption>
FISCAL YEAR
ENDED
MARCH 31, 2003
--------------
(IN THOUSANDS)
Amortization of covenants not to compete.................... $1,369
Amortization of subscription lists.......................... 2,610
Amortization of advertising relationships................... 2,015
Amortization of customer relationships...................... 1,004
Elimination of historical Weider amortization............... (1,842)
------
$5,156
======
</Table>
(3) Represents adjustments necessary to reflect pro forma interest expense
and amortization of deferred debt issuance costs based on pro forma
debt levels and applicable interest rates, net of the elimination of
Weider historical interest expense. A 1% change in our weighted average
interest rate on our variable debt would result in a change of $4.7
million in our interest expense for the fiscal year ended March 31,
2003.
<Table>
<Caption>
FISCAL YEAR
ENDED
MARCH 31, 2003
--------------
(IN THOUSANDS)
Interest on Tranche C-1 Term Loan........................... $ 4,783
Interest on 8 7/8% Senior Subordinated notes................ 10,866
Amortization of deferred debt issuance costs................ 1,457
Elimination of Weider historical interest expense........... (3,942)
-------
$13,164
=======
</Table>
(4) Represents a reduction in the provision for income taxes as a result of
the pro forma adjustments to income before income taxes, computed at an
effective tax rate of 37%.
29
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
At the time we issued the outstanding notes, we entered into an exchange
and registration rights agreement with the initial purchasers of the outstanding
notes in which we agreed, under certain circumstances, to file a registration
statement relating to an offer to exchange the outstanding notes for exchange
notes. We also agreed to use our reasonable best efforts to cause such offer to
be consummated within 225 days following the issuance of the outstanding notes.
The form and terms of the exchange notes are the same as the form and terms of
the outstanding notes, except that the exchange notes will have been registered
under the Securities Act and will not bear legends restricting their transfer.
The outstanding notes were issued on January 23, 2003.
Under the circumstances set forth below, we will use our reasonable best
efforts to cause the SEC to declare effective a shelf registration statement
with respect to the resale of the outstanding notes and keep the statement
effective for up to two years after the effective date of the shelf registration
statement. These circumstances include:
- if pursuant to any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC do not permit us to
effect the exchange offer as contemplated by the exchange and
registration rights agreement;
- if any outstanding notes validly tendered in the exchange offer are not
exchanged for exchange notes within 225 days after the issuance of the
outstanding notes;
- if the initial purchasers of the outstanding notes so requests (but only
with respect to any outstanding notes not eligible to be exchanged for
exchange notes in the exchange offer); or
- if any holder of the outstanding notes notifies us that it is not
permitted to participate in the exchange offer or would not receive fully
tradable exchange notes pursuant to the exchange offer.
If we fail to comply with certain obligations under the exchange and
registration rights agreement, we will be required to pay liquidated damages to
holders of the outstanding notes.
The objective of the exchange offer is to make the exchange notes freely
transferable by the holders without further registration or any prospectus
delivery requirements under the Securities Act of 1933.
Each holder of outstanding notes that wishes to exchange outstanding notes
for exchange notes in the exchange offer will be required to make the following
representations:
- any exchange notes will be acquired in the ordinary course of its
business;
- such holder has no arrangement with any person to participate in the
distribution of the exchange notes; and
- such holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or if it is an affiliate, that it will
comply with applicable registration and prospectus delivery requirements
of the Securities Act.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes, where such outstanding notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution".
RESALE OF EXCHANGE NOTES
Based on interpretations of the SEC staff set forth in no action letters
issued to unrelated third parties, we believe that exchange notes issued under
the exchange offer in exchange for outstanding notes may be offered
30
for resale, resold and otherwise transferred by any exchange note holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act, if:
- such holder is not an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act;
- such exchange notes are acquired in the ordinary course of the holder's
business; and
- the holder does not intend to participate in the distribution of such
exchange notes.
Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the exchange notes:
- cannot rely on the position of the staff of the SEC enunciated in "Exxon
Capital Holdings Corporation" or similar interpretive letters; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
This prospectus may be used for an offer to resell, for the resale or for
other retransfer of exchange notes only as specifically set forth in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired the
outstanding notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives exchange notes for its own account in exchange for outstanding notes,
where such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
Please read the section captioned "Plan of Distribution" for more details
regarding the transfer of exchange notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any outstanding
notes properly tendered and not withdrawn prior to the expiration date of the
exchange offer. We will issue $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of outstanding notes surrendered under
the exchange offer. Outstanding notes may be tendered only in integral multiples
of $1,000.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes except that the issuance of the
exchange notes will have been registered under the Securities Act, and the
exchange notes will not bear legends restricting their transfer. The exchange
notes will evidence the same debt as the outstanding notes. The exchange notes
will be issued under and entitled to the benefits of the same indenture that
authorized the issuance of the outstanding notes. Consequently, the exchange
notes and the outstanding notes will be treated as a single class of debt
securities under that indenture.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered for exchange.
As of the date of this prospectus, $150.0 million aggregate principal
amount of the outstanding notes is outstanding. This prospectus and the letter
of transmittal are being sent to all registered holders of outstanding notes.
There will be no fixed record date for determining registered holders of
outstanding notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions
of the exchange and registration rights agreement, the applicable requirements
of the Securities Act and the Securities Exchange Act of 1934 and the rules and
regulations of the SEC. Outstanding notes that are not tendered for exchange in
the exchange offer will remain outstanding and continue to accrue interest and
will be entitled to the rights and benefits such holders have under the
indenture relating to the outstanding notes.
We will be deemed to have accepted for exchange properly tendered
outstanding notes when we give oral (promptly confirmed in writing) or written
notice of the acceptance to the exchange agent. The exchange
31
agent will act as agent for the tendering holders for the purposes of receiving
the exchange notes from us and delivering exchange notes to such holders.
Subject to the terms of the exchange and registration rights agreement, we
expressly reserve the right to amend or terminate the exchange offer, and not to
accept for exchange any outstanding notes not previously accepted for exchange,
upon the occurrence of any of the conditions specified below under the caption
"-- Certain Conditions to the Exchange Offer."
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. It is
important that you read the section labeled "-- Fees and Expenses" below for
more details regarding fees and expenses incurred in the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time on
, 2003, unless in our sole discretion, we extend it.
In order to extend the exchange offer, we will notify the exchange agent
orally (promptly confirmed in writing) or in writing of any extension. We will
notify the registered holders of outstanding notes of the extension no later
than 9:00 a.m., New York City time, on the business day after the previously
scheduled expiration date.
We reserve the right, in our sole discretion:
- to delay accepting for exchange any outstanding notes, to extend the
exchange offer or to terminate the exchange offer and to refuse to accept
outstanding notes not previously accepted if any of the conditions set
forth below under "-- Certain Conditions to the Exchange Offer" have not
been satisfied, by giving oral (promptly confirmed in writing) or written
notice of such delay, extension or termination to the exchange agent; or
- subject to the terms of the exchange and registration rights agreement,
to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of outstanding notes. If we amend the exchange offer in a
manner that it determines to constitute a material change, we will promptly
disclose such amendment in a manner reasonably calculated to inform the holders
of outstanding notes of such amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to a financial news service.
If we extend the period of time during which the exchange offer is open, or
if we are delayed in accepting for exchange of, or in issuing and exchanging the
exchange notes for, any outstanding notes, or are unable to accept for exchange
of, or issue exchange notes for, any outstanding notes pursuant to the exchange
offer for any reason, then, without prejudice to our rights under the exchange
offer, the exchange agent may, on our behalf, retain all outstanding notes
tendered, and such outstanding notes may not be withdrawn except as otherwise
provided below in "-- Withdrawal of Tenders." The right to delay acceptance for
exchange of, or the issuance and the exchange of the exchange notes for, any
outstanding notes is subject to applicable law, including Rule 14e-1(c) under
the Exchange Act, which requires that we either deliver the exchange notes or
return the outstanding notes deposited by or on behalf of the holders thereof
promptly after termination or withdrawal of the exchange offer.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest at a rate of 8 7/8% per annum,
payable semi-annually, on January 15 and July 15 of each year, commencing on
July 15, 2003, which interest will accrue from the date of issuance.
32
Holders of the outstanding notes not exchanged for exchange notes will continue
to receive interest payments on the outstanding notes on regularly scheduled
interest payment dates pursuant to the terms of the outstanding notes. Interest
on the outstanding notes accepted for exchange will cease to accrue upon
issuance of the exchange notes. Holders of exchange notes will receive interest
on July 15, 2003 from the date of initial issuance of the exchange notes, plus
an amount equal to the interest on the outstanding notes exchanged for exchange
notes accrued and unpaid through the date of issuance of the notes.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange any exchange notes for, any
outstanding notes, and may terminate the exchange offer as provided in this
prospectus before accepting any outstanding notes for exchange, if:
- any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our reasonable judgment, might materially impair our ability to
proceed with the exchange offer;
- any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule or regulation is interpreted by the staff
of the SEC, which, in our reasonable judgment, might materially impair
our ability to proceed with the exchange offer; or
- any governmental approval has not been obtained, which approval we shall,
in our reasonable discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
In addition, we will not be obligated to accept for exchange the
outstanding notes of any holder that has not made to us:
- the representations described under "-- Purpose and Effect of the
Exchange Offer," "-- Procedures for Tendering" and "Plan of
Distribution"; and
- such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available to
us an appropriate form for registration of the exchange notes under the
Securities Act.
If we determine in our sole discretion that any of these foregoing
conditions are not satisfied, we may
- refuse to accept any outstanding notes and return all outstanding notes
to the tendering holders;
- extend the exchange offer and retain all outstanding notes tendered prior
to the expiration of the exchange offer, subject, however, to the rights
of holders to withdraw such outstanding notes; or
- waive such unsatisfied conditions with respect to the exchange offer and
accept all properly tendered outstanding notes which have not been
withdrawn
If such waiver constitutes a material change to the exchange offer, we will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the outstanding notes and we will
extend the exchange offer for a period of five to ten business days, depending
on the significance of the waiver and the manner of disclosure to the registered
holders, if the exchange offer would otherwise expire during such five to ten
day business period.
These conditions are for our sole benefit and we may assert them regardless
of the circumstances that may give rise to them or waive them in whole or in
part at any or at various times in its sole discretion. If we fail at any time
to exercise any of the foregoing rights, this failure will not constitute a
waiver of such right. Each such right will be deemed an ongoing right that we
may assert at any time or from time to time.
In addition, we will not accept for exchange any outstanding notes
tendered, and will not issue exchange notes in exchange for any such outstanding
notes, if at such time any stop order will be threatened or in effect with
respect to the registration statement of which this prospectus constitutes a
part or the qualification of the indenture under the Trust Indenture Act of
1939, as amended.
33
PROCEDURES FOR TENDERING
Only a holder of outstanding notes may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
such letter of transmittal or facsimile to the exchange agent so that the
exchange agent receives such letter of transmittal prior to 5:00 p.m.,
New York City time on the expiration date; or
- comply with the Automated Tender Offer Program ("ATOP") procedures of The
Depository Trust Company ("DTC") described below.
In addition, either:
- the exchange agent must receive outstanding notes along with the letter
of transmittal; or
- the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of such outstanding notes into the
exchange agent's account at DTC according to the procedures for
book-entry transfer described below including a properly transmitted
agent's message; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "-- Exchange Agent" prior to 5:00 p.m., New York
City time on the expiration date.
The tender by a holder that is not withdrawn prior to the 5:00 p.m., New
York City time on the expiration date will constitute an agreement between such
holder and us in accordance with the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal.
The method of delivery of outstanding notes, the letter of transmittal and
all other required documents to the exchange agent is at the holder's election
and risk. Rather than mail these items, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. Holders should not send the letter of transmittal or outstanding notes to
us. Holders may request their respective brokers, dealers, commercial banks,
trust companies or other nominees to effect the above transactions for them.
Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owners' behalf. If such beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the letter of transmittal
and delivering its outstanding notes either:
- make appropriate arrangements to register ownership of the outstanding
notes in such owner's name; or
- obtain a properly completed bond power from the registered holder of
outstanding notes.
The transfer of registered ownership may take considerable time and may not be
completed prior to the expiration date.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes, where such outstanding notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution."
34
Signatures on a letter of transmittal or a notice of withdrawal described
below must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another "eligible institution" within the meaning of Rule 17Ad-15
under the Exchange Act, unless the outstanding notes tendered pursuant thereto
are tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
- for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed on the outstanding notes, such
outstanding notes must be endorsed or accompanied by a properly completed bond
power. The bond power must be signed by the registered holder as the registered
holder's name appears on the outstanding notes and an eligible institution must
guarantee the signature on the bond power.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing. Unless waived by us,
they should also submit evidence satisfactory to us of their authority to
deliver the letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use ATOP to tender outstanding notes.
Participants in the program may, instead of physically completing and signing
the letter of transmittal and delivering it to the exchange agent, transmit
their acceptance of the exchange offer electronically. Accordingly, the letter
of transmittal need not be completed by a holder tendering through ATOP. They
may do so by causing DTC to transfer the outstanding notes to the exchange agent
in accordance with its procedures for transfer. DTC will then send an agent's
message to the exchange agent. The term "agent's message" means a message
transmitted by DTC, received by the exchange agent and forming part of the
book-entry confirmation, to the effect that:
- DTC has received an express acknowledgment from a participant in ATOP
that is tendering outstanding notes that are the subject of such
book-entry confirmation;
- such participant has received and agrees to be bound by the terms of the
letter of transmittal (or, in the case of an agent's message relating to
guaranteed delivery, that such participant has received and agrees to be
bound by the applicable notice of guaranteed delivery); and
- the agreement may be enforced against such participant.
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt), acceptance of tendered
outstanding notes and withdrawal of tendered outstanding notes. Our
determination will be final and binding. We reserve the absolute right to reject
any outstanding notes not properly tendered or any outstanding notes the
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer (including the instructions in the letter of
transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of outstanding notes must
be cured within such time as we shall determine. Although we intend to notify
holders of defects or irregularities with respect to tenders of outstanding
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give such notification. Tenders of outstanding notes
will not be deemed made until such defects or irregularities have been cured or
waived. Any outstanding notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned to the exchange agent without cost to the
tendering holder, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.
35
In all cases, we will issue exchange notes for outstanding notes that we
have accepted for exchange under the exchange offer only after the exchange
agent timely receives:
- outstanding notes or a timely book-entry confirmation of such outstanding
notes into the exchange agent's account at DTC; and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
If any tendered outstanding notes are not accepted for exchange for any
reason set forth in the terms and conditions of the exchange offer or if
outstanding notes are submitted for a greater principal amount than the holder
desires to exchange, such unaccepted or non-exchanged outstanding notes will be
returned without expense to the tendering holder thereof, or, in the case of
outstanding notes tendered by book-entry transfer into the exchange agent's
account at the book-entry transfer facility pursuant to the book-entry transfer
procedures described below, such non-exchanged notes will be credited to an
account maintained with such book-entry transfer facility, as promptly as
practicable after the expiration or termination of the exchange offer.
By signing the letter of transmittal, each tendering holder of outstanding
notes will represent to us that, among other things:
- any exchange notes that the holder receives will be acquired in the
ordinary course of its business;
- the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;
- if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange notes;
- if the holder is a broker-dealer that will receive exchange notes for its
own account in exchange for outstanding notes that were acquired as a
result of market-making activities, that it will deliver a prospectus, as
required by law, in connection with any resale of such exchange notes;
and
- the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of ours or, if the holder is an affiliate, it will comply
with any applicable registration and prospectus delivery requirements of
the Securities Act.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the outstanding notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus; and any financial institution that is a
participant in DTC's system may make book-entry delivery of outstanding notes by
causing DTC to transfer such outstanding notes into the exchange agent's account
at DTC in accordance with DTC's procedures for transfer. Holders of outstanding
notes who are unable to deliver confirmation of the book-entry tender of their
outstanding notes into the exchange agent's account at DTC or all other
documents of transmittal to the exchange agent on or prior to the expiration
date must tender their outstanding notes according to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders wishing to tender their outstanding notes but whose outstanding
notes are not immediately available or who cannot deliver their outstanding
notes, the letter of transmittal or any other required
36
documents to the exchange agent or comply with the applicable ATOP procedures
prior to the expiration date may tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from such
eligible institution either a properly completed and duly executed notice
of guaranteed delivery (by facsimile transmission, mail or hand delivery)
or a properly transmitted agent's message in lieu of a notice of
guaranteed delivery:
- setting forth the name and address of the holder, the registered
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered;
- stating that the tender is being made thereby; and
- guaranteeing that, within three (3) New York Stock Exchange trading days
after the expiration date, the letter of transmittal (or facsimile
thereof) together with the outstanding notes or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible institution with the
exchange agent; and
- the exchange agent receives such properly completed and executed letter
of transmittal (or facsimile thereof), as well as all tendered
outstanding notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three (3) New York State Exchange trading days after
the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, holders of outstanding
notes may withdraw their tenders at any time prior to the 5:00 p.m., New York
City time expiration date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice (which may be by
telegram, telex, facsimile transmission or letter) of withdrawal at the
address set forth below under "-- Exchange Agent", or
- holders must comply with the appropriate ATOP procedures.
Any such notice of withdrawal must:
- specify the name of the person who tendered the outstanding notes to be
withdrawn;
- identify the outstanding notes to be withdrawn (including the principal
amount of such outstanding notes); and
- where certificates for outstanding notes have been transmitted, specify
the name in which such outstanding notes were registered, if different
from that of the withdrawing holder.
If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit:
- the serial numbers of the particular certificates to be withdrawn; and
- a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless such holder is an eligible institution.
If outstanding notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn
outstanding notes and otherwise comply with the procedures of such facility. We
will determine all questions as to the validity, form and eligibility (including
time of receipt) of such notices, and our determination shall be final and
binding on all parties. We will deem any outstanding notes so withdrawn not
37
to have been validly tendered for exchange for purposes of the exchange offer.
