-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TReMzGayGFyDO0RdpAT2P++CruIdqS98/VTk4YkU2aU/iDLvDj+HVtCMFqQXz/9w jyX7zTijiGzwpa1607sbGw== 0000950142-06-000960.txt : 20060510 0000950142-06-000960.hdr.sgml : 20060510 20060510154013 ACCESSION NUMBER: 0000950142-06-000960 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20060510 DATE AS OF CHANGE: 20060510 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EMMIS COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000783005 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 351542018 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43521 FILM NUMBER: 06825852 BUSINESS ADDRESS: STREET 1: ONE EMMIS PLAZA STREET 2: 40 MONUMENT CIRCLE SUITE 700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3172660100 MAIL ADDRESS: STREET 1: ONE EMMIS PLAZA STREET 2: 40 MONUMENT CIRCLE #700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 FORMER COMPANY: FORMER CONFORMED NAME: EMMIS BROADCASTING CORPORATION DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SMULYAN JEFFREY H CENTRAL INDEX KEY: 0001001748 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 40 MONUMENT CIRCLE STREET 2: SUITE 700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 SC 13D/A 1 sc13da1_smulyan.txt AMENDMENT NO. 1 ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 1)* EMMIS COMMUNICATIONS CORPORATION -------------------------------- (Name of Issuer) CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE ----------------------------------------------- (Title of Class of Securities) 291525 10 3 ----------- (CUSIP Number) Jeffrey H. Smulyan c/o Emmis Communications Corporation One Emmis Plaza 40 Monument Circle, Suite 700 Indianapolis, IN 46204 (317) 266-0100 with a copy to: James M. Dubin, Esq. c/o Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 7, 2006 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule 13d-1(f), Rule 13d-1(g), check the following box [_]. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liability of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). ============================================================================== CUSIP NO. 291525 10 3 Page 2 of 10 - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON: Jeffrey H. Smulyan - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS: OO - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OR ORGANIZATION: United States of America - ------------------------------------------------------------------------------ NUMBER OF 7 SOLE VOTING POWER: 6,546,789(1) SHARES -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 30,625(2) OWNED BY -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: 6,546,789(1) REPORTING -------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER: 30,625(2) WITH - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 6,577,414 (1),(2) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [X] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): Approximately 17.0%(3) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON: IN - ------------------------------------------------------------------------------ - ------------------- (1) Consists of (i) 3,951 shares of Class A Common Stock held in the 401(k) Plan, (ii) 101,837 shares of Class A Common Stock held by Mr. Smulyan individually, (iii) 4,929,881 shares of Class B Common Stock held by Mr. Smulyan individually, (iv) 11,120 shares of Class A Common Stock held by Mr. Smulyan as trustee for his children, and (v) options to purchase 1,500,000 shares of Class B Common Stock that are exercisable currently or within 60 days of May 7, 2006. Each share of Class B Common Stock is convertible at any time into one share of Class A Common Stock. (2) Consists of 30,625 shares of Class A Common Stock held by The Smulyan Family Foundation, as to which Mr. Smulyan shares voting and dispositive control. CUSIP NO. 291525 10 3 Page 3 of 10 (3) The denominator is based on (i) 32,255,572 shares of Class A Common Stock outstanding as of May 5, 2006, as obtained from Emmis Communications Corporation, and (ii) 6,429,881 shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock beneficially owned by Mr. Smulyan (including upon the exercise of options to purchase shares of Class B Common Stock held by Mr. Smulyan that are exercisable currently or within 60 days of May 7, 2006). Each share of Class B Common Stock is convertible at any time into one share of Class A Common Stock. Holders of Class A Common Stock and Class B Common stock vote as a single class in all matters submitted to a vote of the stockholders, with each share of Class A Common Stock entitled to one vote per share and each share of Class B Common Stock entitled to ten votes per share, except as otherwise provided in the Issuer's articles of incorporation or as otherwise provided by law. The shares deemed to be beneficially owned by Mr. Smulyan represent approximately 66.7% of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class. CUSIP NO. 291525 10 3 Page 4 of 10 ITEM 1. SECURITY AND ISSUER. This Statement on Schedule 13D (this "Statement") relates to the Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"), of Emmis Communications Corporation, an Indiana corporation (the "Issuer"). The address of the principal executive offices of the Issuer is One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204. ITEM 2. IDENTITY AND BACKGROUND. This Statement is being filed by Jeffrey H. Smulyan (the "Reporting Person"). This Statement amends and restates in its entirety the Statement on Schedule 13D of the Reporting Person (filed with the Securities and Exchange Commission (the "SEC") on October 3, 1995) with respect to the Reporting Person's beneficial ownership of shares of Class A Common Stock. (b) The business address of the Reporting Person is c/o Emmis Communications Corporation, One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204. (c) The present principal occupation of the Reporting Person is Chairman of the Board, Chief Executive Officer and President of the Issuer. (d) During the past five years, the Reporting Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, the Reporting Person has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) The Reporting Person is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The shares of Class A Common Stock that the Reporting Person beneficially owns were acquired through open