EXHIBIT 10.1
MERGER AGREEMENT
BY AND AMONG
INFINITY MEDIA CORPORATION
INFINITY BROADCASTING CORPORATION OF SAN FRANCISCO
SPANISH BROADCASTING SYSTEM, INC.
AND
SBS BAY AREA, LLC
Dated as of October 5, 2004
TABLE OF CONTENTS
Page
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ARTICLE 1 MERGER..................................................................................... 2
1.1. MERGER..................................................................................... 2
1.2. CLOSING.................................................................................... 2
1.3. EFFECTIVE TIME............................................................................. 2
1.4. EFFECTS OF THE MERGER...................................................................... 2
1.5. LIMITED LIABILITY COMPANY AGREEMENT........................................................ 2
1.6. MANAGERS OF THE SURVIVING COMPANY.......................................................... 2
1.7. OFFICERS OF SURVIVING COMPANY.............................................................. 3
1.8. FURTHER ACTION............................................................................. 3
1.9. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES........................................... 3
1.10. CONVERSION OF COMPANY STOCK................................................................ 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SBS...................................................... 3
2.1. ORGANIZATION, QUALIFICATION AND STANDING................................................... 4
2.2. AUTHORIZATION AND BINDING OBLIGATION....................................................... 4
2.3. SBS SERIES C PREFERRED STOCK AND WARRANT TO BE ISSUED IN THIS TRANSACTION.................. 4
2.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS..................................... 4
2.5. SEC DOCUMENTS.............................................................................. 5
2.6 FINANCIAL STATEMENTS....................................................................... 6
2.7. NO MATERIAL UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.................................... 7
2.8. CAPITALIZATION............................................................................. 8
2.9 COMPLIANCE................................................................................. 10
2.10. GOVERNMENTAL AUTHORIZATIONS................................................................ 10
2.11. CONTRACTS AND COMMITMENTS.................................................................. 10
2.12. TRANSACTIONS WITH RELATED PARTIES.......................................................... 11
2.13. FCC QUALIFICATIONS......................................................................... 11
2.14. TAXES...................................................................................... 11
2.15. NO FINDER.................................................................................. 12
2.16. SECTION 203 OF THE DGCL.................................................................... 12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF INFINITY................................................. 12
3.1. ORGANIZATION, QUALIFICATION AND STANDING................................................... 12
3.2. AUTHORIZATION AND BINDING OBLIGATION....................................................... 12
3.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS..................................... 12
3.4. CAPITALIZATION; OWNERSHIP.................................................................. 14
3.5. ABSENCE OF LIABILITIES..................................................................... 14
3.6 ABSENCE OF MATERIAL ADVERSE EFFECT......................................................... 14
3.7. TAXES...................................................................................... 15
3.8. GOVERNMENTAL AUTHORIZATIONS AND FCC LICENSES............................................... 15
3.9. LITIGATION................................................................................. 16
3.10. REAL PROPERTY.............................................................................. 16
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3.11. TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY....................................... 16
3.12. CONTRACTS.................................................................................. 17
3.13. EMPLOYEES.................................................................................. 17
3.14. COMPLIANCE WITH LAWS....................................................................... 18
3.15. PURCHASE FOR OWN ACCOUNT................................................................... 18
3.16. RESTRICTED SECURITIES...................................................................... 18
3.17. LEGEND..................................................................................... 18
3.18. ACCREDITED INVESTOR........................................................................ 18
3.19. NO FINDER.................................................................................. 18
3.20. BOOKS AND RECORDS.......................................................................... 19
3.21. ENVIRONMENTAL MATTERS...................................................................... 19
ARTICLE 4 FCC AND OTHER GOVERNMENTAL CONSENTS........................................................ 19
4.1. FCC APPLICATION............................................................................ 19
4.2. COMPLIANCE WITH HSRA....................................................................... 19
4.3. OTHER GOVERNMENTAL CONSENTS................................................................ 20
ARTICLE 5 COVENANTS AND AGREEMENTS................................................................... 20
5.1. CONTROL OF STATION......................................................................... 20
5.2. OPERATION OF THE STATIONS AND THE COMPANY.................................................. 20
5.3. PERMITTED DISTRIBUTIONS; REQUIRED ASSUMPTIONS.............................................. 21
5.4. ACCESS TO THE COMPANY'S PROPERTIES......................................................... 21
5.5. SBS COVENANTS.............................................................................. 22
5.6. CONFIDENTIALITY............................................................................ 22
5.7. PUBLIC ANNOUNCEMENT........................................................................ 23
5.8. ADVICE OF CHANGES.......................................................................... 23
5.9. EMPLOYMENT MATTERS......................................................................... 23
5.10. REGISTRATION RIGHTS AGREEMENT.............................................................. 23
5.11. REORGANIZATION TREATMENT................................................................... 23
5.12. USE OF INFINITY, KBAA, KBAY AND OTHER TRADEMARKS........................................... 24
5.13. TAX MATTERS................................................................................ 24
ARTICLE 6 CONDITIONS PRECEDENT TO SBS AND MERGER SUB'S OBLIGATION TO CLOSE.......................... 25
6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.................................................. 25
6.2. CORPORATE ACTION........................................................................... 25
6.3. GOVERNMENTAL CONSENTS...................................................................... 26
6.4. ADVERSE PROCEEDINGS........................................................................ 26
ARTICLE 7 CONDITIONS PRECEDENT TO INFINITY AND THE COMPANY'S OBLIGATION TO CLOSE..................... 26
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.................................................. 26
7.2. CORPORATE ACTION........................................................................... 26
7.3. GOVERNMENTAL CONSENTS...................................................................... 26
7.4. ADVERSE PROCEEDINGS........................................................................ 27
7.5. NO MATERIAL ADVERSE EFFECT................................................................. 27
7.6. NO CHANGE IN CONTROL....................................................................... 27
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ARTICLE 8 DOCUMENTS TO BE DELIVERED AT THE CLOSING................................................... 27
8.1. DOCUMENTS TO BE DELIVERED BY INFINITY AND THE COMPANY...................................... 27
8.2. DOCUMENTS TO BE DELIVERED BY SBS AND MERGER SUB............................................ 27
8.3. DOCUMENTS TO BE DELIVERED BY INFINITY AND SBS.............................................. 28
ARTICLE 9 TRANSFER TAXES, FEES AND EXPENSES.......................................................... 28
9.1. TRANSFER TAXES AND SIMILAR CHARGES......................................................... 28
9.2. GOVERNMENTAL FILING OR GRANT FEES.......................................................... 28
9.3. EXPENSES................................................................................... 28
ARTICLE 10 INDEMNIFICATION............................................................................ 28
10.1. INFINITY'S INDEMNITIES..................................................................... 28
10.2. SBS'S INDEMNITIES.......................................................................... 29
10.3. CERTAIN LIMITATIONS........................................................................ 30
10.4. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND OBLIGATIONS.................................... 31
ARTICLE 11 TERMINATION RIGHTS......................................................................... 31
11.1. TERMINATION................................................................................ 31
11.2. LIABILITY.................................................................................. 32
11.3. EFFECT OF TERMINATION...................................................................... 32
11.4. PARENT GUARANTY............................................................................ 32
ARTICLE 12 OTHER PROVISIONS........................................................................... 32
12.1. BENEFIT AND ASSIGNMENT..................................................................... 32
12.2. ENTIRE AGREEMENT........................................................................... 32
12.3. HEADINGS................................................................................... 32
12.4. COMPUTATION OF TIME........................................................................ 32
12.5. GOVERNING LAW; WAIVER OF JURY TRIAL........................................................ 33
12.6. CONSTRUCTION............................................................................... 33
12.7. ATTORNEYS' FEES............................................................................ 33
12.8. SEVERABILITY............................................................................... 33
12.9. NOTICES.................................................................................... 33
12.10. COUNTERPARTS............................................................................... 35
ARTICLE 13 DEFINITIONS................................................................................ 35
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EXECUTION COPY
MERGER AGREEMENT
This MERGER AGREEMENT (this "Agreement"), made as of October 5, 2004, is
by and among, INFINITY MEDIA CORPORATION, a Delaware corporation ("Infinity"),
INFINITY BROADCASTING CORPORATION OF SAN FRANCISCO, a Delaware corporation (the
"Company"), SPANISH BROADCASTING SYSTEM, INC., a Delaware corporation ("SBS"),
and SBS Bay Area, LLC, a Delaware limited liability company ("Merger Sub").
RECITALS
The Company is engaged in the business of owning and operating radio
broadcast station KBAA(FM), San Francisco, California (Facility ID No. 1092)
(the "Station"), pursuant to a license issued by the Federal Communications
Commission (the "FCC").
Infinity owns 100% of the issued and outstanding stock of the Company. SBS
owns 100% of the issued and outstanding membership interests in Merger Sub.
The respective Boards of Directors of the Company and Merger Sub have
determined that the merger (the "Merger") of the Company with and into Merger
Sub is in the best interests of the Company and Merger Sub, and each such Board
of Directors, and Infinity and SBS as the sole stockholder of the Company and
sole interest holder of Merger Sub, respectively, have approved the Merger upon
the terms and subject to the conditions set forth in this Agreement.
Under the terms of this Agreement, shares of common stock, par value $0.01
per share, of the Company issued and outstanding immediately prior to the
Effective Time (the "Company Stock") shall be converted into the right to
receive Series C Convertible Preferred Stock, par value $0.002 per share, of SBS
(the "SBS Series C Preferred Stock") and the Warrant (as defined in Section
1.9).
The parties intend that for federal income tax purposes the Merger will
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, conditions and agreements hereinafter set forth, the parties hereto
agree as follows:
ARTICLE 1
MERGER
1.1. MERGER. Upon the terms and subject to the conditions of this
Agreement, and in accordance with Delaware General Corporation Law (the "DGCL")
and the Delaware Limited Liability Company Act ("DLLCA"), at the Effective Time
(as defined in Section 1.3 below), the Company shall be merged with and into
Merger Sub and the separate corporate existence of the Company shall cease and
Merger Sub shall continue as the surviving entity in the Merger (hereinafter
sometimes referred to as the "Surviving Company.")
1.2. CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
11.1, the consummation of the Merger (the "Closing") shall take place at 10:00
a.m. on the fifth business day after the satisfaction or (subject to applicable
law) waiver of the conditions set forth in Sections 6.3 and 7.3 at the offices
of Xxxxxxxxx Xxxxxx & Xxxxxx PLLC, Washington, D.C., unless another time, date
or place is agreed to in writing by Infinity and SBS. The date on which the
Closing occurs shall be the "Closing Date."
1.3. EFFECTIVE TIME. At the Closing, Merger Sub, as the Surviving Company,
shall duly prepare, execute and acknowledge, and shall thereafter (a) file a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL and the DLLCA to effectuate
the Merger and (b) make all other filings or recordings required under the laws
of Delaware to effectuate the Merger. The Certificate of Merger shall be
effective on the later of the time of filing of the Certificate of Merger or at
such subsequent time as the Company and Merger Sub shall agree and as shall be
specified in the Certificate of Merger (the date and time the Merger becomes
effective being the "Effective Time").
1.4. EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in this Agreement and the applicable provisions
of the DGCL and the DLLCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, subject to the terms and conditions of
this Agreement and the other documents contemplated hereby, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Company, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Company.
1.5. LIMITED LIABILITY COMPANY AGREEMENT. The limited liability company
agreement of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the limited liability company agreement of the Surviving Company until
thereafter changed or amended.
1.6. MANAGERS OF THE SURVIVING COMPANY. The managers of Merger Sub
immediately prior to the Effective Time shall be the managers of the Surviving
Company, each to hold office from the Effective Time in accordance with the
limited liability company agreement of the Surviving Company and until his or
her successor is duly elected and qualified.
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1.7. OFFICERS OF SURVIVING COMPANY. The officers of Merger Sub immediately
prior to the Effective Time shall be the officers of the Surviving Company until
the earlier of their resignation or removal or until their respective successors
are duly appointed and qualified.
1.8. FURTHER ACTION. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Company with the full right, title and possession to all
assets, property, rights, privileges, immunities, powers and franchises of
either or both the Company and Merger Sub, the stockholder of the Company and
the sole interest holder of Merger Sub, by signing this Agreement, hereby
authorize the officers and the member of the Surviving Company in the name of
either or both the Company and Merger Sub or otherwise to take all such actions,
and Infinity and the Company agree to take all such actions as are necessary to
vest the Surviving Company with the full right, title and possession to all
assets, property, rights, privileges, immunities, powers and franchises of
either or both the Company and Merger Sub.
1.9. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Stock or of the holder of any membership interest in
the Merger Sub:
(a) the issued and outstanding shares of Company Stock shall be
converted into the right to receive (i) 380,000 validly issued,
fully paid and non-assessable shares of SBS Series C Preferred Stock
and (ii) a warrant to purchase an additional 190,000 shares of SBS
Series C Preferred Stock as specified and in the form attached as
Exhibit A hereto (the "Warrant").
(b) each issued and outstanding limited liability company interest
of Merger Sub shall remain outstanding and be converted into and
become one validly issued, fully paid and non-assessable limited
liability company interest of the Surviving Company.
1.10. CONVERSION OF COMPANY STOCK. As of the Effective Time, upon the
surrender of one or more certificates representing all of the outstanding shares
of Company Stock immediately prior to the Merger, SBS shall issue and deliver to
Infinity one or more certificates registered in the name of Infinity evidencing
(a) 380,000 shares of SBS Series C Preferred Stock and (b) the Warrant. As of
the Effective Time, all shares of Company Stock shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and Infinity, as
holder of the certificate or certificates that, immediately prior to the
Effective Time, represented outstanding shares of Company Stock shall cease to
have any rights with respect thereto, except the right to receive, upon the
surrender of such certificate, the shares of SBS Series C Preferred Stock to
which such holder is entitled pursuant to Section 1.9 hereof, as represented by
one or more certificates, and the Warrant.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SBS
SBS represents and warrants to Infinity and the Company as follows:
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2.1. ORGANIZATION, QUALIFICATION AND STANDING. SBS is a corporation and
Merger Sub is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of SBS and Merger
Sub is duly qualified to do business as a foreign entity and in good standing
under the laws of each state or other jurisdiction in which either the ownership
or use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure to be so
qualified would not reasonably be expected to, individually or in the aggregate,
(a) have a Material Adverse Effect on SBS or Merger Sub, or (b) impair the
ability of SBS or Merger Sub to consummate the transactions contemplated by, or
to satisfy their obligations under, this Agreement, or (c) delay in any material
respect or prevent the consummation of any of the transactions contemplated by
this Agreement (an "SBS Material Adverse Effect"). Each of SBS and Merger Sub
has the requisite corporate power and authority to own its properties and to
carry on its business as now conducted. SBS has delivered to Infinity true and
complete copies of the certificate of incorporation and bylaws of SBS and the
limited liability company agreement of Merger Sub, in each case as amended
through the date of this Agreement.
2.2. AUTHORIZATION AND BINDING OBLIGATION. Each of SBS and Merger Sub has
all necessary power and authority to enter into and perform its obligations
under this Agreement and to complete the transactions contemplated hereby. Each
of SBS's and Merger Sub's execution, delivery and performance of this Agreement
has been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by SBS and Merger Sub and
constitutes their respective valid and binding obligation, enforceable in
accordance with its terms, except as limited by laws affecting creditors' rights
or equitable principles generally.
2.3. SBS SERIES C PREFERRED STOCK AND WARRANT TO BE ISSUED IN THIS
TRANSACTION. Prior to the Closing, the issuance of SBS Series C Preferred Stock
and the Warrant to Infinity pursuant to this Agreement will have been duly
authorized by all necessary corporate action on the part of SBS.
2.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
(a) Neither the execution and delivery by SBS and Merger Sub of this
Agreement, the consummation by SBS and Merger Sub of the actions contemplated
hereby nor compliance by SBS and Merger Sub with or fulfillment by either of
them of the terms, conditions and provisions hereof will conflict with, or
result in a violation or breach of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Encumbrance
upon any of the properties or assets of SBS or any SBS Subsidiary under, (i) the
certificate of incorporation or bylaws of SBS or the limited liability company
agreement of Merger Sub, (ii) subject to the government filings and other
matters referred to in Article 4, any of the terms, conditions or provisions of
any agreement, including but not limited to any indenture, credit agreement or
other similar agreement providing for the issuance of debt, that is legally
binding on SBS, any SBS Subsidiary or the Merger Sub, or any license held by any
of them, or (iii) subject to
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the governmental filings and other matters referred to in Article 4, any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to SBS or Merger Sub or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such items that, individually or in the
aggregate, would not have an SBS Material Adverse Effect.
(b) Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as may be
required under, and other applicable requirements of, the Exchange Act, the
Securities Act and the HSRA (ii) filings under state securities or "blue sky"
laws, (iii) filings with the NASDAQ, (iv) approvals of and filings with the FCC
under the Communications Act, (v) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and the filing of appropriate
documents with the relevant authorities of other jurisdictions in which the
Merger Sub or the Company is qualified to do business, and (vi) other consents,
approvals, orders, authorizations, registrations, declarations, filings and
applications expressly provided for in this Agreement, no consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to SBS or
Merger Sub in connection with the execution, delivery, performance or
consummation by SBS and Merger Sub of this Agreement (except, in each of the
foregoing cases, where the failure to obtain such consents, approvals, licenses,
permits, orders or authorizations, or to make such registrations, declarations
or filings, would not, individually or in the aggregate, have an SBS Material
Adverse Effect).
2.5. SEC DOCUMENTS.
(a) SBS has delivered or made available to Infinity (i) SBS's annual
report on Form 10-K for its fiscal year ended December 31, 2003, (ii) its
quarterly reports on Form 10-Q for its fiscal quarters ended March 31, 2004 and
June 30, 2004, (iii) its proxy or information statements relating to meetings
of, or actions taken without a meeting by, the stockholders of SBS held since
December 31, 2003, and (iv) all of the other reports, statements, schedules and
registration statements filed by SBS with the SEC since December 31, 2003 (the
documents referred to in this Section 2.5(a), collectively, the "SBS SEC
Documents").
(b) As of its filing date (or, if amended or superceded by a
subsequent filing prior to the date of this Agreement, on the date of such
subsequent filing), each SBS SEC Document filed prior to the date of this
Agreement complied, and each such SBS SEC Document filed subsequent to the date
of this Agreement and prior to the Closing will comply, as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be (including, without limitation, the applicable
accounting requirements of the SEC and the published rules and regulations of
the SEC with respect thereto).
(c) As of its filing date (or, if amended or superceded by a
subsequent filing prior to the date of this Agreement, on the date of such
subsequent filing), each SBS SEC Document (as the information therein may have
been amended, revised, restated or superceded, as the case may be, by a
subsequent filing made prior to the date of this Agreement) filed prior to the
date of this Agreement pursuant to the Exchange Act did not, and each such SBS
SEC Document filed
5
subsequent to the date of this Agreement and prior to the Closing will not,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) At the time each SBS SEC Document filed after July 30, 2002
containing financial statements was filed with the SEC (or, if amended or
superceded by a subsequent filing prior to the date of this Agreement, on the
date of such subsequent filing), such SBS SEC Document included or was
accompanied by the certifications required by the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations promulgated thereunder (the "Xxxxxxxx-Xxxxx Act"),
each such certification complied in all material respects with the
Xxxxxxxx-Xxxxx Act and each such SEC Document otherwise complied in all material
respects with the applicable requirements of the Xxxxxxxx-Xxxxx Act.
2.6 FINANCIAL STATEMENTS.
(a) The financial statements of SBS included in the SBS SEC
Documents (as the information therein may have been amended, revised, restated
or superceded, as the case may be, by a subsequent filing made prior to the date
of this Agreement) at the time filed (and, in the case of proxy statements, on
the dates of effectiveness and the dates of mailing, respectively), were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or in the case
of unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
present, in all material respects, the consolidated financial position of SBS
and its consolidated SBS Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year end adjustments in the case of any unaudited financial
statements).
(b) The management of SBS has: (i) implemented disclosure controls
and procedures designed to provide reasonable assurance that material
information relating to SBS and the SBS Subsidiaries is made known to the
management of SBS by others within those entities; and (ii) disclosed, based on
its most recent evaluation, to SBS's outside auditors and the audit committee of
the Board of Directors of SBS: (A) any significant deficiencies or material
weaknesses in the design or operation of internal control over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are
reasonably likely to adversely affect the ability of SBS to record, process,
summarize and report financial data; and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in SBS's
internal control over financial reporting. A summary of any of those disclosures
made by management to such auditors and such audit committee has been furnished
to Infinity prior to the date of this Agreement. SBS and each of the SBS
Subsidiaries maintain a system of internal accounting controls designed to
provide reasonable assurance that: (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) accounts, notes and other receivables and
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inventory are recorded accurately, and proper and adequate procedures are
implemented to effect the collection thereof on a current and timely basis.