Any outstanding notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder (or, in the case of outstanding notes tendered by book-entry transfer
into the exchange agent's account at DTC according to the procedures described
above, such outstanding notes will be credited to an account maintained with DTC
for outstanding notes) as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn outstanding
notes may be retendered by following one of the procedures described under
"-- Procedures for Tendering" above at any time on or prior to the 5:00 p.m.,
New York City time, on the expiration date.
EXCHANGE AGENT
J.P. Morgan Trust Company, National Association has been appointed as
exchange agent for the exchange offer. You should direct questions and requests
for assistance, requests for additional copies of this prospectus or of the
letter of transmittal and requests for the notice of guaranteed delivery to the
exchange agent addressed as follows:
For Delivery by Registered or Certified Mail, Hand or by Overnight Courier:
J.P. Morgan Trust Company, National Association
3800 Colonnade Parkway, Suite 490
Birmingham, Alabama 35243
By Facsimile Transmission
(for eligible institutions only):
(205) 968-9145
Confirm facsimile by telephone only:
(205) 968-0506
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with the
exchange offer. The expenses are estimated in the aggregate to be approximately
$100,000. They include:
- SEC registration fees;
- fees and expenses of the exchange agent and trustee;
- accounting and legal fees and printing costs; and
- related fees and expenses.
38
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. The tendering holder, however, will
be required to pay any transfer taxes (whether imposed on the registered holder
or any other person) if:
- certificates representing outstanding notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered;
- tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
outstanding notes under the exchange offer.
If satisfactory evidence of payment of such taxes is not submitted with the
letter of transmittal, the amount of such transfer taxes will be billed to that
tendering holder.
Holders who tender their outstanding notes for exchange will not be
required to pay any transfer taxes. However, holders who instruct us to register
exchange notes in the name of, or request that outstanding notes not tendered or
not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be required to pay any applicable transfer tax.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of outstanding notes who do not exchange their notes for exchange
notes under the exchange offer will remain subject to the restrictions on
transfer of such outstanding notes:
- as set forth in the legend printed on the outstanding notes as a
consequence of the issuance of the outstanding notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws;
and
- otherwise as set forth in the offering memorandum distributed in
connection with the private offering of the outstanding notes.
In general, the outstanding notes may not be offered or sold unless they
are registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the exchange and registration rights agreement, we do not
intend to register resales of the outstanding notes under the Securities Act.
Based on interpretations of the SEC staff, exchange notes issued pursuant to the
exchange offer may be offered for resale, resold or otherwise transferred by
their holders (other than any such holder that is our "affiliate" within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holders acquired the exchange notes in the ordinary course of the
holders' business and the holders have no arrangement or understanding with
respect to the distribution of the exchange notes to be acquired in the exchange
offer. Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes:
- should not rely on the above-described interpretations of the SEC; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
To the extent outstanding notes are tendered and accepted in the exchange
offer, the principal amount of outstanding notes will decrease with a resulting
decrease in the liquidity in the market for those notes. Accordingly, the
liquidity of the market of the outstanding notes could be adversely affected.
See "Risk Factors -- Risks Related to the Exchange Offer -- The market value of
your outstanding notes may be lower if you do not exchange your outstanding
notes or fail to properly tender your outstanding notes for exchange."
39
ACCOUNTING TREATMENT
We will record the exchange notes in our accounting records at the same
carrying value as the outstanding notes, which is the aggregate principal
amount, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will record the expenses of the exchange
offer as incurred.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any untendered outstanding notes.
40
DESCRIPTION OF OTHER INDEBTEDNESS
OUR AMENDED AND RESTATED CREDIT FACILITIES
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Amended and Restated Credit Facilities.
Capitalized terms used but not otherwise defined in this "Description of Other
Indebtedness--Our Amended and Restated Credit Facilities" shall have the meaning
assigned to them in the Amended and Restated Credit Facilities.
Our Amended and Restated Credit Facilities provide senior secured financing
consisting of a Tranche A Term Loan facility maturing April 1, 2006, a Tranche C
Term Loan facility maturing April 1, 2007, a Tranche C-1 Term Loan facility
maturing April 1, 2007 and a $60.0 million revolving credit facility maturing
April 1, 2006.
The Amended and Restated Credit Facilities are provided by a syndicate of
banks and other financial institutions led by JPMorgan Chase Bank, as
administrative agent and collateral agent, and J.P. Morgan Securities Inc., as
sole lead arranger.
The Tranche A Term Loan and the revolving credit facility bear interest
(subject to performance based stepdowns) at a rate equal to LIBOR plus 3.0% or,
at our option, the alternate base rate (as defined in the Amended and Restated
Credit Facilities) plus 2.0%. The Tranche C Term Loan and the Tranche C-1 Term
Loan bear the same interest rate, which is equal to LIBOR plus 2.75% or, at our
option, the alternate base rate (as defined in the Amended and Restated Credit
Facilities) plus 1.75%.
The Tranche A Term Loan facility, the Tranche C Term Loan facility and the
Tranche C-1 Term Loan facility amortize in quarterly amounts based upon the
annual amounts shown below:
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------
TRANCHE A TRANCHE C TRANCHE C-1
TERM LOAN TERM LOAN TERM LOAN
(DOLLARS IN MILLIONS) FACILITY FACILITY FACILITY
- ----------------------------------------------------------------------------------------------
Fiscal Year 2004......................................... $ 1.9 $ 3.2 $ 1.4
Fiscal Year 2005......................................... 2.4 3.2 1.4
Fiscal Year 2006......................................... 2.8 3.3 1.4
Fiscal Year 2007......................................... 0.7 233.7 101.9
Fiscal Year 2008......................................... -- 77.6 33.9
-----------------------------------
Total............................................... $ 7.8 $ 321.0 $ 140.0
- ----------------------------------------------------------------------------------------------
</Table>
Our obligations under the Amended and Restated Credit Facilities are
unconditionally and irrevocably guaranteed by Holdings and each of our domestic
subsidiaries. In addition, the Amended and Restated Credit Facilities are
secured by first priority or equivalent security interests in substantially all
tangible and intangible assets of Holdings, the Company and each of our existing
and subsequently acquired or organized domestic subsidiaries, including all the
capital stock of, or other equity interests in, the Company, each of our direct
or indirect domestic and first-tier foreign subsidiaries and each of our
subsequently acquired or organized direct or indirect domestic and first-tier
foreign subsidiaries (which, in the case of a foreign subsidiary, shall in each
case be limited to 65% of such capital stock or equity interests, as the case
may be).
The Amended and Restated Credit Facilities are subject to mandatory
prepayment with, in general,
- 100% of the proceeds of asset sales,
- 50% of our excess cash flow (as defined in the Amended and Restated
Credit Facilities),
41
- 50% of the proceeds of equity offerings, and
- 100% of the proceeds from the issuance of debt obligations, subject to
certain exceptions.
The Amended and Restated Credit Facilities contain a number of covenants
that, among other things, restrict the ability of Holdings, the Company and our
subsidiaries to incur additional indebtedness, create liens on assets, repay
other indebtedness, pay certain restricted payments and dividends and engage in
certain transactions with subsidiaries and affiliates and otherwise restrict
corporate activities. The Amended and Restated Credit Facilities also contain
covenants that among other things, restrict the ability of the Company and our
subsidiaries to dispose of assets, incur guarantee obligations, make
investments, loans or advances, make certain acquisitions, make capital
expenditures and enter into sale and leaseback transactions. In addition, under
the Amended and Restated Credit Facilities we are required to comply with
specified financial ratios and tests, including minimum fixed charge coverage
and interest coverage ratios and maximum leverage ratios. The Amended and
Restated Credit Facilities also contain certain customary events of default.
EXISTING NOTES
On April 30, 1999 we sold $250,000,000 and on February 14, 2002 we sold
$150,000,000 aggregate principal amount of our 10 1/4% Series B Senior
Subordinated Notes due 2009 (the "existing notes"). Interest on the existing
notes is due on May 1 and November 1 of each year and the maturity date of the
existing notes is May 1, 2009.
If we fail to make payments on the existing notes, our guarantor
subsidiaries must make them instead. These guarantees are senior subordinated
obligations of our guarantor subsidiaries. Each of the Note Guarantors also
guarantees the existing notes.
The existing notes are unsecured and subordinated in right of payment to
all of our existing and future senior indebtedness, including all borrowings
under our Amended and Restated Credit Facilities. The existing notes rank
equally in right of payment with all of our existing and future senior
subordinated indebtedness, including the exchange notes, and senior to all of
our existing and future subordinated obligations. The note guarantees are
unsecured and subordinated in right of payment to all existing and future senior
indebtedness of our guarantor subsidiaries, including all guarantees of the
guarantor subsidiaries under our Amended and Restated Credit Facilities. The
guarantees rank equally in right of payment with all of the existing and future
senior subordinated indebtedness of the guarantor subsidiaries, including the
Note Guarantees, and senior to all of the existing and future subordinated
obligations of the guarantor subsidiaries.
We cannot redeem the existing notes prior to May 1, 2004, except as
described below. After this date, we can redeem some or all of the existing
notes at specified redemption prices, plus accrued interest to the redemption
date.
If there is a change of control, we must give holders of the existing notes
the opportunity to sell to us their existing notes at a purchase price of 101%
of their principal amount, plus accrued and unpaid interest, unless we have
previously exercised our right to redeem all of the existing notes.
The indenture governing the existing notes contains covenants that limit
our ability and that of our restricted subsidiaries, subject to important
exceptions and qualifications, to, among other things,
- borrow money;
- guarantee other indebtedness;
- use assets as security in other transactions;
- pay dividends on stock, redeem stock or redeem subordinated debt;
- make investments;
- enter into agreements that restrict dividends from subsidiaries;
- sell assets;
42
- enter into affiliate transactions;
- sell capital stock of subsidiaries;
- enter into new lines of business; and
- merge or consolidate.
The indenture governing the existing notes contains customary events of
default.
43
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
We issued the outstanding notes and will issue the exchange notes under an
indenture dated as of January 23, 2003, among the Company, the Note Guarantors
and J.P. Morgan Trust Company, National Association, as trustee (the "Trustee"),
a copy of which is available upon request to us.
The indenture contains provisions which define your rights under the
exchange notes. In addition, the indenture governs the obligations of the
Company and of each Note Guarantor under the exchange notes. The terms of the
exchange notes include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as amended.
On January 23, 2003, we issued $150.0 million aggregate principal amount of
outstanding notes under the indenture. The terms of the exchange notes are
identical in all material respects to the outstanding notes, except for certain
transfer restrictions and registration and other rights relating to the exchange
of the outstanding notes for the exchange notes. The Trustee will authenticate
and deliver exchange notes for original issue only in exchange for a like
principal amount of outstanding notes. Any outstanding notes that remain
outstanding after the consummation of the exchange offer, together with the
exchange notes, will be treated as a single class of securities under the
indenture. Accordingly, all references in this section to specified percentages
in aggregate principal amount of the outstanding exchange notes shall be deemed
to mean, at any time after the exchange offer is consummated, such percentage in
aggregate principal amount of the outstanding notes and exchange notes then
outstanding.
Certain of our Subsidiaries will guarantee the exchange notes and therefore
will be subject to many of the provisions contained in this "Description of the
Exchange Notes." Each Subsidiary which guarantees the exchange notes is referred
to in this section as a "Note Guarantor." Each such guarantee is termed a "Note
Guarantee."
Definitions of certain terms used in this section may be found under the
heading "-- Certain Definitions." For purposes of this section, the term
"Company" refers only to American Media Operations, Inc. and not any of its
Subsidiaries. The following description is meant to be only a summary of certain
provisions of the indenture. It does not restate the terms of the indenture in
their entirety. We urge that you carefully read the indenture as it, and not
this description, governs your rights as Holders.
OVERVIEW OF THE EXCHANGE NOTES AND THE NOTE GUARANTEES
THE EXCHANGE NOTES
These exchange notes:
- are general unsecured obligations of the Company;
- will rank equally in right of payment with all existing and future Senior
Subordinated Indebtedness of the Company;
- are subordinated in right of payment to any future Senior Indebtedness of
the Company;
- are senior in right of payment to any future Subordinated Obligations of
the Company;
- will be effectively subordinated to any Secured Indebtedness of the
Company and its Subsidiaries to the extent of the value of the assets
securing such Indebtedness; and
- will be effectively subordinated to all liabilities (including Trade
Payables) and preferred stock of each Subsidiary of the Company that is
not a Note Guarantor.
44
THE NOTE GUARANTEES
These exchange notes are guaranteed by each of our Domestic Subsidiaries.
The Note Guarantees:
- will be general unsecured obligations of each Note Guarantor;
- will rank equally in right of payment with any existing and future Senior
Subordinated Indebtedness of each Note Guarantor;
- will be subordinated in right of payment to all existing and future
Senior Indebtedness of each Note Guarantor;
- will be senior in right of payment to any future Subordinated Obligations
of each Note Guarantor; and
- will be effectively subordinated to any Secured Indebtedness of each Note
Guarantor to the extent of the value of the assets securing such
Indebtedness.
The exchange notes will not be guaranteed by our current or future Foreign
Subsidiaries. As of and for the fiscal year ended March 31, 2003, after
eliminating inter-company activity, these non-guarantor Foreign Subsidiaries
would have (i) had approximately $2.0 million of total liabilities (including
Trade Payables), (ii) had approximately 0.3% of our assets and (iii) generated
approximately 0.1% of our operating revenues.
PRINCIPAL, MATURITY AND INTEREST
The exchange notes will mature on January 15, 2011. The exchange notes are
in fully registered form, without coupons, in denominations of $1,000 and any
integral multiple of $1,000.
Each exchange note bears interest at a rate of 8 7/8% beginning on the date
of its issuance, or from the most recent date to which interest has been paid or
provided for. We pay interest semi-annually to Holders of record at the close of
business on the January 1 or July 1 immediately preceding the interest payment
date on January 15 and July 15 of each year, beginning July 15, 2003.
INDENTURE MAY BE USED FOR FUTURE ISSUANCES
We may from time to time issue additional notes having identical terms and
conditions to the exchange notes (the "Additional Notes"). We will only be
permitted to issue such Additional Notes if at the time of such issuance we are
in compliance with the covenants contained in the Indenture. Any Additional
Notes will be part of the same issue as the exchange notes and will vote on all
matters with the exchange notes.
PAYING AGENT AND REGISTRAR
The payment of principal, premium, if any, and interest on the exchange
notes is payable at any office of ours or any agency designated by us. We have
initially designated the corporate trust office of the Trustee to act as our
agent in such matters. The location of the corporate trust office is 2001 Bryan
Street, 9th Floor, Dallas, Texas 75201. We, however, reserve the right to pay
interest to Holders by check mailed directly to Holders at their registered
addresses.
Holders may exchange or transfer their exchange notes at the same location
given in the preceding paragraph. No service charge will be made for any
registration of transfer or exchange of exchange notes. We, however, may require
Holders to pay any transfer tax or other similar governmental charge payable in
connection with any such transfer or exchange.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, we may not redeem the
exchange notes prior to January 15, 2007. On or after this date, we may redeem
the exchange notes, in whole or in part, on not less than 30 nor more than 60
days' prior notice, at the following redemption prices (expressed as percentages
of principal amount), plus accrued and unpaid interest and liquidated damages
thereon, if any, to the redemption
45
date (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
twelve-month period commencing on January 15 of the years set forth below:
<Table>
<Caption>
- -------------------------------------------------------------------------
REDEMPTION
YEAR PRICE
- -------------------------------------------------------------------------
2007........................................................ 104.438%
2008........................................................ 102.958%
2009........................................................ 101.479%
2010 and thereafter......................................... 100.000%
</Table>
SELECTION
If we partially redeem exchange notes, the Trustee will select the exchange
notes to be redeemed on a pro rata basis, by lot or by such other method as the
Trustee in its sole discretion shall deem to be fair and appropriate, although
no note of $1,000 in original principal amount or less will be redeemed in part.
If we redeem any note in part only, the notice of redemption relating to such
note shall state the portion of the principal amount thereof to be redeemed. A
new note in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original note.
On and after the redemption date, interest will cease to accrue on exchange
notes or portions thereof called for redemption so long as we have deposited
with the Paying Agent funds sufficient to pay the principal of, plus accrued and
unpaid interest and liquidated damages thereon, if any, the exchange notes to be
redeemed.
RANKING
The exchange notes will be unsecured Senior Subordinated Indebtedness of
the Company, will be subordinated in right of payment to all existing and future
Senior Indebtedness of the Company, will rank equally in right of payment with
all existing and future Senior Subordinated Indebtedness of the Company
(including any outstanding notes not exchanged) and will be senior in right of
payment to all existing and future Subordinated Obligations of the Company. The
exchange notes also will be effectively subordinated to any Secured Indebtedness
of the Company and its Subsidiaries to the extent of the value of the assets
securing such Indebtedness, as well as to all liabilities of any future
Subsidiaries which will not be Note Guarantors. However, payment from the money
or the proceeds of U.S. Government Obligations held in any defeasance trust
described below under the caption "-- Defeasance" will not be subordinated to
any Senior Indebtedness or subject to the restrictions described herein.
The Note Guarantees will be unsecured Senior Subordinated Indebtedness of
the applicable Note Guarantor, will be subordinated in right of payment to all
existing and future Senior Indebtedness of such Note Guarantor, will rank
equally in right of payment with all existing and future Senior Subordinated
Indebtedness of such Note Guarantor and will be senior in right of payment to
all existing and future Subordinated Obligations of such Note Guarantor. The
Note Guarantees also will be effectively subordinated to any Secured
Indebtedness of the applicable Note Guarantor to the extent of the value of the
assets securing such Secured Indebtedness.