market purchases using personal funds, through his service as an officer or director of the Issuer or through purchases in private transactions. With respect to the proposed transaction described in Item 4 of this Statement (which Item 4 is incorporated herein by reference), the Reporting Person estimates that the amount of funds that would be required to purchase all of the shares of outstanding Class A Common Stock at the Offer Price (as defined in Item 4) and to refinance the outstanding debt and preferred stock CUSIP NO. 291525 10 3 Page 5 of 10 of the Issuer and its subsidiaries is approximately $1.2 billion. The funds required to consummate the proposed transaction would be provided by one or more banks or other financial institutions through various debt financing arrangements as further described in Item 4 and the Proposal Letter and the Debt Financing Letters (each as defined in Item 4). The information set forth in response to this Item 3 is qualified in its entirety by reference to the Proposal Letter and the Debt Financing Letters, which are incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION. As set forth in a letter dated May 7, 2006 (the "Proposal Letter"), ECC Acquisition, Inc., an Indiana corporation wholly-owned by the Reporting Person ("Purchaser"), has submitted to the Issuer's Board of Directors (the "Board of Directors") a proposal to acquire all of the outstanding Class A Common Stock (the "Proposal") not beneficially owned by the Reporting Person, together with the Debt Financing Letters (as defined below). On May 8, 2006, a related press release was issued by the Issuer. Copies of the Proposal Letter and the press release are being filed herewith as Exhibits 1 and 2, respectively. The Board of Directors has formed a special committee of independent directors (the "Special Committee") to consider the terms of the Proposal and to recommend to the Board of Directors whether to approve the Proposal. In the Proposal, Purchaser contemplates that Purchaser would structure the transaction as a merger, with the Issuer as the surviving corporation. In the proposed merger, the outstanding shares of Class A Common Stock other than those beneficially owned by the Reporting Person would be converted into the right to receive a cash payment equal to $15.25 per share (the "Offer Price"). Shares of Common Stock beneficially owned by the Reporting Person would be converted into a new class of common stock of the post-merger Issuer. In the Proposal, Purchaser stated that it intends to invite certain other members of Issuer's management to join as purchaser in the proposed merger. In conjunction with the proposed merger, Purchaser expects to refinance the outstanding debt and preferred stock of the Issuer and its subsidiaries. To finance the Proposal and related refinancing, Purchaser has received a letter from Deutsche Bank Securities Inc. and a letter from Banc of America Securities LLC, each stating that Deutsche Bank Securities Inc. and Banc of America Securities LLC, as applicable, is "highly confident" that it can obtain the required debt financing (the "Debt Financing Letters"). Copies of the Debt Financing Letters are being filed herewith as Exhibits 3 and 4, respectively. Purchaser expects to receive executed commitment letters from its financing sources at or prior to the execution of definitive agreements related to the proposed merger. CUSIP NO. 291525 10 3 Page 6 of 10 The Proposal is subject to the recommendation of the Special Committee and the approval of the Board of Directors, and the Proposal does not create any agreement, arrangement or understanding between Purchaser, the Reporting Person or other parties with respect to the Issuer or the Common Stock for purposes of any law, rule, regulation, agreement or otherwise, until such time as definitive documentation and any agreement, arrangement or understanding has been recommended by the Special Committee and approved by the Board of Directors and thereafter executed and delivered by the Issuer and all other appropriate parties. The proposed merger would be subject to Federal Communications Commission approvals and may be subject to compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Proposal would also require approval by the Issuer's stockholders, with holders of Class A Common Stock and Class B Common Stock voting together as a single class. Pursuant to the terms of the Second Amended and Restated Articles of the Issuer (the "Charter"), the proposed merger would be a "going private" transaction (as such term is defined in the Charter) involving the Issuer and a purchaser affiliated with the Reporting Person. Therefore, a holder of Class B Common Stock is entitled to vote on the transaction on an "as converted" to Class A Common Stock basis, with one vote per share for each class of Common Stock. The Reporting Person beneficially owns approximately 17.0% of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote on the Proposal (calculated to include shares issuable under all options exercisable currently or within 60 days), voting together as a single class, and intends to vote for the Proposal. With respect to the Proposal or any matters related thereto, the Reporting Person's intent is to be a purchaser of shares of Common Stock of the Issuer not already owned by him and not seller of shares of Common Stock of the Issuer owned by him. In the Proposal, Purchaser advised the Board of Directors that, in his capacity as a stockholder of the Issuer, the Reporting Person will not agree to any other transaction involving the Issuer or the Reporting Person's shares of the Issuer. Pursuant to the terms of the Charter, in any such other transaction (other than the "going private" transaction described above) that requires the approval of the Issuer's stockholders, the Class A Common Stock and Class B Common Stock will vote together as a single class, with each share of Class A Common Stock entitled to one vote per share and each share of Class B Common Stock entitled to ten votes per share. The Reporting Person would in such circumstances own approximately 66.7% of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote on any such other transaction (calculated to include shares issuable under all options exercisable currently or within 60 days). The foregoing is a summary of Purchaser's current proposal and