(c) Since June 30, 2002, neither SBS nor any of the SBS Subsidiaries
nor, to the knowledge of SBS, any director or executive officer of SBS or the
SBS Subsidiaries, has received or otherwise had or obtained actual knowledge of
any written complaint, allegation, assertion or claim that SBS believes is
credible regarding the accounting or auditing practices, procedures,
methodologies or methods of SBS or any of the SBS Subsidiaries or their
respective internal accounting controls. No attorney representing SBS or any of
the SBS Subsidiaries, whether or not employed by SBS or any of the SBS
Subsidiaries, has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by SBS or any of its officers,
directors, employees or agents to the Board of Directors of SBS or any committee
thereof or to any director or executive officer of SBS.
(d) To the knowledge of SBS, no employee of SBS or any of the SBS
Subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any law by SBS or any of the SBS
Subsidiaries. Neither SBS nor any of the SBS Subsidiaries has discharged,
demoted, suspended, threatened, harassed or in any other manner discriminated
against an employee of SBS or any of the SBS Subsidiaries in the terms and
conditions of employment because of any act of such employee described in 18
U.S.C. Section 1514A(a).
(e) SBS is in compliance in all material respects with the
provisions of the Xxxxxxxx-Xxxxx Act applicable to it as of the date of this
Agreement.
2.7. NO MATERIAL UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
(a) Neither SBS nor any SBS Subsidiary has any liability or
obligation which would be required by GAAP to be included in the financial
statements of SBS as of the date of this Agreement, and there is no existing
condition, situation or set of circumstances that would reasonably be expected
to result in such a liability or obligation, other than (i) liabilities or
obligations disclosed and provided for in the financial statements or in the
notes thereto contained in SBS's quarterly report on Form 10-Q for the fiscal
quarter that ended June 30, 2004, or (ii) other liabilities or obligations
arising in the ordinary course of business that would not, individually or in
the aggregate, have a Material Adverse Effect on SBS, or as disclosed on
Schedule 2.7.
(b) Except as disclosed in the SBS SEC Documents filed with the SEC
prior to the date of this Agreement since June 30, 2004 through the date hereof,
SBS and each of the SBS Subsidiaries has conducted its business operations in
the ordinary course and there has not been any change, effect, event or
occurrence that, individually or in the aggregate, has had or would reasonably
be expected to have an SBS Material Adverse Effect. Without limiting the
generality of the foregoing, since June 30, 2004 through the date of this
Agreement, there has not occurred:
7
(i) any change or agreement to change the general character or
nature of the business of SBS or any of the SBS Subsidiaries to business
other than the broadcast of Spanish language radio or television
(including Spanish language cable television);
(ii) any purchase, sale, transfer, assignment, conveyance or
pledge of the assets or properties of SBS or any of the SBS Subsidiaries,
except in the ordinary course of business;
(iii) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of SBS
or any of the SBS Subsidiaries (other than dividends paid by SBS in
respect of its Series B Preferred Stock (as defined below) declared or
paid by wholly-owned SBS Subsidiaries) or any other change in authorized
capitalization of SBS or any of the SBS Subsidiaries, except as
contemplated by this Agreement;
(iv) any grant or award of any options, warrants, conversion
rights or other rights to acquire any shares of capital stock of SBS or
any of the SBS Subsidiaries, except (A) as contemplated by this Agreement,
or (B) pursuant to employee benefit plans, programs or arrangements
disclosed in SBS SEC Documents filed with the SEC prior to the date of
this Agreement; or
(vi) any entering into any commitment (contingent or
otherwise) to do any of the foregoing.
2.8. CAPITALIZATION.
(a) The authorized capital stock of SBS consists of 100,000,000
shares of Class A common stock, par value $0.0001 per share (the "SBS Class A
Common Stock"), 50,000,000 shares of Class B common stock, par value $0.0001 per
share (the "SBS Class B Common Stock" and together with the Class A Common
Stock, the "Common Stock"), and 1,000,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"). Of the 1,000,000 shares of authorized
Preferred Stock, 280,000 shares are designated as 10-3/4% Series B cumulative
exchangeable redeemable preferred stock, par value $0.01 per share (the "Series
B Preferred Stock").
(b) As of the date of this Agreement, 39,656,755 shares of SBS Class
A Common Stock, 25,105,150 shares of SBS Class B Common Stock and 80,880.220
shares of Series B Preferred Stock are issued and outstanding. In addition to
shares that may be reserved for issuance in connection with the transactions
contemplated by this Agreement, there are 5,553,652 shares of SBS Class A Common
Stock reserved for issuance in connection with options or warrants that have
been granted but not yet been exercised, and 592,648 shares of SBS Class A
Common Stock have been reserved for options that have not yet been granted. All
of the issued and outstanding shares of stock of SBS have been duly and validly
authorized and are fully paid and non-assessable and not subject to any
preemptive right, right of first refusal or similar rights granted by SBS. All
of the issued and
8
outstanding shares of stock of SBS have been offered, issued and sold by SBS in
material compliance with applicable Federal and state securities laws.
(c) Except as set forth in Schedule 2.8(c) hereto or as provided in
this Agreement, (i) no subscription, warrant, option, convertible security or
other right (contingent or otherwise) issued by SBS or any SBS Subsidiary to
purchase or acquire any shares of capital stock of SBS or any SBS Subsidiary is
authorized or outstanding, (ii) there is no commitment of SBS or any SBS
Subsidiary to issue any subscription, warrant, option, convertible security or
other such right or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of SBS or any SBS
Subsidiary, (iii) neither SBS nor any SBS Subsidiary has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof, and (iv) there are no binding agreements
between SBS or any SBS Subsidiary and any holder of its capital stock relating
to the acquisition, disposition or voting of the capital stock of SBS or any SBS
Subsidiary. Except as provided in the Stockholder Agreement, no person or entity
is entitled to any preemptive right, right of first refusal or similar rights
granted by SBS with respect to the issuance of any capital stock of SBS.
(d) SBS is not a party to any voting trusts or agreements,
stockholders agreement, pledge agreements, buy-sell agreements, agreements
containing rights of first refusal or preemptive rights, and there are no
proxies, in each case, relating to the equity securities of SBS, except as
disclosed in the SBS SEC Documents or as provided in the Stockholder Agreement.
Except as set forth on Schedule 2.8(d) and as provided in the Registration
Rights Agreement to be delivered pursuant to this Agreement, no person or entity
has been granted rights by SBS with respect to the registration of any capital
stock of SBS under the Securities Act.
(e) The Certificate of Designation for the SBS Series C Preferred
Stock is attached hereto as Exhibit B (the "Certificate of Designation"). Prior
to the Closing, the Certificate of Designation will have been duly filed with
the Secretary of State of the State of Delaware. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
SBS Series C Preferred Stock will be as set forth in the Certificate of
Designation, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
in accordance with their terms and in accordance with applicable law. When
issued and delivered to Infinity pursuant to this Agreement, the SBS Series C
Preferred Stock and the Warrant issued pursuant to this Agreement shall be duly
authorized, validly issued, fully paid, non-assessable and not subject to any
preemptive right, right of first refusal or similar purchase right and will be
free and clear of all Encumbrances imposed by or through SBS, except for
restrictions imposed by Federal or state securities or "blue sky" laws. Prior to
the Closing, a sufficient number of authorized, but unissued shares of Class A
Common Stock and SBS Series C Preferred Stock will have been reserved for
issuance upon conversion of the SBS Series C Preferred Stock and exercise of the
Warrant, as the case may be.
(f) The consummation of the transactions contemplated by this
Agreement will not trigger the anti-dilution provisions or other price
adjustment mechanisms of any outstanding
9
subscriptions, options, warrants, calls, contracts, preemptive rights, demands,
commitments, conversion rights or other agreements or arrangements of any
character or nature whatsoever under which SBS is or may be obligated to issue
or acquire its stock.
(g) Except as set forth in Schedule 2.8(g) hereto, SBS owns directly
or indirectly, of record and beneficially, free and clear of all Encumbrances,
all of the issued and outstanding capital stock of all of the SBS Subsidiaries.
2.9. COMPLIANCE. Neither SBS nor the SBS Subsidiaries is in conflict with,
or in default or violation of, (a) any law applicable to SBS or any of the SBS
Subsidiaries or by which any property or asset of SBS or any of the SBS
Subsidiaries is bound or affected or (b) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which SBS or any of the SBS Subsidiaries is a party or by which
the SBS or any of the SBS Subsidiaries is bound or affected, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, reasonably be expected to have a SBS Material Adverse Effect.
2.10. GOVERNMENTAL AUTHORIZATIONS. SBS and each of the SBS Subsidiaries
has all permits, licenses, orders, franchises and other rights and privileges of
all federal, state, local or foreign governmental or regulatory bodies, required
for SBS and such SBS Subsidiaries to conduct their respective businesses as
presently conducted other than permits, licenses, orders, franchises and other
rights and privileges which if not held by SBS or such SBS Subsidiary would not,
individually or in the aggregate, have an SBS Material Adverse Effect. All such
permits, licenses, orders, franchises and other rights and privileges are in
full force and effect and, to the knowledge of SBS, no suspension, cancellation
or adverse modification of any of them is threatened, and none of such permits,
licenses, orders, franchises or other rights and privileges will be affected in
any material respect by the consummation of the transactions contemplated in
this Agreement. Without limiting the generality of the foregoing, SBS and the
SBS Subsidiaries hold all FCC licenses, permits and other authorizations
required for SBS and such SBS Subsidiaries to conduct their respective
businesses as presently conducted (the "SBS FCC Licenses"). Except as set forth
on Schedule 2.10, each of the SBS FCC Licenses is valid and in full force and
effect. SBS and the SBS Subsidiaries have operated their respective businesses
in all material respects in accordance with such SBS FCC Licenses and in
compliance with the Communications Act and the rules and regulations of the FCC.
Except as set forth on Schedule 2.10, neither SBS nor any of the SBS
Subsidiaries has received any notice of cancellation, of default or of any
dispute concerning any SBS FCC License.
2.11. CONTRACTS AND COMMITMENTS. All of the material contracts of SBS or
any of the SBS Subsidiaries that are required to be described in the SBS SEC
Documents, or to be filed as exhibits thereto, prior to the date hereof are
described in the SBS SEC Documents filed prior to the date hereof or filed as
exhibits thereto and are in full force and effect. True and complete copies of
all such material contracts have been made available to Infinity. All material
contracts to which SBS or any of the SBS Subsidiaries are parties on or prior to
the date hereof which will be required to be described or filed as an exhibit in
the SBS SEC Documents required to be filed following the date hereof have been
provided to Infinity and are in full force and effect. Except as set forth on
Schedule
10
2.11, neither SBS nor any of the SBS Subsidiaries nor, to the knowledge of SBS,
any other party is in material breach of or in material default under any such
contract.
2.12. TRANSACTIONS WITH RELATED PARTIES. Except disclosed in the SBS SEC
Documents, there are no loans, leases or other agreements, understandings or
continuing transactions between SBS or any of the SBS Subsidiaries on the one
hand, and any officer or director of SBS or any of the SBS Subsidiaries or any
person owning five percent (5%) or more of the Common Stock or any respective
family member or affiliate of such officer, director or shareholder on the other
hand that are required by federal securities laws to be disclosed in the SBS SEC
Documents.
2.13. FCC QUALIFICATIONS. SBS and Merger Sub are legally and financially
qualified under existing law, including the Communications Act and the existing
rules and regulations of the FCC to control the Station. Neither SBS nor Merger
Sub has knowingly taken any action which would reasonably be expected to cause
the FCC or any other Governmental Entity to institute proceedings against SBS or
Merger Sub with respect to their respective legal qualifications to acquire the
Company Stock or knowingly taken any other action which would reasonably be
expected to result in SBS or Merger Sub being in noncompliance in any material
respect with the ownership requirements of the Communications Act (or of any
other Governmental Entity having jurisdiction) or knowingly taken any action
which would impair SBS's or Merger Sub's qualification to be the transferee of
the FCC Licenses. Immediately following the Merger and assuming exercise of the
warrant by Infinity, Xxxx Xxxxxxx, Xx. will hold or have the right to vote
shares of the capital stock and other securities of SBS having more than 50
percent of the Total Voting Power of all outstanding shares and other securities
of SBS. Immediately following the Merger and assuming exercise of the Warrant by
Infinity, Infinity will hold or have the right to vote shares of the capital
stock and other securities of SBS having less than 5 percent of the Total Voting
Power of all outstanding shares and other securities of SBS. "Total Voting
Power" means the total number of votes that may be cast in the election of
directors of SBS if all securities entitled to vote in such election are present
and voted.
2.14. TAXES. Except as would not have a SBS Material Adverse Effect, (a)
each of SBS and the SBS Subsidiaries has timely filed all federal, state, local
and foreign tax returns and reports (including extensions) required to be filed
by it and has paid and discharged all Taxes shown as due thereon and has paid
all of such other Taxes as are due, other than such payments as are being
contested in good faith by appropriate proceedings, (b) neither the IRS nor any
other taxing authority or agency, domestic or foreign, is now asserting or, to
the knowledge of SBS after due inquiry, threatening to assert against SBS or any
of the SBS Subsidiaries any deficiency or claim for Taxes, (c) the accruals and
reserves for Taxes reflected in the SBS balance sheet included in its Annual
Report on Form 10-K for fiscal year 2003 and the most recent quarterly financial
statements are adequate to cover all Taxes accruable through the date thereof in
accordance with United States generally accepted accounting principles, (d) SBS
and the SBS Subsidiaries has withheld or collected and paid over to the
appropriate governmental authorities or is properly holding for such payment all
Taxes required by law to be withheld or collected, (e) there are no liens for
Taxes upon the assets of SBS or the SBS Subsidiaries, other than liens for Taxes
that are being contested in good faith by appropriate proceedings, (f) SBS has
not constituted a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock
11
qualifying for tax-free treatment under Section 355 of the Code in the two years
prior to the date of this Agreement, and (g) all Tax Returns filed by or on
behalf of SBS with respect to all taxable periods ending on or before the
Closing Date are true, correct and complete.
2.15. NO FINDER. Neither SBS, Merger Sub, nor any party acting on its or
their behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
2.16. SECTION 203 OF THE DGCL. The restrictions on "business combinations"
(as defined in Section 203 of the DGCL) are inapplicable to the Merger, this
Agreement, the Warrant, the Stockholder Agreement and the transactions
contemplated hereby and thereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INFINITY
Infinity represents and warrants to SBS and Merger Sub as follows:
3.1. ORGANIZATION, QUALIFICATION AND STANDING. Each of Infinity and the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Infinity and the Company is
duly qualified to do business as a foreign entity and in good standing under the
laws of each state or other jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification, except where the failure to be so qualified
could not reasonably be expected to (a) have a Material Adverse Effect on
Infinity, or (b) have a Material Adverse Effect on the Surviving Company, or (c)
impair the ability of Infinity or the Company to consummate the transactions
contemplated by, or to satisfy their obligations under, this Agreement, or (d)
delay in any material respect or prevent the consummation of any of the
transactions contemplated by this Agreement (an "Infinity Material Adverse
Effect"). Each of Infinity and the Company has the requisite corporate power and
authority to own its properties and to carry on its business as now conducted.
Infinity has delivered to SBS true and complete copies of the certificate of
incorporation and bylaws the Company, as amended through the date of this
Agreement.
3.2. AUTHORIZATION AND BINDING OBLIGATION. Each of Infinity and the
Company has all necessary power and authority to enter into and perform its
obligations under this Agreement and to complete the transactions contemplated
hereby. Each of Infinity's and the Company's execution, delivery and performance
of this Agreement has been duly and validly authorized by all necessary action
on its part. This Agreement has been duly executed and delivered by Infinity and
the Company and constitutes their respective valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
3.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
(a) Neither the execution and delivery by Infinity of this
Agreement, the consummation by Infinity of the actions contemplated hereby nor
compliance with or fulfillment by
12
Infinity of the terms, conditions and provisions hereof will conflict with, or
result in a violation or breach of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Encumbrance
upon any of the properties or assets of Infinity under, (i) the certificate of
incorporation or bylaws of Infinity, (ii) subject to the government filings and
other matters referred to in Article 4, any of the terms, conditions or
provisions of any agreement, including but not limited to any indenture, credit
agreement or other similar agreement providing for the issuance of the debt,
that is legally binding on Infinity, or any license held by Infinity, or (iii)
subject to the governmental filings and other matters referred to in Article 4,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Infinity or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such items that, individually or in the
aggregate, would not have an Infinity Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this
Agreement, the consummation by the Company of the actions contemplated hereby
nor compliance with or fulfillment by the Company of the terms, conditions and
provisions hereof will conflict with, or result in a violation or breach of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation or acceleration of any
obligation or loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person under, or result
in the creation of any Encumbrance upon any of the properties or assets of the
Company under, (i) the certificate of incorporation or bylaws of the Company,
(ii) subject to the government filings and other matters referred to in Article
4, any of the terms, conditions or provisions of any material agreement,
including but not limited to any indenture, credit agreement or other similar
agreement providing for the issuance of the debt, that is legally binding on the
Company, or any material license held the Company, or (iii) subject to the
governmental filings and other matters referred to in Article 4, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or their respective properties or assets.
(c) Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as may be
required under, and other applicable requirements of the HSRA, (ii) approvals of
and filings with the FCC under the Communications Act, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
the filing of appropriate documents with the relevant authorities of other
jurisdictions in which the Company is qualified to do business, and (iv) other
consents, approvals, orders, authorizations, registrations, declarations,
filings and applications expressly provided for in this Agreement, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by Infinity in
connection with the execution, delivery, performance or consummation by Infinity
of this Agreement (except where the failure to obtain such consents, approvals,
licenses, permits, orders or authorizations, or to make such registrations,
declarations or filings, would not, individually or in the aggregate, have a
Infinity Material Adverse Effect).
13
(d) Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as may be
required under, and other applicable requirements of the HSRA, (ii) approvals of
and filings with the FCC under the Communications Act, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
the filing of appropriate documents with the relevant authorities of other
jurisdictions in which the Company is qualified to do business, and (iv) other
consents, approvals, orders, authorizations, registrations, declarations,
filings and applications expressly provided for in this Agreement, no material
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by the Company
in connection with the execution, delivery, performance or consummation by the
Company of this Agreement.
3.4. CAPITALIZATION; OWNERSHIP.
(a) The authorized capital stock of the Company consists of 1,000
shares of common stock, par value $0.01 per share, 1,000 shares of which are
issued and outstanding. All of the Company Stock is owned beneficially and of
record by Infinity, free and clear of all Encumbrances, and the Company Stock
has been duly authorized, was validly issued, and is fully paid, non-assessable
and not subject to any preemptive right, right of first refusal or similar
purchase right. There are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Infinity or the Company is a party or by which any of them is bound
obligating Infinity or the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
securities of the Company or obligating Infinity or the Company to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of Infinity or the Company to repurchase, redeem or
otherwise acquire any interest in the Company. There are no outstanding
contractual obligations of Infinity to vote or to dispose of any of its interest
in the Company.
(b) Except as disclosed in Schedule 3.4, the Company owns no
subsidiaries or equity or debt interests in any entity.
3.5. ABSENCE OF LIABILITIES. The Company has no material liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities or obligations (a) under the Assumed Contracts and the
FCC Licenses, or (b) which will be assumed by Infinity pursuant to Section 5.3
hereof prior to the Effective Time, or (c) which will be incurred pursuant to
the LMA.
3.6 ABSENCE OF MATERIAL ADVERSE EFFECT. Between January 1, 2004 and the
date of this Agreement, there has not been any change, effect, event or
occurrence that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect on the Company.
14
3.7. TAXES. (a) Except as would not have an Infinity Material Adverse
Effect, (i) the Company has timely filed (or been included in) all federal,
state, local and foreign tax returns and reports (including extensions) required
to be filed by the Company or on behalf of the Company, and the Company has paid
and discharged (either directly or indirectly) all Taxes shown as due thereon
and has paid (directly or indirectly) all of such other Taxes as are due, other
than payments being contested in good faith by appropriate proceedings; (ii)
neither the IRS nor any other taxing authority or agency, domestic or foreign,
is now asserting or, to the best knowledge of Infinity, threatening to assert
against the Infinity or any of its subsidiaries any deficiency or claim for a
material amount of Taxes; (iii) the accruals and reserves for Taxes reflected in
the Balance Sheet are adequate to cover all Taxes accruable through the date
thereof in accordance with United States generally accepted accounting
principles; (iv) the Company has withheld or collected and paid over to the
appropriate governmental authorities or is properly holding for such payment all
Taxes required by law to be withheld or collected; (v) there are no liens for
Taxes upon the assets of the Company, other than liens for Taxes that are being
contested in good faith by appropriate proceedings and for which the Company has
established adequate reserves; (vi) the Company has not constituted a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code in the two years prior to the
date of this Agreement; and (vii) all Tax Returns filed by or on behalf of the
Company with respect to all taxable periods ending on or before the Closing Date
are true, correct and complete.
(b) No election under Section 338 has been made by or with respect
to the Company or any of its assets or properties within the last three years.