We currently conduct all of our operations through our Subsidiaries. To the
extent such Subsidiaries are not Note Guarantors, creditors of such
Subsidiaries, including trade creditors, and preferred stockholders, if any, of
such Subsidiaries generally will have priority with respect to the assets and
earnings of such Subsidiaries over the claims of creditors of the Company,
including Holders. The exchange notes, therefore, will be effectively
subordinated to the claims of creditors, including trade creditors, and
preferred stockholders, if any, of Subsidiaries of the Company that are not Note
Guarantors. For example, the Company's Foreign Subsidiaries will not guarantee
the exchange Notes and, under certain circumstances, the Company will be able to
designate future Domestic Subsidiaries as Unrestricted Subsidiaries, which will
not guarantee the exchange notes.
46
As of March 31, 2003 we would have had outstanding:
(a) $468.8 million of Senior Indebtedness of the Company, consisting
of our borrowings under our Amended and Restated Credit Facilities
(excluding unused commitment under our Amended and Restated Credit
Facilities), all of which would have been Secured Indebtedness;
(b) $550.7 million of Senior Subordinated Indebtedness of the Company
(including the existing notes and the outstanding notes) and no
indebtedness of the Company that is subordinate or junior in right of
repayment to the exchange notes;
(c) no Senior Indebtedness of the Note Guarantors (excluding their
Guarantees of our Indebtedness under our Amended and Restated Credit
Facilities); and
(d) no Senior Subordinated Indebtedness of the Note Guarantors
(excluding the guarantees of the existing notes and the Note Guarantees)
and no Indebtedness of the Note Guarantors that is subordinate or junior in
right of payment to the guarantees of the existing notes and the Note
Guarantees.
Although the amount of additional indebtedness the Company and its
Restricted Subsidiaries can incur is limited, the Company and its Restricted
Subsidiaries may be able to incur substantial amounts of additional Indebtedness
in certain circumstances. Such Indebtedness may be Senior Indebtedness. See
"-- Certain Covenants -- Limitation on Indebtedness" below.
"Senior Indebtedness" of the Company or any Note Guarantor means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or any Note Guarantor, regardless of whether or
not a claim for post-filing interest is allowed in such proceedings), and fees
and other amounts owing in respect of, Bank Indebtedness and all other
Indebtedness of the Company or any Note Guarantor, whether outstanding on the
Closing Date or thereafter Incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such obligations are not superior, or are subordinated, in right of payment
to the exchange notes or such Note Guarantor's Note Guarantee; provided,
however, that Senior Indebtedness shall not include:
(a) any obligation of the Company to any Subsidiary of the Company or
of such Note Guarantor to the Company or any other Subsidiary of the
Company;
(b) any liability for Federal, state, local or other taxes owed or
owing by the Company or such Note Guarantor;
(c) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(d) any Indebtedness or obligation of the Company or such Note
Guarantor (and any accrued and unpaid interest in respect thereof) that by
its terms is subordinate or junior in any respect to any other Indebtedness
or obligation of the Company or such Note Guarantor, including any Senior
Subordinated Indebtedness and any Subordinated Obligations;
(e) any obligations with respect to any Capital Stock; or
(f) any Indebtedness Incurred in violation of the indenture.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the exchange notes. The exchange notes will rank equally in all
respects with all other Senior Subordinated Indebtedness of the Company. The
Company will not Incur, directly or indirectly, any Indebtedness which is
subordinate or junior in ranking in any respect to Senior Indebtedness unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.
We may not pay principal of, premium (if any) or interest on the exchange
notes, or make any deposit pursuant to the provisions described under
"-- Defeasance" below, and may not otherwise repurchase, redeem
47
or otherwise retire any exchange notes (except that Holders may receive and
retain (a) Permitted Junior Securities and (b) payments made from the trust
described under "-- Defeasance" below) (collectively, "pay the exchange notes")
if:
(a) any Designated Senior Indebtedness is not paid when due, or
(b) any other default on Designated Senior Indebtedness occurs and the
maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms
unless, in either case,
(i) the default has been cured or waived and any such acceleration has
been rescinded, or
(ii) such Designated Senior Indebtedness has been paid in full;
provided, however, that we may pay the exchange notes without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of the Designated Senior Indebtedness with
respect to which either of the events set forth in clause (a) or (b) above has
occurred and is continuing.
During the continuance of any default (other than a default described in
clause (a) or (b) above) with respect to any Designated Senior Indebtedness of
the Company pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, we
may not pay the exchange notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to us) of written notice
(a "Blockage Notice") of such default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated:
(a) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice,
(b) by repayment in full of such Designated Senior Indebtedness, or
(c) because no defaults are continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the second preceding sentence),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the exchange notes after the
end of such Payment Blockage Period.
Not more than one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period. However, if any Blockage Notice within such
360-day period is given by or on behalf of any holders of Designated Senior
Indebtedness other than the Bank Indebtedness, the Representative of the Bank
Indebtedness may give another Blockage Notice within such period. In no event,
however, may the total number of days during which any Payment Blockage Period
or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this paragraph, no default or event of
default that existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days.
48
Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or a total or partial dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property:
(a) the holders of Senior Indebtedness of the Company will be entitled
to receive payment in full of such Senior Indebtedness before the Holders
are entitled to receive any payment of principal of or interest on the
exchange notes; and
(b) until such Senior Indebtedness is paid in full any payment or
distribution to which Holders would be entitled but for the subordination
provisions of the indenture will be made to holders of such Senior
Indebtedness as their interests may appear (except that Holders may receive
and retain (i) Permitted Junior Securities and (ii) payments made from the
trust as described under "-- Defeasance" so long as, on the date or dates
the respective amounts were paid into the trust, such payments were made
with respect to the exchange notes without violating the subordination
provisions described herein); if a distribution is made to Holders that due
to the subordination provisions of the indenture should not have been made
to them, such Holders will be required to hold it in trust for the holders
of Senior Indebtedness of the Company and pay it over to them as their
interests may appear.
If payment of the exchange notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of the
Designated Senior Indebtedness of the Company (or their Representative) of the
acceleration. If any Designated Senior Indebtedness of the Company is
outstanding, the Company may not pay the exchange notes until five Business Days
after such holders or the Representative of such Designated Senior Indebtedness
receive notice of such acceleration and, thereafter, may pay the exchange notes
only if the subordination provisions of the indenture otherwise permit payment
at that time.
By reason of the subordination provisions of the indenture, in the event of
insolvency, creditors of the Company who are holders of Senior Indebtedness of
the Company may recover more, ratably, than the Holders, and creditors of the
Company who are not holders of Senior Indebtedness of the Company or of Senior
Subordinated Indebtedness of the Company (including the exchange notes) may
recover less, ratably, than holders of Senior Indebtedness of the Company and
Senior Subordinated Indebtedness of the Company.
NOTE GUARANTEES
All of the Company's Domestic Subsidiaries and certain future Subsidiaries
of the Company (as described below), as primary obligors and not merely as
sureties, will jointly and severally irrevocably and unconditionally Guarantee
on an unsecured senior subordinated basis the performance and full and punctual
payment when due, whether at Stated Maturity, by acceleration, by redemption or
otherwise, of all obligations of the Company under the indenture (including
obligations to the Trustee) and the exchange notes, whether for payment of
principal of or interest on or liquidated damages in respect of the exchange
notes, expenses, indemnification or otherwise (all such obligations guaranteed
by such Note Guarantors being herein called the "Guaranteed Obligations"). Such
Note Guarantors will agree to pay, in addition to the amount stated above, any
and all costs and expenses (including reasonable counsel fees and expenses)
incurred by the Trustee or the Holders in enforcing any rights under the Note
Guarantees. Each Note Guarantee will be limited in amount to an amount not to
exceed the maximum amount that can be Guaranteed by the applicable Note
Guarantor without rendering the Note Guarantee, as it relates to such Note
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
After the Closing Date, the Company will cause each future Domestic Subsidiary
to execute and deliver to the Trustee a supplemental indenture pursuant to which
such Domestic Subsidiary will Guarantee payment of the exchange notes. See
"-- Certain Covenants -- Future Note Guarantors" below. Under certain
circumstances, the Company will be able to designate Domestic Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not Guarantee the
exchange notes and therefore will not be subject to any of the restrictive
covenants set forth in the indenture.
The obligations of a Note Guarantor under its Note Guarantee are senior
subordinated obligations. As such, the rights of Holders to receive payment by a
Note Guarantor pursuant to its Note Guarantee will be
49
subordinated in right of payment to the rights of holders of Senior Indebtedness
of such Note Guarantor. The terms of the subordination provisions described
above with respect to the Company's obligations under the exchange notes apply
equally to a Note Guarantor and the obligations of such Note Guarantor under its
Note Guarantee.
Each Note Guarantee is a continuing guarantee and shall (a) remain in full
force and effect until payment in full of all the Guaranteed Obligations, (b) be
binding upon each Note Guarantor and its successors and (c) inure to the benefit
of, and be enforceable by, the Trustee, the Holders and their successors,
transferees and assigns.
A Note Guarantor shall be released from all obligations under its Note
Guarantee and under the indenture upon (a) the merger or consolidation of such
Note Guarantor with or into any Person other than the Company or a Subsidiary or
Affiliate of the Company where such Note Guarantor is not the surviving entity
of such consolidation or merger or (b) the sale or transfer by the Company or
any Subsidiary of the Company of the Capital Stock of such Note Guarantor (or by
any other Person as a result of a foreclosure of any Lien on such Capital Stock
securing Senior Indebtedness), where, after such sale or transfer, such Note
Guarantor is no longer a Subsidiary of the Company; provided, however, that each
such merger, consolidation, sale or transfer by the Company or such Subsidiary
or Affiliate (i) shall comply with the terms of the indenture, including the
covenant described under "-- Certain Covenants -- Limitation on Sales of Assets
and Subsidiary Stock" or (ii) in the case of a sale or transfer as a result of a
foreclosure of any Lien securing Senior Indebtedness by the holder of such Lien,
the net proceeds therefrom shall be applied in compliance with the terms of the
indenture that would apply to a sale thereof by the Company.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's exchange notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest
and liquidated damages thereon, if any, to the date of repurchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date); provided, however, that
notwithstanding the occurrence of a Change of Control, the Company shall not be
obligated to repurchase the exchange notes pursuant to this section in the event
that it has exercised its right to redeem all the exchange notes under the terms
of the section titled "-- Optional Redemption":
(a) prior to the earlier to occur of (i) the first public offering of
common stock of American Media, Inc. or (ii) the first public offering of
common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Company or American Media, Inc.,
whether as a result of issuance of securities of American Media, Inc. or
the Company, any merger, consolidation, liquidation or dissolution of
American Media, Inc. or the Company, any direct or indirect transfer of
securities by any Permitted Holder or otherwise (for purposes of this
clause (a) and clause (b) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of an entity (the "specified entity")
held by any other entity (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(b) (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (a) above, except that
for purposes of this clause (b) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company or Holdings and (ii) the
Permitted Holders "beneficially own" (as defined in clause (a) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company or American Media, Inc.
than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election
50
a majority of the board of directors of the Company or American Media,
Inc., as the case may be (for the purposes of this clause (b), such other
person shall be deemed to beneficially own any Voting Stock of a specified
entity held by a parent entity, if such other person is the beneficial
owner (as defined in this clause (b)), directly or indirectly, of more than
35% of the voting power of the Voting Stock of such parent entity and the
Permitted Holders "beneficially own" (as defined in clause (a) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent entity and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent entity);
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of the Company
or American Media, Inc., as the case may be (together with any new
directors whose election by such board of directors of the Company or
American Media, Inc., as the case may be, or whose nomination for election
by the shareholders of the Company or American Media, Inc., as the case may
be, was approved by a vote of 66 2/3% of the directors of the Company or
American Media, Inc., as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the board of directors of the Company or American
Media, Inc., as the case may be, then in office;
(d) the adoption of a plan relating to the liquidation or dissolution
of the Company or American Media, Inc.;
(e) the merger or consolidation of the Company or American Media, Inc.
with or into another Person or the merger of another Person with or into
the Company or American Media, Inc., or the sale of all or substantially
all the assets of the Company or American Media, Inc. to another Person
(other than a Person that is controlled by the Permitted Holders), and, in
the case of any such merger or consolidation, the securities of the Company
or American Media, Inc. that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of the
Voting Stock of the Company or American Media, Inc. are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving Person or
transferee that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
Person or transferee; or
(f) Evercore no longer has the direct or indirect power to appoint or
to approve the appointment of a majority of the managers of (or other
individuals comprising) the board of managers or other governing body of
EMP Group L.L.C.
In the event that at the time of such Change of Control the terms of the
Bank Indebtedness restrict or prohibit the repurchase of exchange notes pursuant
to this covenant, then prior to the mailing of the notice to Holders provided
for in the immediately following paragraph but in any event within 30 days
following any Change of Control, the Company shall:
(a) repay in full all Bank Indebtedness or offer to repay in full all
Bank Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer, or
(b) obtain the requisite consent under the agreements governing the
Bank Indebtedness to permit the repurchase of the exchange notes as
provided for in the immediately following paragraph.
Within 30 days following any Change of Control (unless the Company has
exercised its right to redeem the exchange notes as described under "-- Optional
Redemption"), the Company shall mail a notice to each Holder with a copy to the
Trustee (the "Change of Control Offer") stating:
(a) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's exchange notes at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and liquidated damages, if any, to the date of
51
repurchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(b) the circumstances and relevant facts and financial information
regarding such Change of Control;
(c) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(d) the instructions determined by the Company, consistent with this
covenant, that a Holder must follow in order to have its exchange notes
purchased.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by the Company and
purchases all exchange notes validly tendered and not withdrawn under such
Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of exchange notes pursuant to this covenant.
To the extent that the provisions of any securities laws or regulations conflict
with provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the indenture, but that
could increase the amount of Indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings. Restrictions on the
ability of the Company to incur additional Indebtedness are contained in the
covenants described under "-- Certain Covenants -- Limitation on Indebtedness."
Such restrictions can only be waived with the consent of the Holders of a
majority in principal amount of the exchange notes then outstanding.
The occurrence of certain of the events which would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company may contain prohibitions of certain events which
would constitute a Change of Control or require such Senior Indebtedness to be
repurchased upon a Change of Control. Moreover, the exercise by the Holders of
their right to require the Company to repurchase the exchange notes could cause
a default under such Senior Indebtedness, even if the Change of Control itself
does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the Holders upon a repurchase may
be limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases. The provisions under the indenture relative to the
Company's obligation to make an offer to repurchase the exchange notes as a
result of a Change of Control may be waived or modified with the written consent
of the Holders of a majority in principal amount of the exchange notes.
With respect to the disposition of property or assets, the phrase "all or
substantially all" as used in the indenture varies according to the facts and
circumstances of the subject transaction, has no clearly established meaning
under New York law (which is the choice of law under the indenture) and is
subject to judicial interpretation. Accordingly, in certain circumstances there
may be a degree of uncertainty in ascertaining whether a particular transaction
would involve a disposition of "all or substantially all" of the property or
assets of a Person, and therefore it may be unclear as to whether a Change of
Control has occurred and whether the Company is required to make an offer to
repurchase the exchange notes as described above.
52
CERTAIN COVENANTS
The indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that the Company or any Note Guarantor may Incur Indebtedness
if on the date of such Incurrence and after giving effect thereto the Leverage
Ratio would be less than 6.25:1.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Bank Indebtedness Incurred in an aggregate principal amount not to
exceed $650 million at any one time outstanding less the aggregate amount
of all mandatory prepayments, repayments, redemptions or purchases of
principal of such Indebtedness pursuant to the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock";
(ii) Indebtedness of the Company owed to and held by any Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or any Restricted Subsidiary; provided, however, that (1) any
subsequent issuance or transfer of any Capital Stock or any other event
that results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof, (2)
if the Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the exchange notes, (3) if a Restricted
Subsidiary is the obligor, any such Indebtedness is made pursuant to an
intercompany note; and (4) if a Note Guarantor is the obligor, such
Indebtedness is subordinated in right of payment to the Note Guarantee of
such Note Guarantor;
(iii) Indebtedness (1) represented by the exchange notes (not
including any Additional Notes) and the Note Guarantees, (2) outstanding on
the Closing Date (other than the Indebtedness described in clauses (i) and
(ii) above), (3) consisting of Refinancing Indebtedness Incurred in respect
of any Indebtedness described in this clause (iii) (including Refinancing
Indebtedness) or the foregoing paragraph (a) and (4) consisting of
Guarantees by the Company or any Note Guarantor of any Indebtedness
permitted hereunder; provided that if such Indebtedness is by its express
terms subordinated in right of payment to the exchange notes or a Note
Guarantee of a Note Guarantor, as applicable, any such Guarantee with
respect to such Indebtedness shall be subordinated in right of payment to
the exchange notes or such Note Guarantor's Note Guarantee substantially to
the same extent as such Indebtedness is subordinated to the exchange notes
or the Note Guarantee, as applicable;
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Subsidiary of or was
otherwise acquired by the Company); provided, however, that on the date
that such Restricted Subsidiary is acquired by the Company, the Company
would have been able to Incur $1.00 of additional Indebtedness pursuant to
the foregoing paragraph (a) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (iv) and (2) Refinancing Indebtedness
Incurred by a Restricted Subsidiary in respect of Indebtedness Incurred by
such Restricted Subsidiary pursuant to this clause (iv);
(v) Indebtedness (including Capitalized Lease Obligations) incurred by
the Company or any Note Guarantor, to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets) in an aggregate principal amount which, when aggregated with
the principal amount of all other Indebtedness then outstanding and
incurred pursuant to this clause (v) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (v) does not exceed 2% of
Total Assets;
53
(vi) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(vii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary of
the Company in accordance with the terms of the indenture, other than
Guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary of the Company for the
purpose of financing such acquisition; provided, however, that (1) such
Indebtedness is not reflected on the balance sheet of the Company or any
Restricted Subsidiary (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet will
not be deemed to be reflected on such balance sheet for purposes of this
clause (1)) and (2) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including the Fair
Market Value of noncash proceeds (such Fair Market Value of such noncash
proceeds being measured at the time received and without giving effect to
any subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(viii) Hedging Obligations that are incurred in the ordinary course of
business (but in any event excluding Hedging Obligations entered into for
speculative purposes); provided, however, that such Hedging Obligations do
not increase the Indebtedness of the Company outstanding at any time other
than as a result of fluctuations in interest rates or currency exchange
rates or by reason of fees, indemnities and compensation payable
thereunder;
(ix) Obligations in respect of performance and surety bonds and
completion guarantees that are incurred by the Company or any Restricted
Subsidiary in the ordinary course of business;
(x) Indebtedness arising from honoring by a bank or other financial
institution of a check, draft or similar instrument (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is
extinguished within five business days; and
(xi) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to the foregoing paragraph (a) or any other clause of this
paragraph (b)) in an aggregate principal amount on the date of Incurrence
that, when added to all other Indebtedness Incurred pursuant to this clause
(xi) and then outstanding, shall not exceed $45.0 million (it being
understood that any Indebtedness incurred pursuant to this clause (xi)
shall cease to be deemed to be Incurred or outstanding for purposes hereof
but shall be deemed Incurred for purposes of paragraph (a) from and after
the first date on which the Company could have incurred such Indebtedness
under paragraph (a) without reliance on this clause (xi)).