should not be construed as an offer to purchase shares of Class A Common Stock. A proxy statement will be distributed to stockholders if and when definitive documentation is entered into by the Issuer and all other appropriate parties. Stockholders should read the Issuer's proxy statement and other relevant documents regarding the Proposal filed with the SEC when they become available because they will contain important information relevant to the decision to approve the proposed merger. Stockholders will be able to receive these documents (when they become available), as well as other documents filed by the Reporting Person or his affiliates with respect to the Proposal and the proposed merger, free of charge at the SEC's web site, www.sec.gov. Other than as set forth in the Proposal Letter and the Debt Financing Letters, the Reporting Person has no plans or proposals that relate to or would result in any of the events set forth in Items 4(a) through (j) of CUSIP NO. 291525 10 3 Page 7 of 10 Schedule 13D. However, if the Proposal is not consummated for any reason, the Reporting Person intends to review continuously the Issuer's business affairs, capital needs and general industry and economic conditions, and, based on such review, the Reporting Person may, from time to time, determine to increase his ownership of Common Stock, approve an extraordinary corporate transaction with regard to the Issuer or engage in any of the events set forth in Items 4(a) through (j) of Schedule 13D, except that the Reporting Person currently has no intention of selling any shares of Common Stock. The information set forth in response to this Item 4 is qualified in its entirety by reference to the Proposal Letter and the Debt Financing Letters, which are incorporated herein by reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(b) As of May 8, 2006, the Reporting Person may be deemed to beneficially own 147,533 shares of Class A Common Stock and 6,429,881 shares of Class B Common Stock, which are convertible into shares of Class A Common Stock at any time on a share-for-share basis. The shares of Common Stock that the Reporting Person may be deemed to beneficially own consist of: (i) 3,951 shares of Class A Common Stock held in the 401(k) Plan; (ii) 101,837 shares of Class A Common Stock held by the Reporting Person individually; (iii) 11,120 shares of Class A Common Stock held by the Reporting Person as trustee for his children over which the Reporting Person exercises voting and dispositive control; (iv) 30,625 shares of Class A Common Stock held by The Smulyan Family Foundation, as to which the Reporting Person shares voting and dispositive control. (v) 4,929,881 shares of Class B Common Stock held by the Reporting Person individually; and (vi) options to purchase 1,500,000 shares of Class B Common Stock that are exercisable currently or within 60 days. The following is the information required by Item 2 of this Schedule with respect to each person with whom the Reporting Person shares the power to vote or to direct the vote or to dispose or direct the disposition: CUSIP NO. 291525 10 3 Page 8 of 10 (a) RONALD E. ELBERGER (b) The business address of Mr. Elberger is 135 North Pennsylvania Street, Suite 2700, Indianapolis, IN 46204. (c) The present principal occupation of Mr. Elberger is Attorney/Partner with Bose, McKinney & Evans, LLP. (d) During the past five years, Mr. Elberger has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, Mr. Elberger has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Elberger is a citizen of the United States of America. (a) BRUCE JACOBSON (b) The business address of Mr. Jacobson is 800 East 96th Street, Suite 500, Indianapolis, IN 46240. (c) The present principal occupation of Mr. Jacobson is Senior Vice President of KSM Business Services; he is a retired partner of Katz, Sapper & Miller LLP. (d) During the past five years, Mr. Jacobson has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, Mr. Jacobson has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Jacobson is a citizen of the United States of America. (a) GARY KASEFF (b) The business address of Mr. Kaseff is 3500 W. Olive Avenue, Suite 1450, Burbank, CA 91505. (c) The present principal occupation of Mr. Kaseff is Executive Vice President and General Counsel with Emmis Communications Corporation and Subsidiaries. (d) During the past five years, Mr. Kaseff has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, Mr. Kaseff has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Kaseff is a citizen of the United States of America. CUSIP NO. 291525 10 3 Page 9 of 10 The shares that the Reporting Person may be deemed to beneficially own represent approximately 17.0% of the outstanding shares of Class A Common Stock and 66.7% of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class. Holders of Class A Common Stock and Class B Common stock vote as a single class in all matters submitted to a vote of the stockholders, with each share of Class A Common Stock entitled to one vote per share and each share of Class B Common Stock entitled to ten votes per share, except as otherwise provided in the Issuer's articles of incorporation or as otherwise provided by law. The percentage of the Class A Common Stock that the Reporting Person may be deemed to beneficially own as set forth in this Item 5 is calculated based on: (i) 32,255,572 shares of Class A Common Stock outstanding as of May 5, 2006, as obtained from Emmis Communications Corporation; (ii) the number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock, if any, beneficially owned by such Reporting Person (including upon the exercise of options to purchase shares of Class B Common Stock held by such Reporting Person that are exercisable currently or within 60 days, if any); and (iii) the number of shares of Class A Common Stock issuable upon the exercise of options to purchase shares of Class A Common Stock held by such Reporting Person that are exercisable currently or within 60 days, if any. The percentage of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class, that the Reporting Person may be deemed to beneficially own as set forth in this Item 5 is calculated based on: (i) the number of outstanding shares of Class A Common Stock set forth in clause (i) of the immediately preceding paragraph; (ii) 4,929,881 shares of Class B Common Stock