(c) The Company owns no subsidiaries. The Company has an interest in
a partnership as disclosed in Schedule 3.4.
3.8. GOVERNMENTAL AUTHORIZATIONS AND FCC LICENSES. The Company has all
material permits, licenses, orders, franchises and other rights and privileges
of all federal, state, local or foreign governmental or regulatory bodies,
required for the Company to perform its obligations under the LMA. All such
permits, licenses, orders, franchises and other rights and privileges are in
full force and effect and, to the knowledge of Infinity and the Company, no
suspension, cancellation or adverse modification of any of them is threatened,
and subject to the requirement to obtain the FCC Consent, and compliance with
the HRSA, none of such permits, licenses, orders, franchises or other rights and
privileges will be affected in any material respect by the consummation of the
transactions contemplated in this Agreement. Without limiting the generality of
the foregoing, the Company holds the FCC licenses, permits and other
authorizations set forth on Schedule 3.8 (the "FCC Licenses"). Except as set
forth on Schedule 3.8, each of such FCC Licenses is valid and in full force and
effect. The Company has operated the Station in all material respects in
accordance with such FCC Licenses and in compliance with the Communications Act.
Except as set forth on Schedule 3.8, no application, action or proceeding is
pending for the renewal or modification of any of such FCC License and no notice
of cancellation, of default or of any dispute concerning any such FCC License
has been received by the Company. Neither Infinity nor the Company has knowingly
taken any action which would reasonably be expected to cause the FCC or any
other Governmental
15
Entity to institute proceedings against the Surviving Company or SBS with
respect to their respective legal qualifications to acquire the Station or
consummate the transactions contemplated hereby or knowingly taken any other
action which would reasonably be expected to result in SBS or Surviving Company
being in noncompliance in any material respect with the ownership requirements
of the Communications Act (or of any other Governmental Entity having
jurisdiction) or knowingly taken any action which would impair SBS's or Merger
Sub's qualification to be the transferee of the FCC Licenses.
3.9. LITIGATION. Except as set forth on Schedule 3.9, as of the date
hereof there is no litigation, action, suit, investigation or other proceeding
(each a "Proceeding") pending or, to the knowledge of Infinity or the Company,
threatened against Infinity, Parent or the Company (a "Threatened Proceeding")
in relation to the Station, except for Proceedings or Threatened Proceedings
affecting the radio broadcast industry generally. Except as set forth on
Schedule 3.9, as of the date hereof, there is no pending Proceeding or
Threatened Proceeding which would, if adversely decided, impair the ability of
Infinity or the Company to perform their respective obligations in accordance
with the terms of this Agreement. Except as set forth on Schedule 3.9, there is
no Pending or Threatened Proceeding against the Company which may result in
damages or a monetary forfeiture in excess of $100,000, or in any Material
Adverse Effect on the Company, or in any impairment of the right or ability of
the Company to carry on its business as now conducted, except for Proceedings or
Threatened Proceedings affecting the radio broadcast industry generally.
3.10. REAL PROPERTY. The Company owns no real property. All of the
Company's real property leases or licenses are set forth on Schedule 3.10. True,
correct and complete copies of all such leases and licenses have been provided
to SBS, except as disclosed on Schedule 3.12(b), which disclosure shall contain
a summary of all material terms governing such leases and licenses. The Company
and Infinity are in compliance in all material respects with the real estate
leases and licenses used in the business of the Company.
3.11. TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. The Company
owns and has good and marketable title to the tangible personal property
identified on Schedule 3.11(a) and affiliates of the Company currently own and
have good and marketable title to the tangible personal property identified on
Schedule 3.11(b) (together with the tangible personal property listed on
Schedule 3.11(a) the "Personal Property"), free and clear of any Encumbrance
other than Permitted Encumbrances. The tangible personal property identified on
Schedule 3.11(b) will be transferred to the Company prior to Closing. As of the
date of this Agreement, the Personal Property is in good operating condition and
repair (ordinary wear and tear excepted) and is available for immediate use in
the conduct of the business and operation of the Station. None of the Personal
Property is in need of maintenance or repairs except in the ordinary course of
business.
16
3.12. CONTRACTS.
(a) Schedule 3.12(a) contains a list of all contracts, agreements,
leases and legally binding contractual rights to which the Company is a party or
by which it is bound, written or oral (collectively, "Contracts") as of the date
of this Agreement, except for Contracts to be assigned to and assumed by
Infinity pursuant to Section 5.3 prior to the Effective Time.
(b) Except as noted on Schedule 3.12(b), the Company has furnished
SBS with true, correct and complete copies of all written Contracts listed on
Schedule 3.12(a) (the "Assumed Contracts"), including all amendments or
modifications thereto, and a memorandum summarizing the material terms of any
oral Assumed Contract. To the extent that complete copies of Assumed Contracts
have not been delivered, Infinity will use reasonable efforts to obtain and
deliver a complete copy before the Merger, and the missing copies do not contain
any terms, conditions or other provisions that will have a Material Adverse
Effect on the Surviving Company.
(c) To the Company's knowledge, all Assumed Contracts are valid,
binding and enforceable by the Company in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. The Company is not in default under any of the Assumed
Contracts nor is any party thereto claiming that the Company is in default under
any of the Assumed Contracts, except where such default would not have or would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Surviving Company. To the Company's knowledge, no other
contracting party is in default under any of the Assumed Contracts. Except as
set forth in Schedule 3.12(c), the Merger will not require the consent of any
third party or affect the terms, validity, enforceability and continuity of any
of the Assumed Contracts, except where the failure to obtain such third party
consent would not have or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Surviving Company.
3.13. EMPLOYEES.
(a) The Assumed Contracts do not include any employment agreement.
The Company has no obligation to make payments to any employee except for
obligations that will be assumed by Infinity pursuant to Section 5.3 prior to
the Effective Time.
(b) The Company is not a party to any contract or agreement with any
labor organization, nor has the Company agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of the Company's employees.
(c) Except as will be assumed by Infinity pursuant to Section 5.3
prior to the Effective Time, the Company is not a party to or bound by any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
such plan is otherwise exempt from the provisions of ERISA, with respect
17
to any past or present employee of the Company and no such employee or spouse of
such employee is entitled to any benefits that would be payable pursuant to any
such plan. Except as will be assumed by Infinity pursuant to Section 5.3 prior
to the Effective Time, the Company has no fixed or contingent benefit-related
liability or obligation to any person now or formerly employed by the Company,
including, without limitation, pension or thrift plans, individual or
supplemental pension or accrued compensation arrangements, contributions to
hospitalization or other health or life insurance programs, incentive plans,
bonus arrangements, sick leave, disability and termination arrangements or
policies, including workers' compensation policies.
3.14. COMPLIANCE WITH LAWS. The Company has at all times since its
inception operated and is operating in material compliance with all laws,
regulations and governmental orders applicable to its business and operations.
The Company has not received any unresolved notice asserting any material
noncompliance with any applicable statute, rule or regulation, in connection
with its business or operations.
3.15. PURCHASE FOR OWN ACCOUNT. The shares of SBS Series C Preferred Stock
and the Warrant to be acquired by Infinity pursuant to the Merger (the "Merger
Stock") will be acquired for investment for Infinity's own account, not as a
nominee or agent, and not with a view to the resale or public distribution of
any part thereof in violation of any requirements of the Securities Act or
applicable state securities laws.
3.16. RESTRICTED SECURITIES. Infinity understands and acknowledges that
the Merger Stock has not been registered under the Securities Act, and that such
securities are "restricted securities" under applicable U.S. federal and state
securities laws and that, pursuant to these laws, Infinity must hold the Merger
Stock until its resale is registered with the SEC and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available.
3.17. LEGEND. Infinity understands and acknowledges that the certificate
or certificates evidencing the shares of SBS Series C Preferred Stock will bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NO SALE OR
DISTRIBUTION OF SUCH SECURITIES MAY BE EFFECTED WITHOUT EITHER AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933.
3.18. ACCREDITED INVESTOR. Infinity is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.19. NO FINDER. Neither Infinity, the Company, nor any party acting on
its or their behalf has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
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3.20. BOOKS AND RECORDS. The minute books and stock record books of the
Company, all of which have been made available to SBS, are complete and correct.
The minute books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of the Company, and no
meeting of any such stockholders, Board of Directors, or committee has been held
for which minutes have not been prepared and are not contained in such minute
books. At the Closing, all of those books and records will be in the possession
of the Company.
3.21. ENVIRONMENTAL MATTERS. The Company is, and at all times has been, in
material compliance with, and has not been and is not in material violation of
or liable under, any environmental, health or safety legal requirement in effect
as of the date hereof applicable to the Company's ownership and operation of the
Station ("Environmental Law"). With respect to the Company and the Station,
neither Infinity nor the Company has any basis to expect, nor has any of them,
and to the knowledge of Infinity and the Company, any other person or entity for
whose conduct they are or may be held to be responsible, received any actual or
threatened order, notice, or other written communication from (i) any
governmental body or private citizen acting in the public interest, or (ii) the
current or prior owner or operator of any facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
threatened obligation to undertake or bear the cost of any environmental,
health, and safety liabilities with respect to any of the facilities of the
Company or any other properties or assets (whether real, personal, or mixed) in
which the Company has had an interest or in which the Station has operated, or
with respect to any property or facility at or to which hazardous materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Infinity, the Company or any other person or entity for whose conduct they are
or may be held responsible, or from which hazardous materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
ARTICLE 4
FCC AND OTHER GOVERNMENTAL CONSENTS
4.1. FCC APPLICATION. The consummation of the transactions contemplated by
this Agreement is conditioned upon the prior consent of the FCC to the transfer
of control of the FCC Licenses from Infinity to SBS (the "FCC Consent"). No
later than five (5) business days after the date of this Agreement, Infinity and
SBS shall prepare and jointly file an application or applications requesting the
FCC's consent to the transfer of control of the FCC Licenses from Infinity to
SBS or a Subsidiary thereof (the "FCC Application"). Infinity and SBS shall
thereafter prosecute the FCC Application in good faith and with all reasonable
diligence and otherwise use their commercially reasonable efforts to obtain the
grant of the FCC Application as expeditiously as practicable. If reconsideration
or judicial review is sought with respect to the FCC Consent, the party or
parties affected shall vigorously oppose such efforts for reconsideration or
judicial review; provided, however, that nothing herein shall be construed to
limit either party's right to terminate this Agreement pursuant to Section 11.1.
4.2. COMPLIANCE WITH HSRA. Each party shall make or cause to be made in a
timely fashion, and in any event within ten (10) business days following the
date of this Agreement, all
19
filings which are required in connection with the transactions contemplated
hereby under the HSRA, and shall furnish to the other party all information that
the other reasonably requests in connection with such filings. The consummation
of the transactions contemplated by this Agreement is conditioned upon the
expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to such consummation.
4.3. OTHER CONSENTS. Promptly following the execution of this Agreement,
the parties shall prepare and file with the appropriate Governmental Entity or
third parties any other requests for approval or waiver that are required from
such Governmental Entity or third party in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
ARTICLE 5
COVENANTS AND AGREEMENTS
5.1. CONTROL OF STATION. Prior to the Closing, neither SBS nor Merger Sub
shall directly or indirectly control, supervise or direct the operations of the
Station. Such operations shall be the sole responsibility of the Company and,
subject to the provisions of this Article 5, shall be in its complete
discretion.
5.2. OPERATION OF THE STATION AND THE COMPANY. From the date of this
Agreement until the Effective Time, except as expressly permitted by this
Agreement or with the prior written consent of SBS, which consent shall not be
unreasonably withheld:
(a) The Company shall operate the Station in accordance with the
Local Marketing Agreement of even date herewith by and between the Company
and Merger Sub (the "LMA");
(b) The Company shall not sell, assign, lease or otherwise transfer
or dispose of any of its assets, except for assets consumed or disposed of
in the ordinary course of business, where no longer used or useful in the
business or operation of the Station, in which event the same shall be
replaced with assets of equal or greater value and utility;
(c) Neither Infinity nor the Company shall amend, or permit the
amendment of, the certificate of incorporation or bylaws of the Company;
(d) The Company shall operate the Station in accordance with the
FCC's rules and regulations and the FCC Licenses (except to the extent the
FCC has waived temporarily any such requirement), and shall not cause or
permit by any act, or failure to act, any of the FCC Licenses to expire,
be surrendered, adversely modified, or otherwise terminated;
(e) The Company shall not waive any material right under any Assumed
Contract;
20
(f) The Company shall not amend or renew any Assumed Contract,
except as consistent with the LMA;
(g) The Company shall timely make all payments required to be paid
under any Contract when due and otherwise pay all liabilities and satisfy
all obligations when such liabilities and obligations become due;
(h) The Company shall conduct its operations in material compliance
with law;
(i) The Company shall maintain its books and records in accordance
with its past practices;
(j) The Company shall not create, incur, guarantee or assume any
indebtedness for borrowed money or enter into any capitalized leases;
(k) The Company shall not acquire any business, invest in any
corporation, partnership, association or other business organization or
otherwise make an investment, by acquisition or otherwise, in any material
assets;
(l) Subject to the terms and conditions of the LMA, the Company
shall conduct the business of the Company in the ordinary course; and
(m) Except pursuant to the LMA, the Company shall not enter into any
agreement or contract which shall require the Company to perform any
obligations or assume or maintain any liabilities after the Closing.
5.3. PERMITTED DISTRIBUTIONS; REQUIRED ASSUMPTIONS. Notwithstanding
anything to the contrary in this Agreement, between the date hereof and the
Effective Time, the Company may distribute to Infinity all of the Company's cash
and cash equivalents (including any marketable securities or certificates of
deposit), all accounts receivable (including intercompany receivables), all
other current assets, and all assets not identified on Schedules 3.8, 3.11 or
3.12. Prior to the Effective Time, the Company shall assign all Contracts not
listed on Schedule 3.12 to Infinity and Infinity shall assume all obligations
and liabilities of the Company under such Contracts and all intercompany
payables of the Company, and the Surviving Company shall be released from any
liability therefor.
5.4. ACCESS TO THE COMPANY'S PROPERTIES. Between the date of this
Agreement and the Closing Date, Infinity and the Company shall give SBS and its
representatives reasonable access to the Company's properties, records and
employees and shall furnish SBS with all information that SBS reasonably
requests. SBS's rights under this Section shall not be exercised in any manner
that would interfere unreasonably with the business of the Station.
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5.5. SBS COVENANTS. From the date of this Agreement until the Closing
Date, except as expressly permitted by this Agreement, or as required by law, or
with the prior written consent of Infinity, SBS shall not, and shall not permit
any of the SBS Subsidiaries to:
(a) adopt or propose any change to its certificate of incorporation
or bylaws or other constituent documents;
(b) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization (other than a merger or consolidation
between wholly owned SBS Subsidiaries); merge or consolidate with any
other company; or acquire a material amount of stock or assets of any
other company or person;
(c) issue or agree to issue any stock or other equity securities or
any warrant, option, convertible security or other right (contingent or
otherwise) to acquire stock or equity securities, except pursuant to
plans, instruments or agreements disclosed on Schedule 2.8(c);
(d) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any material portion of its shares of
capital stock or other equity securities held by an Related Party;
(e) split, combine, subdivide or reclassify any shares of its
capital stock or other equity securities;
(f) take any affirmative action that would require the consent of
the holders of a majority of the SBS Series C Preferred Stock pursuant to
the Certificate of Designation;
(g) take any action, or fail to take any action, in violation of the
Stockholder Agreement;
(h) declare or pay any dividends, or make any other distributions in
respect of the outstanding shares of capital stock of SBS or any of the
SBS Subsidiaries (other than dividends paid by SBS in respect of its
Series B Preferred Stock declared or paid by wholly-owned SBS
Subsidiaries);
(i) take any affirmative action that would cause Infinity or Viacom
Inc. to acquire an "attributable interest" in SBS or any broadcast
stations controlled by SBS as a result of the Merger, the conversion of
the SBS Series C Preferred Stock to Class A Common Stock or the exercise
of the Warrant under the rules or policies of the FCC; or
(j) agree or commit to do any of the foregoing.
5.6. CONFIDENTIALITY. Each party shall keep confidential, and cause its
agents, attorneys, employees and representatives to keep confidential, all
Evaluation Material as defined by and in
22
accordance with the Confidentiality Agreement dated July 26, 2004, by and
between SBS and Viacom, Inc., which is hereby incorporated by reference.
5.7. PUBLIC ANNOUNCEMENT. None of the parties hereto shall, without the
approval of the other, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law or by the rules,
regulations or policies of any national securities exchange or association or
Governmental Entity, in which case the other parties shall be advised and the
parties shall use their commercially reasonable efforts to cause a mutually
agreeable release or announcement to be issued; provided, however, that the
parties hereby acknowledge and agree that communications among employees of the
parties hereto and their attorneys, representatives and agents necessary to
consummate the transactions contemplated hereby shall not be deemed a public
announcement for purposes of this Section. In furtherance of the foregoing, upon
the execution and delivery of this Agreement, the parties hereto will cooperate
in respect of the immediate issuance of a mutually acceptable press release
relating to the transactions contemplated by this Agreement.
5.8. ADVICE OF CHANGES. From the date hereof until the Effective Time,
each party shall promptly advise the other parties orally and in writing of (a)
any representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (b) the failure by any party or one of its
affiliates to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (c) any change, effect, event or occurrence that has resulted, or
which can reasonably be expected to result, in any of the conditions set forth
in Sections 6 or 7 not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.9. EMPLOYMENT MATTERS. At Closing and as of the Effective Time, the
Company will terminate any employee remaining on the Company's payroll. Infinity
or an affiliate of Infinity shall have the right to employ such persons in other
capacities.
5.10. REGISTRATION RIGHTS AGREEMENT. At the Closing, SBS and Infinity
shall enter into the Registration Rights Agreement in the form of Exhibit C
hereto (the "Registration Rights Agreement").
5.11. REORGANIZATION TREATMENT.
(a) Each of SBS, Merger Sub, Infinity and the Company, as
applicable, represents, warrants and covenants as follows: (i) each of SBS,
Merger Sub, Infinity and the Company intends that the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and Treasury
Regulation Section 1.368-2T(b)(1)(ii) and each party will take the position for
all Tax purposes that the Merger so qualifies unless a contrary position is
required by a "determination" within the meaning of Section 1313(a) of the Code
(or by a comparable state, local or foreign provision), (ii) none of SBS, Merger
Sub, Infinity or the Company has taken or agreed to take any
23
action that would prevent the Merger from constituting a transaction qualifying
as a "reorganization" within the meaning of Section 368(a) of the Code and
Treasury Regulation Section 1.368-2T(b)(1)(ii), (iii) none of SBS, Merger Sub,
Infinity or the Company is aware of any agreement, plan or other circumstance
that would prevent the Merger from so qualifying as a "reorganization," and (iv)
SBS, Merger Sub, Infinity and the Company shall each use its respective
commercially reasonable efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and Treasury
Regulation Section 1 .368-2T(b)(1)(ii), and shall not take actions, cause
actions to be taken, or fail to take actions that are reasonably likely to
prevent the Merger from so qualifying as a "reorganization."
(b) Each of SBS and Merger Sub represents, warrants and covenants as
follows: (i) at all times Merger Sub has been and is currently disregarded as an
entity separate from SBS for federal income tax purposes, (ii) Merger Sub has
not made and will not make an election under Treasury Regulation Section
301.7701-3 or take any other action to be treated as an association taxable as a
corporation or a partnership for U.S. federal income tax purposes, and (iii)
following the Merger, SBS will or will cause Merger Sub (or a corporation
controlled by SBS within the meaning of Section 368(a)(2)(C) of the Code) to
continue the business or to use a significant portion of the Company's business
assets in a business.
5.12. USE OF INFINITY, KBAA, KBAY AND OTHER TRADEMARKS. Immediately
following the Effective Time, SBS shall cause the Surviving Company to: (a)
cease and desist from all further use of the name "Infinity," "KBAA," "KBAY,"
MUSIC THAT MOVES THE WORLD, CONTINUOUS SOFT ROCK, SOFT ROCK HITS, SOFT ROCK HITS
OF YESTERDAY AND TODAY, THE 15 IN A ROW WHILE YOU WORK STATION or any trade
names, trademarks, identifying logos or service marks related thereto (including
"Infinity Broadcasting"), or any part or variation of any of the foregoing or
any confusingly similar trade names, trademarks or logos (collectively,
"Infinity's Trademarks and Logos"); and (b) to adopt new trade names,
trademarks, identifying logos and service marks related thereto which are not
confusingly similar to Infinity's Trademarks and Logos. SBS acknowledges and
agrees that Infinity's Trademarks and Logos are the property of the Company,
Infinity or their affiliates. Between the date hereof and the Effective Time,
the Company shall transfer any rights it holds in Infinity's Trademarks and
Logos to Infinity or its affiliates pursuant to Section 5.3 hereof and none of
Infinity's Trademarks and Logos will be owned by the Surviving Company.