(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness pursuant to paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness will be
subordinated to the exchange notes to at least the same extent as such
Subordinated Obligations. The Company may not Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
In addition, the Company may not Incur any Secured Indebtedness which is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the exchange notes equally and ratably with (or on a senior basis
to, in the case of Indebtedness subordinated in right of payment to the exchange
notes) such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien. A Note Guarantor may not Incur any Indebtedness if such
Indebtedness is by its terms expressly subordinate or junior in ranking in any
respect to any Senior Indebtedness of such Note Guarantor unless such
Indebtedness is Senior Subordinated Indebtedness of such
54
Note Guarantor or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Note Guarantor. In addition, a Note Guarantor
may not Incur any Secured Indebtedness that is not Senior Indebtedness of such
Note Guarantor unless contemporaneously therewith effective provision is made to
secure the Note Guarantee of such Note Guarantor equally and ratably with (or on
a senior basis to, in the case of Indebtedness subordinated in right of payment
to such Note Guarantee) such Secured Indebtedness for as long as such Secured
Indebtedness is secured by a Lien.
(d) Notwithstanding any other provision of this covenant, the maximum
amount of Indebtedness that the Company or any Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rates of currencies. For purposes of determining
the outstanding principal amount of any particular Indebtedness Incurred
pursuant to this covenant, (i) Indebtedness Incurred pursuant to the Credit
Agreement prior to or on the Closing Date shall be treated as Incurred pursuant
to clause (i) of paragraph (b) above, (ii) Indebtedness permitted by this
covenant need not be permitted solely by reference to one provision permitting
such Indebtedness but may be permitted in part by one such provision and in part
by one or more other provisions of this covenant permitting such Indebtedness
and (iii) in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in this covenant, the Company, in its sole
discretion, shall classify such Indebtedness and only be required to include the
amount of such Indebtedness in one of such clauses.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the
direct or indirect holders of its Capital Stock except dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and except dividends or distributions payable to the Company or
another Restricted Subsidiary (and, if such Restricted Subsidiary has
shareholders other than the Company or other Restricted Subsidiaries, to
its other shareholders on a pro rata basis),
(ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of American Media, Inc., the Company or any Restricted
Subsidiary held by Persons other than the Company or another Restricted
Subsidiary,
(iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition and other than Indebtedness described in clause
(ii) of paragraph (b) of the covenants described under "-- Limitation on
Indebtedness") or
(iv) make any Investment (other than a Permitted Investment) in any
Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein
referred to as a "Restricted Payment") if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default will have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under
"-- Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (including, if the amount so expended is other than
in cash, the Fair Market Value of such Restricted Payments) declared or
made subsequent to the Closing Date would exceed the sum of, without
duplication:
(A) (i) $54.4 million plus (ii) 100% of EBITDA accrued during
the period (treated as one accounting period) from December 24, 2002
to the end of the most recent fiscal quarter
55
ending prior to the date of such Restricted Payment for which
financial statements are available (or, in case such EBITDA during
such period is a deficit minus 100% of such deficit), minus (iii)
140% of Consolidated Interest Expense accrued during the period
(treated as one accounting period) from December 24, 2002 to the end
of the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are available;
(B) the aggregate Net Cash Proceeds and the Fair Market Value of
property or assets used or useful in a Permitted Business, in each
case received by the Company from capital contributions or the issue
or sale of its Capital Stock (other than Disqualified Stock) on or
subsequent to the Closing Date (other than an issuance or sale to (i)
a Subsidiary of the Company or (ii) an employee stock ownership plan
or other trust established by the Company or any of its Subsidiaries
to the extent such sale is financed by loans from or from
Indebtedness guaranteed by the Company unless such loans or
Indebtedness have been repaid with cash on or prior to the date of
determination);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Closing Date of any Indebtedness of the
Company or its Restricted Subsidiaries issued after the Closing Date
which is convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash or
the Fair Market Value of other property distributed by the Company or
any Restricted Subsidiary upon such conversion or exchange);
(D) 100% of the aggregate amount received in cash from (i) the
sale or other disposition (other than to the Company or a Restricted
Subsidiary) of Investments (other than Permitted Investments)
("Restricted Investments") made by the Company and its Restricted
Subsidiaries after the Closing Date and from repurchases and
redemptions after the Closing Date of such Restricted Investments
from the Company and its Restricted Subsidiaries by any Person (other
than the Company or any of its Subsidiaries or Affiliates) and from
repayments of loans or advances after the Closing Date which
constituted Restricted Investments or (ii) the sale (other than to
the Company or a Subsidiary or an Affiliate) after the Closing Date
of the Capital Stock of an Unrestricted Subsidiary, in an amount not
to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included
in the calculation of the amount of Restricted Payments; provided,
however, that no amount will be included in this clause (D) to the
extent it is already included in Consolidated Net Income; and
(E) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries since the Closing Date resulting from (i)
payments of dividends, repayments of the principal of loans or
advances or other transfers of assets to the Company or any
Restricted Subsidiary from Unrestricted Subsidiaries or (ii) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount
of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included
in the calculation of the amount of Restricted Payments; provided,
however, that no amount will be included in this clause (E) to the
extent it is already included in Consolidated Net Income.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase, repurchase, retirement or other acquisition or
retirement for value of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified
Stock and other than Capital Stock issued or sold to a Subsidiary of the
Company or an employee stock ownership plan or other trust established by
the Company or any of its Subsidiaries to the extent such sale is financed
by
56
loans from or from Indebtedness guaranteed by the Company unless such loans
or Indebtedness have been repaid with cash on or prior to the date of
determination); provided, however, that
(1) such Restricted Payment will be excluded in subsequent
calculations of the amount of Restricted Payments and
(2) the Net Cash Proceeds from such sale applied in the manner set
forth in this clause (i) will be excluded from the calculation of
amounts under clause (iv)(3)(B) of paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company that is permitted to be
Incurred pursuant to the covenant described under "-- Limitation on
Indebtedness"; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value will be
excluded in subsequent calculations of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock"; provided, however,
that such purchase or redemption will be excluded in subsequent
calculations of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend will be included
in subsequent calculations of the amount of Restricted Payments;
(v) the repurchase or other acquisition of shares of, or options to
purchase shares of, Capital Stock of the Company or any of its Subsidiaries
from employees, former employees, directors or former directors of the
Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to
the terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount
of such repurchases or acquisitions in any fiscal year of the Company after
the Closing Date shall not exceed, together with the aggregate amount of
all payments made under clause (vi)(3) of this paragraph (b) below in such
fiscal year, in the aggregate $5.0 million (with unused amounts in any
fiscal year being carried over to succeeding fiscal years subject to a
maximum of $10.0 million in any one fiscal year), up to a maximum aggregate
amount, together with the aggregate amount of all payments made under
clause (vi)(3) of this paragraph (b) below, of $25.0 million during the
period from and after the Closing Date; provided further, however, that
such repurchases and other acquisitions shall be included in subsequent
calculations of the amount of Restricted Payments;
(vi) the payment of dividends, other distributions or other amounts by
the Company for the purposes set forth in clauses (1) through (4) below;
provided, however, that such dividend, distribution or amount set forth in
clauses (1) through (4) shall be included in subsequent calculations of the
amount of Restricted Payments for the purposes of paragraph (a) above:
(1) to American Media, Inc. in amounts equal to the amounts
required for American Media, Inc. to pay franchise taxes and other fees
required to maintain its corporate existence and provide for other
operating costs of up to $2.0 million per fiscal year;
(2) to American Media, Inc. in amounts equal to amounts required
for American Media, Inc. to pay Federal, state and local income taxes to
the extent such income taxes are attributable to the income of the
Company and its Restricted Subsidiaries (and, to the extent of amounts
actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of
such Unrestricted Subsidiaries);
(3) to American Media, Inc. in amounts equal to amounts expended by
American Media, Inc. to repurchase Capital Stock of American Media, Inc.
owned by former employees of the Company
57
or its Subsidiaries or their assigns, estates and heirs; provided,
however, that the aggregate amount paid, loaned or advanced to American
Media, Inc. pursuant to this clause (3) in any fiscal year of the
Company after the Closing Date shall not exceed, together with the
aggregate amount of all payments made under clause (v) of this paragraph
(b) above during such fiscal year, in the aggregate, $5.0 million (with
unused amounts in any fiscal year being carried over to succeeding
fiscal years subject to a maximum of $10.0 million in any one fiscal
year), up to a maximum aggregate amount, together with the aggregate
amount of all payments made under clause (v) of this paragraph (b)
above, of $25.0 million during the period from and after the Closing
Date, plus any amounts contributed by American Media, Inc. to the
Company as a result of resales of such repurchased shares of Capital
Stock; and
(4) to American Media, Inc. in amounts required to pay the annual
monitoring fee to Evercore; provided, however, that the aggregate amount
paid, loaned or delivered to American Media, Inc. pursuant to this
clause (4) shall not, in the aggregate, exceed $750,000 per fiscal year;
(vii) the payment of dividends on the Company's common stock (or the
payment of dividends to American Media, Inc. to fund the payment by
American Media, Inc. of dividends on American Media, Inc.'s common stock)
following the first public offering of common stock of the Company or
American Media, Inc., as the case may be, after the Closing Date, of up to
6% per annum of the net proceeds received by the Company or contributed to
the Company by American Media, Inc. from such public offering; provided,
however, that (1) the aggregate amount of all such dividends shall not
exceed the aggregate amount of net proceeds received by the Company or
contributed to the Company by American Media, Inc. from such public
offering, (2) at the time of, and after giving effect to, any payment
permitted under this clause (vii), no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof and
(3) any such payment shall be included in subsequent calculations of the
amount of Restricted Payments;
(viii) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Stock of the Company or any
of its Restricted Subsidiaries issued or Incurred in accordance with the
covenant described under "-- Limitation on Indebtedness"; provided,
however, that such payments shall be excluded in subsequent calculations of
the amount of Restricted Payments; or
(ix) other Restricted Payments in an aggregate amount not to exceed
$35.0 million since the Closing Date; provided, however, that at the time
of, and after giving effect to, any payment permitted under this clause
(ix), no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and provided further that any such
payment shall be included in subsequent calculations of the amount of
Restricted Payments.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(a) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to the Company or any of
its Restricted Subsidiaries,
(b) make any loans or advances to the Company or any of the Restricted
Subsidiaries or
(c) transfer any of its property or assets to the Company or any of
its Restricted Subsidiaries, except:
(i) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to
which such
58
Restricted Subsidiary became a Restricted Subsidiary or was otherwise
acquired by the Company) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this covenant or this
clause (iii) or contained in any amendment to an agreement referred to
in clause (i) or (ii) of this covenant or this clause (iii); provided,
however, that the encumbrances and restrictions contained in any such
Refinancing agreement or amendment are no less favorable, in the
aggregate, to the Holders than the encumbrances and restrictions
contained in such predecessor agreements;
(iv) in the case of clause (c), any encumbrance or restriction
(1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or
(2) contained in security agreements securing Indebtedness of a
Restricted Subsidiary to the extent such encumbrance or restriction
restricts the transfer of the property subject to such security
agreements;
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition; and
(vi) in the case of clause (c), any encumbrance or restriction
pursuant to any agreement relating to Purchase Money Indebtedness that
is Incurred subsequent to the Closing Date in compliance with the
covenant described under "-- Limitation on Indebtedness."
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the Fair Market Value of the
shares and assets subject to such Asset Disposition,
(ii) at least 75% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash or Temporary Cash
Investments; provided that the amount of (1) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto) of the Company or any Restricted Subsidiary (other
than liabilities that are by their terms subordinated to the exchange
notes), that are assumed by the transferee of any such assets (provided
that the Company or such Restricted Subsidiary is released from all
liability with respect thereto), (2) any securities received by the Company
or such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash (to the extent of the
cash received) within 90 days following the closing of such Asset
Disposition and (3) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in such Asset Disposition
having an aggregate Fair Market Value, taken together with all other
Designated Noncash Consideration received pursuant to this clause (3) that
is at that time outstanding, not to exceed the greater of (A) $25.0 million
or (B) 3% of Total Assets at time of receipt of such Designated Noncash
Consideration (with the Fair Market Value of each item of Designated
Noncash Consideration being measured at the time received and without
giving effect to subsequent changes in value), shall be deemed to be cash
for purposes of this provision and for no other purpose; and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be)
(1) first, (A) to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem or purchase
Senior Indebtedness of the Company or Indebtedness (other than any
Disqualified Stock) of a Restricted Subsidiary (in each case other
59
than Indebtedness owed to the Company or an Affiliate of the Company and
other than Preferred Stock) or (B) to the extent the Company or such
Restricted Subsidiary elects, to acquire Additional Assets (including by
means of an Investment in Additional Assets by a Restricted Subsidiary
with Net Available Cash received by the Company or another Restricted
Subsidiary), in each case within one year from the later of such Asset
Disposition or the receipt of such Net Available Cash;
(2) second, to the extent of the balance of such Net Available Cash
after application in accordance with clause (1), to make an Offer (as
defined below) to purchase exchange notes pursuant to and subject to the
conditions set forth in section (b) of this covenant; provided, however,
that if the Company elects (or is required by the terms of any other
Senior Subordinated Indebtedness), such Offer may be made ratably to
purchase the exchange notes and other Senior Subordinated Indebtedness
of the Company; and
(3) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (1) and (2), for any
general corporate purpose permitted pursuant to the terms of the
indenture;
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (1)(A) or (2) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries will not be required to apply any Net Available Cash
in accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $5.0 million.
(b) In the event of an Asset Disposition that requires the purchase of
exchange notes (and other Senior Subordinated Indebtedness) pursuant to clause
(a)(iii)(2) of this covenant, the Company will be required to purchase exchange
notes (and other Senior Subordinated Indebtedness) tendered pursuant to an offer
by the Company for the exchange notes (and other Senior Subordinated
Indebtedness) (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest and liquidated damages, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) in
accordance with the procedures (including prorating in the event of
oversubscription), set forth in the indenture. If the aggregate purchase price
of exchange notes (and other Senior Subordinated Indebtedness) tendered pursuant
to the Offer is less than the Net Available Cash allotted to the purchase of the
exchange notes (and other Senior Subordinated Indebtedness), the Company may
apply the remaining Net Available Cash for any general corporate purpose
permitted pursuant to the terms of the indenture. The Company will not be
required to make an Offer for exchange notes (and other Senior Subordinated
Indebtedness) pursuant to this covenant if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (a)(iii)(1))
is less than $10.0 million for any particular Asset Disposition (which lesser
amount will be carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of exchange notes pursuant to
this covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter into
or conduct any transaction or series of related
60
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless such Affiliate Transaction is on terms:
(i) that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate,
(ii) that, in the event such Affiliate Transaction involves an
aggregate amount in excess of $2.0 million,
(1) are set forth in writing and
(2) have been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction and
(iii) that, in the event such Affiliate Transaction involves an amount
in excess of $10.0 million, have been determined in writing by a nationally
recognized appraisal or investment banking firm to be fair, from a
financial standpoint, to the Company and its Restricted Subsidiaries or not
materially less favorable than those that might reasonably have been
obtained in an arm's-length transaction.
(b) The provisions of the foregoing paragraph (a) will not prohibit
(i) any Restricted Payment permitted to be paid pursuant to the
covenant described under "-- Limitation on Restricted Payments,"
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors,
(iii) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors,
(iv) loans or advances to employees of the Company or any of its
Restricted Subsidiaries in the ordinary course of business not in excess of
$5.0 million in the aggregate outstanding at any one time,
(v) the payment of reasonable fees to directors of the Company and its
Subsidiaries who are not employees of the Company or its Subsidiaries, or
(vi) any transaction between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
shares of its Capital Stock except:
(a) to the Company or a Restricted Subsidiary; or
(b) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would continue to be a Restricted Subsidiary or if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer be a Restricted Subsidiary and the Investment of
the Company in such Person after giving effect to such issuance or sale
would have been permitted to be made under the covenant described under
"-- Limitation on Restricted Payments" as if made on the date of such
issuance or sale (and such Investment shall be deemed to be an Investment
made for the purposes of such covenant). The proceeds of any sale of such
Capital Stock permitted hereby will be treated as Net Available Cash from
an Asset Disposition and must be applied in accordance with the terms of
the covenant described under "-- Limitation of Sales of Assets and
Subsidiary Stock."
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business, other than a Permitted
Business.