outstanding as of May 5, 2006, as obtained from Emmis Communications Corporation; (iii) the number of shares of Class B Common Stock issuable upon the exercise of options to purchase shares of Class B Common Stock held by the Reporting Person that are exercisable currently or within 60 days, if any; and (iv) the number of shares of Class A Common Stock issuable upon the exercise of options to purchase shares of Class A Common Stock held by the Reporting Person that are exercisable currently or within 60 days, if any. Except as otherwise provided in this Item 5, the Reporting Person has the sole power to vote or to direct the vote, and the sole power to dispose or to direct the disposition of, the shares of Class A Common Stock that the Reporting Person may be deemed to beneficially own. (c) The Reporting Person has not effected any transactions in the Class A Common Stock during the past 60 days. The Reporting Person has effected the following transaction in the Class B Common Stock during the past 60 days: On April 18, 2006 the Reporting Person acquired 38,700 shares of Class B Common Stock. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO SECURITIES OF THE ISSUER. Items 3 and 4 of this Statement are incorporated herein by reference. CUSIP NO. 291525 10 3 Page 10 of 10 The information set forth in response to this Item 6 is qualified in its entirety by reference to the Proposal Letter and the Debt Financing Letters, which are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. EXHIBIT NO. DESCRIPTION FILED WITH - ----------- ----------- ---------- 1 Proposal Letter, dated May 7, 2006. This Statement 2 Press Release, dated May 8, 2006. This Statement 3 Highly Confident Letter, dated May 6, 2006, from Deutsche Bank Securities Inc. This Statement 4 Highly Confident Letter, dated May 6, 2006, This Statement from Banc of America Securities LLC. SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: May 10, 2006 /s/ Jeffrey H. Smulyan ------------------------------ Jeffrey H. Smulyan EX-99 2 ex-1sc13da1_smulyan.txt EXHIBIT 1 EXHIBIT 1 ECC ACQUISITION, INC. May 7,2006 Board of Directors Emmis Communications Corporation One Emmis Plaza 40 Monument Circle, Suite 700 Indianapolis, IN 46204 Ladies and Gentlemen, ECC Acquisition, Inc., an Indiana corporation wholly owned by Jeff Smulyan ("Purchaser"), is pleased to offer to acquire all of the outstanding shares of Class A Common Stock of Emmis Communications Corporation ("Emmis") that are not beneficially owned by Mr. Smulyan at a cash purchase price of $15.25 per share. We believe that our offer is fair to and in the best interest of Emmis and its various constituencies, including its public shareholders. This offer represents a 13.6% premium over the closing price of Emmis' Class A shares on May 5,2006. Our current intent is to structure the transaction as a merger. In conjunction with the merger, we expect to refinance Emmis' outstanding debt and preferred stock. To finance this transaction, we have received a letter from Deutsche Bank Securities Inc. and a letter from Bane of America Securities LLC, each stating that Deutsche Bank Securities Inc. and Bane of America Securities LLC, as applicable, is "highly confident" that it can obtain the required debt financing, copies of which is enclosed herewith. We expect to receive commitment letters from our financing sources and will of course submit them as soon as we have received them. We believe that such financing will be sufficient to meet the needs of this transaction and to operate the business going forward. The transaction will also have to be approved by Emmis' shareholders. No regulatory approvals will be required for the transaction other than FCC approvals and, if applicable, compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. We also intend to invite certain other members of Emmis' management to join us as purchaser in the offer as proposed. We expect that the Board of Directors of Emmis will form a special committee of independent directors to consider our proposal on behalf of Emmis' public shareholders and to recommend to the Board of Directors whether to approve the proposal. Jeff Smulyan will vote in favor of that delegation of authority. We also 2 encourage the special committee to retain its own independent financial advisor and legal counsel to assist in its review. We would welcome the opportunity to present our proposal to the special committee as soon as possible. To assist us in this transaction, we have retained each of The Blackstone Group L.P., Bane of America Securities LLC and Deutsche Bank Securities Inc. as our financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP as our legal counsel. In considering our offer, you should know that we are interested only in acquiring the publicly held shares of Emmis and, Jeff Smulyan, in his capacity as shareholder of Emmis, will not agree to any other transaction involving Emmis or his shares of Emmis. This indication of interest is non-binding and no agreement, arrangement or understanding between the parties shall be created until such time as definitive documentation has been executed and delivered by Emmis and all other appropriate parties and the agreement, arrangement or understanding has been approved by Emmis' Board of Directors and its special committee. [Remainder of this page intentionally left blank] 3 Our entire team looks forward to working with the special committee and its financial advisor and legal counsel to complete a mutually acceptable transaction. Should you have any questions, please contact us. Very truly yours, ECC ACQUISITION, INC. /s/ Jeff Smulyan ------------------------- Name: Jeff Smulyan Title: President EX-99 3 ex-2sc13da1_smulyan.txt EXHIBIT 2 EXHIBIT 2 For Immediate Release Monday, May 8, 2006 Contacts: Dave Newcomer Jodi Wright 317.266-0100 CHAIRMAN AND CEO PROPOSES TO ACQUIRE EMMIS COMMUNICATIONS CORPORATION'S OUTSTANDING PUBLIC SHARES $15.25 CASH PER SHARE OFFERED FOR EMMIS COMMUNICATIONS CORPORATION'S PUBLIC SHARES EMMIS COMMUNICATIONS CORPORATION ANNOUNCES AGREEMENTS TO SELL WKCF-TV AND KKFR-FM HEARST-ARGYLE TO PURCHASE ORLANDO'S WB/CW AFFILIATE FOR $217.5 MILLION; BONNEVILLE TO PURCHASE PHOENIX RADIO STATION FOR $77.5 MILLION CHAIRMAN AND CEO PROPOSAL: Indianapolis, IN, May 8, 2006 - Emmis Communications Corporation (NASDAQ: EMMS) ("Emmis") today announced that ECC