5.13. TAX MATTERS.
(a) The Company or an affiliate of Infinity shall file on a timely
basis all Tax Returns with respect to the Company (or that include the Company
on a consolidated or combined basis) for taxable periods ending on or before the
Closing Date. All such Tax Returns will be true, complete and correct in all
material respects. Infinity or an affiliate of Infinity will pay all Taxes due
with respect to such Tax Returns or otherwise.
(b) Following the date hereof, the Company shall (i) give SBS and
its authorized representatives, full access to its books and records (and permit
SBS to make copies thereof) to the extent relating to the Company, as SBS may
reasonably request, (ii) permit SBS to make inspections
24
thereof, and (iii) cause the Company's officers and advisors (including, without
limitation, its auditors, attorneys, financial advisors and other consultants,
agents and advisors) to furnish SBS with such financial, tax and other operating
data and other information with respect to the business and properties of the
Company's for periods ending before or including the Closing Date as SBS may
reasonably request.
(c) Each of SBS, the Company and Infinity and their affiliates will
provide the other parties with such assistance as may reasonably be requested by
any of them in connection with the preparation of any Tax Return, any audit or
other examination by any Taxing Authority, any judicial or administrative
proceedings relating to liability for Taxes, or any other claim arising under
this Agreement, and each will retain and provide the others with any records or
information that may be relevant to any such Tax Return, audit or examination,
proceeding or claim. Such assistance shall include making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder and shall include providing copies of any
relevant Tax Returns and supporting work schedules. The party requesting
assistance hereunder shall reimburse the other parties for reasonable out of
pocket expenses incurred in providing such assistance. Notwithstanding any other
provision of this Section, Infinity hereby agrees that it will retain, until all
appropriate statutes of limitation (including any extensions) expire, copies of
all Tax Returns, supporting work schedules and other records or information
which may be relevant to such Tax Returns.
ARTICLE 6
CONDITIONS PRECEDENT TO SBS
AND MERGER SUB'S OBLIGATION TO CLOSE
The obligations of SBS and Merger Sub hereunder are, at their option,
subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Infinity (considered
collectively) and the Company (considered individually) made in this Agreement
shall be accurate in all material respects (except such representations and
warranties which are qualified by materiality or Material Adverse Effect, which
shall be accurate in all respects) on and as of the Closing Date as if made on
and as of that date, except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of such
earlier date).
(b) All of the terms, covenants and conditions to be complied with
and performed by Infinity and the Company under this Agreement on or prior to
the Closing Date shall have been complied with or performed in all material
respects.
6.2. CORPORATE ACTION. Infinity and the Company shall have taken all
action necessary to approve the transactions contemplated by this Agreement, and
shall have delivered certified copies
25
of the resolutions of the boards of directors of Infinity and the Company and
the written consent of Infinity as the sole stockholder of the Company approving
the transactions contemplated by this Agreement.
6.3. GOVERNMENTAL CONSENTS. The FCC shall have granted the FCC Consent,
and the FCC Consent shall be effective and in full force and effect. The waiting
period under the HSRA shall have terminated or expired.
6.4. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto that would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
ARTICLE 7
CONDITIONS PRECEDENT TO INFINITY AND THE
COMPANY'S OBLIGATION TO CLOSE
The obligations of Infinity and the Company hereunder are, at their
option, subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties made by SBS (considered
collectively) and Merger Sub (considered individually) in this Agreement shall
be true and complete in all material respects (except such representations and
warranties which are qualified by materiality or Material Adverse Effect, which
shall be accurate in all respects) on and as of the Closing Date as if made on
and as of that date, except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of such
earlier date).
(b) All the terms, covenants and conditions to be complied with and
performed by SBS and Merger Sub under this Agreement on or prior to the Closing
Date shall have been complied with or performed in all material respects.
7.2. CORPORATE ACTION. SBS and Merger Sub shall have taken all action
necessary to approve the transactions contemplated by this Agreement, and shall
have delivered certified copies of the resolutions of the board of directors of
SBS and board of managers of Merger Sub and the written consent of SBS as the
sole holder of interests of Merger Sub approving the transactions contemplated
by this Agreement.
7.3. GOVERNMENTAL CONSENTS. The FCC shall have granted the FCC Consent,
and the FCC Consent shall be effective and in full force and effect. The waiting
period under the HSRA shall have terminated or expired.
26
7.4. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto that would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
7.5. NO MATERIAL ADVERSE EFFECT. No change, occurrence or development that
may reasonably be likely to have a Material Adverse Effect on SBS shall have
occurred or become known to Infinity.
7.6. NO CHANGE IN CONTROL. There shall have been no change in control of
SBS, either voluntary or involuntary, as "control" is defined by the FCC, and
Xxxx Xxxxxxx, Xx. shall have delivered a certification to Infinity that he has
not entered into any agreement and is not negotiating any agreement that would
result in such a change of control.
ARTICLE 8
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1. DOCUMENTS TO BE DELIVERED BY INFINITY AND THE COMPANY. At the
Closing, Infinity and the Company shall deliver to SBS and Merger Sub the
following:
(a) a certificate signed by an officer of Infinity and the Company,
dated the Closing Date, in form and substance reasonably satisfactory to
SBS and Merger Sub, certifying to the fulfillment of the conditions set
forth in Section 6.1 hereof;
(b) certified copies of the resolutions of the boards of directors
of Infinity and the Company and of Infinity as the sole stockholder of the
Company approving the transactions contemplated by this Agreement; and
(c) a certificate duly completed and executed by an officer of the
Company, dated the Closing Date, in form and substance reasonably
satisfactory to SBS and Merger Sub, and in accordance with Section
1.1445-2(b)(2) of the Treasury Regulations, certifying that the Company is
not a "foreign person" within the meaning of Section 1445 of the Code.
8.2. DOCUMENTS TO BE DELIVERED BY SBS AND MERGER SUB. At the Closing, SBS
and Merger Sub shall deliver to Infinity and the Company the following:
(a) a certificate signed by an officer of SBS or Merger Sub, dated
the Closing Date, in form and substance reasonably satisfactory to
Infinity and the Company, certifying to the fulfillment of the conditions
specified in Section 7.1;
(b) certified copies of the resolutions of the boards of directors
of SBS and Merger Sub and of SBS as the sole stockholder of Merger Sub
approving the transactions contemplated by this Agreement;
27
(c) one or more certificates registered in the name of Infinity
evidencing 380,000 shares of SBS Series C Preferred Stock; and
(d) the Warrant.
8.3. DOCUMENTS TO BE DELIVERED BY INFINITY AND SBS. At the Closing,
Infinity and SBS shall execute and deliver the Registration Rights Agreement.
ARTICLE 9
TRANSFER TAXES, FEES AND EXPENSES
9.1. TRANSFER TAXES AND SIMILAR CHARGES. Any sales, use, documentary,
stamp or other transfer tax (including any penalties, additions to tax and
interest) imposed on this transaction shall be borne equally by Infinity and
SBS. Infinity and the Surviving Company shall cooperate in preparing and filing
all necessary Tax Returns and other documentation with respect to all such
transfer Taxes.
9.2. GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees
(including FCC and HSRA filing fees) imposed by any governmental authority, the
consent of which is required for the transactions contemplated hereby, shall be
borne equally by Infinity and SBS.
9.3. EXPENSES. Except as otherwise provided in this Agreement, each party
hereto shall be solely responsible for and shall pay all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1. INFINITY'S INDEMNITIES.
(a) Infinity shall indemnify, defend and hold harmless SBS, Merger
Sub, the Surviving Company, their affiliates, employees, successors and assigns,
shareholders, directors, and officers ("SBS Indemnitees"), from and against, and
shall reimburse them for, all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties, court costs and reasonable attorneys'
fees and expenses ("Losses"), asserted against, resulting to, imposed upon or
incurred by any SBS Indemnitee, directly or indirectly, with respect to (i)
Infinity's ownership or the business or operations of the Company prior to the
Effective Time except to the extent such expenses are addressed in the LMA; (ii)
the breach by Infinity or the Company of any agreement or covenant contained in
this Agreement; or (iii) the breach or inaccuracy of any representation or
warranty of Infinity contained in this Agreement.
(b) An SBS Indemnitee shall give Infinity written notice of any
claim or the commencement of any action or proceeding for which SBS Indemnitee
seeks indemnification within
28
thirty (30) days after receipt by the SBS Indemnitee of notice of such claim or
action and the SBS Indemnitee shall permit Infinity to assume the defense of any
such claim or any litigation resulting from such claim with counsel reasonably
satisfactory to the SBS Indemnitee. An SBS Indemnitee's failure to give Infinity
timely notice shall not preclude the SBS Indemnitee from seeking indemnification
from Infinity except to the extent that the SBS Indemnitee's failure has
materially prejudiced Infinity's ability to defend the claim or litigation.
(c) Infinity shall not settle any claim for which a SBS Indemnitee
seeks indemnification or consent to entry of any judgment in litigation arising
from such a claim without obtaining a release of the SBS Indemnitee from all
liability in respect of such claim or litigation. If Infinity shall not assume
the defense of any such claim or litigation resulting therefrom, or if
injunctive relief is sought against a SBS Indemnitee, the SBS Indemnitee may,
but shall have no obligation to, defend against or settle such claim or
litigation in such manner as it may deem appropriate. Infinity shall promptly
reimburse the SBS Indemnitee for the amount of all expenses, legal or otherwise,
incurred by the SBS Indemnitee in connection with the defense against or
settlement of such claim or litigation. If no settlement of the claim or
litigation is made, Infinity shall promptly reimburse the SBS Indemnitee for the
amount of any judgment rendered with respect to such claim or in such litigation
and of all expenses, legal or otherwise, incurred by the SBS Indemnitee in the
defense against such claim or litigation.
(d) Infinity shall pay, indemnify and hold harmless SBS, the
Company, and their successors, from and against all liabilities for Taxes of
Infinity, the Company or any of their respective affiliates attributable to
taxable periods ending on or before the Closing Date, including any Taxes due as
a result of the Merger. For purposes of this Section 10.1(d), the Closing Date
shall be treated as the last day of a taxable period whether or not the taxable
period in fact ends on the Closing Date. The Company and Infinity shall mutually
agree on the amount, if any, of Taxes properly accruable for any taxable period
that does not in fact end on the Closing Date. The Company and Infinity shall
each bear its own costs in determining any amount due under this Section
10.1(d). For purposes of this Section 10.1(d) and the calculation of any
indemnity, interest, penalties or additions to tax accruing after the Closing
Date with respect to a liability for Taxes for which Infinity indemnifies the
Company shall be deemed to be attributable to a taxable period ending on or
before the Closing Date.
10.2. SBS'S INDEMNITIES.
(a) SBS or Merger Sub shall indemnify, defend and hold harmless
Infinity, the Company, their affiliates, employees, successors and assigns,
shareholders, directors and officers (the "Infinity Indemnitees"), from and
against, and shall reimburse them for, all Losses asserted against, resulting
to, imposed upon, or incurred by any Infinity Indemnitee with respect to: (i)
the ownership or operation of the Surviving Company or the Station after the
Effective Time; (ii) the breach by SBS or Merger Sub of any agreement or
covenant contained in this Agreement; or (iii) the breach or inaccuracy of any
representation or warranty of SBS contained in this Agreement.
29
(b) An Infinity Indemnitee shall give SBS or Merger Sub written
notice of any claim or the commencement of any action or proceeding for which
Infinity Indemnitee seeks indemnification within thirty (30) days after receipt
by the Infinity Indemnitee of notice of such claim or action and the Infinity
Indemnitee shall permit SBS or Merger Sub to assume the defense of any claim or
any litigation resulting from such claim. An Infinity Indemnitee's failure to
give SBS or Merger Sub timely notice shall not preclude the Infinity Indemnitee
from seeking indemnification from SBS or Merger Sub except to the extent that
the Infinity Indemnitee's failure has materially prejudiced SBS or Merger Sub's
ability to defend the claim or litigation.
(c) SBS or Merger Sub shall not settle any claim for which a
Infinity Indemnitee seeks indemnification or consent to entry of any judgment in
litigation arising from such a claim without obtaining a release of the Infinity
Indemnitee from all liability in respect of such claim or litigation. If SBS or
Merger Sub shall not assume the defense of any such claim or litigation
resulting therefrom, or if injunctive relief is sought against a Infinity
Indemnitee, the Infinity Indemnitee may, but shall have no obligation to, defend
against or settle such claim or litigation in such manner as it may deem
appropriate. SBS or Merger Sub shall promptly reimburse the Infinity Indemnitee
for the amount of all expenses, legal or otherwise, incurred by the Infinity
Indemnitee in connection with the defense against or settlement of such claim or
litigation. If no settlement of the claim or litigation is made, SBS or Merger
Sub shall promptly reimburse the Infinity Indemnitee for the amount of any
judgment rendered with respect to such claim or in such litigation and for all
expenses, legal or otherwise, incurred by the Infinity Indemnitee in the defense
against such claim or litigation.
10.3. CERTAIN LIMITATIONS.
(a) All indemnification payments under this Agreement shall be
determined on a pre-tax basis, i.e., without regard to the tax consequences to
the indemnitee of making a payment that is indemnified by another party under
this Agreement or of receiving a payment under this Agreement as indemnification
therefor.
(b) Neither Infinity nor SBS shall have any obligation to indemnify
the SBS Indemnitees or the Infinity Indemnitees, as the case may be, in respect
of claims under Sections 10.1(a)(i), 10.1(a)(iii), 10.2(a)(i), or 10.2(a)(iii)
until, and only to the extent that, the SBS Indemnitees' or the Infinity
Indemnitees' aggregate Losses under Sections 10.1(a)(i), 10.1(a)(iii),
10.2(a)(i), or 10.2(a)(iii) exceed $200,000 (the "Basket Amount"). The maximum
liability of Infinity or SBS for Losses under Sections 10.1(a)(i), 10.1(a)(iii),
10.2(a)(i) or 10.2(a)(iii) shall be $20,000,000 (the "Cap"), provided, however,
that the cap shall not apply to (i) breaches of representation or warranty
included in Sections 2.1, 2.2, 2.3, 2.4, 2.15, 2.16, 3.1, 3.2, 3.3, 3.4, 3.8 and
3.19 hereof or (ii) any intentional breach or fraud. Neither the Basket Amount
nor the Cap shall apply to Infinity's obligation to indemnify the SBS
Indemnitees for breach of Section 3.6 (Taxes) or Section 10.1(d).
(c) At Infinity's election, Infinity may satisfy its indemnity
obligations hereunder by delivering to SBS shares of SBS Series C Preferred
Stock with a value on the date of delivery
30
equal to the amount of SBS's indemnifiable Losses. The value of such SBS Series
C Preferred Stock shall be the product of (i) the number of shares delivered
times (ii) 20 times (iii) the average of the closing prices for SBS Class A
Common Stock for the five (5) consecutive trading days commencing six (6) days
before the date of delivery of the shares.
10.4. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND OBLIGATIONS. All
representations, warranties, covenants and obligations contained in this
Agreement shall survive the Effective Time; provided, however, that the
representations and warranties contained in Articles 2 and 3 of this Agreement
shall terminate twelve (12) months after the Closing Date, except that any
representation or warranty relating to Taxes shall terminate at the time the
applicable statute of limitations with respect to the Taxes in question expire
(giving effect to any extension thereof) and except that any representations or
warranties included in Sections 2.1, 2.2, 2.3, 2.4, 2.8, 2.15, 2.16, 3.1, 3.2,
3.3, 3.4, 3.8 and 3.19 shall survive without limitation as to time. This Section
10.4 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time. Notwithstanding the
foregoing, a claim for fraud or intentional breach may be made at any time.
ARTICLE 11
TERMINATION RIGHTS
11.1. TERMINATION. This Agreement may be terminated at any time prior to
Closing:
(a) by the mutual consent of all parties hereto; or
(b) by any party hereto, upon written notice to the other parties
upon the occurrence of any of the following:
(i) if, on or prior to the Closing Date, the other party
defaults in any material respect in the observance or in the due and
timely performance of any of its covenants or agreements contained
herein such that there would be a failure of the condition to
closing of the non-breaching party and such default is not cured
within fifteen days after the non-defaulting party has provided the
defaulting party with written notice specifying the event or events
that, if not cured, would constitute a default and specifying the
actions necessary to cure the default(s) within such period;
(ii) if the FCC denies the FCC Application or any part thereof
or designates any part of it for a trial-type hearing;
(iii) if there shall be in effect any judgment, final decree
or order that would prevent or make unlawful the Closing; or
(iv) if the Closing has not occurred twelve months from the
date of acceptance for filing of the FCC Application.
31
11.2. LIABILITY. The termination of this Agreement under Section 11.1
hereof shall not relieve any party of any liability for breach of this Agreement
prior to the date of termination.
11.3. EFFECT OF TERMINATION. The termination of this Agreement shall not
affect the following sections of this Agreement, which shall remain in full
force and effect following any termination: Sections 5.6 (Confidentiality) and
9.3 (Expenses).
11.4. PARENT GUARANTY. Infinity Broadcasting Corporation, a Delaware
corporation ("Parent"), hereby irrevocably and unconditionally guarantees to SBS
the due and punctual payment and performance of the obligations of Infinity and
the Company arising under this Agreement (including but not limited to any
indemnification obligations of Infinity under Article 10). Parent represents
that it is receiving material benefit from the execution of this Agreement and
the consummation of the transactions contemplated hereby.
ARTICLE 12
OTHER PROVISIONS
12.1. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither SBS or Merger Sub nor Infinity or the Company may assign
its rights under this Agreement without the prior written consent of the other
party hereto. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
12.2. ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought. No failure or delay on the part of SBS or Merger Sub or
Infinity or the Company in exercising any right or power under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power.
12.3. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
12.4. COMPUTATION OF TIME. If after making computations of time provided
for in this Agreement, a time for action or notice falls on Saturday, Sunday or
a Federal holiday, then such time shall be extended to the next business day.
32
12.5. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its principles of conflict of law. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the parties hereto irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or proceeding. Each
party agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
IN ANY WAY TO THIS AGREEMENT, INCLUDING WITH RESPECT TO ANY COUNTERCLAIM MADE IN
SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
DECIDED SOLELY BY A JUDGE. The parties hereto hereby acknowledge that they have
each been represented by counsel in the negotiation, execution and delivery of
this Agreement and that their lawyers have fully explained the meaning of the
Agreement, including in particular the jury-trial waiver.
12.6. CONSTRUCTION. Any question of doubtful interpretation shall not be
resolved by any rule providing for interpretation against the party who causes
the uncertainty to exist or against the drafter of this Agreement.
12.7. ATTORNEYS' FEES. In the event of any dispute between the parties to
this Agreement, Infinity and the Company, or SBS and Merger Sub, as the case may
be, shall reimburse the prevailing party for its reasonable attorneys' fees and
other costs incurred in enforcing its rights or exercising its remedies under
this Agreement. Such right of reimbursement shall be in addition to any other
right or remedy that the prevailing party may have under this Agreement.
12.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
12.9. NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request.
33
If to Infinity or the Company:
Infinity Media Corporation
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
With copies, which shall not constitute notice, to:
General Counsel
Viacom Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Xxxxxxxxx Xxxxxx & Xxxxxx PLLC
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to SBS or Merger Sub:
Xx. Xxxx Xxxxxxx, Xx.
President/CEO
Spanish Broadcasting System, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, XX XX
Xxxxxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
With a copy, which shall not constitute notice, to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxx Xxxxxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (iii) on the date of receipt, if mailed by registered or
34
certified mail, postage prepaid and return receipt requested, or (iv) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy. Any
party may, with written notice to the other, change the place for which all
further notices to such party shall be sent. All costs and expenses for the
delivery of notices hereunder shall be borne and paid for by the delivering
party.
12.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Faxed copies of the
Agreement and faxed signature pages shall be binding and effective as to all
parties and may be used in lieu of the original Agreement, and, in particular,
in lieu of original signatures, for any purpose whatsoever.
ARTICLE 13
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein has the meanings assigned to them below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
"Agreement" has the meaning set forth in the Preamble to this Agreement.
"Assumed Contracts" has the meaning set forth in Section 3.12(b).
"Basket Amount" has the meaning set forth in Section 10.3.
"Cap" has the meaning set forth in Section 10.3.
"Certificate of Designation" has the meaning set forth in Section 2.8.
"Certificate of Merger" has the meaning set forth in Section 1.3.
"Closing" and "Closing Date" have the meanings set forth in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in Section 2.8.
"Communications Act" means the Communications Act of 1934, as amended.
"Company" has the meaning set forth in the Preamble to this Agreement.
"Company Stock" has the meaning set forth in the Recitals to this
Agreement.
"Contracts" has the meaning set forth in Section 3.12(a).
35
"DGCL" means the Delaware General Corporation Law.
"DLLCA" means the Delaware Limited Liability Company Act.
"Effective Time" has the meaning set forth in Section 1.3.
"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, lease,
defect in title, covenant or other restrictions of any kind.
"Environmental Law" has the meaning set forth in Section 3.21.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCC" means the United States Federal Communications Commission.