61
SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the SEC and provide the Trustee and Holders and prospective
Holders (upon request) within 15 days after it files them with the SEC, copies
of its annual report and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act; provided, however, the
Company shall not be so obligated to file such reports with the SEC if the SEC
does not permit such filing, in which event the Company will make available such
information to the Trustee, Holders and prospective Holders (upon request)
within 15 days after the time the Company would be required to file such
information with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act. Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the Exchange Offer (as defined) or the
effectiveness of the Shelf Registration Statement (as defined) by the filing
with the SEC of the Exchange Offer Registration Statement (as defined) and/or
Shelf Registration Statement, and any amendments thereto, with such financial
information that satisfies Regulation S-X of the Securities Act. The Company
also will comply with the other provisions of Section 314(a) of the TIA.
Future Note Guarantors. The Company will cause each Domestic Subsidiary
organized or acquired after the date hereof to become a Note Guarantor, and
execute and deliver to the Trustee a supplemental indenture in the form set
forth in the indenture pursuant to which such Domestic Subsidiary will Guarantee
payment of the exchange notes. Each Note Guarantee will be limited to an amount
not to exceed the maximum amount that can be Guaranteed by that Domestic
Subsidiary without rendering the Note Guarantee, as it relates to such Domestic
Subsidiary, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
MERGER AND CONSOLIDATION
(a) The indenture will provide that the Company will not consolidate with
or merge with or into, or convey, transfer or lease all or substantially all its
assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") will be a corporation organized and existing under the laws of
the United States, any State thereof or the District of Columbia and the
Successor Company (if not the Company) will expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
exchange notes and the indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted Subsidiary at the time
of such transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness under paragraph (a) of the covenant described under
"-- Certain Covenants -- Limitation on Indebtedness"; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets will not be released from the obligation to pay the
principal of and interest on the exchange notes.
(b) In addition, the Company will not permit any Note Guarantor to
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all of its assets to, any Person unless:
(i) the resulting, surviving or transferee Person will be a
corporation organized and existing under the laws of the United States, any
State thereof or the District of Columbia, and such Person (if not such
62
Note Guarantor) will expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of such Note Guarantor under its Note Guarantee;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the resulting, surviving or
transferee Person as a result of such transaction as having been Incurred
by such Person at the time of such transaction), no Default shall have
occurred and be continuing; and
(iii) the Company will have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture;
(iv) provided, however, that the foregoing shall not apply to any such
consolidation or merger with or into, or conveyance, transfer or lease to,
any Person if the resulting, surviving or transferee Person will not be a
Subsidiary of the Company and the other terms of the indenture, including
the covenant described under "-- Certain Covenants -- Limitations on Sales
of Assets and Subsidiary Stock," are complied with.
(c) Notwithstanding the foregoing:
(i) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and
(ii) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to
realize tax or other benefits.
DEFAULTS
Each of the following is an Event of Default:
(a) default in any payment of interest on any exchange note when due
and payable, whether or not prohibited by the provisions described under
"-- Ranking" above, continued for 30 days,
(b) a default in the payment of principal of any exchange note when
due and payable at its Stated Maturity, upon required redemption or
repurchase, upon declaration or otherwise, whether or not such payment is
prohibited by the provisions described under "-- Ranking" above,
(c) the failure by the Company to comply with its obligations under
the covenant described under "-- Merger and Consolidation" above,
(d) the failure by the Company to comply for 30 days after notice with
any of its obligations under the covenants described under "-- Change of
Control" or "-- Certain Covenants" above (in each case, other than a
failure to purchase exchange notes),
(e) the failure by the Company to comply for 60 days after notice with
its other agreements contained in the exchange notes or the indenture,
(f) the failure by the Company or any Restricted Subsidiary to pay any
Indebtedness within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders thereof because of a
default if the total amount of such Indebtedness unpaid or accelerated
exceeds $25.0 million or its foreign currency equivalent (the "cross
acceleration provision") and such failure continues for 10 days after
receipt of the notice specified in the indenture,
(g) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions"),
(h) the rendering of any judgment or decree for the payment of money
in excess of $25.0 million (net of any amounts with respect to which a
reputable and creditworthy insurance company has
63
acknowledged liability in writing) or its foreign currency equivalent
against the Company or a Restricted Subsidiary if:
(i) an enforcement proceeding thereon is commenced by any creditor,
or
(ii) such judgment or decree remains outstanding for a period of 60
days following such judgment and is not discharged, waived or stayed
(the "judgment default provision") or
(iii) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Note Guarantor or
Person acting by or on behalf of such Note Guarantor denies or
disaffirms such Note Guarantor's obligations under the indenture or any
Note Guarantee and such Default continues for 10 days after receipt of
the notice specified in the indenture.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
However, a default under clauses (d), (e), (f) or (j) will not constitute
an Event of Default until the Trustee notifies the Company or the Holders of at
least 25% in principal amount of the exchange notes notify the Company of the
default and the Company or the Note Guarantor, as applicable, does not cure such
default within the time specified after receipt of such notice.
If an Event of Default (other than an Event of Default relating to certain
events of bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the exchange notes by notice to the Company and the Trustee may declare the
principal of and accrued but unpaid interest on all the exchange notes to be due
and payable. Upon such a declaration, such principal and interest will be due
and payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs, the principal of
and interest on all the exchange notes will become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
Under certain circumstances, the Holders of a majority in principal amount of
the exchange notes may rescind any such acceleration with respect to the
exchange notes and its consequences.
Subject to the provisions of the indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the indenture or the exchange notes unless:
(a) such Holder has previously given the Trustee notice that an Event
of Default is continuing,
(b) Holders of at least 25% in principal amount of the exchange notes
have requested the Trustee in writing to pursue the remedy,
(c) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense,
(d) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity,
and
(e) the Holders of a majority in principal amount of the exchange
notes have not given the Trustee a direction inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the exchange notes will be given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability. Prior
to
64
taking any action under the indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
The indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a Default in the payment of principal of, premium (if any) or interest
on any Note (including payments pursuant to the redemption provisions of such
Note), the Trustee may withhold notice if and so long as a committee of its
Trust Officers in good faith determines that withholding notice is in the
interests of the Holders. In addition, the Company will be required to deliver
to the Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default that occurred during
the previous year. The Company will also be required to deliver to the Trustee,
within 30 days after the occurrence thereof, written notice of any event which
with the giving of notice or the lapse of time would become an Event of Default,
their status and what action the Company is taking or proposes to take in
respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the indenture or the exchange notes may be
amended with the written consent of the Holders of a majority in principal
amount of the exchange notes then outstanding and any past default or compliance
with any provisions may be waived with the consent of the Holders of a majority
in principal amount of the exchange notes then outstanding. However, without the
consent of each Holder of a note affected, no amendment may, among other things:
(a) reduce the amount of exchange notes whose Holders must consent to
an amendment,
(b) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any exchange note,
(c) reduce the principal of or extend the Stated Maturity of any
exchange note,
(d) reduce the premium payable upon the redemption of any exchange
note or change the time at which any Note may be redeemed as described
under "-- Optional Redemption" above,
(e) make any exchange note payable in money other than that stated in
the Note,
(f) make any change to the subordination provisions of the indenture
that adversely affects the rights of any Holder,
(g) impair the right of any Holder to receive payment of principal of,
and interest or any liquidated damages on, such Holder's exchange notes on
or after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder's exchange notes,
(h) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions or
(i) modify the Note Guarantees in any manner adverse to the Holders.
Without the consent of any Holder, the Company and the Trustee may amend
the indenture to:
(a) cure any ambiguity, omission, defect or inconsistency,
(b) provide for the assumption by a successor corporation of the
obligations of the Company under the indenture,
(c) provide for uncertificated exchange notes in addition to or in
place of certificated exchange notes (provided that the uncertificated
exchange notes are issued in registered form for purposes of Section 163(f)
of the Code, or in a manner such that the uncertificated exchange notes are
described in Section 163(f)(2)(B) of the Code),
(d) make any change in the subordination provisions of the indenture
that would limit or terminate the benefits available to any holder of
Senior Indebtedness of the Company (or any representative
65
thereof) under such subordination provisions, or to add additional Note
Guarantees with respect to the exchange notes,
(e) secure the exchange notes,
(f) add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power conferred upon the Company,
(g) make any change that does not adversely affect the rights of any
Holder, subject to the provisions of the indenture,
(h) provide for the issuance of the exchange notes, Additional Notes
or Private Exchange Notes (as defined in the exchange and registration
rights agreement), or
(i) comply with any requirement of the SEC in connection with the
qualification of the indenture under the TIA.
However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior Indebtedness
of the Company then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent to
such change.
The consent of the Holders will not be necessary under the indenture to
approve the particular form of any proposed amendment. It will be sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, the Company will
be required to mail to Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders, or any defect therein,
will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Holder will be able to transfer or exchange the exchange notes in
accordance with the indenture. Upon any transfer or exchange, the registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes required by law or permitted by the indenture. The Company will not be
required to transfer or exchange any exchange note selected for redemption or to
transfer or exchange any exchange note for a period of 15 days prior to a
selection of exchange notes to be redeemed. The exchange notes will be issued in
registered form and the registered Holder will be treated as the owner of such
exchange note for all purposes.
DEFEASANCE
The Company may at any time terminate all its obligations under the
exchange notes and the indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the exchange notes, to replace mutilated,
destroyed, lost or stolen exchange notes and to maintain a registrar and paying
agent in respect of the exchange notes. In addition, the indenture provides that
the Company at any time may terminate:
(a) its obligations under the covenants described under "-- Certain
Covenants," and
(b) the operation of the cross-acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries and the judgment
default provision described under "-- Defaults" above and the limitations
contained in clause (iii) under paragraph (a) of "-- Merger and
Consolidation" above ("covenant defeasance").
In the event that the Company exercises its legal defeasance option or its
covenant defeasance option, each Note Guarantor will be released from all of its
obligations with respect to its Note Guarantee.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the exchange notes may
66
not be accelerated because of an Event of Default with respect thereto. If the
Company exercises its covenant defeasance option, payment of the exchange notes
may not be accelerated because of an Event of Default specified in clause (d),
(f), (g) (with respect only to Significant Subsidiaries), or (h) (with respect
only to Significant Subsidiaries) under "-- Defaults" above or because of the
failure of the Company to comply with clause (iii) under paragraph (a) of
"-- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money in an amount
sufficient or U.S. Government Obligations, the principal of, and interest on
which, will be sufficient, or a combination thereof sufficient, to pay the
principal, premium (if any) and interest on the exchange notes when due at
redemption or maturity, as the case may be, including interest thereon to
maturity or such redemption date, and must comply with certain other conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
Holders will not recognize income, gain or loss for Federal income tax purposes
as a result of such deposit and defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred (and, in the
case of legal defeasance only, such Opinion of Counsel must be based on a ruling
of the Internal Revenue Service or other change in applicable Federal income tax
law).
CONCERNING THE TRUSTEE
JPMorgan Trust Company, National Association is the Trustee under the
indenture and has been appointed by the Company as Registrar and Paying Agent
with regard to the exchange notes.
GOVERNING LAW
The indenture provides that it and the exchange notes will be governed by,
and construed in accordance with, the laws of the State of New York.
CERTAIN DEFINITIONS
"Acquisition" means the acquisition of Weider Publications, LLC as
described in this prospectus.
"Additional Assets" means:
(a) any property or assets (other than Indebtedness and Capital Stock)
to be used by the Company or a Restricted Subsidiary in a Permitted
Business;
(b) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or
(c) Capital Stock constituting a minority interest in any Person that
at such time is a Restricted Subsidiary; provided, however, that any such
Restricted Subsidiary described in clauses (b) or (c) above is primarily
engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "-- Certain Covenants -- Limitation
on Transactions with Affiliates" and "-- Certain Covenants -- Limitation on
Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or American Media,
Inc. or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of
67
a merger, consolidation, or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(a) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary),
(b) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary, or
(c) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary;
other than, in the case of (a), (b) and (c) above:
(i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Note Guarantor,
(ii) any sale of Capital Stock in, or Indebtedness or other securities
of, an Unrestricted Subsidiary,
(iii) transactions permitted under paragraph (a) under "-- Merger and
Consolidation,"
(iv) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Restricted Subsidiary,
(v) for purposes of the provisions described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition subject to the covenant described under "-- Certain
Covenants -- Limitation on Restricted Payments,"
(vi) any Permitted Asset Swap and
(vii) any disposition of assets with a Fair Market Value of not more
than $2.5 million.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the exchange notes, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing:
(a) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of such Indebtedness or scheduled redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment,
by
(b) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect
of the Credit Agreement and any Refinancing Indebtedness with respect thereto,
as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors of
the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
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"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a
penalty.
"Closing Date" means the date of the indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Restricted Subsidiaries, plus, to
the extent Incurred by the Company and its Restricted Subsidiaries in such
period but not included in such interest expense:
(a) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction,
(b) amortization of debt discount and debt issuance costs,
(c) capitalized interest,
(d) noncash interest expense,
(e) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing,
(f) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by the Company or any Restricted
Subsidiary,
(g) net costs associated with Hedging Obligations,
(h) dividends in respect of all Disqualified Stock of the Company and
all Preferred Stock of any of the Restricted Subsidiaries of the Company,
to the extent held by Persons other than the Company or a Wholly Owned
Subsidiary,
(i) interest Incurred in connection with investments in discontinued
operations and
(j) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
Notwithstanding anything to the contrary contained herein, commissions,
discounts, yield and other fees and charges Incurred in connection with any
transaction pursuant to which the Company or any Subsidiary of the Company may
sell, convey or otherwise transfer or grant a security interest in any accounts
receivable or related assets shall be included in Consolidated Interest Expense.
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(a) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that
(i) subject to the limitations contained in clause (d) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to
the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
made to a Restricted Subsidiary, to the limitations contained in clause
(c) below) and
69
(ii) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income to
the extent such loss has been funded with cash from the Company or a
Restricted Subsidiary;
(b) any net income (or loss) of any person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(c) any net income (or loss) of any Restricted Subsidiary (other than
any Note Guarantor) if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that
(i) subject to the limitations contained in clause (d) below, the
Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of
a dividend or other distribution made to another Restricted Subsidiary,
to the limitation contained in this clause) and
(ii) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(d) any gain (loss) realized upon the sale or other disposition of any
asset of the Company or its Consolidated Subsidiaries (including pursuant
to any Sale/Leaseback Transaction) that is not sold or otherwise disposed
of in the ordinary course of business and any gain (loss) realized upon the
sale or other disposition of any Capital Stock of any Person;
(e) any extraordinary gain or loss; and
(f) the cumulative effect of a change in accounting principles.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of May 7, 1999, as
amended and restated as of November 1, 1999, as amended as of February 11, 2002,
as amended and restated in connection with the Acquisition, as amended,
restated, supplemented, waived, replaced (whether or not upon termination),
restructured, repaid, refunded, refinanced or otherwise modified from time to
time including any agreement extending the maturity thereof or otherwise
restructuring all or any portion of the Indebtedness under such agreement or
increasing the amount loaned thereunder or altering the maturity thereof,
initially among American Media, Inc., the Company, the lenders thereunder and JP
Morgan Chase Bank, as administrative agent for such lenders.
"Currency Agreement" means with respect to any Person any foreign exchange
contract, currency swap agreements or other similar agreement or arrangement to
which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Noncash Consideration" means the Fair Market Value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Disposition that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of Temporary Cash Investments received in
connection with a subsequent sale of such Designated Noncash Consideration.
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"Designated Senior Indebtedness" of the Company means:
(a) the Bank Indebtedness and
(b) any other Senior Indebtedness of the Company that, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to at least $10.0 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness" for purposes of the indenture.
"Designated Senior Indebtedness" of a Note Guarantor has a correlative
meaning.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event:
(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise,
(b) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock convertible or exchangeable solely at the
option of the Company or a Restricted Subsidiary; provided that any such
conversion or exchange shall be deemed an Incurrence of Indebtedness or an
issuance of Disqualified Stock, as applicable) or
(c) is redeemable at the option of the holder thereof, in whole or in
part,
in each case on or prior to 91 days after the Stated Maturity of the exchange
notes, provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to 91 days
after the Stated Maturity of the exchange notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of the covenants described under "-- Change of
Control" and "-- Certain Covenants -- Limitation on Sale of Assets and
Subsidiary Stock"; provided, however, that only the portion of Capital Stock
which so matures or is mandatorily redeemable, is so convertible or exchangeable
or is so redeemable at the option of the holder thereof prior to such date shall
be deemed to be Disqualified Stock; provided further, however, that if such
Capital Stock is issued to any employee or to any plan for the benefit of
employees of the Company or its Subsidiaries or by any such plan to such
employees, such Capital Stock shall not constitute Disqualified Stock solely
because it may be required to be repurchased by the Company in order to satisfy
applicable statutory or regulatory obligations or as a result of such employee's
termination, death or disability.
"Domestic Subsidiary" means each Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus, without duplication, the following to the extent deducted in calculating
such Consolidated Net Income:
(a) Consolidated income tax expense,
(b) Consolidated Interest Expense,
(c) Consolidated depreciation expense,
(d) Consolidated amortization expense (excluding amortization expense
attributable to a prepaid cash item that was paid in a prior period),
(e) any nonrecurring expenses or charges related to any Equity
Offering, Permitted Investment, acquisition (including the Acquisition) or
Indebtedness permitted to be incurred by the indenture (whether or not
successful),
(f) the amount of any annual monitoring fees paid to Evercore in an
amount not to exceed $750,000 during any fiscal year, and
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(g) any other noncash charges reducing Consolidated Net Income for
such period (excluding any such charge which consists of or requires an
accrual of, or cash reserve for, any anticipated cash charges for any prior
or in any future period).