Acquisition, Inc., an Indiana corporation wholly-owned by Jeffrey H. Smulyan, the Chairman, Chief Executive Officer and controlling shareholder of Emmis ("Purchaser"), has made a non-binding proposal to acquire the outstanding publicly held shares of Emmis for $15.25 per share in cash. According to the proposal, the offer price represents a 13.6% premium over the closing price of Emmis' Class A common stock on Friday, May 5, 2006, the last trading day prior to the proposal. The proposal values the total common equity of Emmis (including both Class A Common Stock and Class B Common Stock) at approximately $567 million and implies an enterprise value of approximately $1.4 billion (based on Emmis' outstanding debt and preferred stock). The proposal states that the transaction would be implemented through a merger of Emmis with the Purchaser. In conjunction with the merger, Purchaser proposes to refinance certain of Emmis' outstanding debt and preferred stock. The proposal further states that Purchaser intends to invite certain other members of Emmis' management to join the Purchaser in the proposed transaction. In response to the proposal, the Board of Directors of Emmis announced that it has formed a special committee of independent directors to consider the proposal. The Special Committee will select its own independent financial and legal advisors. Mr. Smulyan and the other directors of Emmis that are members of management will not participate in the evaluation of the proposal, which requires the recommendation of the special committee and the approval of the Board of Directors. Emmis expects this process to have no impact on day-to-day operations. The transaction will be subject to the negotiation and execution of definitive agreements related to the transaction and will be subject to receipt of required financing. The proposal states that the transaction is not subject to any regulatory conditions other than Federal Communications Commission ("FCC") approvals and, if applicable, compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The proposal also states that the transaction will be subject to approval by Emmis' shareholders. Under the terms of Emmis' charter, the transaction will be a "going private" transaction (as such term is defined in the charter) involving Emmis and a purchaser affiliated with Mr. Smulyan; therefore, holders of Class B Common Stock will be entitled to vote on the transaction on an "as converted" to Class A Common Stock basis so that all shares are entitled to one vote per share and vote together as a single class. Mr. Smulyan owns shares of Emmis representing approximately 16.9% of the equity and 16.9% of the votes entitled to vote on the proposal (calculated in each case to include shares issuable under all options exercisable currently or within 60 days). In its proposal, Purchaser advised Emmis' Board that Mr. Smulyan will not agree to any other transaction involving Emmis or his shares of Emmis. Under the terms of Emmis' charter, on any such other transaction (other than the "going private" transaction described above) that requires the approval of Emmis' shareholders, the Class A Common Stock and Class B Common Stock will vote together as a single class, with each share of Class A Common Stock entitled to one vote per share and each share of Class B Common Stock entitled to ten votes per share. Mr. Smulyan would in such circumstances have approximately 66.7% of the combined voting power entitled to vote on any such other transaction (calculated to include shares issuable under all options exercisable currently or within 60 days), thereby giving him the ability to prevent Emmis from engaging in any such other transaction. The proposal stated that The Blackstone Group L.P., Banc of America Securities LLC and Deutsche Bank Securities Inc. are each serving as Purchaser's financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal advice to Purchaser. Emmis does not anticipate making any further announcement concerning the proposal unless and until a definitive agreement is reached. If and when the parties reach a definitive agreement with respect to the proposal, Emmis and Purchaser will file appropriate materials with the Securities and Exchange Commission and mail such materials to Emmis shareholders. Shareholders and other interested parties should read Emmis' relevant documents filed with the SEC when they become available because they will contain important information. Emmis' shareholders will be able to obtain such documents free of charge at the SEC's web site (www.sec.gov) or from Emmis at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, Attn: Scott Enright. AGREEMENTS TO SELL WKCF-TV AND KKFR-FM; CLOSING ON WRDA-FM Emmis today also announced that it has signed agreements to sell two of its broadcast properties: WKCF-TV, its WB/CW affiliate in Orlando, and KKFR-FM in Phoenix. Under terms of its agreement, Hearst-Argyle Television, Inc. (NYSE: HTV) has agreed to pay $217.5 million in cash for the assets of WKCF-TV, subject to FCC and other regulatory approvals. Emmis continues to own 50 percent of "The Daily Buzz," a syndicated weekday news program produced in the WKCF studios, with partner Acme Communications, and will retain the WKCF building. Emmis purchased WKCF in October of 1999 from Press Communications, LLC. In May 2005, Emmis announced its intention to explore strategic alternatives for its 16-station television division. Since that time and including today's announcement, 14 Emmis television stations have found buyers. The television stations remaining in the Emmis portfolio are New Orleans' WVUE-TV (Fox 8) and Honolulu's KGMB-TV (CBS 9). In Phoenix, Bonneville International Corporation and Bonneville Holding Company have agreed to purchase the assets of KKFR-FM (Power 92.3) for $77.5 million, subject to FCC and other regulatory approvals. Emmis purchased KKFR-FM from Clear Channel in August 2000. In January 2005, Emmis swapped three Phoenix stations -- KTAR-AM, KMVP-AM and KKLT-FM -- with Bonneville in exchange for WLUP-FM (97.9) in Chicago and $70 million in cash. After the close of the transaction, Emmis will own 23 domestic radio stations in seven markets. The closing of each of these transactions is subject to customary conditions, including approval from the FCC, and is expected to occur in the next three to six months. Emmis also