"FCC Application" has the meaning set forth in Section 4.1.
"FCC Consent" has the meaning set forth in Section 4.1.
"FCC Licenses" has the meaning set forth in Section 3.8.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Entity" means any federal, state, local or foreign
government, or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign.
"HSRA" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
"Infinity" has the meaning set forth in the Preamble to this Agreement.
"Infinity Indemnitees" has the meaning set forth in Section 10.2.
"Infinity Material Adverse Effect" has the meaning set forth in Section
3.1.
"Infinity's Trademarks and Logos" has the meaning set forth in Section
5.12.
"IRS" means the United States Internal Revenue Service.
"LMA" has the meaning set forth in Section 5.2.
36
"Losses" has the meaning set forth in Section 10.1.
"Material Adverse Effect" means, with respect to any entity, any change,
effect, event or occurrence that is materially adverse to the business,
properties, assets, financial condition, results of operation or property of
such entity, but no transaction expressly permitted under this Agreement,
individually or in the aggregate, shall be deemed to have a Material Adverse
Effect.
"Merger" has the meaning set forth in the Recitals to this Agreement.
"Merger Stock" has the meaning set forth in Section 3.15.
"Merger Sub" has the meaning set forth in the Preamble to this Agreement.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"Parent" has the meaning set forth in Section 11.4.
"Permitted Encumbrance" means (i) Encumbrances for taxes not yet due and
payable, (ii) such Encumbrances, easements, rights of way, building and use
restrictions, exceptions, reservations and limitations that do not in any
material respect detract from the value of the property subject thereto or
impair the use thereof in the ordinary course of the business of the Station,
and (iii) any items listed on Schedule 3.11.
"Personal Property" has the meaning set forth in Section 3.11.
"Preferred Stock" has the meaning set forth in Section 2.8.
"Registration Rights Agreement" has the meaning set forth in Section 5.10.
"Xxxxxxxx-Xxxxx Act" has the meaning set forth in Section 2.5.
"SBS" has the meaning set forth in the Preamble to this Agreement.
"SBS Class A Common Stock" has the meaning set forth in Section 2.8.
"SBS Class B Common Stock" has the meaning set forth in Section 2.8.
"SBS FCC Licenses" has the meaning set forth in Section 2.10.
"SBS Indemnitees" has the meaning set forth in Section 10.1.
"SBS Material Adverse Effect" has the meaning set forth in Section 2.1.
37
"SBS SEC Documents" has the meaning set forth in Section 2.5.
"SBS Series C Preferred Stock" has the meaning set forth in the Recitals
to this Agreement.
"SBS Subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, (i) of which SBS or any other Subsidiary of SBS
is a general partner or (ii) of which at least 50% of the securities or other
interests having by their terms ordinary voting power to elect at least 50% of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by SBS, by any one or more of its Subsidiaries, or by SBS and one or
more of its Subsidiaries.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" has the meaning set forth in Section 2.8.
"Series B Preferred Stock" has the meaning set forth in Section 2.8.
"Station" has the meaning set forth in the Recitals to this Agreement.
"Stockholder Agreement" means that certain Stockholder Agreement of even
date herewith among SBS, Infinity and Xxxx Xxxxxxx, Xx.
"Surviving Company" has the meaning set forth in Section 1.1.
"Taxes" means (i) any and all taxes fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding ad
valorem, stamp, transfer, value added, or gains taxes; and customs' duties,
tariffs and similar charges and (ii) any obligations under any amendments or
arrangements with respect to any Taxes described in clause (i) above.
"Taxing Authority" means any governmental authority, domestic or foreign,
having jurisdiction over the assessment, determination, collection, or other
imposition of any Tax.
"Tax Returns" means returns, reports and forms required to be filed with
any Taxing Authority.
"Total Voting Power" has the meaning set forth in Section 2.13.
38
"Warrant" has the meaning set forth in Section 1.9.
[SIGNATURES ON PAGE IMMEDIATELY FOLLOWING]
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
INFINITY MEDIA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Treasurer
INFINITY BROADCASTING CORPORATION OF
SAN FRANCISCO
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Treasurer
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Xxxx Xxxxxxx, Xx.
-----------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Chief Executive Officer and
President
SBS BAY AREA, LLC
By: /s/ Xxxx Xxxxxxx, Xx.
-----------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Chief Executive Officer and
President
FOR PURPOSES OF SECTION 11.4 ONLY:
INFINITY BROADCASTING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Treasurer
EXHIBIT A
FORM OF WARRANT
NEITHER THE WARRANT NOR THE SHARES OF COMMON STOCK TO BE ISSUED UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, NOR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND WERE AND WILL BE
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED,
ASSIGNED, OR HYPOTHECATED, EXCEPT IN A TRANSACTION REGISTERED UNDER SUCH ACTS OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS.
Number of Shares of Date of Issuance: ______ __, 200_
Series C Preferred Stock: 190,000
WARRANT
TO PURCHASE SERIES C PREFERRED STOCK
OF
SPANISH BROADCASTING SYSTEM, INC.
VOID AFTER ______ __, 200_
THIS IS TO CERTIFY THAT, for value received, Infinity Media Corporation, a
Delaware corporation (the "Holder") is entitled, subject to the terms and
conditions set forth herein, to purchase from Spanish Broadcasting System, Inc.
(the "Company") an aggregate of up to 190,000 shares (the "Warrant Shares") of
fully paid, nonassessable shares of the Company's Series C Preferred Stock, par
value $0.002 per share (the "Series C Preferred Stock"). The number, character
and Exercise Price (defined below) of such shares of Series C Preferred Stock
are subject to adjustment as provided herein. The term "Warrant" as used herein
shall include this Warrant and any warrants delivered in substitution,
replacement or exchange therefor as provided herein. The term "Common Stock" as
used herein shall mean Class A common stock, par value $0.0001 per share, Class
B common stock, par value $0.0001 per share, and all other stock of any class or
classes (however designated) of the Company, the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part in two equal increments
of 95,000 Warrant Shares each, during the term commencing on the date hereof and
ending at 5:00 p.m., prevailing
1
local time in New York, New York, on _____ __ , 200_, (the "Expiration Date").
If not exercised prior to the Expiration Date, this Warrant and all rights
granted under this Warrant shall expire and lapse.
2. EXERCISE PRICE. The price at which this Warrant may be exercised shall
be $300.00 per share of Series C Preferred Stock, as adjusted from time to time
pursuant to Section 9 hereof (the "Exercise Price").
3. EXERCISE OF WARRANT.
i. The purchase right represented by this Warrant shall be
exercisable by the Holder, either in whole or in one of two parts of 95,000
Warrant Shares each at any time prior to the Expiration Date upon (i) the
surrender and presentment of this Warrant accompanied by a duly completed and
executed notice of exercise in the form of Exhibit A attached hereto (the
"Exercise Notice") at the principal office of the Company (listed as the
Company's address in Section 15 herein) or such other office or agency as the
Company may designate by notice pursuant to Section 15 herein, and (ii) payment
of the aggregate Exercise Price equal to the number of shares of Series C
Preferred Stock being purchased upon exercise of this Warrant multiplied by the
Exercise Price (the "Aggregate Exercise Price") in cash, by certified or
official bank check payable to the order of the Company, or by wire transfer to
an account in a bank designated for such purpose by the Company.
ii. This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise and
payment as provided above, and the person entitled to receive the shares of
Series C Preferred Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As promptly as practicable on or after such date, the Company shall
issue and deliver to the person entitled to receive the same, a certificate for
the number of shares of Series C Preferred Stock issuable upon such exercise. If
such certificate shall be registered in a name other than the name of the
Holder, then funds sufficient to pay all stock transfer taxes which shall be
payable upon the issuance of such certificate shall be paid by the Holder at the
time of exercise of this Warrant and the Company shall not be required to issue
or deliver any certificate until such tax or other charge has been paid by the
Holder.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In the event that an adjustment in the number of shares of Series C
Preferred Stock issuable upon the exercise of this Warrant made pursuant to this
Section 4 hereof results in a number of shares issuable upon the exercise which
includes a fraction, at the Holder's election, this Warrant may be exercised for
the next larger whole number of shares or the Company shall make a cash payment
equal to that fraction multiplied by the current market value of that share.
2
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and substance to the Company or, in
the case of mutilation, on surrender and cancellation of this Warrant, the
Company shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor and equal amount.
6. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the Holder to
any rights as a stockholder of the Company.
7. WARRANT REGISTER. The Company shall maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Company may treat
the Holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes and shall not be affected by any notice to the
contrary.
8. RESERVATION OF STOCK. The Company covenants and agrees that during the
term that this Warrant is exercisable:
(a) All shares of Series C Preferred Stock that are issued upon the
exercise of this Warrant shall, upon issuance, be validly issued, not subject to
any preemptive rights, and be free from all taxes, liens, security interests,
charges, and other encumbrances with respect to the issuance thereof, other than
(i) taxes in respect of any transfer occurring contemporaneously with such
issue, (ii) an encumbrance under applicable Federal securities laws or state
"Blue Sky" laws, and (iii) an encumbrance created by the terms of this Warrant.
(b) The Company shall at all times have authorized and reserved, and
shall keep available and free from preemptive rights, a sufficient number of
shares of Series C Preferred Stock to provide for the exercise of the rights
represented by this Warrant and Class A Common Stock to provide for conversion
of the Series C Preferred Stock.
(c) The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, spin-off,
consolidation, merger, dissolution, issue or sale of securities or any other
action or inaction, seek to avoid the observance or performance of any of the
terms of this Warrant, and shall at all times in good faith assist in performing
and giving effect to the terms hereof and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of the Holder
against dilution or other impairment.
9. ADJUSTMENTS. The Exercise Price and the number and type of shares
purchasable hereunder are subject to adjustment from time to time as follows:
(a) Adjustment for Change in Capital Stock. If the Company:
3
(i) pays a dividend or makes a distribution on its Common
Stock, in either case in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any
shares of its capital stock.
then the number of shares of Series C Preferred Stock issuable upon the exercise
of this Warrant immediately prior to such action shall be proportionately
adjusted so that the Holder of this Warrant thereafter exercised shall receive
the aggregate number and kind of shares of capital stock of the Company which he
would have owned immediately following such action if the Warrant had been
exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them to purchase shares of Common Stock at
a price per share less than the current market price per share on the record
date for determining holders entitled to the distribution of rights, options or
warrants, the number of shares of Series C Preferred Stock issuable upon the
exercise of this Warrant shall be adjusted in accordance with the formula:
O + A
N' = N x -------------
O + (A x P/M)
where:
N' = the adjusted number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
N = the current number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
4
O = the number of shares of Common Stock outstanding on the record date.
A = the number of additional shares of Common Stock offered.
P = the purchase price per share of the additional shares of Common
Stock offered.
M = the current market price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the number of shares of Series C Preferred Stock
issuable upon the exercise of this Warrant shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued at the end of the period.
(c) Adjustment for Other Distributions. If the Company distributes
to all holders of its Common Stock any of its assets (excluding cash
distributions for which there will be no adjustment under this Section 9(c)) or
debt or other securities or any rights, options or warrants to purchase the
assets or debt or other securities of the Company, the number of shares of
Common Stock issuable upon exercise of each Warrant shall be adjusted in
accordance with the formula:
M
N'= N x -----
M - F
where:
N' = the adjusted number of shares of Common Stock issuable upon exercise
of each Warrant.
N = the current number of shares of Common Stock issuable upon exercise of
each Warrant.
M = the current market price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights, options or warrants distributable to one share of Common Stock
after taking into account, in the case of any rights, options or warrants,
the consideration required to be paid upon exercise thereof. The Board
shall reasonably determine the fair market value in good faith and such
determination shall be conclusive.
5
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section 9(c) does not apply to rights, options or warrants
referred to in Section 9(b). If any adjustment is made pursuant to this Section
9(c) as a result of the issuance of rights, options or warrants and at the end
of the period during which any such rights, options or warrants are exercisable,
not all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value described in the definition of "F" on the record date of the assets
or securities actually distributed upon exercise of such rights, options or
warrants divided by the number of shares of Common Stock outstanding on the
record date. Notwithstanding anything to the contrary contained in this Section
9(c), if "M-F" in the above formula is less than $1.00, the Company may elect
to, and if "M-F" is a negative number, the Company shall, in lieu of the
adjustment otherwise required by this Section 9(c), distribute to the Holder of
the Warrant, upon exercise thereof, the assets, securities, rights, options or
warrants (or the proceeds thereof) which would have been distributed to the
Holder had such Warrant been exercised immediately prior to the record date for
such distribution.
(d) Adjustment for Common Stock Issue. If the Company issues shares
of Common Stock for a consideration per share less than the current market price
per share on the date the Company fixes the offering price of such additional
shares, the number of shares of Series C Preferred Stock issuable upon the
exercise of this Warrant shall be adjusted in accordance with the formula:
A
N'= N x -------
O + P/M
where:
N'= the adjusted number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
N = the current number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
O = the number of fully diluted shares outstanding immediately prior to
the issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of such
additional shares.
6
A = the number of fully diluted shares of Common Stock outstanding
immediately after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This Section 9(d) does not apply to:
(i) any of the transactions described in Sections 9(b) and 9(c);
(ii) the exercise of this Warrant, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
or the issuance of Common Stock upon the exercise of rights,
options or warrants issued to the holders of Common Stock;
(iii) Common Stock (and options exercisable therefor) issued to the
Company's employees, officers, directors, consultants or
advisors (whether or not still in such capacity on the date of
exercise) under bona fide employee benefit plans or stock
option plans adopted by the board of directors (the "Board")
of the Company and approved by the holders of Common Stock
when required by law, if such Common Stock would otherwise be
covered by this Section 9(d);
(iv) Common Stock issued in a bona fide public offering; and
(v) Common Stock issued to the seller of a business or substantial
assets to the Company or any of its direct or indirect
subsidiaries.
(e) Adjustment for Convertible Securities Issue. If the Company
issues any securities convertible into or exchangeable for Common Stock (other
than securities issued in transactions described in Sections 9(b) and 9(c)) for
a consideration per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the current market price per share on
the date of issuance of such securities, the number of shares of Series C
Preferred Stock issuable upon the exercise of this Warrant shall be adjusted in
accordance with this formula:
O + D
N'= N x -------
O + P/M
where:
N'= the adjusted number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
7
N = the current number of shares of Series C Preferred Stock issuable
upon the exercise of this Warrant.
O = the number of fully diluted shares of Common Stock outstanding
immediately prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of such
securities.
D = the maximum number of shares of Common Stock deliverable upon
conversion or in exchange for such securities at the initial
conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange
of such securities have not been issued when such securities are no longer
outstanding, then the number of shares of Series C Preferred Stock issuable upon
the exercise of this Warrant shall promptly be readjusted to what it would have
been had the adjustment upon the issuance of such securities been made on the
basis of the actual number of shares of Common Stock issued upon conversion or
exchange of such securities.
This Section 9(e) does not apply to:
(i) any of the transactions described in Sections 9(b),
(ii) convertible securities issued in a bona fide public offering,
(iii) the exercise of this Warrant, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
or the issuance of Common Stock upon the exercise of rights,
options or warrants issued to the holders of Common Stock,
(iv) Common Stock (and options exercisable therefor) issued to the
Company's employees, officers, directors, consultants or
advisors (whether or not still in such capacity on the date of
exercise) under bona fide employee benefit plans or stock
option plans adopted by the Board and approved by the holders
of Common Stock when required by law, if such Common Stock
would otherwise be covered by this Section 9(e),
(v) Common Stock issued in a bona fide public offering, and
8
(vi) Common Stock issued to the seller of a business or substantial
assets to the Company or any of its direct or indirect
subsidiaries.
(f) Current Market Price. In Sections 9(b), (c), (d) and (e), the
current market price per share of Common Stock on any date is the lower of: (i)
the closing price on the trading date prior to the event; or (ii) the average of
the closing prices of the Common Stock for 20 consecutive trading days
commencing 30 trading days before the date in question.
(g) Consideration Received. For purposes of any computation
respecting consideration received pursuant to Sections 9(b), (c), (d) and (e),
the following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the gross proceeds to the
Company from such issuance, which shall not include any
deductions for any commissions, discounts, other expenses
incurred by the Company in connection therewith or amounts
paid or payable for accrued interest or accrued dividends;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash or, subject
to clause (iii) below, securities, the consideration other
than cash shall be deemed to be the fair market value thereof
as determined in good faith by the Board (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive;
(iii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part consisting of securities,
the value of any securities shall be deemed to be: (x) if
traded on a securities exchange or through the Nasdaq National
Market, the average of the closing prices of the securities on
such quotation system over the 30-day period ending three days
preceding the day in question, (y) if actively traded
over-the-counter, the average of the closing bid or sale
prices (whichever is applicable) over the 30-day period ending
three days preceding the day in question and (z) if there is
no active public market, the fair market value thereof,
determined as provided in clause (B) above; and
(iv) in the case of the issuance of securities convertible into,
exercisable for or exchangeable for shares of Common Stock,
the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the
issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion, exercise or exchange thereof for the maximum
number of shares used to calculate the adjustment (the
consideration in each case to be determined
9
in the same manner as provided in clauses (i) through (iii) of
this Section 9(g)).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the number of shares of Series C Preferred Stock
issuable upon the exercise of this Warrant need be made unless the adjustment
would require an increase or decrease of at least 2% in such number. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment.
All calculations under this Section 9 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required. No adjustment need be made for a
transaction referred to in Sections 9(b), (c), (d) or (e) if the Holder is given
the opportunity to participate, without requiring this Warrant to be exercised,
in the transaction on a basis and with notice that the Board reasonably
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction.
To the extent this Warrant becomes convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which this
Warrant is exercisable. Interest will not accrue on the cash.
(j) Merger, Sale of Assets, Reorganization, Reclassification. If
during the period that this Warrant remains outstanding and unexpired, there
shall be (i) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity and by which the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, (ii) a sale or transfer of all or
substantially all of the Company's properties and assets to any other person, or
(iii) a capital reorganization or reclassification of the Class A Common Stock
(other than a combination or subdivision of shares otherwise provided for
herein), then, lawful provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the Holder, upon the exercise
hereof at any time after the consummation of such event, shall be entitled to
purchase, in lieu of the shares of Class A Common Stock for which this Warrant
could have been exercised immediately prior to such consummation, the stock or
other securities, cash or property which the Holder would have been entitled to
receive upon such consummation if the Holder had exercised this Warrant for such
shares of Class A Common Stock immediately prior thereto, subject to adjustment
as nearly equivalent as possible to the adjustments provided for in this Section
9. If the per share consideration payable to the Holder in connection with any
such event is in a form other than cash or marketable securities, then the value
of such consideration shall be determined in good faith by the Company's Board
of Directors. In all events, appropriate adjustment (as determined in good faith
by the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant such that the Holder's rights and interest in this
Warrant shall be
10
applicable after such event, to the greatest extent possible, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant.
If this Section 9(j) applies, Sections 9(a), (b), (c), (d) and (e) do not
apply.
(k) When Issuance or Payment May Be Deferred. In any case in which
this Section 9 shall require that an adjustment in the number of shares of
Series C Preferred Stock issuable upon the exercise of this Warrant be made
effective as of a record date for a specified Event, the Company may elect to
defer the occurrence of the adjustment until the occurrence of such underlying
event that requires the adjustment.
(l) Adjustment in Exercise Price.
Upon each Event that provides for an adjustment of the number of
shares of Series C Preferred Stock issuable upon the exercise of this Warrant
pursuant to this Section 9, this Warrant if outstanding prior to the making of
the adjustment shall thereafter have an adjusted Exercise Price (calculated to
the nearest ten millionth) obtained from the following formula:
N
E'= E x ---
N'
where:
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
N' = the adjusted number of Series C Preferred Stock issuable
upon the exercise of this Warrant by payment of the adjusted
Exercise Price.
N = the number of Series C Preferred Stock previously issuable
upon the exercise of this Warrant by payment of the Exercise
Price prior to adjustment.
Following any adjustment to the Exercise Price pursuant to this
Section 9, the amount payable, when adjusted and together with any consideration
allocated to the issuance of this Warrant, shall never be less than the Series C
Preferred Stock par value at the time of such adjustment. Such adjustment shall
be made successively whenever any Event listed above shall occur. The Company
hereby agrees with the Holder that it shall not increase the par value of the
Common Stock above its current par value of $0.0001 per share.
10. CERTIFICATES OF ADJUSTMENTS; NOTICES.
11
(a) Whenever the Exercise Price or number or type of shares
purchasable hereunder shall be adjusted or readjusted pursuant to Section 9
herein, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the Event requiring the adjustment
or readjustment, the amount of the adjustment or readjustment, the method by
which such adjustment or readjustment was calculated, the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment or
readjustment and the amount, if any, of other property to be received upon the
exercise of this Warrant after giving effect to such adjustment or readjustment.
The Company shall deliver a copy of such certificate to the Holder in accordance
with Section 15 herein.