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and noncash charges of, a
Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income; provided, however, that with respect to any Restricted Subsidiary
other than a Note Guarantor, such amount shall be added to Consolidated Net
Income to compute EBITDA only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Offering" means any public or private sale of common stock or
Preferred Stock of the Company or American Media, Inc. (other than Disqualified
Stock), other than public offerings with respect to the Company's or American
Media Inc.'s common stock registered on Form S-8 or other issuances upon
exercise of options by employees of the Company or any of its Restricted
Subsidiaries.
"Evercore" means Evercore Capital Partners L.P., a Delaware limited
partnership, and its Affiliates.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Notes" means the $400,000,000 aggregate principal amount of the
Company's 10 1/4% Series B Senior Subordinated Notes due 2009.
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. For purposes of clause
(iv)(3)(B) under paragraph (a) of the covenant described under "-- Certain
Covenants -- Limitation on Restricted Payments," the definition of "Permitted
Asset Swap" and calculating the Fair Market Value of Designated Noncash
Consideration, the Fair Market Value of property or assets other than cash which
involves (a) an aggregate amount in excess of $2.0 million, shall be set forth
in a resolution approved by at least a majority of the Board of Directors and
(b) an aggregate amount in excess of $10.0 million, shall have been determined
in writing by a nationally recognized appraisal or investment banking firm. For
all other purposes of the indenture, Fair Market Value will be determined in
good faith by the Board of Directors, whose determination will be conclusive and
evidenced by a resolution of the Board of Directors.
"Foreign Subsidiary" means each Restricted Subsidiary of the Company that
is organized under the laws of any country other than the United States, any
State thereof, the District of Columbia or any territory thereof.
"GAAP" means generally accepted accounting principles in the United States
as in effect as of the Closing Date, including those set forth in:
(a) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants,
(b) statements and pronouncements of the Financial Accounting
Standards Board,
(c) such other statements by such other entities as approved by a
significant segment of the accounting profession and
(d) unless otherwise indicated, all ratios and computations based on
GAAP contained in the indenture shall be computed in conformity with GAAP.
72
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take- or-
pay, or to maintain financial statement conditions or otherwise) or
(b) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name an exchange note is registered on
the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. The term "Incurrence" when used as a
noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
(b) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, exchange notes or other similar
instruments;
(c) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto);
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(e) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(f) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(g) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
the lesser of
(i) the Fair Market Value of such asset at such date of
determination and
(ii) the amount of such Indebtedness of such other Persons;
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person;
(i) to the extent not otherwise included, the amount then outstanding
(i.e., advanced, and received by, and available for use by, such Person)
under any receivables financing (as set forth in the books and
73
records of such Person and confirmed by the agent, trustee or other
representative of the institution or group providing such receivables
financing); and
(j) all obligations of the type referred to in clauses (a) through (i)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person; provided that (a) Hedging Obligations
entered into in the ordinary course of business and in compliance with the
indenture, (b) endorsements of negotiable instruments and documents in the
ordinary course of business and (c) an acquisition of assets, Capital Stock or
other securities by the Company for consideration consisting exclusively of
Capital Stock (other than Disqualified Stock) of the Company shall not be deemed
to be an Investment. For purposes of the definition of "Unrestricted Subsidiary"
and the covenant described under "-- Certain Covenants -- Limitation on
Restricted Payments":
(a) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market Value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in
an Unrestricted Subsidiary in an amount (if positive) equal to
(i) the Company's "Investment" in such Subsidiary at the time of
such redesignation less
(ii) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation; and
(b) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value at the time of such transfer.
"Legal Holiday" means a Saturday, Sunday or other day on which banking
institutions in New York State are not required by law or regulation to be open.
"Leverage Ratio" as of any date of determination means the ratio of:
(a) Total Consolidated Indebtedness as of the date of determination to
(b) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at the end of the most recent
fiscal quarter for which financial statements are available,
provided, however, that
(i) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Leverage Ratio is an Incurrence of Indebtedness, EBITDA and,
for the purpose of calculating EBITDA, Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on the first
74
day of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such
period,
(ii) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the Leverage
Ratio, EBITDA and, for the purpose of calculating EBITDA, Consolidated
Interest Expense for such period shall be calculated on a pro forma basis
as if such discharge had occurred on the first day of such period and as if
the Company or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or Temporary
Cash Investments used to repay, repurchase, defease or otherwise discharge
such Indebtedness,
(iii) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets that are the subject of such Asset
Disposition for such period or increased by an amount equal to EBITDA (if
negative) directly attributable thereto for such period and, for the
purpose of calculating EBITDA, Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after
such sale),
(iv) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and, for the purpose of
calculating EBITDA, Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence
of any Indebtedness) as if such Investment or acquisition occurred on the
first day of such period, and
(v) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (iii) or
(iv) above if made by the Company or a Restricted Subsidiary during such
period, EBITDA and, for the purpose of calculating EBITDA, Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition of
assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
Any such pro forma calculations may include operating expense reductions for
such period resulting from the acquisition which is being given pro forma effect
that (a) would be permitted pursuant to Article XI of Regulation S-X under the
Securities Act or (b) have been realized or for which the steps necessary for
realization have been taken or are reasonably expected to be taken within six
months following any such acquisition, including, but not limited to, the
execution or termination of any contracts, the termination of any personnel or
the closing (or approval by the Board of Directors of any closing) of any
facility, as applicable, provided that, in either case, such adjustments
75
are set forth in an Officers' Certificate signed by the Company's chief
financial officer and another Officer which states (i) the amount of such
adjustment or adjustments, (ii) that such adjustment or adjustments are based on
the reasonable good faith beliefs of the officers executing such Officers'
Certificate at the time of such execution and (iii) that any related Incurrence
of Indebtedness is permitted pursuant to the indenture. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the date
of determination in excess of twelve months).
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other noncash form) therefrom, in each case net
of:
(a) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition,
(b) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of
the proceeds from such Asset Disposition,
(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and
(d) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property
or other assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means each Guarantee of the obligations with respect to
the exchange notes issued by any Person pursuant to the terms of the indenture.
Each such Note Guarantee will have subordination provisions equivalent to those
contained in the indenture and will be substantially in the form prescribed in
the indenture.
"Note Guarantor" means any Person that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company. An "Officer" of a Note Guarantor has a correlative
meeting.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or a Note Guarantor, as applicable, or the Trustee.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any Restricted Subsidiary exchanges assets (other than the trademarks
or other assets related to National Enquirer or Star)
76
for consideration consisting of (a) assets used or useful in a Permitted
Business and (b) any cash or Temporary Cash Investments (provided that such cash
or Temporary Cash Investments will be considered Net Available Cash from an
Asset Disposition); provided, however, that the Fair Market Value of the assets
received by the Company or such Restricted Subsidiary in such exchange, together
with the amount of any cash or Temporary Cash Investments also received in such
exchange, shall be at least equal to the Fair Market Value of the assets
exchanged by the Company or such Restricted Subsidiary.
"Permitted Business" means any business engaged in by the Company or any
Restricted Subsidiary on the Closing Date and any Related Business.
"Permitted Holders" means EMP Group L.L.C. and any Person acting in the
capacity of an underwriter in connection with a public or private offering of
the Company's or American Media Inc.'s Capital Stock.
"Permitted Investment" means
(a) an Investment by the Company or any Restricted Subsidiary in the
Company, a Restricted Subsidiary or a Person that will, upon the making of
such Investment, become a Restricted Subsidiary; provided, however, that
the primary business of such Restricted Subsidiary is a Permitted Business;
(b) an Investment by the Company or any Restricted Subsidiary in
another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Permitted
Business;
(c) an Investment by the Company or any Restricted Subsidiary in
Temporary Cash Investments;
(d) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(e) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(f) loans or advances to employees of the Company or such Restricted
Subsidiary made in the ordinary course of business not exceeding $5 million
in the aggregate outstanding at any time;
(g) an Investment by the Company or any Restricted Subsidiary in
stock, obligations or securities received in settlement of debts created in
the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments;
(h) an Investment by the Company or any Restricted Subsidiary in any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition that was made pursuant to
and in compliance with the covenant described under "-- Certain Covenants
-- Limitation on Sales of Assets and Subsidiary Stock";
(i) any Investment existing on the Closing Date;
(j) guarantees (including Guarantees) of Indebtedness permitted under
the indenture; and
(k) without duplication, any Investment in any Person, the amount of
which, together with all other Investments in other Persons made pursuant
to this clause (k) does not exceed $40.0 million in the aggregate at any
time outstanding.
"Permitted Junior Securities" shall mean debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the same extent
that the exchange notes are subordinated to the payment of all Senior
Indebtedness of the Company on the Closing Date, so long as to the extent that
any Senior Indebtedness of the Company outstanding on the date of
77
consummation of any such plan of reorganization or readjustment is not paid in
full in cash or Cash Equivalents on such date, the holders of any such Senior
Indebtedness not so paid in full in cash have consented to the terms of such
plan or reorganization or readjustment.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"principal" of an exchange note means the principal of the exchange note
plus the premium, if any, payable on the exchange note which is due or overdue
or is to become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(a) consisting of the deferred purchase price of an asset, conditional
sale obligations, obligations under any title retention agreement and other
purchase money obligations, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the asset being
financed, and
(b) incurred to finance the acquisition by the Company or a Restricted
Subsidiary of such asset, including additions and improvements; provided,
however, that such Indebtedness is incurred within 180 days after the
acquisition by the Company or such Restricted Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) any Indebtedness of the Company or any Restricted
Subsidiary existing on the Closing Date or Incurred in compliance with the
indenture (including Indebtedness of the Company that Refinances Refinancing
Indebtedness); provided, however, that:
(a) the Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being Refinanced,
(b) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
remaining Average Life of the Indebtedness being refinanced,
(c) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate
issue price), plus costs related to the issuance of such Refinancing
Indebtedness, that is equal to or less than the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being Refinanced and
(d) if the Indebtedness being Refinanced is subordinated in right of
payment to the exchange notes, such Refinancing Indebtedness is
subordinated in right of payment to the exchange notes at least to the same
extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(i) Indebtedness of a Restricted Subsidiary other than a Note
Guarantor that Refinances Indebtedness of the Company or
(ii) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or complementary
to the businesses of the Company and the Restricted Subsidiaries on the Closing
Date.
78
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness of the Company.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or a Restricted Subsidiary transfers such property to a Person and
the Company or such Restricted Subsidiary leases it from such Person, other than
leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. "Secured Indebtedness" of a Note Guarantor has a correlative meaning.
"Senior Subordinated Indebtedness" of the Company means the exchange notes,
the existing notes and any other Indebtedness of the Company that specifically
provides that such Indebtedness is to rank equal with the exchange notes in
right of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior
Indebtedness. "Senior Subordinated Indebtedness" of a Note Guarantor has a
correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the exchange notes pursuant to a written
agreement. "Subordinated Obligation" of a Note Guarantor has a correlative
meaning.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person or
(c) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following:
(a) any investment in direct obligations of the United States or any
agency thereof or obligations Guaranteed by the United States or any agency
thereof,
(b) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws
of the United States, any state thereof or any foreign country recognized
by the United States having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose long-term debt is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act),
79
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered
into with a bank meeting the qualifications described in clause (b) above,
(d) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States or any foreign country recognized by the United States with a
rating at the time as of which any investment therein is made of "P-1" (or
higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Service, a division of The McGraw-
Hill Companies, Inc. ("S&P"), and
(e) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
"A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. sec.sec.
77aaa -- 77bbbb) as in effect on the Closing Date.
"Total Assets" means the total Consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Total Consolidated Indebtedness" means the aggregate amount of all
Indebtedness of the Company and its Restricted Subsidiaries, outstanding as of
such date of determination, determined on a Consolidated basis, after giving
effect to any Incurrence of Indebtedness and the application of the proceeds
therefrom giving rise to such determination.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trustee" means the party named as such in the indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in
the manner provided below and
(b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any
Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided, however, that
either:
(i) the Subsidiary to be so designated has total Consolidated
assets of $1,000 or less or
(ii) if such Subsidiary has Consolidated assets greater than
$1,000, then such designation would be permitted under the covenant
entitled "Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, however, that immediately after giving effect to such
designation:
(1) the Company could Incur $1.00 of additional Indebtedness
under paragraph (a) of the covenant described under "-- Certain
Covenants -- Limitation on Indebtedness" and
80
(2) no Default shall have occurred and be continuing. Any such
designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of the United States is pledged and which are not callable
or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company and/or one or more Wholly Owned Subsidiaries.
81
CERTAIN U.S. FEDERAL TAX CONSEQUENCES
The following is a summary of certain U.S. federal tax consequences to
holders who receive exchange notes in the exchange of the ownership and
disposition of exchange notes as of the date hereof. Except where noted, this
summary deals only with exchange notes held as capital assets, and it does not
deal with special situations. For example, this summary does not address tax
consequences to holders who may be subject to special tax treatment, such as
dealers in securities or currencies, financial institutions, regulated
investment companies, real estate investment trusts, tax-exempt entities,
insurance companies, persons holding exchange notes as a part of a hedging,
integrated, conversion or constructive sale transaction or a straddle, traders
in securities that elect to use a mark-to-market method of accounting for their
securities holdings, persons liable for alternative minimum tax or holders of
exchange notes whose "functional currency" is not the U.S. dollar. In addition,
this summary does not represent a detailed description of the U.S. federal
income tax consequences applicable to you if you are subject to special
treatment under the U.S. federal income tax laws (including if you are a U.S.
expatriate, "controlled foreign corporation," "passive foreign investment
company," "foreign personal holding company" or a corporation that accumulates
earnings to avoid U.S. federal income tax).
This summary is based upon provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), and regulations, rulings and judicial decisions as of
the date hereof. Those authorities may be changed, perhaps retroactively, so as
to result in U.S. federal income tax consequences different from those
summarized below.
If a partnership holds exchange notes, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding exchange notes, you
should consult your tax advisors.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE PARTICULAR U.S.
FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE OWNERSHIP OF THE EXCHANGE NOTES,
AS WELL AS THE CONSEQUENCES TO YOU ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.
CONSEQUENCES OF REGISTERED EXCHANGE OFFER
The exchange of outstanding notes pursuant to the registered exchange offer
will not constitute a material modification of the terms of the outstanding
notes and therefore will not constitute a taxable event for U.S. federal income
tax purposes. In that event, the exchange would have no U.S. federal income tax
consequences to a holder, so that the holder's holding period and adjusted tax
basis for an exchange note would not be affected, and the U.S. holder would
continue to take into account income in respect of an exchange note in the same
manner as before the exchange.
CONSEQUENCES TO U.S. HOLDERS
The following is a summary of certain U.S. federal tax consequences that
will apply to you if you are a U.S. holder of exchange notes. Certain
consequences to "Non-U.S. holders" of exchange notes, which are beneficial
owners of exchange notes who are not U.S. holders, are described under
"-- Consequences to Non-U.S. Holders" below.
A "U.S. holder" means a person that is one of the following:
- a citizen or resident of the U.S.;
- a corporation or partnership created or organized in or under the laws of
the U.S. or any political subdivision thereof;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust if it (1) is subject to the primary supervision of a court within
the U.S. and one or more U.S. persons have the authority to control all
substantial decisions of the trust, or (2) has a valid election in effect
under applicable U.S. Treasury regulations to be treated as a U.S.
person.
82
PAYMENTS OF INTEREST
Except as set forth below, interest on an exchange note will generally be
taxable to you as ordinary income at the time it is paid or accrued in
accordance with your method of accounting for tax purposes.
MARKET DISCOUNT
If a U.S. holder purchased an outstanding note for an amount that is less
than its adjusted issue price, the amount of the difference is treated as
"market discount" for U.S. federal income tax purposes, unless that difference
is less than a specified de minimis amount. Under the market discount rules, a
U.S. holder will be required to treat any payment, other than qualified stated
interest, on, or any gain on the sale, exchange, retirement or other disposition
of, an exchange note as ordinary income to the extent of the market discount
that a U.S. holder has not previously included in income and is treated as
having accrued on the exchange note at the time of its payment or disposition.
In addition, a U.S. holder may be required to defer, until the maturity of the
exchange note or its earlier disposition in a taxable transaction, the deduction
of all or a portion of the interest expense on any indebtedness attributable to
the exchange note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the exchange note, unless a
U.S. holder elects to accrue on a constant interest method. A U.S. holder may
elect to include market discount in income currently as it accrues, on either a
ratable or constant interest method, in which case the rule described above
regarding deferral of interest deductions will not apply. A U.S. holder's
election to include market discount in income currently, once made, applies to
all market discount obligations acquired by the U.S. holder on or after the
first taxable year to which a U.S. holder's election applies and may not be
revoked without the consent of the Internal Revenue Service("IRS"). U.S. holders
should consult their own tax advisors before making this election.
AMORTIZABLE BOND PREMIUM
If you purchased an outstanding note at a price that exceeds the amount
payable at the maturity of the outstanding note (not taking into account any
portion of the purchase price attributable to accrued but unpaid interest, if
any), you will be considered to have purchased the outstanding note at a
"premium". You generally may elect to amortize the premium over the remaining
term of the outstanding note on a constant yield method as an offset to interest
when includible in income under your regular accounting method. In the case of
instruments that provide for alternative payment schedules, such as the
outstanding notes and the exchange notes, amortizable bond premium is calculated
by assuming that (a) you will exercise or not exercise options in a manner that
maximizes your yield, and (b) we will exercise or not exercise options in a
manner that minimizes your yield (except that we will be assumed to exercise
call options in a manner that maximizes your yield). If you do not elect to
amortize bond premium, that premium will decrease the gain or increase the loss
you would otherwise recognize on disposition of an exchange note. Your election
to amortize premium on a constant yield method will also apply to all debt
obligations held or subsequently acquired by you on or after the first day of
the first taxable year to which the election applies. You may not revoke the
election without the consent of the IRS. You should consult your own tax advisor
before making this election.