announced that on May 5, 2006, it completed the sale of the assets of WRDA-FM (104.1 FM, now known as WHHL-FM) to Radio One (NASDAQ: ROIAK and ROIA) for $20 million. Emmis announced it had signed a definitive agreement for the sale of the station in September of 2005. In St. Louis, Emmis continues to own KFTK-FM (97.1), KIHT-FM (96.3), KPNT-FM (105.7) and legendary KSHE-FM (94.7). Emmis-St. Louis continues to air Red's programming via the web at WWW.REDONTHEWEB.COM. OTHER MATTERS: Through February 28, 2006, Emmis had deferred approximately $1.1 million of third-party acquisition-related costs associated with the acquisition of the Washington Nationals Major League Baseball franchise. On April 18, 2006, Emmis reported results for its fourth quarter and full year ended February 28, 2006, and continued to believe that deferral of these costs was appropriate. However, on May 3, 2006, Major League Baseball announced that it had awarded the right to purchase the Washington Nationals to a group other than the one led by Emmis. As a result of this subsequent event, Emmis has expensed these costs in its year ended February 28, 2006, as a component of corporate expenses. Consequently, Emmis' operating income in its Form 10-K for the year ended February 28, 2006, will be $1.1 million lower than the operating income reported in its press release on April 18, 2006. Please see the financial table attached to this press release as Annex A. EMMIS COMMUNICATIONS - GREAT MEDIA, GREAT PEOPLE, GREAT SERVICE(R) Emmis Communications is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Pro forma for the transactions above, Emmis' 21 FM and 2 AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. In addition, Emmis owns a radio network, international radio interests, two television stations, award-winning regional and specialty magazines, and ancillary businesses in broadcast sales and publishing. NOTE: STATEMENTS IN THIS RELEASE REPRESENT THE PARTIES' CURRENT INTENTIONS, PLANS, EXPECTATIONS AND BELIEFS AND INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM THE EVENTS DESCRIBED IN THIS RELEASE, INCLUDING RISKS OR UNCERTAINTIES RELATED TO THE SUCCESS OF THE NEGOTIATIONS WITH THE SPECIAL COMMITTEE AND WHETHER THE MERGER WILL BE COMPLETED, AS WELL AS CHANGES IN GENERAL ECONOMIC CONDITIONS, STOCK MARKET TRADING CONDITIONS, TAX LAW REQUIREMENTS OR GOVERNMENT REGULATION, AND CHANGES IN THE BROADBAND COMMUNICATIONS INDUSTRY OR THE BUSINESS OR PROSPECTS OF EMMIS. THE READER IS CAUTIONED THAT THESE FACTORS, AS WELL AS OTHER FACTORS DESCRIBED OR TO BE DESCRIBED IN SEC FILINGS WITH RESPECT TO THE TRANSACTION, ARE AMONG THE FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THE CURRENT EXPECTATIONS DESCRIBED HEREIN. NO AGREEMENT, ARRANGEMENT OR UNDERSTANDING WITH RESPECT TO THE ACQUISITION OF THE STOCK OF EMMIS DESCRIBED ABOVE SHALL BE CREATED (OR DEEMED CREATED FOR ANY PURPOSE) UNTIL SUCH TIME AS DEFINITIVE DOCUMENTATION PROVIDING FOR ANY SUCH AGREEMENT, ARRANGEMENT, OR UNDERSTANDING HAS BEEN APPROVED BY THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF EMMIS AND THEREAFTER EXECUTED AND DELIVERED BY EMMIS AND ALL OTHER RELEVANT PERSONS. CERTAIN STATEMENTS INCLUDED IN THIS RELEASE WHICH ARE NOT STATEMENTS OF HISTORICAL FACT, INCLUDING BUT NOT LIMITED TO THOSE IDENTIFIED WITH THE WORDS "EXPECT," "WILL" OR "LOOK" ARE INTENDED TO BE, AND ARE, BY THIS NOTE, IDENTIFIED AS "FORWARD-LOOKING STATEMENTS," AS DEFINED IN THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF EMMIS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULT, PERFORMANCE OR ACHIEVEMENT EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, AMONG OTHERS: o GENERAL ECONOMIC AND BUSINESS CONDITIONS; o FLUCTUATIONS IN THE DEMAND FOR ADVERTISING AND DEMAND FOR DIFFERENT TYPES OF ADVERTISING MEDIA; o OUR ABILITY TO SERVICE OUR OUTSTANDING DEBT; o INCREASED COMPETITION IN OUR MARKETS AND THE BROADCASTING INDUSTRY; o OUR ABILITY TO ATTRACT AND SECURE PROGRAMMING, ON-AIR TALENT, WRITERS AND PHOTOGRAPHERS; o INABILITY TO OBTAIN (OR TO OBTAIN TIMELY) NECESSARY APPROVALS FOR PURCHASE OR SALE TRANSACTIONS OR TO COMPLETE THE TRANSACTIONS FOR OTHER REASONS GENERALLY BEYOND OUR CONTROL; o PURCHASER'S OFFER TO PURCHASE BEING TERMINATED OR MODIFIED MATERIALLY; o INCREASES IN THE COSTS OF PROGRAMMING, INCLUDING ON-AIR TALENT; o INABILITY TO GROW THROUGH SUITABLE ACQUISITIONS; o NEW OR CHANGING REGULATIONS OF THE FEDERAL COMMUNICATIONS COMMISSION OR OTHER GOVERNMENTAL AGENCIES; o COMPETITION FROM NEW OR DIFFERENT TECHNOLOGIES; o WAR, TERRORIST ACTS OR POLITICAL INSTABILITY; AND OTHER FACTORS MENTIONED IN DOCUMENTS FILED BY EMMIS WITH THE SECURITIES AND EXCHANGE COMMISSION. Annex A EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited, dollars in thousands, except per share data)
THREE MONTHS ENDED FEBRUARY 28, TWELVE MONTHS ENDED ------------------------------- ------------------- 2006 2005 2006 ---- ---- ---- OPERATING DATA: Net revenues: Radio $ 63,045 $ 60,855 $ 300,545 Publishing 21,440 20,021 86,836 Total net revenues 84,485 80,876 387,381 Operating expenses, excluding noncash compensation: Radio 43,978 38,768 174,321 Publishing 20,976 17,683 78,837 Total station operating expenses, excluding noncash compensation 64,954 56,451 253,158 Corporate expenses, excluding noncash compensation 13,295 7,438 32,686 Noncash compensation (a) 690 2,318 8,906 Depreciation and amortization 4,867 3,835 17,335 Impairment loss 37,372 -- 37,372 Loss on disposal of assets 9 718 94 ------------ ------------ ------------ Operating income (loss) (36,702) 10,116 37,830 Interest expense (21,513) (9,568) (70,586) Interest income 3,040 564 3,532 Gain from unconsolidated affiliates 55 3 8 Loss on debt extinguishment (b) (6,952) -- (6,952) Other income (expense), net (170) 680 (500) ------------ ------------ ------------ Income (loss) before income taxes, minority interest, discontinued operations and accounting change (62,242) 1,795 (36,668) Provision (benefit) for income taxes (25,748) 1,544 (15,455) Minority interest (income) expense, net of tax (485) 539 3,026 ------------ ------------ ------------ Income (loss) from continuing operations (36,009) (288) (24,239) Income (loss) from discontinued operations, net of tax 174,951 37,389 382,010 ------------ ------------ ------------ Income (loss) before accounting change 138,942 37,101 357,771 Cumulative effect of accounting