(b) In the event:
(1) that the Company shall take any action that would
require an adjustment in the number of shares of
Series C Preferred Stock issuable upon the
exercise of this Warrant or Exercise Price
pursuant to Sections 9(a), (b), (c), (d) or (e)
and if the Company does not arrange for the
Warrant Holder to participate pursuant to Section
9(i);
(2) of any voluntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to the
Holder a notice specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, and stating the amount and
character of such dividend, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the date, if any is to be fixed, as of which
the holders of record of Series C Preferred Stock (or such other stock or
securities at the time receivable upon the exercise of this Warrant), shall be
entitled to exchange their shares of Series C Preferred Stock (or such other
stock or securities at the time receivable upon exercise of this Warrant), for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior to the date
therein specified for the occurrence of any of the foregoing events.
(c) All notices pursuant to this Section 10 shall be given in the
manner set forth in Section 15 herein.
11. RESTRICTIVE LEGEND ON STOCK CERTIFICATE. A certificate for shares
issued upon exercise of this Warrant, unless at the time of exercise such shares
are registered under the Securities Act, shall bear a legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES OR BLUE SKY LAWS
12
OF ANY STATE AND ARE SUBJECT TO THE CONDITIONS SPECIFIED IN A
CERTAIN WARRANT DATED SEPTEMBER 30, 2003, BY AND BETWEEN SPANISH
BROADCASTING SYSTEM, INC. AND INTERNATIONAL CHURCH OF THE FOURSQUARE
GOSPEL, COPIES OF WHICH WARRANT ARE AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF SPANISH BROADCASTING SYSTEM, INC. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OR OTHERWISE
TRANSFERRED, IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE LAWS,
OR IN VIOLATION OF THE PROVISIONS OF THE WARRANT. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND
BY THE PROVISIONS OF SUCH WARRANT.
12. NO TRANSFER. This Warrant may not be transferred in whole or in part
except to an affiliate of Holder.
13. AMENDMENTS. This Warrant may not be modified or amended without the
written consent of the Company and the Holder.
14. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
15. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been given if (i)
personally delivered by hand or by messenger, (ii) mailed by registered or
certified mail, postage prepaid and return receipt requested or (iii) sent by a
nationally recognized overnight courier service for next morning delivery. Any
such notice shall be deemed to have been received on the date of personal
delivery; on the fourth day after deposit in the U.S. mail if mailed by
registered or certified mail; and on the day after delivery to a nationally
recognized overnight courier service. Notices shall be addressed as follows (or
to such other address as a party requests by written notice):
If to Holder, to: Infinity Media Corporation
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxx & Xxxxxx, P.L.L.C.
0000 X Xxxxxx, X.X.
00
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Company, to:
Spanish Broadcasting System, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, XX XX
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
16. SEVERABILITY. If any provision of this Warrant is held to be
prohibited by or invalid under applicable law, then such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Warrant.
17. HEADINGS. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of _______ ___, 200_ by its duly authorized officer and its
corporate seal to be impressed hereon and attested by its Secretary.
SPANISH BROADCASTING SYSTEM, INC.
By:__________________________________________
Xxxx Xxxxxxx, Xx.
Chairman of the Board of Directors,
Chief Executive Officer and President
Attest:
By:____________________________________
Xxxxxx X. Xxxxxx
Executive Vice President,
Chief Financial Officer and Secretary
EXHIBIT A
NOTICE OF EXERCISE
The undersigned registered owner of the attached Warrant irrevocably
exercises the attached Warrant in full for the purchase of _______ shares of
Series C Preferred Stock of SPANISH BROADCASTING SYSTEM, INC. and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
the attached Warrant, and requests that a certificate for the shares of Series C
Preferred Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of the undersigned and delivered to
the undersigned at the address below.
In exercising the attached Warrant, the undersigned hereby confirms and
acknowledges that the shares of Series C Preferred Stock to be issued are being
acquired solely for the account of the undersigned and not as a nominee for any
other party, and for investment, and that the undersigned shall not offer, sell
or otherwise dispose of any such shares of Series C Preferred Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
Dated:__________________
Signature:_________________________________
Registered Owner
_________________________________
Print Name
_________________________________
_________________________________
Address
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATION SETTING FORTH THE
VOTING POWER, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS
OF THE
SERIES C CONVERTIBLE PREFERRED STOCK
OF
SPANISH BROADCASTING SYSTEM, INC.
Pursuant to Section 151
of the General Corporation Law
of the State of Delaware
Spanish Broadcasting System, Inc. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of directors
of the Company (the "Board of Directors") by its Third Amended and Restated
Certificate of Incorporation, as amended and restated (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors, on _________
___, 2004 duly approved and adopted the following resolution (the "Resolution"):
WHEREAS, the Board of Directors of the Company is authorized by its
Certificate of Incorporation to issue up to one million (1,000,000) shares of
preferred stock in one or more series and, in connection with the creation of
any series, to fix by the resolutions providing for the issuance of shares the
powers, designations, preferences and relative, participating, optional or other
rights of the series and the qualifications, limitations or restrictions
thereof; and
WHEREAS, it is the desire of the Board of Directors of the Company,
pursuant to such authority, to authorize and fix the terms and provisions of a
series of preferred stock, classes of such series of preferred stock and the
number of shares constituting such classes;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a series
of preferred stock on the terms and with the provisions herein set forth on
Annex A attached to this resolution.
_________________________________
Name:
Title:
ATTEST:
_________________________________
Name:
Title:
ANNEX A
SERIES C CONVERTIBLE PREFERRED STOCK
The powers, designations, preferences and relative, participating,
optional or other rights of the Series C Convertible Preferred Stock of Spanish
Broadcasting System, Inc. (the "Company") are as follows:
1. DESIGNATION AND AMOUNT.
(a) There is hereby created out of the authorized and unissued shares of
preferred stock of the Company a series of preferred stock
designated as the "Series C Convertible Preferred Stock." The number
of shares constituting such series shall be 600,000 shares, par
value $0.002 per share, and are referred to as the "Series C
Preferred Stock."
(b) Shares of Series C Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or
exchanged, shall (upon compliance with any applicable provisions of
the laws of Delaware) have the status of authorized and unissued
shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of preferred stock;
provided that any issuance of such shares as Series C Preferred
Stock must be in compliance with the terms hereof.
2. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 2 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable
meanings when used in the plural).
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of such Person, whether through the ownership
of voting securities, by agreement or otherwise; provided that (a)
beneficial ownership of at least 10% of the Voting Stock of a Person shall
be deemed to be control and (b) for purposes of the "Transactions with
Affiliates" covenant contained in Section 9(b), for so long as Pablo Xxxx
Xxxxxxx, Xx. or Xxxx Xxxxxxx, Xx. are directors, officers or stockholders
of the Company, they, their respective spouses, lineal descendants and any
Person controlled by any of them shall be Affiliates of the Company and
its Subsidiaries.
"Affiliate Transaction" has the meaning set forth in Section 9(b).
"Board" or "Board of Directors" shall mean the Board of Directors of
the Company as from time to time constituted.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in the City of New York or at a place of
payment are authorized by law, regulation or executive order to remain
closed. If any conversion or payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such conversion or payment
shall be made on the immediately succeeding Business Day.
2
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
limited liability company, partnership or membership interests (whether
general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"Certificate of Designation" means this Certificate of Designation
setting forth the voting power, preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the Series C Preferred Stock.
"Certificate of Incorporation" means the Company's Third Amended and
Restated Certificate of Incorporation, as the same may be amended from
time to time.
"Class A Common Stock" means the shares of Class A Common Stock, par
value $0.0001 per share, of the Company.
"Class B Common Stock" means the shares of Class B Common Stock, par
value $0.0001 per share, of the Company.
"Common Stock" means the Class A Common Stock and Class B Common
Stock and any other class of common stock of the Company hereafter created
and any securities of the Company into which such Common Stock may be
reclassified, exchanged or converted.
"Communications Act" means the Communications Act of 1934, as
amended.
"Conversion Date" has the meaning set forth in Section 6(a)(iii).
"Conversion Notice" has the meaning set forth in Section 6(b)(i).
"DGCL" means the Delaware General Corporation Law.
"Equity Securities" shall mean shares of Common Stock and all other
securities of the Company which may be convertible into, exchangeable for,
exercisable for or issued in exchange for or in respect of, shares of
Common Stock.
"Excluded Group" has the meaning set forth in Section 8(f).
"Excluded Issuances" means (i) issuances of options, warrants,
subscription rights or other rights to acquire Equity Securities granted
to the Company's employees, officers, directors, consultants or advisors
under bona fide employee benefit plans or stock option plans adopted by
the Board of Directors; (ii) issuances of up to 250,000 shares of Class A
Common Stock upon the exercise of options previously granted to Xxxxxx
Xxxxxxxx; (iii) issuances of up to 2,700,000 shares of Class A Common
Stock upon the exercise of warrants previously granted to the
International Church of the FourSquare Gospel; (iv) shares of Class A
Common Stock issued upon conversion of the Series C Preferred Stock or the
exercise of the Warrant; (v) Equity Securities or other capital stock
issued as consideration for any acquisition of an entity, a business, line
of business or significant asset; (vi) Common Stock or other Equity
Securities issued pursuant to any public offering approved by a majority
of the Board of Directors; or (vii) shares of Common Stock, preferred
stock or other Equity Securities issued as a stock dividend or upon a
subdivision of Equity Securities.
3
"FCC" means the United States Federal Communications Commission.
"Holder" means a holder in whose name a share of Series C Preferred
Stock is registered.
"Issue Date" means [date of the Merger].
"Junior Securities" means all classes of common stock of the Company
and to each other class of Capital Stock or series of preferred stock of
the Company created after the Issue Date by the Board of Directors of the
Company the terms of which do not expressly provide that it ranks on a
parity with the Series C Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the
Company.
"Material Adverse Effect" means a material adverse effect on the
business, assets, operations or financial or other condition of the
Company and the Company Subsidiaries taken as a whole.
"Merger Agreement" means the merger agreement dated as of October
___, 2004, by and among, Infinity Media Corporation, Infinity Broadcasting
Corporation of San Francisco, the Company and SBS Bay Area, LLC.
"Minimum Investment" means 5,700,000 shares of Class A Common Stock,
including for this purpose Class A Common Stock issuable upon the
conversion of any Series C Preferred Stock beneficially owned by the
Holders, which may include Series C Preferred Stock, if any, outstanding
following exercise of the Warrant.
"Parity Securities" has the meaning set forth in Section 3.
"Permitted Business" means the broadcast radio and television
business, including cable television and any activity reasonably
incidental thereto.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, limited liability company or government or any agency or
political subdivision thereof (including any subdivision or ongoing
business of any such entity or substantially all of the assets of such
entity, subdivision or business).
"Preemptive Offer" has the meaning set forth in Section 8(a).
"Preemptive Offer Acceptance Notice" has the meaning set forth in
Section 8(c).
"Preemptive Offer Period" has the meaning set forth in Section 8(b).
"Refused Equity Securities" has the meaning set forth in Section
8(d).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar successor statute and the rules and regulations thereunder.
"Series A Preferred Stock" means the Company's 10 3/4% Series A
Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per
share.
4
"Series B Preferred Stock" means the Company's 10 3/4% Series B
Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per
share.
"Series C Preferred Stock" has the meaning set forth in Section
1(a).
"Stockholder Agreement" has the meaning set forth in the Merger
Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock 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 such Person or one or more of the other Subsidiaries of
that Person (or a combination thereof).
"Transfer" means, with respect to any shares of Capital Stock, any
direct or indirect sale, assignment, pledge, offer or other transfer or
disposal of any interest in such Capital Stock.
"Transfer Notice" has the meaning set forth in Section 6(a).
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Warrant" has the meaning set forth in the Merger Agreement.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be
owned by such Person or by one or more Wholly Owned Subsidiaries of such
Person and one or more Wholly Owned Subsidiaries of such Person.
3. RANKING.
The Series C Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company, rank (i) subordinate to the Series A Preferred
Stock and the Series B Preferred Stock; and (ii) subject to certain
conditions described below, on a parity with the Common Stock and each
other class or series of capital stock created after the Issue Date by the
Board of Directors of the Company, the terms of which expressly provide
that such class or series will rank on a parity with the Series C
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities").
4. MANDATORY DIVIDENDS.
If the Board of Directors declares and pays a dividend in respect of
any Common Stock, then the Board of Directors shall declare and pay to the
Holders of the Series C Preferred Stock a mandatory dividend in an amount
per share of Series C Preferred Stock equal to the number of shares of
Common Stock into which the Series C Preferred Stock is convertible on the
record date established by the Board of Directors or under applicable law
for such dividend multiplied by the per share amount declared and paid in
respect of each share of Common Stock.
5
5. DISSOLUTION.
(a) In the event of the liquidation, dissolution or winding up of
the Company occurring prior to ______________(1), the Holders of the
Series C Preferred Stock shall be entitled to receive out of assets of the
Company available for distribution to stockholders of the Company, prior
and in preference to any distribution to the holders of any Junior Stock,
an amount per share equal to $0.002.
(b) After the distribution described in (a) above is made, if any,
the Holders of the Series C Preferred Stock shall be entitled to
participate in the distribution of any amounts available for distribution
to the holders of the Common Stock in a per share amount equal to the
number of shares of Common Stock into which the Series C Preferred Stock
is convertible on the record date established by the Board of Directors or
under applicable law for such distribution multiplied by the per share
amount paid in respect of each share of Common Stock.
6. TRANSFER AND CONVERSION.
Shares of Series C Preferred Stock may be converted into shares of
Class A Common Stock, on the terms and conditions set forth in this
Section 6.
(a) Transfers.
(i) The Holders of Series C Preferred Stock may not Transfer the
shares of Series C Preferred Stock to any Person, other than
to an Affiliate, unless the Holder making such Transfer has
given the Company written notice of such Holder's intent to
Transfer five trading days (or such shorter period as the
Company may determine in its sole discretion) prior to such
Transfer (the "Transfer Notice"). The Transfer Notice shall be
substantially in the form attached hereto as Exhibit A. Any
Transfer in violation of this Section 6(a), including, without
limitation, the failure to submit a Transfer Notice within the
specified time to the Company, shall be null and void.
(ii) Upon the Transfer of the shares of the Series C Preferred
Stock in accordance with Section 6(a)(i) above to any Person
other than an Affiliate of a Holder, every share of Series C
Preferred Stock so transferred shall automatically convert
into twenty fully paid and non-assessable shares of Class A
Common Stock (such number of shares subject to adjustment
pursuant to Section 6(g) below).
(iii) Shares of Series C Preferred Stock Transferred to any Person,
other than to an Affiliate of the Holders, shall be deemed
converted without further action into shares of Class A Common
Stock immediately prior to the close of business on the day
(the "Conversion Date"). Immediately prior to the close of
business on the Conversion Date, the rights of the holders of
such shares of Series C Preferred Stock so transferred as a
Holder shall cease, and the Person or Persons entitled to
receive the Class A Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or
holders of such Class A Common Stock as and after such time.
------------------------
(1) This date shall be four years following the issuance/closing date.
6
(b) Optional Conversion.
(i) At the option of the Holders, each share of Series C Preferred
Stock held by the Holders shall convert into twenty fully paid
and non-assessable shares of Class A Common Stock (such number
of shares subject to adjustment pursuant to Section 6(g)
below), on the later of (A) the date specified in a written
notice delivered to the Company stating that such Holder
desires to convert shares of Series C Preferred Stock then
outstanding (the "Conversion Notice"), which date must be at
least five trading days following delivery of the Conversion
Notice unless otherwise determined by the Company in its sole
discretion, and (B) the date upon which such converting Holder
surrenders such shares of Series C Preferred Stock which such
Holder desires to convert, all in accordance with Section
6(b)(ii) below.
(ii) In order to convert shares of Series C Preferred Stock into
Class A Common Stock pursuant to paragraph 6(b)(i) above, the
Holders shall:
(1) surrender the certificate or certificates evidencing
such of the Holders shares of Series C Preferred Stock
to be converted, duly endorsed in blank or accompanied
by proper instruments of transfer, at the principal
office of the Company or any transfer agent for the
Series C Preferred Stock, and
(2) shall give the Conversion Notice to the Company at such
office of the election to convert the same and shall
state therein the name or names in which the Holders
wishes the certificate or certificates for Class A
Common Stock to be issued. As soon as practicable
thereafter, the Company shall issue and deliver at such
office to the Holders or their respective transferee,
certificates for the number of whole shares of Class A
Common Stock to which such Holders shall be entitled.
The Conversion Notice shall be substantially in the form
attached hereto as Exhibit B.
(c) Effect of Conversion. Upon the conversion of the Series C Preferred
Stock pursuant to this Section 6, the shares of Series C Preferred
Stock shall not be transferred on the books of the Company or be
deemed to be outstanding for any purpose whatsoever and shall
constitute only the right to receive such number of shares of Class
A Common Stock as may be issuable on an as converted basis upon such
conversion upon compliance with the requirements of this Section 6;
provided, however, that the Holders of Series C Preferred Stock as
of any record date for the payment of all declared but unpaid
dividends, if any, on any shares of Series C Preferred Stock shall
be paid, out of any assets at the time legally available therefor,
upon conversion of such shares of Series C Preferred Stock into
shares of Class A Common Stock, but shall not be paid any amounts in
respect of the Class A Common Stock into which it has been or will
be converted.
(d) Fractions of Shares. No fractional shares of Class A Common Stock
shall be issued by the Company. In lieu thereof, the Company shall
pay in cash the fair market value of such fractional share as
determined in good faith by the Board of Directors. Such conversion
shall be deemed to have been made as of the date of the Conversion
Notice and such surrender of the Series C Preferred Stock to be
converted, and the person or persons entitled to receive the Class A
Common Stock issuable upon such conversion
7
shall be treated for all purposes as the record holder or holders of
such Class A Common Stock on said date.
(e) Adjustments. If the Company at any time (i) subdivides the
outstanding Common Stock or (ii) issues a stock dividend on its
outstanding Common Stock, the number of shares of Class A Common
Stock issuable upon conversion of the Series C Preferred Stock
immediately prior to such subdivision or the issuance of such stock
dividend shall be proportionately increased by the same ratio as the
subdivision or dividend. If the Company at any time combines its
outstanding Common Stock, the number of shares of Class A Common
Stock issuable upon conversion of the Series C Preferred Stock
immediately prior to such combination shall be proportionately
decreased by the same ratio as the combination. All such adjustments
described herein shall be effective at the close of business on the
date of such subdivision, stock dividend or combination, as the case
may be.
(f) Reorganization. In case of any capital reorganization (other than in
connection with a merger or other reorganization in which the
Company is not the continuing or surviving entity) or any
reclassification of the Common Stock, the Series C Preferred Stock
shall thereafter be convertible into that number of shares of stock
or other securities or property to which a holder of the number of
shares of Class A Common Stock deliverable upon conversion of the
Series C Preferred Stock immediately prior to such reorganization or
recapitalization would have been entitled upon such reorganization
or reclassification. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in
the application of the provisions herein set forth with respect to
the rights, preferences and powers thereafter of the Holders of
Series C Preferred Stock, such that the provisions set forth herein
shall thereafter be applicable, as nearly as reasonably may be, in
relation to any share of stock or other property thereafter
deliverable upon the conversion.
(g) Authorized Shares. The Company shall at all times reserve and keep
available, out of its authorized but unissued Class A Common Stock,
solely for the purpose of effecting the conversion of Series C
Preferred Stock, the full number of shares of Class A Common Stock
deliverable from time to time upon the conversion of all shares of
Series C Preferred Stock from time to time outstanding. The Company
shall from time to time (subject to obtaining necessary Board of
Directors and stockholder approvals), in accordance with the laws of
the State of Delaware, increase the authorized amount of its Class A
Common Stock if at any time the authorized number of shares of Class
A Common Stock remaining unissued shall not be sufficient to permit
the conversion of all of the shares of Series C Preferred Stock at
the time outstanding.
7. VOTING AND CORPORATE ACTIONS.
(a) Voting Rights and Powers.
8
(i) The Holders of Series C Preferred Stock shall be entitled to
the number of votes equal to the number of shares of Class A
Common Stock into which such shares of Series C Preferred
Stock could be converted on the record date for the vote or
consent of stockholders or, if no record date is established,
at the date such vote is taken or any consent of stockholders
solicited, and shall have voting rights and powers equal to
the voting rights and powers of the Class A Common Stock on an
as-converted basis on all matters brought before the
stockholders of the Company.
(ii) The Holders of Series C Preferred Stock shall be entitled to
notice of any stockholders' meeting in accordance with the
Company's by-laws and applicable law and shall vote together
with holders of the Common Stock as a single class upon any
and all matters submitted to a vote of stockholders, except
those matters required by law or this Certificate of
Designation to be submitted to a class vote.
(iii) Notwithstanding the foregoing, any Holder of the shares of the
Series C Preferred Stock may deliver to the Company a notice
requesting termination of the voting rights provided in
Section 6(a)(i) and (ii) of this Certificate of Designation,
except voting rights on those matters required by law or this
Certificate of Designation to be submitted to a class vote.