DISPOSITION OF NOTES
A U.S. holder's tax basis in an exchange note will, in general, be the U.S.
holder's cost therefor, reduced by any amortized premium. Upon the sale,
exchange, retirement or other disposition of an exchange note, a U.S. holder
will recognize gain or loss equal to the difference between the amount realized
upon the sale, exchange, retirement or other disposition (not including an
amount equal to any accrued interest which will be treated as a payment of
interest for U.S. federal income tax purposes) and the adjusted tax basis of the
exchange note. Capital gains of individuals derived in respect of capital assets
held for more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
83
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on the exchange notes and to
the proceeds of sale of an exchange note made to you (unless you are an exempt
recipient such as a corporation). A backup withholding tax will apply to such
payments if you fail to provide a taxpayer identification number, a
certification of other exempt status, or fail to report in full dividend and
interest income.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
CONSEQUENCES TO NON-U.S. HOLDERS
U.S. FEDERAL WITHHOLDING TAX
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest on an exchange note provided that:
- interest paid on the exchange note is not effectively connected with your
conduct of a trade or business in the United States;
- you do not actually (or constructively) own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and applicable U.S. Treasury regulations;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on the notes is described in
section 881(c)(3)(A) of the Code; and
- either (a) you provide your name and address on an IRS Form W-8BEN (or
other applicable form), and certify, under penalties of perjury, that you
are not a U.S. person or (b) you hold your exchange notes through certain
foreign intermediaries and satisfy the certification requirements of
applicable U.S. Treasury regulations.
Special certification and other rules apply to certain non-U.S. holders
that are entities rather than individuals.
If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) IRS Form W-8BEN (or other
applicable form) claiming an exemption from or reduction in withholding under
the benefit of an applicable income tax treaty or (2) IRS Form W-8ECI (or other
applicable form) stating that interest paid on an exchange note is not subject
to withholding tax because it is effectively connected with your conduct of a
trade or business in the U.S. (as discussed below under "U.S. Federal Income
Tax").
The 30% U.S. federal withholding tax generally will not apply to any gain
that you realize on the sale, exchange, retirement or other disposition of an
exchange note.
U.S. FEDERAL INCOME TAX
If you are engaged in a trade or business in the U.S. and interest on the
exchange notes is effectively connected with the conduct of that trade or
business, you will be subject to U.S. federal income tax on that interest on a
net income basis (although exempt from the 30% withholding tax, provided certain
certification and disclosure requirements discussed above in "U.S. Federal
Withholding Tax" are complied with) in the same manner as if you were a U.S.
person as defined under the Code. In addition, if you are a foreign corporation,
you may be subject to a branch profits tax equal to 30% (or lower applicable
income tax treaty rate) of your earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with the conduct by you
of a trade or business in the U.S.
84
Any gain realized on the disposition of an exchange note (other than gain
representing accrued interest, which will be treated as a payment of interest
for U.S. federal income tax purposes) generally will not be subject to U.S.
federal income tax unless:
- the gain is effectively connected with the conduct of a trade or business
in the U.S. by you, or
- you are an individual who is present in the U.S. for 183 days or more in
the taxable year of that disposition, and certain other conditions are
met.
U.S. FEDERAL ESTATE TAX
Your estate will not be subject to U.S. federal estate tax on notes
beneficially owned by you at the time of your death, provided that any payment
to you on the notes would be eligible for exemption from the 30% federal
withholding tax under the "portfolio interest rule" described above under "U.S.
Federal Withholding Tax" without regard to the statement requirement described
in the last bullet point.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, we must report to the IRS and to you the amount of interest paid
to you and the amount of tax, if any, withheld with respect to those payments.
Copies of the information returns reporting such interest payments and any
withholding may also be made available to the tax authorities in the country in
which you reside under the provisions of an applicable income tax treaty.
In general, you will not be subject to backup withholding with respect to
payments that we make to you provided that we do not have actual knowledge or
reason to know that you are a U.S. person, as defined under the Code, and you
have provided the statement described above in the last bullet point under "U.S.
Federal Withholding Tax."
You will be subject to information and reporting and, depending on the
circumstances, backup withholding with respect to the proceeds of the sale of a
note within the United States or conducted through certain U.S.-related
financial intermediaries, unless the payor of the proceeds receives the
statement described above and does not have actual knowledge or reason to know
that you are a U.S. person, as defined under the Code, or you otherwise
establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
85
PLAN OF DISTRIBUTION
Based on interpretations by the SEC set forth in no-action letters issued
to third parties, we believe that exchange notes issued pursuant to the exchange
offer in exchange for the outstanding notes may be offered for resale, resold
and otherwise transferred by holders thereof, other than any holder which is:
- an "affiliate" of us within the meaning of Rule 405 under the Securities
Act;
- a broker-dealer who acquired exchange notes directly from us; or
- broker-dealers who acquired exchange notes as a result of market-making
or other trading activities,
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such exchange notes are acquired in the
ordinary course of such holders' business, and such holders are not engaged in,
and do not intend to engage in, and have no arrangement or understanding with
any person to participate in, a distribution of such exchange notes. However,
broker-dealers receiving exchange notes in the exchange offer will be subject to
a prospectus delivery requirement with respect to resales of such exchange
notes. To date, the SEC has taken the position that these broker-dealers may
fulfill their prospectus delivery requirements with respect to transactions
involving an exchange of securities such as the exchange pursuant to the
exchange offer, other than a resale of an unsold allotment from the sale of the
outstanding notes to the initial purchasers, with the prospectus contained in
the exchange offer registration statement. Pursuant to the exchange and
registration rights agreement, we have agreed to permit these broker-dealers to
use this prospectus in connection with the resale of such exchange notes. We
have agreed that, for a period of 180 days after the expiration date, we will
make this prospectus, and any amendment or supplement to this prospectus,
available to any broker-dealer that requests such documents in the letter of
transmittal.
The objective of the exchange offer is to make the exchange notes freely
transferable by the holders without further registration or any prospectus
delivery requirements under the Securities Act of 1933.
Each holder of the outstanding notes who wishes to exchange its outstanding
notes for exchange notes in the exchange offer will be required to make certain
representations to us as set forth in "The Exchange Offer -- Procedures for
Tendering."
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were acquired as a
result of market-making activities or other trading activities. Until
, 2003, all dealers effecting transactions in the exchange notes may
be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of exchange
notes and any commission or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
86
exchange offer, including the expenses of one counsel for the holders of the
outstanding notes, other than commissions or concessions of any broker-dealers,
and will indemnify the holders of the outstanding notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the exchange notes are being passed
upon for us by Simpson Thacher & Bartlett LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended March
31, 2003 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference (which report
expresses an unqualified opinion and includes an explanatory paragraph relating
to a change in the method of accounting for goodwill and other intangible assets
to conform to Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets and an explanatory paragraph concerning the application
of procedures relating to certain disclosures of financial statement amounts
related to the fiscal year 2002 and 2001 financial statements that were audited
by other auditors who have ceased operations), and has been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The combined consolidated financial statements of Weider Publications, Inc.
and subsidiaries and Weider Interactive Networks, Inc. incorporated in this
prospectus by reference from the Current Report on Form 8-K of American Media
Operations, Inc. filed on June 6, 2003, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference (which report expresses an unqualified opinion and includes
an explanatory paragraph relating to a change in the method of accounting for
goodwill and other intangible assets to conform to Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets), and has
been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
CHANGE IN ACCOUNTANTS
As discussed in a Current Report on Form 8-K that the Company filed with
the Commission on July 12, 2002, as amended by a Current Report on Form 8-K/A
filed with the Commission on July 26, 2002, the Company dismissed its
independent auditors, Arthur Andersen LLP, on July 9, 2002 and engaged the
services of Deloitte & Touche LLP as the Company's new independent auditors for
the fiscal year ending March 31, 2003. The Company's Board of Directors
authorized the dismissal of Arthur Andersen LLP and the engagement of Deloitte &
Touche LLP.
Arthur Andersen LLP's reports on the Company's consolidated financial
statements for the fiscal year ended March 25, 2002 did not contain an adverse
opinion, or disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles.
During the fiscal year ended March 25, 2002 there were no disagreements
with Arthur Andersen on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which
disagreement, if not resolved to Arthur Andersen's satisfaction, would have
caused it to make reference to the subject matter of the disagreement in
connection with its report on the Company's consolidated financial statements
for such year.
87
AMERICAN MEDIA, INC. LOGO
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
the Company's board of directors to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with any
threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or agent
of the Company, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). The statute provides that indemnification pursuant to its provisions is
not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise.
The Company's by-laws provide for the mandatory indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the DGCL, and the Company has entered into agreements with its officers,
directors and certain key employees implementing such indemnification.
As permitted by Sections 102 and 145 of the DGCL the Company's certificate
of incorporation eliminates a director's personal liability for monetary damages
to the Company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under Section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to the Company or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction
which the director derived an improper personal benefit.
The directors and officers of the Company are covered by insurance policies
indemnifying against certain liabilities, including certain liabilities arising
under the Securities Act which might be incurred by them in such capabilities
and against which they cannot be indemnified by the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*1 -- Purchase Agreement, dated as of January 16, 2003, among
American Media Operations, Inc., AM Auto World Weekly, Inc,
American Media Consumer Entertainment Inc., American Media
Consumer Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
AMI Books, Inc., AMI Films, Inc., Weider Publications, LLC,
SYL Communications, J.P. Morgan Securities Inc. and Bear,
Stearns & Co. Inc.
***2.1 -- Agreement and Plan of Merger, dated as of February 16, 1999,
by and between EMP Acquisition Corp., a Delaware
corporation, and American Media, Inc., a Delaware
corporation.
***2.2 -- Certificate of Merger of EMP Acquisition Corp. with and into
American Media, Inc. (under Section 251 of the General
Corporation Law of the State of Delaware)
****2.3 -- Stock and Asset Purchase Agreement, dated as of November 1,
1999, among Mike Rosenbloom, Globe International Publishing,
Inc., Globe International, Inc., EMP Group LLC and American
Media Operations, Inc.
##2.4 -- Purchase and Contribution Agreement, dated as of November
26, 2002, by and among Weider Health and Fitness, Weider
Interactive Networks, Inc., Weider Health and Fitness, LLC,
Weider Publications, LLC, EMP Group L.L.C., and American
Media Operations, Inc.
</Table>
II-1
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
###2.5 -- Agreement and Plan of Merger, dated February 24, 2003, by
and among EMP Group L.L.C. and EMP Merger Corporation.
###2.6 -- Amendment No. 1 to the Agreement and Plan of Merger, dated
April 14, 2003, by and between EMP Group L.L.C. and EMP
Merger Corporation.
###2.7 -- Contribution Agreement, dated as of February 24, 2003, by
and among EMP Merger Corporation and the persons set forth
on the signature pages thereto.
###2.8 -- Amendment No. 1 to the Contribution Agreement, dated April
14, 2003, by and among EMP Merger Corporation and the
persons set forth on the signature pages thereto.
####3.1 -- Certificate of Incorporation of Enquirer/Star Group, Inc.
and amendments thereto.(1)
####3.2 -- Amended By-laws of Enquirer/Star, Inc.(1)
#####3.3 -- Amendment of Certificate of Incorporation of Operations
dated November 7, 1994 changing its name to American Media
Operations, Inc. from Enquirer/Star, Inc.
*****3.4 -- Articles of Incorporation of AM Auto World Weekly, Inc.
*****3.5 -- Bylaws of AM Auto World Weekly, Inc.
*****3.6 -- Articles of Incorporation of American Media Consumer
Entertainment Inc.
*****3.7 -- Bylaws of American Media Consumer Entertainment Inc.
*****3.8 -- Articles of Incorporation of American Media Consumer
Magazine Group, Inc.
*****3.9 -- Bylaws of American Media Consumer Magazine Group, Inc.
*****3.10 -- Articles of Incorporation of American Media Distribution &
Marketing Group, Inc.
*****3.11 -- Bylaws of American Media Distribution & Marketing Group,
Inc.
*****3.12 -- Articles of Incorporation of American Media Property Group,
Inc.
*****3.13 -- Bylaws of American Media Property Group, Inc.
*****3.14 -- Articles of Incorporation of American Media Mini Mags, Inc.
*****3.15 -- Bylaws of American Media Mini Mags, Inc.
*****3.16 -- Articles of Incorporation of American Media Newspaper Group,
Inc.
*****3.17 -- Bylaws of American Media Newspaper Group, Inc.
***3.18 -- Articles of Incorporation of Country Music Media Group, Inc.
(formerly known as Country Weekly, Inc.)
***3.19 -- Bylaws of Country Music Media Group, Inc. (formerly known as
Country Weekly, Inc.)
***3.20 -- Articles of Incorporation of Distribution Services, Inc.
***3.21 -- Bylaws of Distribution Services, Inc.
*****3.22 -- Articles of Incorporation of Globe Communications Corp.
*****3.23 -- Bylaws of Globe Communications Corp.
*****3.24 -- Articles of Incorporation of Globe Editorial, Inc.
*****3.25 -- Bylaws of Globe Editorial, Inc.
*****3.26 -- Articles of Incorporation of Mira! Editorial, Inc.
*****3.27 -- Bylaws of Mira! Editorial, Inc.
***3.28 -- Articles of Incorporation of National Enquirer, Inc.
***3.29 -- Bylaws of National Enquirer, Inc.
*****3.30 -- Articles of Incorporation of National Examiner, Inc.
*****3.31 -- Bylaws of National Examiner, Inc.
***3.32 -- Articles of Incorporation of NDSI, Inc.
***3.33 -- Bylaws of NDSI, Inc.
***3.34 -- Articles of Incorporation of Star Editorial, Inc.
***3.35 -- Bylaws of Star Editorial, Inc.
</Table>
II-2
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*3.36 -- Articles of Incorporation of AMI Books, Inc.
*3.37 -- Bylaws of AMI Books, Inc.
*3.38 -- Articles of Incorporation of AMI Films, Inc.
*3.39 -- Bylaws of AMI Films, Inc.
*3.40 -- Certificate of Formation of Weider Publications, LLC
*3.41 -- Limited Liability Company Agreement of Weider Publications,
LLC
*3.42 -- Articles of Incorporation of SYL Communications
(f/k/a/Wieder Communications)
*3.43 -- Bylaws of SYL Communications (f/k/a/Wieder Communications)
***4.1 -- Indenture, dated as of May 7, 1999, among American Media
Operations, Inc., National Enquirer, Inc., Star Editorial,
Inc., SOM Publishing, Inc., Weekly World News, Inc., Country
Weekly, Inc., Distribution Services, Inc., Fairview
Printing, Inc., NDSI, Inc., Biocide, Inc., American Media
Marketing, Inc., Health Xtra, Inc., Retail Marketing Network
and Marketing Services, Inc., and The Chase Manhattan Bank,
a New York banking corporation, as trustee.
***4.2 -- Indemnity, Subrogation and Contribution Agreement, dated as
of May 7, 1999, among American Media Operations, Inc., each
subsidiary of American Media, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, as collateral agent
for the Secured Parties (as defined in the Security
Agreement).
***4.3 -- Pledge Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as Collateral Agent for the Secured
Parties (as defined in the Security Agreement).
***4.4 -- Security Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as collateral agent for the Secured
Parties (as defined herein).
****4.5 -- Credit Agreement, dated as of May 7, 1999, as Amended and
Restated as of November 1, 1999, among American Media Inc.,
American Media Operations, Inc., the Lenders party thereto,
and The Chase Manhattan Bank, as Administrative Agent.
*****4.6 Amendment, dated as of February 11, 2002, to the Credit
Agreement, dated as of May 7, 1999, among American Media
Inc., American Media Operations, Inc., the Lenders party
thereto, and JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as Administrative Agent.
*****4.7 -- Indenture, dated as of February 14, 2002, among American
Media Operations, Inc., AM Auto World Weekly, Inc., American
Media Consumer Entertainment Inc., American Media Consumer
Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee.
##4.8 -- Indenture, dated as of January 23, 2003, among American
Media Operations, Inc., AM Auto World Weekly, Inc, American
Media Consumer Entertainment Inc., American Media Consumer
Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
AMI Books, Inc., AMI Films, Inc., Weider Publications, LLC,
SYL Communications, and J.P. Morgan Trust Company, National
Association, as trustee.
</Table>
II-3
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
##4.9 -- Amendment and Restatement Agreement, dated as of January 23,
2003, among American Media Operations, Inc., American Media,
Inc., the lenders party thereto, and JPMorgan Chase Bank, as
Administrative Agent, under the Credit Agreement, dated as
of May 7, 1999, as amended and restated as of May 21, 2002,
among the parties thereto.
******4.10 -- Reaffirmation and Amendment Agreement, as of January 23,
2003, among American Media Operations, Inc., American Media,
Inc., the Subsidiary Loan Parties and JPMorgan Chase Bank,
as Administrative Agent and Collateral Agent under the
Restated Credit Agreement.
******4.11 -- Amendment No. 1 dated as of March 5, 2003 to the Amended and
Restated Credit Agreement dated as of January 23, 2003,
among American Media Inc., American Media Operations, Inc.,
the lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent.
*****4.12 -- Exchange and Registration Rights Agreement, dated as of
January 23, 2003, among American Media Operations, Inc., AM
Auto World Weekly, Inc., American Media Consumer
Entertainment Inc., American Media Consumer Magazine Group,
Inc., American Media Distribution & Marketing Group, Inc.,
American Media Property Group, Inc., American Media Mini
Mags, Inc., American Media Newspaper Group, Inc., Country
Music Media Group, Inc., Distribution Services, Inc., Globe
Communications Corp., Globe Editorial, Inc., Mira!
Editorial, Inc., National Enquirer, Inc., National Examiner,
Inc., NDSI, Inc., Star Editorial, Inc., AMI Books, Inc., AMI
Films, Inc., Weider Publications, LLC, SYL Communications,
J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc.
*5 -- Opinion of Simpson Thacher & Bartlett LLP.