change, net of tax -- (303,000) -- ------------ ------------ ------------ Net income (loss) 138,942 (265,899) 357,771 Preferred stock dividends 2,246 2,246 8,984 ------------ ------------ ------------ Net income (loss) available to common shareholders $ 136,696 $ (268,145) $ 348,787 ============ ============ ============ Basic net income (loss) per common share: Continuing operations $ (1.03) $ (0.04) $ (0.78) Discontinued operations, net of tax 4.72 0.66 8.91 Cumulative effect of accounting change, net of tax -- (5.37) -- ------------ ------------ ------------ Net income (loss) available to common shareholders $ 3.69 $ (4.75) $ 8.13 ============ ============ ============ Diluted net income (loss) per common share: Continuing operations (1.03) $ (0.04) $ (0.78) Discontinued operations, net of tax 4.72 0.66 8.91 Cumulative effect of accounting change, net of tax -- (5.37) -- ------------ ------------ ------------ Net income (loss) available to common shareholders $ 3.69 $ (4.75) $ 8.13 ============ ============ ============ Weighted average shares outstanding: Basic 37,056 56,397 42,876 Diluted 37,056 56,397 42,876
EX-99 4 ex-3sc13da1_smulyan.txt EXHIBIT 3 EXHIBIT 3 DEUTSCHE BANK SECURITIES INC. 60 WALL STREET NEW YORK, NEW YORK 10005 May 6, 2006 ECC Acquisition, Inc. Attention: Jeffrey H. Smulyan Ladies and Gentlemen: You have advised Deutsche Bank Securities Inc. ("DBSI") of your intention to enter into a transaction (the "Transaction") in which you ("Newco"), a company newly formed by Jeffrey H. Smulyan and certain other investors, would acquire all of the outstanding capital stock of Emmis Communications Corporation (the "Acquired Business"). You have asked us to assist you in (i) raising funds in an aggregate amount of $1.036 billion to consummate the Transaction through the arrangement of senior secured term loans of Newco and its affiliates (the "Term Loans") and through the sale or placement of debt securities (the "Notes") to be issued by Newco and (ii) arranging a working capital facility in an amount necessary to fund ongoing working capital (the "REVOLVING CREDIT FACILITY" and, together with the Term Loans, the "Bank Financing"). It is our understanding that other than the Bank Financing and the Notes, Newco would have no other indebtedness for money borrowed after giving effect to the consummation of the Transaction. We are pleased to inform you that, based upon our understanding of the Transaction as summarized above and current market conditions and subject to, among other things, the conditions set forth below, we are highly confident of our ability to arrange the Bank Financing and sell or place the Notes in connection with the Transaction. The structure, covenants and terms of the Bank Financing and the Notes would be as determined by DBSI in consultation with you, on terms mutually acceptable to both parties based on market conditions at the time of the arrangement and the sale or placement and on the structure and documentation of the Transaction. Our confidence in our ability to arrange the Bank Financing and consummate the sale or placement of the Notes is subject to, among other things, (i) there not having occurred any material adverse change in the condition (financial or otherwise), results of operations, business or prospects of the Acquired Business, (ii) there not existing any pending or threatened claim, suit or proceeding which DBSI shall reasonably determine could have a materially adverse effect on the business, property, assets, liabilities, condition (financial or otherwise) or prospects of Newco or the Acquired Business, (iii) the receipt of all necessary governmental, regulatory or third party approvals or consents in connection with the Transaction, (iv) the execution and delivery of documentation for the Transaction and related transactions in form and substance reasonably satisfactory to DBSI and such documentation -2- being in full force and effect, (v) agreement on the terms of the Bank Financing and the Notes and negotiation and execution of satisfactory documentation relating thereto, (vi) DBSI and its representatives shall have completed and be satisfied with the results of its financial, business, environmental and legal due diligence, (vii) the receipt and review (to our reasonable satisfaction) of independent third party reports as to certain matters customarily so reported upon in transactions of this type, (viii) the availability of audited and unaudited historical financial statements of Newco and the Acquired Business and pro forma financial statements of Newco after giving effect to the Transaction, in each case reasonably acceptable to DBSI, (ix) there not having been any material disruption or material adverse change in the market for new issues of high yield securities or the syndication market for credit facilities or the financial or capital markets in general, in the judgment of DBSI, (x) DBSI having been engaged to and having a reasonable time to arrange the Bank Financing and market the Notes based on DBSI's experience in comparable transactions, and (xi) completion of credit and other internal approvals. This letter is not intended to be and should not be construed as a commitment to provide or arrange, or to offer to provide or arrange, the Bank Financing, the underwriting, sale or placement of the Notes or any other financing, on terms described herein or otherwise. Any such commitment, if forthcoming, would be evidenced by a separate written agreement executed by DBSI (or a designated affiliate thereof). -3- Except as otherwise required by law or unless DBSI has otherwise consented in writing, you are not authorized to show or circulate this letter to any other person or entity (other than your legal or financial advisors in connection with your evaluation hereof and the Acquired Business and its legal and financial advisors). Very truly yours, DEUTSCHE BANK SECURITIES INC. By: /s/ Sean Murphy ----------------------------- Name: Sean Murphy Title: Managing Director By: /s/ Elizabeth Chang ----------------------------- Name: Elizabeth Chang Title: Director EX-99 5 ex-4sc13da1_smulyan.txt EXHIBIT 4 EXHIBIT 4 BANC OF AMERICA SECURITIES LETTERHEAD Banc of America Securities LLC 9 West 57th Street New York, NY 10019 May 6, 2006 ECC Acquisition, Inc. Attention: Jeff Smulyan HIGHLY CONFIDENT LETTER Ladies and Gentleman: You have