Immediately following receipt of such notice, the Holders of
shares of Series C Preferred Stock shall have no voting
rights, except as required by Delaware law and as hereinafter
provided.
(b) Approval of Certain Corporate Actions. Without the prior approval of
the Holders, an amendment to the Certificate of Incorporation or
this Certificate of Designation may not:
(i) amend this Certificate of Designation;
(ii) alter or change the voting rights or powers of the Series C
Preferred Stock or reduce the number of shares of Series C
Preferred Stock whose holders must approve any such amendment;
(iii) adversely affect the preferences, powers or rights of the
Holders of Series C Preferred Stock;
(iv) increase or decrease the number of authorized shares of the
Company designated as Series C Preferred Stock; or
(v) amend Section 5.4 of the Certificate of Incorporation.
(c) Limitation on Lines of Business. So long as the Holders of Series C
Preferred Stock beneficially own the Minimum Investment, the Company
shall not, without the prior approval of the Holders, enter into or
conduct any business, either directly or through any Subsidiary,
except for Permitted Businesses.
8. PREEMPTIVE RIGHTS
(a) Preemptive Right. Each Holder of the shares of Series C Preferred
Stock shall have the right to purchase its pro rata share (as set
forth below) of Equity Securities (the
9
"Preemptive Offer") which the Company may, from time to time,
propose to sell and issue (subject to such requirements and
restrictions imposed by the Securities Act of 1933, as amended, and
state securities laws and to the actual issuance of the Equity
Securities) after the Issue Date, other than Excluded Issuances. For
purposes of this Section 8(a), the Holders pro rata share shall be
the amount of such Equity Securities obtained by applying the
following ratio against the total number of such Equity Securities
to be offered by the Company: (i) the number of shares of the Common
Stock (including all shares of Common Stock issued or issuable upon
conversion of the Series C Preferred Stock or the exercise of
outstanding Equity Securities held by the Holders, including the
Series C Preferred Stock issued pursuant to the Warrant) of which
the Holder is deemed to be a holder immediately prior to the
issuance of such Equity Securities, to (ii) the total number of
shares of Common Stock issued and outstanding (including all shares
of Common Stock issued or issuable upon conversion of the Series C
Preferred Stock or the exercise of outstanding Equity Securities
held by the Holders, including the Series C Preferred Stock issued
pursuant to the Warrant) immediately prior to the issuance of the
Equity Securities, determined on a fully diluted basis after giving
effect to the exercise in full of then outstanding options and
warrants and the conversion of all securities convertible into
shares of Common Stock.
(b) Notice of Preemptive Offer. In the event the Company proposes to
undertake an issuance of Equity Securities, it shall give the
Holders of Series C Preferred Stock written notice of its intention,
describing the type of Equity Securities and the price and the terms
upon which the Company proposes to issue the same. The Preemptive
Offer shall by its terms remain open and irrevocable for a period of
five Business Days from the date it is received from the Company
(the "Preemptive Offer Period").
(c) Preemptive Offer Acceptance. The Holders of Series C Preferred Stock
shall have the option, exercisable at any time during the Preemptive
Offer Period by delivering written notice to the Company (a
"Preemptive Offer Acceptance Notice"), to purchase its pro rata
share of Equity Securities. The Company shall notify the Holders
within five days following the expiration of the Preemptive Offer
Period of the number or amount of the Holders pro rata share of
Equity Securities it has subscribed to purchase.
(d) Offer of Refused Equity Securities. If the Preemptive Offer
Acceptance Notice is not given by the Holders of Series C Preferred
Stock for all of their pro rata share of Equity Securities, the
Company shall have 180 days from the expiration of the Preemptive
Offer Period to sell all or any part of such Holders pro rata share
of Equity Securities as to which the Preemptive Offer Acceptances
Notice has not been given by the Holders (the "Refused Equity
Securities") to any other Persons upon the terms and conditions
including price, which are no more favorable, in the aggregate, to
such other Persons or less favorable to the Company than those set
forth in the Preemptive Offer.
(e) Closing. Upon the closing of the sale to such other Persons of all
the Equity Securities, the Holders of Series C Preferred Stock shall
purchase from the Company, and the Company shall sell to the
Holders, the pro rata share of Equity Securities with respect to
which the Preemptive Offer Acceptance Notice was delivered by the
Holders, at the same terms specified in the Preemptive Offer.
(f) Emergency Funding. If the Company determines in good faith that the
delay occasioned by complying with the procedures contemplated by
this Section 8 would be prejudicial to the Company or its financial
condition or business and operations, then the Company
10
may before delivering the Preemptive Offer or after delivering the
Preemptive Offer (but before observing the time periods and other
procedures set forth in this Section 8), issue or sell all of the
Equity Securities. If the Company elects to issue Equity Securities
under this Section 8 before it delivers a Preemptive Offer, then the
Company shall deliver the Preemptive Offer to the Holders of Series
C Preferred Stock to which it has not so issued or sold Equity
Securities (the "Excluded Group") no later than five Business Days
after the date on which such Equity Securities are issued or sold to
the Holders. If the Excluded Group delivers a Preemptive Offer
Acceptance Notice within 10 Business Days and the Company has issued
or sold the Equity Securities to a Person but not to the Holders,
then the Company shall issue or sell such number of pro rata shares
of Equity Securities as the participating members of the Excluded
Group would have been entitled had the Preemptive Offer been made
and accepted by such member of the Excluded Group in accordance with
Sections 8(a) through (d) as promptly as practicable, but in no
event later than five Business Days following the date of delivery
of the Preemptive Offer Acceptance Notice, at the same price, and on
the same terms and conditions as the issuance and sale occurred.
(g) Expiration. The rights granted under this Section 8 to the Holders
of Series C Preferred Stock shall expire upon such time as the
Holders of Series C Preferred Stock no longer beneficially own the
Minimum Investment.
9. CERTAIN COVENANTS
(a) Merger, Consolidation, or Sale of Assets. If the Company (i) merges
or consolidates with or into another corporation or limited
liability company in which the Company is not the surviving entity
and by which the shares of the Company's capital stock outstanding
immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash,
or otherwise or (ii) sells or transfers all or substantially all of
the Company's properties and assets to any other Person, then, a
provision shall be made so that, upon the basis and the terms and in
the manner provided in this Certificate of Designation, the Holders
of Series C Preferred Stock shall be entitled to receive the stock
or other securities, cash or property which the Holders would have
been entitled to receive upon such consummation if the Holders had
converted the shares of Series C Preferred Stock for such shares of
Class A Common Stock immediately prior thereto. If the per share
consideration payable to the Holders in connection with any such
event is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by
the Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in
the application of the provisions of this Certificate of Designation
such that the Holders rights and interest in this Certificate of
Designation shall be applicable after such event, to the greatest
extent possible, in relation to any shares or other property
deliverable after that event.
(b) Transactions With Affiliates. Without the prior approval of the
Holders, the Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or
such Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such
11
Subsidiary with an unrelated Person (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $2.5 million, such
Affiliate Transaction or series of Affiliated Transactions has been
approved by a majority of the members of the Board of Directors that
are disinterested as to such Affiliate Transaction or series of
Affiliated Transactions and (iii) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to
the fairness to the Company of such Affiliate Transaction or series
of Affiliated Transactions from a financial point of view issued by
an accounting, appraisal or investment banking firm of national
standing; provided that (1) any transaction approved by the Board of
Directors, with an officer or director of the Company or of any of
its Subsidiaries in his or her capacity as an officer or director
entered into in the ordinary course of business; (2) transactions
between or among the Company and/or its Subsidiaries; (3) payment of
reasonable directors fees to the Board of Directors and of its
Subsidiaries; (4) fees and compensation paid to, and indemnity
provided on behalf of, officers, directors or employees of the
Company or any of its Subsidiaries, as determined in good faith by
the Board of Directors of the Company or of any such Subsidiary, to
the extent the same are reasonable and customary; and (5) agreements
in effect on the Issue Date and any modification thereto or any
transaction contemplated thereby (including pursuant to any
modification thereto) in any replacement agreement therefor so long
as such modification or replacement is not more disadvantageous to
the Company in any material respect than the original agreement as
in effect on the Issue Date, in each case, shall not be deemed to be
Affiliate Transactions.
(c) Reports. Whether or not required by the rules and regulations of the
SEC, so long as any shares of Series C Preferred Stock are
outstanding, the Company shall make available to the Holders, upon
request, (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms
10-Q and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on
the face of the financial statements or in the footnotes thereto and
in Management's Discussion and Analysis of Financial Condition and
Results of Operations, the financial condition and results of
operations of the Company and its Subsidiaries separate from the
financial information and results of operations of the Subsidiaries
of the Company) and, with respect to the annual information only, a
report thereon by the Company certified independent accountants and
(ii) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company was required to file such reports, in
each case within the time periods set forth in the SEC's rules and
regulations. For purpose of this provision, posting such reports on
XXXXX or on the Company's website shall constitute making such
reports available to the Holders. The Company also agrees to provide
the Holders with such additional information as the Holders may from
time to time reasonably request.
(d) Events of Default. The Company agrees that, so long as the Holders
of Series C Preferred Stock beneficially own the Minimum Investment,
the Company shall furnish to the Holders, as soon as possible and
in any event within five Business Days of obtaining knowledge
thereof, an officer's certificate specifying the nature and period
of existence of such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of
such claimed violation, default, event or condition, and what action
the Company has taken, is taking and proposes to take with respect
to notice:
12
(i) of any condition or event that constitutes an event of default
under the instruments governing the Company's outstanding debt
with a principal amount in excess of $50,000,000;
(ii) that any Person has given any notice to the Company or any of
its Subsidiaries or taken any other action with respect to a
claimed default or event or condition that would be required
to be disclosed in a current report filed by the Company with
the SEC on Form 8-K (Items 1, 2, 4 and 5 of such Form as in
effect on the date hereof); or
(iii) of any condition or event which constitutes a Material Adverse
Effect.
(e) No Poison Pills. Without the prior approval of the Holders, the
Company shall not, so long as the Holders of Series C Preferred
Stock beneficially own the Minimum Investment, create or adopt any
shareholders rights plan or "poison pill", amend any of its
organizational documents, or take any similar action that would
prohibit or materially impede or materially delay the ability of the
Holders and their Affiliates to acquire additional shares of Capital
Stock, or to dispose of or sell such Capital Stock, in any manner
permitted by this Certificate of Designation, the Warrant and the
Stockholders Agreement; provided that, for avoidance of doubt, the
foregoing shall not restrict the Company from (a) entering into loan
agreements that contain customary covenants, including provisions
permitting acceleration of the related indebtedness upon a change of
control and (b) issuing debt securities or preferred stock that
contain customary covenants, including change of control provisions.
(f) Limitation on Issuance of Series C Preferred Stock. Without the
prior approval of the Holders, the Company shall not issue any
shares of Series C Preferred Stock to any Person other than the
Infinity Media Corporation, a Delaware corporation, and its
Affiliates.
10. AMENDMENT.
Notwithstanding anything to the contrary in the DGCL, subject to
Section 9(a), neither this Certificate of Designation nor the Certificate
of Incorporation shall be amended, altered or repealed (by merger,
consolidation or otherwise) in any manner that would alter or change the
powers, preferences or special rights of the Series C Preferred Stock so
as to affect the Holders thereof adversely without the affirmative vote of
the Holders of Series C Preferred Stock voting separately as a class.
11. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of Series C
Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than
those specifically set forth in this Certificate of Designation (as such
Certificate of Designation may be amended from time to time in accordance
with the terms hereof) and in the Certificate of Incorporation.
12. HEADINGS OF SECTIONS.
The headings of the various sections and subsections hereof are for
convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
13
EXHIBIT A
NOTICE OF TRANSFER
The undersigned, being the registered record holder of the Series C
Convertible Preferred Stock (the "Series C Preferred Stock") of Spanish
Broadcasting System, Inc. (the "Company") hereby gives the Company notice of a
transfer of [number] outstanding shares of Series C Preferred Stock on [date] to
[name of transferee] pursuant to Section 6(a) of the Certificate of Designation
of the Series C Preferred Stock.
Dated: [five trading days prior to the date fixed for transfer]
________________________
Name
________________________
Address
________________________ ________________________
Please print name and (Signature)
address, including zip
code number
Denominations:________
14
EXHIBIT B
NOTICE TO EXERCISE CONVERSION RIGHT
The undersigned, being the registered record holder of the Series C
Convertible Preferred Stock (the "Series C Preferred Stock") of Spanish
Broadcasting System, Inc. (the "Company") irrevocably exercises the right to
convert ____________ outstanding shares of Series C Preferred Stock on
___________, ____, into shares of Class A Common Stock of the Company in
accordance with the terms of the shares of Series C Preferred Stock, and directs
that the shares issuable and deliverable upon the conversion be issued and
delivered in the denominations indicated below to the registered holder hereof
unless a different name has been indicated below.
Dated: [five trading days prior to the date fixed for conversion]
Fill in for registration of shares of
Class A Common Stock if to be issued
otherwise than to the registered holder:
________________________
Name
________________________
Address
________________________ ________________________
Please print name and (Signature)
address, including zip
code number
Denominations:________
15
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _______ __, 200_ (this
"Agreement"), by and between Spanish Broadcasting System, Inc., a Delaware
corporation (the "Company") and Infinity Media Corporation, a Delaware
corporation (the "Shareholder").
WHEREAS, simultaneous with the execution of this Agreement, the
Company, SBS Bay Area, LLC, a Delaware limited liability company ("Merger Sub"),
Infinity Broadcasting Corporation of San Francisco, a Delaware corporation
("Target") and the Shareholder are consummating the transactions contemplated by
the Merger Agreement, dated as of October __, 2004, pursuant to which Target is
merging with and into Merger Sub with the result that Merger Sub will be the
surviving entity (the "Merger");
WHEREAS, pursuant to the terms of the Merger, the Shareholder is
acquiring an aggregate of 380,000 shares of the Series C Convertible preferred
stock of the Company (the "Series C Preferred Stock"), which are convertible
into shares of the Class A common stock, par value $0.0001 per share, of the
Company (the "Class A Common Stock") as set forth in the certificate of
designation for the Series C Preferred Stock filed with the Secretary of State
of the State of Delaware;
WHEREAS, pursuant to the terms of the Merger, the Shareholder is
acquiring a non-transferable warrant (the "Warrant") to purchase 190,000 shares
of Series C Preferred Stock at an exercise price of $300.00 per share; and
WHEREAS, in connection with the Merger and pursuant to the Merger
Agreement, the Company has agreed to provide the Shareholder with certain
registration rights as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
The following terms, as used in this Agreement, have the following
respective meanings:
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, such Person.
"Agreement" has the meaning set forth in preamble of this Agreement.
"Xxxxxxx" has the meaning set forth in Section 3.6 of this
Agreement.
"Class A Common Stock" has the meaning set forth in recitals of this
Agreement.
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Company" has the meaning set forth in preamble of this Agreement.
"Control" (including with correlative meaning, the terms
"Controlling", "Controlled by" and "under common Control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Conversion Shares" means shares of Class A Common Stock issued or
issuable upon conversion of the Series C Preferred Stock or any other
Convertible Securities held by the Shareholder.
"Convertible Securities" shall mean (i) any rights, options or
warrants to acquire Class A Common Stock or any capital stock of the Company or
any subsidiary of the Company, including the Series C Preferred Stock, and (ii)
any notes, debentures, shares of preferred stock or other securities, options,
warrants or rights, which are convertible or exercisable into, or exchangeable
for, Class A Common Stock or any capital stock of the Company or any subsidiary
of the Company, including the Warrant.
"Demand Registration" has the meaning set forth in Section 3.1 of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute and the rules and regulations thereunder.
"Merger" has the meaning set forth in recitals of this Agreement.
"Merger Sub" has the meaning set forth in recitals of this
Agreement.
"Nasdaq" has the meaning set forth in Section 3.12 of this
Agreement.
"Person" means any natural person, corporation, limited partnership,
general partnership, a limited liability company, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, and any government
agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3.6 of
this Agreement.
"Public Sale" means any sale of the Company's common stock to the
public pursuant to an effective registration statement under the Securities Act
or pursuant to the provisions of Rule 144 of the Securities Act.
"Registrable Securities" means the Conversion Shares issued or
issuable to the Shareholder from time to time in connection with the conversion
of the Series C Preferred Stock,
2
including the Conversion Shares issued or issuable in connection with the
conversion of the Series C Preferred Stock issued or issuable upon exercise of
the Warrant; provided, however, that as to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been distributed to the public pursuant to a Public Sale.
"Registration Expenses" has the meaning set forth in Section 3.10 of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute and the rules and regulations thereunder.
"Selling Expenses" means all underwriting discounts and commissions,
and the fees and expenses in excess of those for one counsel for the Shareholder
applicable to the sale of Registrable Securities.
"Series C Preferred Stock" has the meaning set forth in recitals of
this Agreement.
"Shareholder" has the meaning set forth in preamble of this
Agreement and shall include any Transferee pursuant to Section 3.18.
"Shareholder Request" has the meaning set forth in Section 3.1 of
this Agreement.
"Target" has the meaning set forth in recitals of this Agreement.
"Transferee" has the meaning set forth in Section 3.18 of this
Agreement.
"Warrant" has the meaning set forth in recitals of this Agreement.
ARTICLE II
Legend
2.1 Restrictive Legend. (a) Each certificate representing the
Registrable Securities shall bear a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION
IS NOT REQUIRED."
3
(b) In addition to the legend set forth in paragraph (a) of
this Section 2.1, each certificate representing the Registrable Securities shall
bear a legend substantially in the following form:
"THE INTERESTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A REGISTRATION RIGHTS AGREEMENT, DATED AS
OF __________ __, 200_, BETWEEN THE COMPANY AND THE REGISTERED
OWNER OF THIS CERTIFICATE (OR THE REGISTERED OWNER'S
PREDECESSOR IN INTEREST), AS MAY BE AMENDED, AND SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE
OFFICES OF THE COMPANY."
A certificate shall not bear such legends if in the opinion of counsel
satisfactory to the Company (it being agreed that each of Shearman & Sterling
LLP and Xxxx Xxxxxxx LLP shall be satisfactory) the securities represented
thereby have been registered under the Securities Act or may be publicly sold
without registration under the Securities Act and any applicable state
securities laws.
2.2 Removal of Legend. Each certificate representing the
Registrable Securities sold or otherwise transferred shall bear the legends set
forth in Section 2.1, except that such certificate shall not bear such legend,
and the Company will take the steps necessary to remove such legend if (i) the
sale is made in accordance with the provisions of Rule 144 (or any other rule
permitting sale without registration under the Securities Act) or (ii) in the
opinion of counsel satisfactory to the Company (it being agreed that either of
Shearman & Sterling LLP or Xxxx Xxxxxxx LLP shall be satisfactory) the
transferee and any subsequent transferee would be entitled to sell or transfer
such securities without registration under the Securities Act.
ARTICLE III
Registration Rights
3.1 Demand Registration. Subject to Section 3.2, if the
Shareholder notifies the Company in writing, which notice may not be delivered
prior to one year after the date hereof (the "Shareholder Request"), that it
wishes to offer or cause to be offered in a registered public offering the
number of Registrable Securities set forth in the Shareholder Request (a "Demand
Registration"), the Company agrees promptly within 60 days after receipt of the
Shareholder Request to prepare and file a registration statement on Form X-0,
X-0 or S-3, or any successor form under the Securities Act with the Commission
to register under the Securities Act all Registrable Securities requested to be
registered by the Shareholder, and to use its reasonable best efforts to have
such registration statement declared effective as promptly as practicable (but
in any event within 150 days after receipt of the properly given Shareholder
Request), as would permit or facilitate the sale and distribution of the
Registrable Securities. So long as any Registrable Securities remain held by the
Shareholder and the Shareholder is entitled to require a Demand Registration
hereunder, the Company shall use its reasonable best efforts to use Form S-
4
3 or a successor form thereof to effect the registration required hereunder. The
Company shall not be required to effect more than three (3) Demand Registrations
pursuant to this Section 3.1.
3.2 Acceleration of Demand Registration. If at any time prior to
the first anniversary of the date of this Agreement the Company enters into a
definitive agreement with a third party to sell any radio stations that the
Company controls in the New York City or Miami markets, then the Shareholder
shall have the right to make a Demand Registration without regard to the
one-year period set forth in this first sentence of Section 3.1.
3.3 Priority on Demand Registrations. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities exceeds the
number of Registrable Securities and other securities, if any, which can be sold
therein without adversely affecting the marketability of the offering, the
Company will include in such registration prior to the inclusion of any
securities which are not Registrable Securities the maximum number of
Registrable Securities requested to be included which in the opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering. No holder of any Company security for which the Company has granted
registration rights (other than the Shareholder) shall have the right to
participate in any registration made by the Company pursuant to a Demand
Registration.