######10.1 -- Tax Sharing Agreement, dated as of March 31, 1992, among
Enquirer/Star Group Inc. and its subsidiaries.(1)
###10.2 -- Management Agreement, dated as of April 17, 2003, by and
between American Media, Inc., THL Managers V, LLC and
Evercore Advisors L.P.
******10.3 -- Amended and Restated Employment Agreement dated February 24,
2003, of David J. Pecker.
#10.4 Side Letter regarding David J. Pecker Employment Agreement,
dated April 13, 1999
****10.5 -- Mike Rosenbloom Employment Agreement, dated as of November
1, 1999.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of American Media Operations, Inc.
*23.1 -- Consent of Deloitte and Touche LLP (American Media).
*23.2 -- Consent of Deloitte and Touche LLP (Weider).
*23.3 -- Consent of Simpson Thacher & Bartlett LLP (included in
Exhibit 5).
*24 -- Powers of Attorney (included on pages II-6 through II-26).
*25 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of J.P. Morgan Trust Company, National
Association, as Trustee.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
</Table>
- ---------------
(1) Enquirer/Star, Inc. is now named American Media Operations, Inc.;
Enquirer/Star Group, Inc. is now named American Media, Inc.
* Filed herewith.
** To be filed by amendment.
*** Incorporated by reference to our Registration Statement on Form S-4
filed August 28, 1999.
**** Incorporated by reference to our Annual Report on Form 10-K for
fiscal 2000 filed June 26, 2000.
II-4
***** Incorporated by reference to our Registration Statement on Form S-4
filed April 23, 2002.
****** Incorporated by reference to our Annual Report on Form 10-K for fiscal
2003 filed June 6, 2003.
# Incorporated by reference to our Annual Report on Form 10-K for
fiscal 1999 filed June 28, 1999.
## Incorporated by reference to the Form 8-K filed January 27, 2003.
### Incorporated by reference to the Form 8-K filed April 24, 2003.
#### Incorporated by reference to our Registration Statement on Form S-1
filed March 25, 1992.
##### Incorporated by reference to our Annual Report on Form 10-K for fiscal
1995 filed June 23, 1995.
###### Incorporated by reference to the Annual Report on Form 10-K for
American Media for fiscal 1992 filed June 25, 1992.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of Form
S-4, within one business day of receipt of any such request, and to send
the incorporated documents by first class mail or other equally prompt
means, including information contained in documents filed after the
effective date of this registration statement through the date of
responding to such request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in this registration statement
when it became effective.
(3) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. If a claim of
indemnification against such liabilities, other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in a successful defense of any action, suit or
proceeding, is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA OPERATIONS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Operations,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and John
A. Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director (Principal
Executive Officer)
/s/ JOHN A. MILEY Executive Vice President and June 6, 2003
------------------------------------------------ Chief Financial Officer
John A. Miley (Principal Financial and
Accounting Officer)
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-6
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AM AUTO WORLD WEEKLY, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of AM Auto World Weekly, Inc.
(the "Company") do hereby constitute and appoint David J. Pecker and John A.
Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-7
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA CONSUMER
ENTERTAINMENT INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Consumer
Entertainment Inc. (the "Company") do hereby constitute and appoint David J.
Pecker and John A. Miley, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys or
agents, or either of them, may deem necessary or advisable to enable the Company
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names and in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto and we do hereby ratify and confirm all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- --------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ---------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ---------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ---------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ---------------------------------------------
Michael Garin
</Table>
II-8
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA CONSUMER MAGAZINE
GROUP, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Consumer
Magazine Group, Inc. (the "Company") do hereby constitute and appoint David J.
Pecker and John A. Miley, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys or
agents, or either of them, may deem necessary or advisable to enable the Company
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names and in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto and we do hereby ratify and confirm all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-9
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA DISTRIBUTION &
MARKETING GROUP, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Distribution &
Marketing Group, Inc. (the "Company") do hereby constitute and appoint David J.
Pecker and John A. Miley, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys or
agents, or either of them, may deem necessary or advisable to enable the Company
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names and in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto and we do hereby ratify and confirm all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-10
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA PROPERTY GROUP, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Property
Group, Inc. (the "Company") do hereby constitute and appoint David J. Pecker and
John A. Miley, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-11
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA MINI MAGS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Mini Mags,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and John
A. Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-12
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMERICAN MEDIA NEWSPAPER GROUP, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Newspaper
Group, Inc. (the "Company") do hereby constitute and appoint David J. Pecker and
John A. Miley, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-13
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
COUNTRY MUSIC MEDIA GROUP, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Country Music Media Group,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and John
A. Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
DISTRIBUTION SERVICES, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Distribution Services, Inc.
(the "Company") do hereby constitute and appoint David J. Pecker and John A.
Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-15
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
GLOBE COMMUNICATIONS CORP.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Globe Communications Corp.
(the "Company") do hereby constitute and appoint David J. Pecker and John A.
Miley, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
GLOBE EDITORIAL, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Globe Editorial, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-17
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
MIRA! EDITORIAL, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Mira! Editorial, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-18
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
NATIONAL ENQUIRER, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of National Enquirer, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, June 6, 2003
------------------------------------------------ President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
------------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
------------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
------------------------------------------------
Michael Garin
</Table>
II-19
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
NATIONAL EXAMINER, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of National Examiner, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
NDSI, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NDSI, Inc. (the "Company") do
hereby constitute and appoint David J. Pecker and John A. Miley, or either of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys or agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names and in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto and we do hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, Chief June 6, 2003
- ------------------------------------------ Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-21
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMI BOOKS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of AMI Books, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
AMI FILMS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of AMI Films, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-23
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
WEIDER PUBLICATIONS, LLC
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Weider Publications, LLC (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, June 6, 2003
- ------------------------------------------ Chief Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-24
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
SYL COMMUNICATIONS
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of SYL Communications (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, Chief June 6, 2003
- ------------------------------------------ Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-25
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JUNE 6, 2003.
STAR EDITORIAL, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Star Editorial, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and John A. Miley,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID J. PECKER Chairman of the Board, President, Chief June 6, 2003
- ------------------------------------------ Executive Officer and Director
David J. Pecker
/s/ AUSTIN M. BEUTNER Director June 6, 2003
- ------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director June 6, 2003
- ------------------------------------------
Neeraj Mital
/s/ SOREN OBERG Director June 6, 2003
- ------------------------------------------
Soren Oberg
/s/ MICHAEL GARIN Director June 6, 2003
- ------------------------------------------
Michael Garin
</Table>
II-26
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*1 -- Purchase Agreement, dated as of January 16, 2003, among
American Media Operations, Inc., AM Auto World Weekly, Inc,
American Media Consumer Entertainment Inc., American Media
Consumer Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
AMI Books, Inc., AMI Films, Inc., Weider Publications, LLC,
SYL Communications, J.P. Morgan Securities Inc. and Bear,
Stearns & Co. Inc.
***2.1 -- Agreement and Plan of Merger, dated as of February 16, 1999,
by and between EMP Acquisition Corp., a Delaware
corporation, and American Media, Inc., a Delaware
corporation.
***2.2 -- Certificate of Merger of EMP Acquisition Corp. with and into
American Media, Inc. (under Section 251 of the General
Corporation Law of the State of Delaware)
****2.3 -- Stock and Asset Purchase Agreement, dated as of November 1,
1999, among Mike Rosenbloom, Globe International Publishing,
Inc., Globe International, Inc., EMP Group LLC and American
Media Operations, Inc.
##2.4 -- Purchase and Contribution Agreement, dated as of November
26, 2002, by and among Weider Health and Fitness, Weider
Interactive Networks, Inc., Weider Health and Fitness, LLC,
Weider Publications, LLC, EMP Group L.L.C., and American
Media Operations, Inc.
###2.5 -- Agreement and Plan of Merger, dated February 24, 2003, by
and among EMP Group L.L.C. and EMP Merger Corporation.
###2.6 -- Amendment No. 1 to the Agreement and Plan of Merger, dated
April 14, 2003, by and between EMP Group L.L.C. and EMP
Merger Corporation.
###2.7 -- Contribution Agreement, dated as of February 24, 2003, by
and among EMP Merger Corporation and the persons set forth
on the signature pages thereto.
###2.8 -- Amendment No. 1 to the Contribution Agreement, dated April
14, 2003, by and among EMP Merger Corporation and the
persons set forth on the signature pages thereto.
####3.1 -- Certificate of Incorporation of Enquirer/Star Group, Inc.
and amendments thereto.(1)
####3.2 -- Amended By-laws of Enquirer/Star, Inc.(1)
#####3.3 -- Amendment of Certificate of Incorporation of Operations
dated November 7, 1994 changing its name to American Media
Operations, Inc. from Enquirer/Star, Inc.
*****3.4 -- Articles of Incorporation of AM Auto World Weekly, Inc.
*****3.5 -- Bylaws of AM Auto World Weekly, Inc.
*****3.6 -- Articles of Incorporation of American Media Consumer
Entertainment Inc.
*****3.7 -- Bylaws of American Media Consumer Entertainment Inc.
*****3.8 -- Articles of Incorporation of American Media Consumer
Magazine Group, Inc.
*****3.9 -- Bylaws of American Media Consumer Magazine Group, Inc.
*****3.10 -- Articles of Incorporation of American Media Distribution &
Marketing Group, Inc.
*****3.11 -- Bylaws of American Media Distribution & Marketing Group,
Inc.
*****3.12 -- Articles of Incorporation of American Media Property Group,
Inc.
*****3.13 -- Bylaws of American Media Property Group, Inc.
*****3.14 -- Articles of Incorporation of American Media Mini Mags, Inc.
*****3.15 -- Bylaws of American Media Mini Mags, Inc.
*****3.16 -- Articles of Incorporation of American Media Newspaper Group,
Inc.
*****3.17 -- Bylaws of American Media Newspaper Group, Inc.
***3.18 -- Articles of Incorporation of Country Music Media Group, Inc.
(formerly known as Country Weekly, Inc.)
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
***3.19 -- Bylaws of Country Music Media Group, Inc. (formerly known as
Country Weekly, Inc.)
***3.20 -- Articles of Incorporation of Distribution Services, Inc.
***3.21 -- Bylaws of Distribution Services, Inc.
*****3.22 -- Articles of Incorporation of Globe Communications Corp.
*****3.23 -- Bylaws of Globe Communications Corp.
*****3.24 -- Articles of Incorporation of Globe Editorial, Inc.
*****3.25 -- Bylaws of Globe Editorial, Inc.
*****3.26 -- Articles of Incorporation of Mira! Editorial, Inc.
*****3.27 -- Bylaws of Mira! Editorial, Inc.
***3.28 -- Articles of Incorporation of National Enquirer, Inc.
***3.29 -- Bylaws of National Enquirer, Inc.
*****3.30 -- Articles of Incorporation of National Examiner, Inc.
*****3.31 -- Bylaws of National Examiner, Inc.
***3.32 -- Articles of Incorporation of NDSI, Inc.
***3.33 -- Bylaws of NDSI, Inc.
***3.34 -- Articles of Incorporation of Star Editorial, Inc.
***3.35 -- Bylaws of Star Editorial, Inc.
*3.36 -- Articles of Incorporation of AMI Books, Inc.
*3.37 -- Bylaws of AMI Books, Inc.
*3.38 -- Articles of Incorporation of AMI Films, Inc.
*3.39 -- Bylaws of AMI Films, Inc.
*3.40 -- Certificate of Formation of Weider Publications, LLC
*3.41 -- Limited Liability Company Agreement of Weider Publications,
LLC
*3.42 -- Articles of Incorporation of SYL Communications (f/k/a/
Wieder Communications)
*3.43 -- Bylaws of SYL Communications (f/k/a/ Wieder Communications)
***4.1 -- Indenture, dated as of May 7, 1999, among American Media
Operations, Inc., National Enquirer, Inc., Star Editorial,
Inc., SOM Publishing, Inc., Weekly World News, Inc., Country
Weekly, Inc., Distribution Services, Inc., Fairview
Printing, Inc., NDSI, Inc., Biocide, Inc., American Media
Marketing, Inc., Health Xtra, Inc., Retail Marketing Network
and Marketing Services, Inc., and The Chase Manhattan Bank,
a New York banking corporation, as trustee.
***4.2 -- Indemnity, Subrogation and Contribution Agreement, dated as
of May 7, 1999, among American Media Operations, Inc., each
subsidiary of American Media, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, as collateral agent
for the Secured Parties (as defined in the Security
Agreement).
***4.3 -- Pledge Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as Collateral Agent for the Secured
Parties (as defined in the Security Agreement).
***4.4 -- Security Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as collateral agent for the Secured
Parties (as defined herein).
****4.5 -- Credit Agreement, dated as of May 7, 1999, as Amended and
Restated as of November 1, 1999, among American Media Inc.,
American Media Operations, Inc., the Lenders party thereto,
and The Chase Manhattan Bank, as Administrative Agent.
*****4.6 Amendment, dated as of February 11, 2002, to the Credit
Agreement, dated as of May 7, 1999, among American Media
Inc., American Media Operations, Inc., the Lenders party
thereto, and JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as Administrative Agent.
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*****4.7 -- Indenture, dated as of February 14, 2002, among American
Media Operations, Inc., AM Auto World Weekly, Inc., American
Media Consumer Entertainment Inc., American Media Consumer
Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee.
##4.8 -- Indenture, dated as of January 23, 2003, among American
Media Operations, Inc., AM Auto World Weekly, Inc, American
Media Consumer Entertainment Inc., American Media Consumer
Magazine Group, Inc., American Media Distribution &
Marketing Group, Inc., American Media Property Group, Inc.,
American Media Mini Mags, Inc., American Media Newspaper
Group, Inc., Country Music Media Group, Inc., Distribution
Services, Inc., Globe Communications Corp., Globe Editorial,
Inc., Mira! Editorial, Inc., National Enquirer, Inc.,
National Examiner, Inc., NDSI, Inc., Star Editorial, Inc.,
AMI Books, Inc., AMI Films, Inc., Weider Publications, LLC,
SYL Communications, and J.P. Morgan Trust Company, National
Association, as trustee.
##4.9 -- Amendment and Restatement Agreement, dated as of January 23,
2003, among American Media Operations, Inc., American Media,
Inc., the lenders party thereto, and JPMorgan Chase Bank, as
Administrative Agent, under the Credit Agreement, dated as
of May 7, 1999, as amended and restated as of May 21, 2002,
among the parties thereto.
******4.10 -- Reaffirmation and Amendment Agreement, as of January 23,
2003, among American Media Operations, Inc., American Media,
Inc., the Subsidiary Loan Parties and JPMorgan Chase Bank,
as Administrative Agent and Collateral Agent under the
Restated Credit Agreement.
******4.11 -- Amendment No. 1 dated as of March 5, 2003 to the Amended and
Restated Credit Agreement dated as of January 23, 2003,
among American Media Inc., American Media Operations, Inc.,
the lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent.
*****4.12 -- Exchange and Registration Rights Agreement, dated as of
January 23, 2003, among American Media Operations, Inc., AM
Auto World Weekly, Inc., American Media Consumer
Entertainment Inc., American Media Consumer Magazine Group,
Inc., American Media Distribution & Marketing Group, Inc.,
American Media Property Group, Inc., American Media Mini
Mags, Inc., American Media Newspaper Group, Inc., Country
Music Media Group, Inc., Distribution Services, Inc., Globe
Communications Corp., Globe Editorial, Inc., Mira!
Editorial, Inc., National Enquirer, Inc., National Examiner,
Inc., NDSI, Inc., Star Editorial, Inc., AMI Books, Inc., AMI
Films, Inc., Weider Publications, LLC, SYL Communications,
J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc.
*5 -- Opinion of Simpson Thacher & Bartlett LLP.
######10.1 -- Tax Sharing Agreement, dated as of March 31, 1992, among
Enquirer/Star Group, Inc. and its subsidiaries.(1)
###10.2 -- Management Agreement, dated as of April 17, 2003, by and
between American Media, Inc., THL Managers V, LLC and
Evercore Advisors L.P.
******10.3 -- Amended and Restated Employment Agreement dated February 24,
2003, of David J. Pecker.
#10.4 Side Letter regarding David J. Pecker Employment Agreement,
dated April 13, 1999.
****10.5 -- Mike Rosenbloom Employment Agreement, dated as of November
1, 1999.
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of American Media Operations, Inc.
*23.1 -- Consent of Deloitte and Touche LLP (American Media).
*23.2 -- Consent of Deloitte and Touche LLP (Weider).
*23.3 -- Consent of Simpson Thacher & Bartlett LLP (included in
Exhibit 5).
*24 -- Powers of Attorney (included on pages II-6 through II-26).
*25 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of J.P. Morgan Trust Company, National
Association, as Trustee.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
</Table>
- ---------------
(1) Enquirer/Star, Inc. is now named American Media Operations, Inc.;
Enquirer/Star Group, Inc. is now named American Media, Inc.
* Filed herewith.
** To be filed by amendment.
*** Incorporated by reference to our Registration Statement on Form S-4
filed August 28, 1999.
**** Incorporated by reference to our March 27, 2000 Form 10-K for fiscal
2000 filed June 26, 2000.
***** Incorporated by reference to our Registration Statement on Form S-4
filed April 23, 2002.
****** Incorporated by reference to our March 31, 2003 Form 10-K for fiscal
2003 filed June 6, 2003.
# Incorporated by reference to our March 29, 1999 for fiscal 1999 Form
10-K filed June 28, 1999.
## Incorporated by reference to the Form 8-K filed January 27, 2003.
### Incorporated by reference to the Form 8-K filed April 24, 2003.
#### Incorporated by reference to our Registration Statement on Form S-1
filed March 25, 1992.
##### Incorporated by reference to our Annual Report on Form 10-K for fiscal
1995 filed June 23, 1995.
###### Incorporated by reference to the Annual Report on Form 10-K for American
Media for fiscal 1992 filed June 25, 1992.