advised Banc of America Securities LLC ("BAS") that ECC Acquisition, Inc. (the "Purchaser") intends to acquire Emmis Communications Corporation (the "Subject Company") through the purchase, directly or indirectly, of all of the outstanding capital stock or a substantial portion of the assets of the Subject Company not currently owned by the Purchaser, including, if appropriate, refinancing the Subject Company's existing debt (collectively, the "Acquisition"). You have further advised us that the Acquisition will be financed from a combination of the rollover of Jeff Smulyan's entire equity holdings and the rollover and/or purchase of equity by certain other members of management of the Subject Company and other capital of approximately $ 1.2 billion comprised of (i) private senior and/or subordinated debt securities (the "Debt Securities") or, in the event market conditions do not permit the issuance of the Debt Securities at the closing of the Acquisition, interim financing in lieu thereof (the "Bridge Facility") and/or (ii) senior credit facilities (the "Credit Facilities") and/or (iii) the assumption of existing indebtedness of the Subject Company and/or (iv) preferred stock (together with the Debt Securities, the "Securities"). We are pleased to inform you that, based upon (and subject to) our understanding of the Acquisition and current market conditions and subject to the conditions set forth below, we are highly confident of our ability, (i) as sole "book running" lead underwriter or placement agent, to sell or place the Securities in connection with the Acquisition and (ii) as sole lead arranger, to arrange and syndicate the Credit Facilities in connection with the Acquisition. The structure, interest rate and yield, covenants and terms of, and the documentation for, the Securities and the Credit Facility will be based on market conditions at the time of the sale or placement and the arrangement and on the structure and documentation of the Acquisition and all the financing therefor. Our confidence in our ability to consummate the sale or placement of the Securities and to arrange and syndicate the Credit Facilities is subject to: (i) the principal economic terms and structure of the Acquisition and the ECC Acquisition, Inc. May 6, 2006 Page 2 related financing components being on the terms as described to BAS on the date hereof or otherwise on terms and conditions acceptable to BAS and the execution of documentation relating thereto satisfactory in form and substance to BAS, and the Acquisition having been consummated; (ii) the receipt of all required governmental, regulatory or third party approvals or consents in connection with the Acquisition; (iii) the availability of audited and unaudited historical financial statements of the Subject Company and its subsidiaries and pro forma financial statements of the Subject Company and its subsidiaries assuming consummation of the Acquisition, in each case, satisfactory to BAS and in form and presentation as required by the Securities Act of 1933, as amended, and the rules and regulations thereunder applicable to registration statements on Form S-l (with such other adjustments to form and presentation to be agreed upon); (iv) there not having occurred any change or development that either individually or in the aggregate could reasonably be expected to have a material adverse effect on the business, operations, assets, properties, liabilities (actual and contingent), results of operations, condition (financial or otherwise) or prospects of the Subject Company and its subsidiaries, in each case taken as a whole, since the date of the most recent audited financial statements of the Subject Company, in each case, in BAS's sole judgment; (v) BAS and its representatives being satisfied with the results of their continuing business and legal due diligence (and no new fact, circumstance or development shall have occurred or been discovered which BAS believes is inconsistent in any material respect with any information previously provided to it) and your, and the Subject Company's, full cooperation with respect to the marketing of the Securities and the syndication of the Credit Facilities (including the availability of senior management of the Subject Company); and (vi) no change or proposed change in law or regulation, including regulations that could reasonably be expected to materially and adversely affect (a) the business or prospects of the Subject Company and its subsidiaries, taken as a whole or (b) the economic consequences, that the Purchaser contemplates deriving from the Acquisition. You acknowledge that BAS and its affiliates may share with each other any information related to you, the Subject Company or its affiliates (including information relating to creditworthiness), or the Acquisition or the financing therefor; provided that BAS and such affiliates agree to hold any non-public information confidential in accordance with their respective customary policies related to non-public information. This letter is not intended to be and should not be construed as (or relied upon as) an offer or commitment by BAS or any of its affiliates with respect to the extension of credit or the underwriting, sale, arrangement or placement of the Securities, the Credit Facilities or any of the other financings referenced herein and creates no obligations or liability on our part or your part, or on the part of any of our respective affiliates, in connection therewith. Obtaining financing for the Acquisition is inherently subject to uncertainties and contingencies beyond our control; accordingly there can be no assurance that the offering or placement of the Securities or the arrangement of the Credit Facilities will in fact be accomplished. May 6, 2006 Page 3 Except as otherwise required by law or unless BAS has otherwise consented in writing, you are not authorized to show or circulate this letter to any other person or entity (other than your advisors and to the Subject Company, its board of directors and its advisors with a need to know). Nothing herein, express or implied, is intended or shall confer upon any third party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this letter. Very truly yours, BANC OF AMERICA SECURITIES LLC By: /s/ Dan Kelly ----------------------------- Dan Kelly Managing Director -----END PRIVACY-ENHANCED MESSAGE-----