3.4 Completion of Demand Registrations. Notwithstanding any other
provision of this Agreement to the contrary, a Demand Registration pursuant to
Section 3.1 shall not be deemed to have been effected (and, therefore, not
requested for purposes of the number of Demand Registrations), (i) unless it has
become effective, (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason other than a
misrepresentation or an omission by the Shareholder and, as a result thereof,
the Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the related
registration statement or (iii) if the conditions to closing specified in any
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived other than by reason of some act
or omission by the Shareholder.
3.5 Limitation on Registration Requirement. (a) The Company will
not be obligated to effect any Demand Registration within six (6) months after
the effective date of (i) a prior Demand Registration or (ii) a registration in
which the Shareholder was able to fully exercise their piggyback rights pursuant
to Section 3.6 without any reduction in the number of Registrable Securities
requested to be registered.
(b) The Company shall have the right to postpone for up to
75 days the filing or the effectiveness of a registration statement for a Demand
Registration required pursuant to Section 3.1 hereof if the Board of Directors
of the Company determines in good faith (and the Company so certifies to the
Shareholder) that the filing of such registration statement would require the
disclosure of non-public material information the disclosure of which would have
a material adverse effect on the Company or would otherwise adversely affect (i)
any proposal or plan by the Company or any of its Subsidiaries to engage in any
financing transaction, public offering of securities, acquisition of assets
(other than in the ordinary course
5
of business) or any merger, consolidation, tender offer or similar transaction,
or (ii) any material corporate development; provided, however, that the Company
may not exercise its right to so delay a registration pursuant to Section 3.1
hereof more than once in any twelve (12) month period.
(c) The Company shall not be obligated or required to effect
any registration pursuant to Section 3.1 hereof during the period commencing on
the date falling 90 days prior to the Company's estimated date of filing of, and
ending on the date 90 days following the effective date of, any underwritten
registration of Company common stock initiated by the Company, for the account
of the Company, if the Shareholder Request shall have been received by the
Company after the Company shall have advised the Shareholder of Registrable
Securities that the Company is contemplating commencing an underwritten
registration initiated by the Company on a particular date; provided, however,
that the Company will use reasonable efforts to cause any such registration to
be filed and to become effective as expeditiously as shall be reasonably
possible and that in no event shall the period during which the Company is not
required to effect registration under this Section 3.5(c) be longer than an
aggregate of 180 days within any twelve (12) month period.
3.6 Piggyback Registrations. Whenever the Company proposes to
register any securities beneficially owned by Xxxx Xxxxxxx, Xx. ("Xxxxxxx")
under the Securities Act (including secondary registrations on behalf of
Xxxxxxx'x securities other than pursuant to a Demand Registration) and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Company will give prompt written
notice to the Shareholder of its intention to effect such a registration and
will include in such registration all Registrable Securities with respect to
which the Company has received written requests (including the intended method
of distribution of Registrable Securities by the Shareholder) for inclusion
therein within fifteen (15) days after the receipt of the Company's notice.
Notwithstanding anything to the contrary herein, the piggyback registration
rights provided under this Section 3.6 shall not be available in connection with
registrations by the Company for its own account (i) on Form S-8 or any
successor form thereto, (ii) filed solely in connection with a dividend
reinvestment plan or employee benefit plan covering officers or directors of the
Company or its Affiliates, or (iii) on Form S-4 or any successor form thereto,
in connection with a merger, acquisition, exchange offer or similar corporate
transaction.
3.7 Expenses of Piggyback Registrations. The Company will pay all
Registration Expenses of a Piggyback Registration, whether or not it becomes
effective.
3.8 Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of Xxxxxxx, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without adversely affecting the
marketability of the offering (including the price per share), the Company will
include in such registration (i) FIRST, the securities the Company proposes to
sell for its own account, if any; (ii) SECOND, the securities the Company
proposes to sell on behalf of Xxxxxxx; (iii) THIRD, the Registrable Securities
requested by the Shareholder to be included in such registration; and (iii)
FOURTH, other securities requested to be included in such registration. No
6
registration of Registrable Securities effected under Section 3.6 shall relieve
the Company of its obligation to effect registration(s) of Registrable
Securities pursuant to Section 3.1.
3.9 Registration Procedures. If and whenever the Company is
required by the provisions of this Article III to effect a registration of the
Registrable Securities under the Securities Act, the Company will as promptly as
practicable but in any event within the time periods provided in this Agreement:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become and remain effective
for the period of time required for the disposition of all such Registrable
Securities covered by the registration statement by the Shareholder;
(b) prepare and file with the Commission all such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities registered under such
registration statement until the earlier of (i) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement and (ii) two
years after such registration statement becomes effective, provided that such
period shall be extended by the number of days for which the Shareholder is
unable to make sales of Registrable Securities as a result of an event of the
type described in Section 3.9(i);
(c) furnish to the Shareholder and to each duly authorized
underwriter of the Shareholder such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), authorized copies of the prospectus,
including copies of any preliminary prospectus, and of each such amendment or
supplement thereto, in conformity with the requirements of the Securities Act,
and such other documents as the Shareholder or underwriter may reasonably
request in order to facilitate the sale or other disposition of the Registrable
Securities registered under such registration statement;
(d) use its reasonable best efforts to register or qualify
such Registrable Securities covered by such registration statement under such
securities or blue sky laws of such jurisdictions as the Shareholder or any
underwriter shall request, and do any and all other acts and things which may be
necessary under such securities or blue sky laws to enable the Shareholder to
consummate the sale or other disposition in such jurisdictions of the
Registrable Securities to be sold by the Shareholder, except that the Company
shall not for any such purpose be required to qualify to do business in any
jurisdiction wherein it is not qualified or to file any general consent to
service of process in any such jurisdiction;
(e) before filing the registration statement or prospectus
or any amendments or supplements thereto or any other documents related thereto,
furnish to counsel selected by the Shareholder of Registrable Securities
included in such registration statement
7
copies of all such documents proposed to be filed, all of which shall be subject
to the reasonable approval of such counsel;
(f) furnish, at the request of the Shareholder, (i) to the
underwriters, on the date(s) reasonably requested by such underwriters, an
opinion of the independent counsel representing the Company for the purposes of
such registration addressed to such underwriters and to such seller, in such
form and content as the underwriters and such seller may reasonably request, or
(ii) if such Registrable Securities are not being sold through underwriters,
then to the sellers, on the date that the registration statement with respect to
such Registrable Securities becomes effective, an opinion, dated such date, of
the independent counsel representing the Company for the purposes of such
registration in such form and content as such seller may reasonably request; and
in the case of clauses (i) and (ii) above, a letter dated such date, from the
independent certified public accountants of the Company addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the sellers and, if such accountants refuse to
deliver such letter to such sellers, then to the Company, stating that they are
independent certified public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act and covering such other matters as are customarily covered in accountant's
"comfort" letters;
(g) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;
(h) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement;
(i) promptly notify the Shareholder of Registrable
Securities included in such registration statement, (i) at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or incomplete
in the light of the circumstances under which they were made, (ii) of the
issuance by the Commission or any state securities authority of any stop order
suspending the effectiveness of a registration statement or the initiation or
proceedings for that purpose and (iii) of any request by the Commission or any
other regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in each such case, promptly prepare, file with the Commission as
required, and furnish to the Shareholder a reasonable number of copies of a
supplement to or an amendment to such prospectus and registration statement as
may be necessary so that, as thereafter delivered to purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or incomplete in
light of the circumstances under which they were made;
8
(j) use its commercially reasonable efforts to list all
Registrable Securities covered by such registration statement on any securities
exchange on which the shares of Class A Common Stock are then listed; and
(k) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable, but not
later than 18 months after the effective date of the registration statement, an
earnings statement covering the period of at least twelve (12) months beginning
with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act.
3.10 Expenses. (a) All expenses incurred in effecting the
registrations provided for in this Article III (excluding Selling Expenses),
including without limitation all registration and filing fees (including all
expenses incident to filing with the NASD Regulation, Inc. and any securities
exchange), printing expenses, fees and disbursements of counsel for the Company,
fees of the Company's independent auditors and accountants, expenses of any
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
subsection 3.9(d) hereof, underwriters (excluding discounts and commissions,
which shall be borne by the seller(s) of securities) and other Persons retained
by the Company (all such expenses being herein called "Registration Expenses"),
will be borne as provided in this Agreement, except that the Company will, in
any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system (on the National Market System if the Company so qualifies).
The Company shall have no obligation to pay any transfer taxes associated with
the disposition of Registrable Securities by a holder thereof.
(b) In connection with the first Demand Registration, the
Company will pay all Registration Expenses, whether or not it becomes effective,
and will reimburse the Shareholder for the reasonable fees and disbursements of
one counsel to the Shareholder in connection with the Demand Registration;
provided, however, that the Company shall not be required to pay for any
expenses of any Demand Registration proceeding begun pursuant to Section 3.1 if
the Demand Registration request is subsequently withdrawn at the request of the
Shareholder, in which case the Shareholder shall bear all such expenses, and,
provided further, that if at the time of such withdrawal, the Shareholder has
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to such Shareholder at the time of its request and
has withdrawn the request with reasonable promptness, then the Shareholder shall
not be required to pay any of such expenses and shall retain their rights
pursuant to Section 3.10.
(c) In connection with the second and third Demand
Registrations, the Shareholder will pay all Registration Expenses, whether or
not the registration statement becomes effective, and the Shareholder will
reimburse the Company for the reasonable fees and disbursements of the Company's
regular outside corporate counsel for performance of the
9
normal and customary functions of counsel in connection with the second and
third Demand Registrations.
(d) All Selling Expenses in connection with each Demand
Registration shall be borne by the Shareholder.
3.11 Time Limitations; Termination of Rights. Notwithstanding the
foregoing provisions of this Article III, the rights to registration shall
terminate as to any particular Registrable Securities when (i) such Registrable
Securities shall have been effectively registered under the Securities Act and
sold by the Shareholder thereof in accordance with such registration, (ii) such
Registrable Securities shall have been sold in compliance with Rule 144
promulgated under the Securities Act, or (iii) written opinions from counsel
reasonably acceptable to the Company and the holder of such Registrable
Securities, to the effect that such Registrable Securities may be sold without
registration under the Securities Act or applicable state law and without
restriction as to the volume and timing of such sales, shall have been received
from either counsel to the Company or counsel to the Shareholder; provided, that
so long as any Registrable Securities are held by the Shareholder, the
Shareholder shall be entitled to one (1) Demand Registration to be used to
effect an underwritten offering of such number of Registrable Securities as the
Shareholder may request; provided further that the Shareholder shall pay all
Registration Expenses in connection with such Demand Registration.
3.12 Compliance with Rule 144. At the request of the Shareholder of
Registrable Securities proposing to sell Registrable Securities in compliance
with Rule 144 promulgated under the Securities Act, assuming that at such time
the provisions of such Rule are applicable to the Shareholder and, in the event
the Shareholder is or could be deemed to be an "affiliate" of the Company within
the meaning of the Securities Act, and the Company is then required to file
reports under Section 13 or 15(d) of the Exchange Act, the Company shall (a)
forthwith furnish to the Shareholder a written statement as to its compliance
with the filing requirements of the Commission as set forth in such Rule, as
such Rule may be amended from time to time, and (b) make such additional filings
of reports with the Commission as will enable the Shareholder to make sales of
Registrable Securities pursuant to such Rule. At all times during which this
Agreement is effective, the Company shall file with the Commission and, if
applicable, The Nasdaq Stock Market, Inc. ("Nasdaq"), in a timely manner, all
reports and other documents required to be filed by the Company, (i) with the
Commission pursuant to the Exchange Act, and (ii) with Nasdaq pursuant to its
rules and regulations.
3.13 Company's Indemnification. In the case of each offering of
Registrable Securities, the Company hereby agrees to indemnify and hold harmless
the Shareholder, each Person, if any, who controls the Shareholder within the
meaning of Section 15 of the Securities Act and each other Person (including
each underwriter and each Person who controls such underwriter) who participates
in the offering of Registrable Securities, against any losses, claims, damages
or liabilities, joint or several, to which the Shareholder, controlling person
or participating person may become subject under the Securities Act or
otherwise, against any and all losses, claims, damages or liabilities (or
proceedings in respect thereof) that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which the Registrable Securities are registered
under the Securities Act, in any preliminary prospectus or final prospectus
contained therein, or in any
10
amendment or supplement thereto, or document incorporated by reference therein
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Shareholder, the
controlling person and participating person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability or proceeding; provided, however, that the Company will
not be liable in any case to the Shareholder, the controlling Person or
participating Person to the extent that any loss, claim, damage or liability
results from any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary or final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
the Shareholder or any other person who participates as an underwriter in the
offering or sale of such securities, in either case, specifically stating that
it is for use in the preparation thereof or controlling or participating person,
as the case may be, specifically stating that it is for use in the preparation
of such document. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Shareholder
disposing of Registrable Securities or any such underwriter or controlling
person and shall survive the transfer of such securities by the Shareholder and
the expiration or termination of this Agreement.
3.14 Indemnification by the Shareholder. (a) In the case of each
offering of Registrable Securities, the Shareholder agrees to indemnify and hold
harmless (in the same manner as set forth in Section 3.13 above) the Company,
each Person referred to in clause (1), (2) or (3) of Section 11(a) of the
Securities Act (except if such Person is also a selling shareholder under such
registration) in respect of the registration statement, and each other Person,
if any, who controls the Company within the meaning of Section 15 the Securities
Act (except if such Person is also a selling shareholder under such
registration), with respect to any untrue statement or alleged untrue statement
of any material fact contained in the registration statement under which the
Registrable Securities are registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein or in any amendment
or supplement thereto, or that arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, which, in each case,
is made in or omitted from the registration statement, preliminary or final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
the Shareholder specifically for use in the preparation thereof; provided,
however, that the indemnification obligations of the Shareholder shall be
limited to the net proceeds received by the Shareholder from the sale of
Registrable Securities pursuant to such registration. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any person indemnified by virtue of this Section 3.14
and shall survive the transfer of such securities by the Shareholder and the
expiration or termination of this Agreement. In the case of an offering made
pursuant to this Agreement with respect to which the Company has designated the
lead or managing underwriters (or the Company is offering securities directly,
without an underwriter), this indemnity does not apply to any loss, claim,
damage or liability arising out of or related to any untrue statement or alleged
untrue statement or omission or alleged omission in any preliminary prospectus
or offering memorandum if a copy of a final prospectus or offering memorandum
was not sent or given by or on behalf of any underwriter (or the Company, as the
case may be) to such Person asserting such loss, claim,
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damage or liability at or prior to the written confirmation of the sale of the
Registrable Securities as required by the Securities Act and such untrue
statement or omission has been corrected in such final prospectus or offering
memorandum.
3.15 Contribution. If the indemnification provided for in Section
3.13 or 3.14 from the indemnifying party is unavailable to an indemnified party
hereunder, or is insufficient to hold harmless an indemnified party, in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission, provided that the maximum amount of the Shareholder's
contribution shall be limited to the net proceeds received by the Shareholder
from the sale of Registrable Securities pursuant to such registration. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 3.15 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
3.16 Notification of and Participation in Actions. Promptly after
receipt by an indemnified party under this Article III of oral or written notice
of a claim or the commencement of any proceeding against it, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such Article, give written notice to the indemnifying party of the
commencement thereof, but the failure so to notify the indemnifying party shall
not relieve it of any liability that it may have to any indemnified party except
to the extent the indemnifying party demonstrates that the defense of such
action is prejudiced thereby. In case any such proceeding shall be brought
against an indemnified party and it shall give notice to the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish (unless the
indemnifying party is also a party to such proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate) to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
Article for any fees of other counsel or any
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other expenses with respect to the defense of such proceeding, in each case,
subsequently incurred by such indemnified party in connection with the defense
thereof. If an indemnifying party assumes the defense of such proceeding, (a) no
compromise or settlement thereof may be effected by the indemnifying party
without the indemnified party's reasonable consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any Person and no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary damages that are
paid in full by the indemnifying party, and (b) the indemnifying party shall
have no liability with respect to any compromise or settlement thereof effected
without its consent, which shall not be unreasonably withheld. If notice is
given to an indemnifying party of the commencement of any proceeding and it does
not, within fifteen (15) business days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume the
defense thereof, the indemnifying party shall be bound by any determination made
in such action or any compromise or settlement thereof effected by the
indemnified party. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages, such indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise or settle such
proceeding, but the indemnifying party shall not be bound by any determination
of a proceeding so defended or any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld). All
indemnification obligations of the parties hereto shall survive any termination
of this Agreement pursuant to Section 3.13 hereof.
3.17 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Article III that the
Shareholder requesting registration of Registrable Securities furnish to the
Company such information regarding them, the Registrable Securities held by them
and the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company. In the event that the registration under Article III
involves an underwritten offering, the Company agrees to provide such
information to the underwriters as they may reasonably request in connection
with their due diligence procedures.
3.18 Transfer of Registration Right. The Shareholder may transfer
all or any portion of the registration rights granted under Article III to an
Affiliate in respect of Registrable Securities owned by the Shareholder at the
time of the transfer (each such Affiliate that receives such Registrable
Securities being referred to herein as a "Transferee"). Any transfer of
registration rights pursuant to this Section 3.18 shall be effective upon the
receipt by the Company of (i) written notice from the Shareholder stating the
name and address of such Transferee and identifying the number of Registrable
Securities with respect to which rights under this Agreement are being
transferred and the nature of the rights so transferred and (ii) a written
agreement from such Transferee to be bound by the terms of this Article III and
Sections 4.2, 4.4, 4.6 and 4.7 of this Agreement.
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ARTICLE IV
Miscellaneous
4.1 No Inconsistent Agreements. The Company will not, at any time
after the effective date of this Agreement, enter into, and is not now a party
to or otherwise bound by, any agreement or contract (whether written or oral)
with respect to any of its securities which is inconsistent in any respect with
the registration rights granted by the Company pursuant to this Agreement.
4.2 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the parties with respect to the subject matter hereof.
4.3 Notices. Notices and other communications provided for herein
shall be in writing and shall be given in the manner and with the effect
provided in the Merger Agreement. Such notices and communications shall be
addressed if to the Shareholder of Registrable Securities, to its address as
shown on the transfer records of the Company, unless the Shareholder shall
notify the Company that notices and communications should be sent to a different
address (or facsimile number), in which case notices and communications shall be
sent to the address (or such facsimile number) specified by the Shareholder.
4.4 Waivers; Amendments. No failure or delay of the Shareholder of
Registrable Securities in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Shareholder are cumulative
and not exclusive of any rights or remedies which it would otherwise have. The
provisions of this Agreement may be amended, modified or waived only by an
agreement in writing and any such waiver shall be effective only in the specific
instance and for the purpose for which given. Notwithstanding the foregoing, no
amendment, modification or waiver of any provision of this Agreement shall be
effective against the Shareholder of Registrable Securities unless (a) agreed to
in writing by the Shareholder or (b) agreed to in writing by the Shareholder's
predecessor in interest and notation thereof is set forth on the certificate
evidencing the Shareholder's Registrable Securities as the case may be. No
notice or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances.
4.5 Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provision hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
14
4.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each of the
parties hereto agrees that any dispute relating to or arising from this
Agreement or the transactions contemplated hereby may be resolved in the courts
of the State of New York sitting in the County of New York or the United States
District Court for the Southern District of New York and the appellate courts
having jurisdiction of appeals in such courts. In that context, and without
limiting the generality of the foregoing, each of the parties hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal suit,
action or proceeding relating to this Agreement or any transaction contemplated
hereby, or for recognition and enforcement of any judgment in respect thereof,
to the nonexclusive jurisdiction of the courts of the State of New York sitting
in the County of New York or the United States District Court for the Southern
District of New York and appellate courts having jurisdiction of appeals in such
courts, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such suit, action, or proceeding may be heard
and determined in such New York State court or, to the extent permitted by law,
in such federal court;
(b) consents that any such suit, action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue or jurisdiction of any such action or proceeding in such court
or that such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such party
as provided in Section 4.3 hereof; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by New York law.
4.7 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns. Nothing contained in this Agreement, express or implied,
is intended to confer upon any other person or entity any benefits, rights or
remedies.
4.8 Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
4.9 Section Headings. The section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
4.10 Expenses. Except as expressly otherwise provided herein, each
party shall bear its own expenses incurred in connection with the preparation,
execution and performance of
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this Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representatives, counsel and accountants.
4.11 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by facsimile or
otherwise) to the other parties, it being understood that all parties need not
sign the same counterpart. Any counterpart or other signature hereupon delivered
by facsimile shall be deemed for all purposes as constituting good and valid
execution and delivery of this Agreement by such party.
4.12 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
4.13 Further Agreements. The parties agree that they will execute
any further instruments and perform any acts that may become necessary or
desirable to carry out this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be duly executed, all as of the day and year above written.
SPANISH BROADCASTING SYSTEM, INC.
By:________________________________________
Name:
Title:
INFINITY MEDIA CORPORATION
By:________________________________________
Name:
Title:
